Comment Letter to FSOC on Proposed Rules and Related Guidance on the Criteria for Designating Systemically Significant Nonbank Financial Institutions

December 19, 2011

From: MFA, Richard Baker


Timothy Geithner, Financial Stability Oversight Council

MFA submitted a comment letter to the Financial Stability Oversight Council regarding proposed rules to designate nonbank financial companies as systemically important. Specifically, the comments are in response to the Council’s proposed rulemaking, Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies and related interpretive guidance.  In our letter, we encouraged the Council:

  1. in applying the proposed rule and guidance, to consider the important difference between the fund managers, which often do not hold significant assets, but rather manage assets on behalf of clients, and the investment funds, where the assets are held;
  2. to the extent the Council does engage in future rulemaking or guidance with respect to asset managers or hedge and private equity funds, to propose such rules or guidance for public review and comment; and
  3. to provide additional clarity regarding the criteria that it will consider when analyzing nonbank financial institutions, particularly the so-called Stage 1 thresholds (such as the consolidated asset test, the scope of the short-term debt and loans outstanding thresholds, and the calculation of derivatives liabilities) set out in the guidance.