WASHINGTON (Reuters) - New Treasury Secretary Jack Lew on Thursday praised a council of financial regulators for its work on Wall Street reform, but an influential former regulator later said that the group should do more to boost oversight of big, non-bank financial firms.
Lew, in his first official meeting as head of the Financial Stability Oversight Council, said the group “has made significant progress to promote market stability by taking actions to issue rules, identify risks and increase oversight.”
The 2010 Dodd-Frank law created the council to oversee financial system stability, which includes declaring large non-bank firms “systemically important” if it felt that their collapse could sink the U.S. financial system.
Regulators are considering firms for this designation, which would bring extra regulatory oversight from the U.S. Federal Reserve.
Treasury spokesman Suzanne Elio said in a statement that the FSOC discussed non-bank companies that are in the final stage of this review during a closed meeting on Thursday. The council does not name companies it is considering for more oversight.
Insurance companies American International Group and Prudential Financial have said they are in the final stage of review, after which the council could vote to designate them.
GE Capital, which received support from the federal government during the U.S. financial crisis, as did AIG, has also been said to be under review.
In a telephone interview with Reuters, Sheila Bair, a former head of the Federal Deposit Insurance Corp, said she found it “amazing” that the FSOC has not designated the companies for heightened supervision.
“Boy, during the crisis we seemed to be able to figure out that AIG and GE Capital were systemic,” Bair said.
“But when it comes to designating systemic institutions to give them more regulation and make sure that in the future they can go into bankruptcy without the rest of us having to bail them out, you know, we can’t seem to get that done,” she said.
Treasury officials have said working toward designating additional firms would be a priority for 2013.
Business groups, on the other hand, have urged the council to take its time and finish other Dodd-Frank rules first. They say the FSOC should be careful about how it approaches new regulations for non-bank firms.
The oversight group last month decided not to move additional companies into the final stage of review, according to minutes posted on the FSOC’s website on Thursday.
The group also has been working on recommendations for new regulations of the money market fund industry. The FSOC heard from the Securities and Exchange Commission on that group’s efforts related to money funds, Elio said in the statement.
Reporting by Emily Stephenson, editing by G Crosse