US rescinds Prudential’s ‘too-big-to-fail’ designation

0

WASHINGTON: US regulators removed insurance giant Prudential Financial from the list of financial institutions that are deemed ‘systemically important’ and placed under heightened government supervision.

The Financial Stability Oversight Council, created in the wake of the 2008 global financial crisis, announced it had voted to rescind its finding that trouble at Prudential could cause problems for the financial stability of the United States.

“The council’s decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability,” Treasury Secretary Steven Mnuchin said in a statement.

The council’s decision was unanimous but one member, Federal Housing Finance Authority director Mel Watt, said there had been no independent evaluation of the impact on the market from Prudential’s size.

Under the 2010 Dodd-Frank Wall Street reform laws, dozens of banks and others were designated as ‘systemically important financial institutions’ requiring heightened scrutiny to reduce risks to the broader economy. Many objected strongly.

The oversight council recently also removed insurance giant American International Group, MetLife and the lending arm of General Electric from the list.

In a statement on Wednesday, Prudential said it was ‘pleased’ with the decision, which it said reflected its strong capitalisation and ‘comprehensive risk management.’ — AFP