2015 0429 - GOV (House) - The Impact of International Regulatory Standards -  [PDF-125p, part 1 - VIDEO-youtube , Part 2 - VIDEO-youtube] 

(p19) - Mark Van Der Weide - (Deputy Director, Division of Banking Supervision and Regulation, at the Federal Reserve Board of Governors)

The FSOC publicizes a summary of its decision whenever it designates a non-bank SIFI.

• And that was true as well for the three insurance non-bank SIFIs that the FSOC has designated.

They have also put out a public framework to describe the factors that they used to assess whether a particular non-bank financial firm is a SIFI.

• And those procedures were followed in the process that led to the designation of the three U.S. insurers as non-bank SIFIs.

I think the FSOC recognizes that traditional insurance activities tend to generate low amounts of systemic risk.

• But there are a fair amount of nontraditional insurance activities that are engaged in by those three firms, and those did generate some amounts of systemic risk.
• Some of the key factors that were cited in the FSOC’s decisions included:
  • the extent of short-term funding activities at those organizations,
  • the extent of their capital markets activities— repos, securities, lending, OTC derivatives—which create interconnectedness with the rest of the financial system,
  • and also the runnable liabilities of some of those firms embedded in their insurance or annuities products, which would enable the annuitant or the insurance policyholder to potentially take out its money from the firm on short notice.
  • But those are some of the factors that...

(p21) - Chairman LUETKEMEYER. Thank you. Mr. Van Der Weide, I want to let you know that you gave us more information in your 2 or 3 minutes’ response here than all of the other folks we have had before this committee, put together, when we asked that question about SIFIs. Thank you for your response.