On October 17, 2018, the U.S. Treasury Department announced that the Financial Stability Oversight Council (FSOC) had lifted its designation of Prudential Financial Inc. as a systemically important financial institution (SIFI). The decision was unanimous, with Securities and Exchange Commission (SEC) Commissioner Elad Roisman voting on delegated authority due to the recusal of SEC Chair Jay Clayton.
The FSOC was established pursuant to the 2010 Dodd-Frank financial reform legislation and is chaired by the Secretary of the Treasury with members composed of the federal financial services regulators, state regulators in banking, insurance and securities and an independent member with insurance expertise. Its various responsibilities include designating as SIFIs those large nonbank financial institutions the material financial distress of which would be a threat to the stability of the US financial system. SIFIs are subject to regulation and supervision by the Federal Reserve Board and the designations are to be reevaluated by the FSOC at least annually.
Since 2010, only four SIFI designations had been made and Prudential’s SIFI designation was the last to be lifted. General Electric Capital Corporation had its SIFI designation lifted in 2016 after reorganizing and selling many of its financial services operations. On September 29, 2017, the FSOC lifted its SIFI designation of American International Group, Inc. (AIG). MetLife challenged its SIFI designation and won in federal court to overturn the FSOC decision and finally prevailed in January of this year.