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1 [1] (October 29, 2015)

handle is hein.crs/crsmthaafuq0001 and id is 1 raw text is: CRS INSIGHT Designation of Global 'Too Big To Fail' Firms October 29, 2015 (IN10388) Related Authors *Rena S Mill-er Rena S. Miller, Specialist in Financial Economics (rmiler l , 7-0826) James K. Jackson, Specialist in International Trade and Finance (jzckson crs l , 7-775 1) Hearings in both the U us and the 5,nat have examined the role and processes for U.S. financial regulators and the international standard-setting body-the Financial Stability Board (FSB)-for designating large financial institutions as systemically important (or too big to fail). Members of Congress and ya ri witne have raised concerns that the process of FSB designation for global firms, including U.S. firms, is opaque, and that it has potentially costly implications for large U.S. financial firms without affording them U.S. legal means of redress or U.S. due process. This CRS Insight provides background on the FSB's designation process for systemically significant financial institutions, but takes no position on any potential benefits or shortcomings of that process. Background The FB was established by G-20 nations in April 2009 to help strengthen the global financial system following the 2008 financial crisis. Its members comprise financial regulatory agencies of G-20 nations. The United States is represented at the FSB by the Department of the Treasury, the Federal Reserve Board, and the Securities and Exchange Commission. The FSB's f in include assessing vulnerabilities to the global financial system; coordinating with financial authorities of member nations; and recommending measures to protect and strengthen the global financial system. The FSB's recommendations and decisions are not legally binding on any of its member nations. Rather, the FSB standards that its members commi t implementina at national level. As part of its monitoring of global financial stability, the FSB designates a number of financial institutions as globally systemically important. Although the FSB has its own legal identity, its Secretariat is housed within the Bank for International Settlements (BIS), and it also relies on the Basel Committee on Banking Supervision (BCBS) to help create methodologies for assessing certain risks for banks, on the Intern iana A i ion f In r an rir (JAIS) for insurers, and on the Internatioal rganization of Securities Commissin for non-bank non- insurers. An FSB designation is meant to indicate that the failure of an individual institution could have a negative impact on the global financial system. Initially, the designation focused on global s stemically impo ant banks (G- SIBs), but it now includes global systemically important insurers (G-SIs), and non-bank non-insurer global svstemically importan financial institutios (NBNI G-SIFIs), such as large asset managers, broker-dealers and hedge funds. Designated institutions are expected to meet higher qualitative and quantitative regulatory and capital standards

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