Today, President Trump is set to sign a presidential memorandum aimed, in part, at reviewing the process for designating non-bank financial institutions as “systemically important,” better known as too-big-to-fail.
Statement by John Berlau, CEI Senior Fellow and financial reform expert:
“This memorandum is a good start to both ending senseless red tape and bailouts of financial firms, but more needs to be done. The Trump administration should curtail – not just review — the designation for nonbank companies of “systemically important financial institution” (SIFI), which both labels a firm “too big to fail” and subjects it to additional regulation.
Some firms have embraced this designation, and some have fought it. But this should not matter for public policy, as government in a free market should not target certain firms either for favorable subsidies or for punitive regulation. Secretary Mnuchin should use the Treasury Department’s membership in the Financial Stability Oversight Council (FSOC) to block the designation of any additional firms as SIFIs and pressure FSOC to rescind the designation from the firms currently labeled as SIFIs.”
Related report: A Bird in the Hand and No Banks in the Bush