NU Online News Service, Aug. 11, 1:55 p.m.EDT

The Treasury Department confirmed late Wednesday that theFinancial Stability Oversight Council plans to re-propose—with"greater detail on the process and framework"—the principles itwill use in designating nonbank financial companies as systemicallysignificant.

The FSOC's plans were reiterated in a letter sent to Rep. RandyNeugebauer, R-Texas, chairman of the Oversight Subcommittee of theHouse Financial Services Committee.

The new document justifies for the first time the use ofqualitative considerations—as well as the 10 quantitative criteriaspelled out in the Dodd-Frank financial services law—that the FSOCwill use to designate certain nonbanks as systemicallysignificant.

"Because the statutory considerations, individually as well asin combination, cannot be reduced to a simple formula, the guidancewill set forth both quantitative metrics the FSOC expects to use,in addition to the qualitative considerations that, in the FSOC'sjudgment, will allow it to evaluate the threat that particularcompanies pose to financial stability," the letter says.

The letter doesn't specify exactly when the proposed regulationand guidance will be published for comment, but it does call for a60-day comment period, and notes that the guidance will be releasedat the same time.

Moreover, the letter says, the rule will not be finalized untilthe FSOC has "reviewed and considered" all comments.

Insurers want the FSOC to be as specific as possible in aregulation so that they can challenge such a designation in courtif they desire, according to several industry lawyers andlobbyists.

The FSOC letter follows similar comments on the issue made by NeilWolin, deputy Treasury secretary, before the Senate BankingCommittee July 21.

The letter was signed by Amias Gerety, deputy assistantsecretary in the Treasury Department's Office of the FSOC.

Gerety says in the letter that the proposed rule will specifythe procedures "pursuant to which nonbank financial companies willbe considered for designation."

He adds that the accompanying guidance "will provide the publicwith additional clarity regarding the FSOC proposed approach toevaluating nonbank financial companies for designation."

"This will help enable nonbank financial companies to assesswhether they are likely to be considered for designation," theletter says.

The guidance will also describe the FSOC's view of the primaryfactors relevant to a designation "which may be adjusted over timerespond to emerging threats as financial markets and companiesevolve," according to the letter.