The Financial Stability Oversight Council (FSOC) is inthe final stages of evaluating an initial set of nonbank financialcompanies for potential designation as SIFIs, or systemicallyimportant financial institutions, according to remarks made todayby Mary Miller, U.S. Treasury Under Secretary for DomesticFinance.

However, Miller cautioned that careful assessments of thesefirms, which include AIG and Prudential Financial,take time.

The hope is that the FSOC will vote up or down on the SIFIdesignations “in the next few months,” said Miller, who wasspeaking before the Annual Washington Conference of the Instituteof International Bankers (IIB) this morning.

In a telephone interview last week with Bloomberg News, SheilaBair called FSOC spineless in not designating nonbank SIFIs.

“It's lack of will, it's lack of courage, it's lack of spine,”Bair said in a telephone interview Feb. 28 with Bloomberg News.“You can quote me on that and they'll be angry with me, but I don'tcare. This is outrageous.”

Bair, former chairman of the Federal Deposit Insurance Corp.,now heads the Systemic Risk Council, a private watchdog groupfocused on regulatory issues.

The SIFI designation will subject the companies it applies toenhanced prudential standards and supervision by the FederalReserve. Asset management businesses that make up a large part ofsome insurers may at some point come under these standards and haveto reckon with them.

The designations are “not a power the Council (now headed byTreasury Secretary Jacob Lew) wields cavalierly,” Millerstated.

FSOC wants to make sure that it gets the designations right, andthe data is watertight – it does not want a situation that could beeasily appealed, the remarks convey.

The benefits of strengthened coordination go beyond regulatoryimplementation, Miller said. She pointed to FSOC's ability “toquickly bring the key regulators together to respond to such eventsas the failure of MF Global and the disruption to financial marketscaused by Superstorm Sandy,” as evidence of FSOC's strength andnimbleness.

“Since October 2010, we have designed a rigorous designationprocess that is thorough and fair and takes into account bothquantitative data and qualitative judgment. The Council isevaluating the potential for companies to pose a threat tofinancial stability based on a broad array of factors,” shestated.

She was speaking broadly on Dodd Frank regulatory reforms in themonth, as she noted, that marks the five-year anniversary of thefailure of Bear Stearns and the start of the financial crisis andbiggest recession our country has experienced since the GreatDepression. The FSOC comments were just a small part of the overallspeech.

However, she noted that FSOC can also help promote collaborationamong U.S. regulators on international regulatory issues. Shesaid U.S. representatives to groups such as the Financial StabilityBoard and the International Association of InsuranceSupervisors (IAIS) are able to use the FSOC as a means ofsharing information and collaborating with a broader group ofdomestic colleagues on international efforts. IAIS has been themost recent conduit of information on confidential data from U.S.insurers feeding to the IAIS on its oversight initiatives.