WASHINGTON — Despite calls by some lawmakers and businesses to delay regulators' decision to designate certain nonbank firms as systemically risky, an interagency council voted Friday to move forward with the third and final phase of such a plan.

The Financial Stability Oversight Council, headed by Treasury Secretary Tim Geithner, met in a closed-door session to take a key step toward publicly declaring some nonbanks as systemically important financial institutions, or SIFIs.

Analysts said the move is essential because it will give regulators the power to oversee nonbanks that have previously escaped close supervision.

"FSOC is proceeding to implement one of the critical pieces of Dodd-Frank, which is nonbank SIFIs, to prevent the whole weight of the banking rules from empowering shadow banking," said Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc. "If all FSOC did was regulate banks, we would be laying the seeds for renewed systemic risk."

The names of the companies that are under consideration, which could include insurance companies, were not disclosed by regulators following the council's meeting. Regulators have previously said they will postpone designating hedge funds and private-equity firms in this initial round.

Instead, the council reiterated the confidential nature of this process as they evaluate each firm individually.

"The council will notify the companies that were advanced but does not intend to publicly announce the name of any nonbank financial company that is under evaluation before a final designation of such company," a Treasury spokesman said.

That has not stopped observers and others from speculating, however.

Many expect American International Group, for example, to be among the first SIFI designations. AIG has previously said it meets the thresholds set by the council to decide which firms require further review.

In a recent filing with the Securities and Exchange Commission, the bailed-out insurer told investors if designated it would be subject to stricter requirements related to risk-based capital, leverage, liquidity, and credit exposure. Jim Anker, an AIG spokesman, declined to provide further comment.

Also a possibility is GE Capital, an arm of General Electric Co.

Russell Wilkerson, a GE Capital spokesman, said, "As we have stated previously, we are prepared for whatever SIFI designation the regulators may decide."

Under the Dodd-Frank Act, FSOC was given authority to designate nonbank financial institutions that could pose risk to the financial system.

Each firm under consideration has a 30-day window to challenge the designation by regulators. The council is then required to schedule a non-public hearing within 30 days, after which it has another 60 days to make a final decision.

Once designated by the council, these firms will face a tougher set of supervisory standards and will be required to prepare and file a plan with regulators to safely unwind the company if it's on the brink of failure. Still, it's unclear exactly what additional capital and liquidity requirements those nonbank firms would face under the Federal Reserve Board's supervision.

To be designated, it would require a two-thirds majority and approval from the chairman of the council.

Sen. David Vitter, R-La. sent a letter to Geithner on Friday asking regulators to slow down their efforts to name non-banks as systemically important until all the rules under Dodd-Frank have been finalized.

"I urge the FSOC to refrain from hasty, unfair and potentially unnecessary designations prior to fully implementing the regulatory regime envisioned by Title I of Dodd-Frank," said Vitter in his letter. "Designating firms without having finalized all of the rules, given the material nature of even a preliminary designation, and the attendant disclosure requirements of federal securities law, would be ill-advised and would create a level of unfairness to designate firms from which it would be impossible to recover."

Some firms are also pushing back. In particular, insurance companies have sought to make the case to regulators to differentiate how they regulate bank holding companies compared to life insurers.

Prudential Financial Inc., the No. 2 life insurance company in the U.S., has previously said it would likely be among the firms reviewed by the council. Spokesman Bob DeFillippo said Friday that "we have worked with the regulators to help them understand that insurance companies should not be treated like banks in this process."

MetLife Inc., the largest insurance company in the U.S., is currently subject to Fed's oversight until it completes its sale of the firm's bank deposit business to GE Capital. John Calagna, a MetLife spokesman, declined to comment on the FSOC's latest step.

In April, regulators finalized a three-stage process for how to designate a SIFI.

The council used several criteria to make its initial identification during stage one. To qualify, a nonbank firm must hold at least $50 billion of global consolidated assets. It must also meet at least one of the following thresholds: $20 billion in total debt outstanding, a minimum leverage ratio of 15 to 1, or $30 billion in gross notional credit default swap outstanding.

Regulators can also weigh a number of other considerations, including whether it believes the company could pose a threat to financial stability.

Even so, meeting some or all of the criteria will not necessarily mean a company would be identified as a SIFI. Regulators have said they will be making determinations on a case-by-case basis.

Looking ahead, the challenge for regulators will be figuring how to judge which institutions should be included, as well as what capital requirements and other supervisory standards to assign.

"Naming names is one thing, how are they going to be regulated by the Fed is quite another," said Petrou. "They're going to have a lot to learn about these nonbank holding companies and many, many questions are open because a lot of key laws and rules don't apply to them."

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