By Emily Stephenson
WASHINGTON, Sept 19 Insurer Prudential Financial
Inc said on Thursday that U.S. regulators had voted to
designate the company as systemically risky, bringing it under
stricter regulatory oversight.
A group of regulators known as the Financial Stability
Oversight Council had been weighing whether Prudential was so
big that its failure could threaten U.S. financial markets.
It was doing so under a provision of the 2010 Dodd-Frank law
that says the risk council can designate non-bank financial
firms as "systemically important." The tag brings tougher
capital requirements and means the firms will be regulated by
the Federal Reserve.
Prudential had opposed regulators' attempts to give it the
systemic tag and argued that it was not too big to fail. The
insurer now has 30 days to determine whether it will ask a court
to overturn the regulators' decision.
"We are currently reviewing the rationale for the
determination and our options," Prudential said in a statement.
Regulators already tapped American International Group
and GE Capital, the financial services arm of General
Electric, for this new oversight. Both accepted the
The risk council also proposed naming Prudential, the
second-largest U.S. life insurer, a globally systemic insurer,
according to an international regulatory group.
But Prudential appealed to regulators to change their minds,
becoming the first firm to formally contest the U.S.
The council, which is led by Treasury Secretary Jack Lew,
stuck by its initial decision, Prudential said on Thursday. A
Treasury spokeswoman declined to comment.
The regulatory group's procedures stipulate that after it
votes to designate a non-bank financial company as risky, it
must wait one business day before announcing the decision.
Prudential's designation makes it appear more likely the
council will next name MetLife, another big U.S.
insurer, as systemically important. MetLife has said regulators
were considering it for tougher oversight, but it was not as far
along in the process.