NU Online News Service, July 22, 11:55 a.m.EDT

WASHINGTON—The Financial Stability Oversight Council(FSOC) will soon issue new proposed guidance on the criteria itwill use to determine which financial firms are systemicallysignificant, the deputy Treasury secretary told Congressyesterday.

In testimony before the Senate Banking Committee, Neal Wolinsaid the proposed additional guidance that will be published by theFSOC for comment will include "specific metrics that will helpprovide clarity on the FSOC's evaluation of firms for potentialdesignation."

The testimony was a progress report on implementation of theDodd-Frank financial-services reform law.

"The designation process will employ the judgment of thecouncil's members based on a comprehensive understanding of afirm's risks," Wolin says.

He "anticipates that this proposed guidance will be issued forpublic comment in the near future."

Wolin's comments came on the heels of a letter to the Treasuryfrom Sen. Sherrod Brown, D-Ohio, and Sen. Pat Toomey, R-Pa., inwhich the lawmakers say they "remain concerned about the lack ofclarity in the current rule proposed on SiFi [systemicallyimportant financial institution] designations. Specifically, it isimportant that the SiFi designation criteria involve clearbenchmarks, so that firms have some ability to predict whether andwhen they will be deemed 'systemically important' in the eyes ofthe FSOC, as a SiFi designation will significantly affect anyfirm."

In other comments, Wolin says the FSOC will soon release itsfirst annual report, which will detail the monitoring process aimedat preventing the failure of any firm which would constitute asystemic risk to the financial system.

He says the report will outline the activities of the FSOC,including any designations or recommendations made with respect toactivities that could threaten financial stability. It will alsodetail significant financial-market and regulatory developments,including insurance and accounting regulations and standards.

Wolin also says the report will include, as required by statute,recommendations "to enhance the integrity, efficiency,competitiveness and stability of the United States financialmarkets; promote market discipline; and maintain investorconfidence."

The Treasury is also making progress in establishing the Officeof Financial Research, which is designed to provide data to theFSOC and Treasury on worldwide financial issues, Wolin says. TheOFR should have a staff of 60 by fall.