Lew Defends SIFIs, Refutes Subsidies
Although Secretary Lew took heavy fire on the IRS scandal, the FSOC hearing before Senate Banking was very substantive on many pending regulatory matters. In this report, we assess the give-and-take on SIFI designation, TTIP negotiations, and the extent to which the Federal Reserve should move now to sanction large BHCs if their living wills do not demonstrate resolvability under bankruptcy. Secretary Lew reiterated the comment we highlighted in yesterday’s report on the FinServ session, namely that he does not believe large BHCs now enjoy a significant “market advantage.” This led Sens. Brown (D-OH) and Warren (D-MA) to push back hard, making clear that any number the GAO provides on the “subsidy” question will be a critical policy driver (see Client Report TBTF12).
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