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What Happens If Investment Funds Are Labeled 'Too Big To Fail'? 

June 19, 2014
Douglas Holtz-Eakin, Satya Thallam, Forbes

One of the major new tools to come out of the 2010 financial regulatory reform (“Dodd-Frank”) was the Financial Stability Oversight Council (FSOC). Unfortunately the FSOC’s authority to designate nonbanks as a “threat to financial stability” is increasingly becoming the hammer with which everything looks like a nail.

The idea of the FSOC is simple.  Complex financial firms stretch across markets and products – making them hard for a single agency to regulate effectively.  Getting it right is important; witness 2008 when the failures of Lehmann Brothers and other single firms had far-reaching effects.  The FSOC is intended to be a hub for all the regulators to address system-wide risks.

Read More: Forbes

 
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