The Republicans on the Senate Banking Committee have asked Treasury Secretary Steven Mnuchin to end the “too big to fail” policy for non-banks. From The Hill:
Ten of the Banking panel’s 12 Republicans wrote to Mnuchin, asking him to freeze the Financial Stability Oversight Council’s (FSOC) ability to classify as “systemically important financial institutions” any organization that isn’t a bank. The SIFI label, nicknamed “too big to fail,” subjects firms to stricter federal oversight and requirements.The group of Republicans wrote that the FSOC process “lack transparency and accountability, insufficiently tracks data, and does not have a consistent methodology for determinations.” They also claimed the process creates “substantial new regulatory costs while putting taxpayers on the hook for any future bailout to these firms.”Republicans have long objected to the “too big to fail” label and the process that the federal government would use to dismantle SIFI-designated financial firms on the brink of failure. Republicans claim that process amounts to a bailout, though no taxpayer money goes to the failing firms.The House Financial Services Committee Republican staff recently released a report claiming the FSOC used the label “arbitrarily and inconsistently.” They’re likely to seek changes the process by either eliminating it or adjusting how a bank or firm is labeled systemically important.
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