WASHINGTON (AP) — A group of top U.S. regulators charged with monitoring the financial system is making changes to the way big financial firms are chosen for stricter government oversight.
Companies will be notified earlier in the process by the Financial Stability Oversight Council that they could be designated as a potential threat to the financial system, under the changes adopted Wednesday by the council. That will give the companies more time to challenge the designation.
The council also will provide more information on its review process to the companies and the public. Sensitive, confidential company information will still be kept from public view, the council said in a news release.
Business interests that oppose the 2010 financial overhaul law that created the oversight council have accused it of operating without transparency. Among the business groups is the U.S. Chamber of Commerce.
A designation of "systemically important" means regulators believe a company is so big and entwined with the financial system that it could threaten the economy if it collapsed.
The designation brings stricter government oversight, increased capital requirements as a cushion against losses and limits on use of borrowed money.
The oversight council arose from the 2008 financial crisis. It was created by the 2010 Wall Street overhaul law to monitor the financial system for risks with an eye to preventing another crisis. The group is headed by Treasury Secretary Jack Lew; its members include Federal Reserve Chair Janet Yellen and Mary Jo White, chair of the Securities and Exchange Commission.
The council members voted in a closed meeting Wednesday to adopt the changes in its process.
"The changes adopted today represent an important step for the council that will increase the transparency of our designations process and strengthen the council overall," Lew said in a statement.
The council was empowered by the 2010 law to tag certain companies for stricter supervision as a way to end "too big to fail": the idea that some financial institutions are so big and crucial to the system that the government would step in to rescue them if they veered toward collapse. That's what happened in the 2008 crisis, with hundreds of millions of dollars in taxpayer aid going to big U.S. banks and other financial institutions.
The council so far has designated four nonbank financial firms as "systemically important": MetLife Inc., the largest U.S. insurance company by assets; insurer American International Group Inc.; Prudential Financial Inc., and General Electric Capital Corp., the finance arm of General Electric Co.
MetLife last month challenged the regulators' action, announcing it is taking the government to court to appeal the designation. It was the first legal challenge to the council.