The Financial Stability Oversight Council, the super-regulatory body headed by Lew, has treated insurers worse than asset managers such as BlackRock and Fidelity Investments, the Republicans say, moving too quickly to label insurers "too big to fail" and threats to the financial system.
The council was created by the 2010 Dodd-Frank financial reform law to identify all threats to the financial system, including ones originating outside Wall Street. It comprises the heads of the Treasury, the Federal Deposit Insurance Corporation, the Federal Reserve and other agencies, and has the power to name any company "systemically important" and subject it to higher capital standards, tighter regulation and Federal Reserve oversight. It already has given the too-big-to-fail designation to the insurance companies AIG and Prudential.
Rep. Scott Garrett, the New Jersey Republican who is chairman of the capital markets subcommittee of the House Financial Services Committee, wrote a letter to Lew Tuesday with six other Republicans warning that the council's treatment of insurers "has led to uncertainty in the insurance industry and raised concern that the council's approach to insurance companies designations is 'designate first, ask questions later.'"
The Republicans faulted the council for not undertaking the research and outreach on insurance companies that it has for asset managers recently.
The letter comes ahead of a scheduled council meeting Thursday in which it plans to discuss labeling non-banks too big to fail as well as considering applying the designation to asset management firms such as Fidelity.
It was reported that the council moved toward a decision on labeling the life insurance company MetLife a systemically important financial institution at its last meeting, but it is not clear whether it is planning on making a final determination this week.
The other Republicans signing the letter sent Tuesday were Spencer Bachus of Alabama, Ed Royce of California, Steve Stivers of Ohio, Sean Duffy of Wisconsin, Mick Mulvaney of South Carolina, and Dennis Ross of Florida, all members of the Financial Services Committee.