Financial Regulatory Forum

White House regulatory plan won’t name systemic risk financial firms

By Reuters Staff
October 27, 2009

WASHINGTON, Oct 27 (Reuters) – Financial firms that could pose a risk to the economy will not all be named at once under Obama administration plans to tighten bank and capital market regulations, a congressional aide said on Tuesday.

The administration wants to subject so-called Tier 1 firms to a tougher regulatory regime, including higher capital requirements. It is expected to unveil a new plan before Thursday for unwinding troubled financial firms, overseeing risk in the financial system and supervising banks.

This comes after the government was forced to improvise last year in crises at big financial firms such as investment banks Lehman Brothers and Bear Stearns.

As federal regulators supervise and impose requirements on the firms, their identities are expected to become known over time, a House aide told reporters on Tuesday.

U.S. Treasury Secretary Timothy Geithner has already told Congress that the government would not identify in advance financial firms that it views as systemically important.

Some fear that revealing the identities of the firms would send a message to markets that these systemically important firms would never be allowed to fail. (Reporting by Rachelle Younglai; Editing by Theodore d’Afflisio) ((rachelle.younglai@thomsonreuters.com + 1 202 898 8411))

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