The proposed two-tier framework for the separate types of firms "reflects the different risks they pose to the safety and soundness of depository institutions and to the financial system more generally," Fed Governor Daniel Tarullo said in a statement.

He added that the central bank had adopted such an approach to avoid unnecessary compliance costs on those who pose the least risk.

The Fed currently oversees roughly one quarter of the $8 trillion U.S. insurance industry.

MetLife Inc, the largest U.S. life insurer, was previously categorized as systemically important, but a federal judge struck down that designation in March. The U.S. government has appealed.

There is no currently defined timeline for when the Fed expects the proposals will be finalized, Federal Reserve officials said. The next step in the rulemaking process for both proposals is a period for public comment until Aug. 2. 

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