In this report, we build on our Friday assessment to go in depth into the President’s memorandum to Treasury on SIFI designations.  As noted, it covers not only designation of non-bank SIFIs, but also financial market utilities (FMUs).  The new Treasury study is to look at many of the issues raised in the MetLife decision (see Client Report SIFI19), for example at the value of determining not just if a company’s distress would be systemic, but also the likelihood that it would fail.  We expect the Administration to rewrite current FSOC designation criteria (see FSM Report SYSTEMIC60), but not to withdraw from the appeal now reconsidering the MetLife action.  Even if the Administration wished to do so – as these study criteria suggest – the procedure for actively withdrawing from the case is complex, doubtless dissuading Secretary Mnuchin from pursuing it.

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