As a prelude to the Financial Stability Oversight Council issuing long-anticipated designations of “systemically important financial institutions,” a final rule issued last week by the Federal Reserve Board has detailed the criteria used when considering that designation for a “nonbank financial company.”
Under the Dodd-Frank Act, the FSOC may subject a nonbank financial company to supervision by the Board and consolidated prudential standards only if it is “predominantly engaged in financial activities” and it is determined that financial distress—or the nature, scope, size, scale, concentration, interconnectedness, or mix of its activities —could pose a threat to the financial stability of the United States
