The Financial Stability Oversight Council announced that it would hold an executive session next week to consider a “potential application” for dedesignation of a bank holding company or its successor as a systemically important financial institution.
That potential application presumably refers to Zions Bancorp., which said
The FSOC notice says that the council will discuss “a potential application to the Council from a bank holding company or its successor under section 117 of the Dodd-Frank Act.” Dodd-Frank requires that all bank holding companies with more than $50 billion in assets are automatically regulated as SIFIs, subjecting them to enhanced prudential requirements such as stress testing, capital and liquidity requirements.
Section 117 of Dodd-Frank — commonly referred to as the “Hotel California” provision — holds that the successor institution of any bank holding company that restructures itself would also be automatically designated as a SIFI.
A successor institution may request a hearing for dedesignation, however, and the FSOC may grant such a hearing if more than two-thirds of the voting members and the chair agree to one. The FSOC must then issue a final decision within 60 days of the hearing and submit a report to the Senate Banking Committee detailing its final decision and the rationale upon which it is based.
The FSOC recently issued a series of
The FSOC’s notice also said that the committee would receive an “update on the annual re-evaluation of the designation of a nonbank financial company” as a SIFI. This re-evaluation can also be presumed to apply to insurance giant Prudential, which is the only remaining nonbank designated as a SIFI.
The council
