FOR IMMEDIATE RELEASE
Wednesday, October 17, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com
Washington, D.C. – Following the de-designation by the Financial Stability Oversight Council (FSOC) of the Prudential Insurance Company as a systemically important nonbank financial institution (SIFI), Dennis Kelleher, president and CEO of Better Markets, issued the following statement:
“By its action today de-designating the Prudential Insurance Company, President Trump’s Financial Stability Oversight Council (FSOC) has put up an ‘out of business’ sign on its door and effectively renamed itself into the ‘Financial Instability and No Oversight Council.’ That is a tragic dereliction of duty for every American because the next financial crash will happen sooner and be worse than it otherwise would have been.
“Just ten years ago, the US government ladled out trillions of dollars in bailouts to dozens of systemically significant nonbanks in a shadow banking system that was crashing and threatening to cause a second Great Depression. Just eight years ago, the FSOC was created to prevent that from ever happening again. The FSOC is the only entity in the entire US government that has the duty and responsibility to designate for heightened regulation systemically significant non-banks.
“With today’s de-designation of Prudential, coming on top of the de-designation of AIG and MetLife, President Trump’s FSOC has declared that there is not one single systemically significant nonbank in the US. That is, of course, absurd and an historic mistake. The FSOC’s actions will revive the shadow banking system by recreating the two-tier regulatory system which will incentivize the migration of risk from the higher regulated banking system to the unregulated shadow banking system. That is exactly what was done in the early 2000s, which directly lead to the catastrophic 2008 financial crash and economic crisis.
“Forgetting something from long ago, particularly if it was not experienced directly, might be excusable. Knowingly ignoring clear lessons from just a few years ago is a dereliction of duty that history will judge harshly.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
