If anyone was in doubt about whether the Financial Stability Oversight Council would attempt to complete the designation of asset managers and other capital markets participants as systemically important financial institutions, or SIFIs, this year, the G-7 summit communique issued from Brussels last week removed any doubt:
We agreed that 2014 will be the year in which we focus on substantially completing key aspects of the core financial reforms that we undertook in response to the global financial crisis: building resilient financial institutions; ending too-big-to-fail; addressing shadow banking risks; and making derivatives markets safer. We remain committed to the agreed G-20 roadmap for work on relevant shadow banking activities with clear deadlines and actions to progress rapidly towards strengthened and comprehensive oversight and regulation appropriate to the systemic risks posed.
Given the fact that the G-7 leaders, including President Obama, signed on to this language, we can expect that the Financial Stability Board will shortly be completing the work it earlier described as bringing “shadow banks” within its “SIFI Framework,” and the FSOC will then follow suit with designations.
It’s important to recall that a communique like this acts as a direct order from the president to the members of the FSOC.
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