Two Sets of Standards, One Big Muddle for SIFIs
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By Karen Shaw Petrou |
There will be two turning points this month for the new regulatory framework for systemically important financial institutions. First, global regulators will reveal criteria to define global SIFIs — the biggest of the big. And the U.S. will take yet another stab at our SIFI standards, issuing the third proposal on how to tell a SIFI from a run-of-the-mill big nonbank financial company. As these standards take shape, there’s growing danger that their sum total will be flat-out silly: global SIFIs judged by just how humongous they are while U.S. SIFI standards slap around bank holding companies with as little as $50 billion in assets and even small foreign-bank operations here if the parent back home crosses the $50 billion threshold. The stakes here are very high. The global SIFI standards will cost covered firms first a punitive capital surcharge and then additional up-the-ante requirements. U.S. SIFI standards are set by Title I of the Dodd-Frank Act, meaning they are set in law and soon to come. The statute mandates an array of high-impact SIFI standards to be set by final rule no later than Jan. 21, 2012.