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Dodd-Frank alternative would do away with SIFI designation

Posted On: Apr. 27, 2017 2:15 PM CST

Legislation that would repeal the ability to designate insurers and other financial institutions as “too big to fail” has been introduced in the U.S. House of Representatives. 

The Financial CHOICE Act, the Republican-developed alternative to the Dodd-Frank Wall Street Reform and Consumer Protection Act, was introduced Wednesday by Financial Services Committee Chairman Jeb Hensarling, R-Texas. 

The bill would eliminate or revise several features of Dodd-Frank, including retroactively repealing the authority of the Financial Stability Oversight Council to designate firms as systematically important financial institutions.

The FSOC currently has the power to designate financial institutions as SIFIs subject to heightened capital requirements and reporting rules. In July 2013, the council voted to designate New York-based American International Group Inc. and Norwalk, Connecticut-based General Electric Capital Corp. Inc. as SIFIs, with Newark, New Jersey-based Prudential Financial Inc. also designated as a SIFI in September 2013. 

In December 2014, the council voted to designate New York-based MetLife Inc. as a SIFI, but the insurer won a court challenge against the designation in March 2016 — a decision currently under appeal by the government.

In June 2016, the council voted to rescind GE’s SIFI designation after the company changed its business by divesting assets and changing its funding model.