U.S. financial regulators took a long-awaited step to address market vulnerabilities yesterday, proposing that a first round of large, nonbank financial companies, including American International Group Inc., face tougher government oversight, the Wall Street Journal reported today. The Financial Stability Oversight Council, led by the Treasury Department, voted to propose designating several companies as "systemically important," according to government officials. While the panel of regulators did not disclose which companies were proposed for designation, AIG, Prudential Financial Inc. and the GE Capital Unit of General Electric Co. confirmed they were part of the first group. Companies have 30 days to challenge the designation but the proposal clears the path for firms seen as systemically risky to be designated for tougher oversight by the Federal Reserve. Companies tagged as "systemically important financial institutions" (SIFIs) could be subject to tougher capital and liquidity requirements, annual stress tests and limits on executive compensation and dividends.
