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House Subcommittee to Hold Hearing On Banks Designated as ‘Systemically Important’

money-steps [1]The House Subcommittee on Financial Institutions and Consumer Credit [2] will hold a hearing [3] on the designation of bank holding companies as "systemically important financial institutions" (SIFIs), commonly called "too big to fail," and the regulations those institutions face on Wednesday, July 8.

The hearing, titled "Examining the Designation and Regulation of Bank Holding Company SIFIs," begins at 1 p.m. Eastern time. The hearing will include a one-panel hearing with the following witnesses:  Harris Simmons, Chairman and CEO of Zions Bancorporation; Dr. James Barth, Professor of Finance at Auburn University; Dr. Paul Kupiec, Resident Fello of the American Enterprise Institute; Satish Kini, Partner, Debevoise & Plimpton; and Dr. Simon Johnson and Dr. Ronald A. Kurtz, Professors of Entrepreneurship at the Massachusetts Institute of Technology. The Chairman of the Subcommittee on Financial Institutions and Consumer Credit is Randy Neugebauer (R-Texas). Neugebauer has been an outspoken critic of Too Big to Fail; in March at the Five Star Institute Government Forum in Washington, D.C., he declared, "Too Big to Fail has made it too small to succeed."

"Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, there has been much discussion by members of Congress, regulators, and academic experts related to the designation and regulatory standards for bank holding company SIFIs," the Committee wrote in a memorandum about Wednesday's hearing [4].

Topics to be discussed at the hearing will include how and why bank holding companies are designated as SIFIs as defined by the Dodd-Frank Act; the standards and requirements those bank holding companies are subject to once they are designated as SIFIs; alternative ways (outside of Dodd-Frank) of measuring the systemic importance of financial institutions, including certain metrics that were developed in global forums; and the operational challenges and limitations bank holding companies designated as SIFIs face when complying with enhanced prudential standards.

The following day, on Thursday, July 9, the first in a series of three full Committee hearings in the House Financial Services Committee examining the effect of Dodd-Frank, titled "The Dodd-Frank Act Five Years Later: Are We More Stable [5]?" begins at 10 a.m. Eastern time.

Editor's note: The Five Star Institute is the parent company of DS News and DSNews.com.