Prudential: Too Big to Fail?

October 23rd, 2012
in econ_news, syndication

Econintersect:  A leading insurance industry website has reported that Prudential (NYSE:PRU) is close to being classified as a SIFI (systemically important financial too-big-to-failSMALLinstitution).  If the process is completed Prudential will join the mega banks, MetLife (NYSE:MET) and AIG (NYSE:AIG) as an official TBTF (too big to fail) corporation.  LifeHealthPro also said that The Hartford (NYSE:HIG) is also being considered for the SIFI classification.  The classification is made by the FSOC (Financial Stability Oversight Council), a group comprised of the Fed Chairman, the Secretary of the Treasury, the head of the FDIC and seven additional members.

Follow up:

Companies on the SIFI list are subsect to special oversight by the Federal Reserve in addition to normal state and federal regulation.  SIFI companies will be subjected to more stringent capital requirements and will not be able to have a free hand with comoensation and shareholder benefits such as share buybacks and dividends.

John Lounsbury



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