The Federal Reserve approved a final rule yesterday that brings the government closer to placing large nonbank companies that were at the heart of the financial crisis under stricter supervision, the Washington Post reported today. The rule leaves a strikingly wide swath of companies on the table as potentially falling under tougher oversight, including private-equity firms and hedge funds. Yet industry officials and others following the process say it is unlikely that officials will ultimately single out more than a handful of firms. Any final decision by officials will be closely watched by Wall Street, since a company designated by the government as "systemically important" would face tougher capital standards, among other restrictions, that could eat into the firm’s profitability. It has taken federal regulators nearly three years since the passage of Dodd-Frank, the country’s overhaul of Wall Street rules, to define which nonbank companies, if they were to fail, could threaten the integrity of the country’s financial system. Yesterday's move indicates that the Financial Stability Oversight Council, an interagency panel of regulators, is in the final stages of reviewing institutions. Regulators say they will vote in the next few months on which companies will fall under increased scrutiny.
