WASHINGTON Sen. Mike Crapo, the top Republican on the Senate Banking Committee, is asking the Government Accountability Office to examine the Financial Stability Oversight Council's process for designating systemically important institutions to ensure that it is transparent and fair.
FSOC's recent designations of certain nonbank firms including Prudential Financial, American International Group and GE Capital as "systemically important financial institutions" subjects them to tougher supervisory standards. Designated firms must submit a plan to regulators for how they would be safely unwound in a crisis.
Crapo wrote to the GAO on Monday asking the watchdog to look into the FSOC's criteria that led to the designations and the council's communication with the institutions that were evaluated during the process, among other information.
"These designations have significant implications for these institutions as well as the economy as a whole," the Idaho Republican said in the letter.
Crapo "believes the process FSOC uses lacks transparency and fails to demonstrate the logic behind determining why some financial firms may be considered SIFIs while others are not," a spokeswoman added.