Yesterday, the FSOC finalized new criteria for designating nonbank financial companies as systemic institutions – a status that then brings down the FRB as top-tier regulator, along with a host of tough new prudential standards. We had expected Fannie, Freddie and the FHLBs to be among the first systemic nonbanks – or we did until Secretary Geithner today said he doesn’t think Fannie and Freddie pose so grave a risk.

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