The ability of the Financial Stability Oversight Council (FSOC) to designate nonbank firms as systemically important financial institutions (SIFIs) has come under intense scrutiny in recent months, HousingWire.com reported today. Many critics have called the SIFI designation just another version of “too big to fail,” the phrase that became synonymous with the bailouts of some of the nation’s largest financial institutions in the aftermath of the financial crisis, as the SIFI designation brings the nonbank under the supervision of the Federal Reserve. But during the Monday keynote address at ABS East in Miami, Patrick Pinschmidt, the deputy assistant secretary and executive director of the FSOC, said that those characterizations are inaccurate and untrue. “SIFI designation is not ‘too big to fail,’” Pinschmidt said. He countered that the SIFI designation is designed to bring additional oversight of nonbanks in an attempt to mitigate the impact of a nonbank’s potential failure on the country’s economy.
