Econintersect: A leading insurance industry website has reported that Prudential (NYSE:PRU) is close to being classified as a SIFI (systemically important financial institution). 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.
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.
- Report cites Prudential to be named as a non-bank SIFI (Arthur D. Postal, LifeHealthPro, 19 October 2012)