(Bloomberg News) A team of regulators charged with preventing another financial crisis is fending off criticism it's moving too slowly to identify the firms whose failure could pose a threat to the economy.

The year-old Financial Stability Oversight Council planned to start designating systemically important non-bank financial companies, such as insurers, as early as the middle of this year. The council met today without setting the criteria it will use to decide which firms could threaten to bring down the financial system, as American International Group Inc. almost did in 2008.

The delays make it harder for financial firms to plan, fueling complaints that the industry is being hamstrung by regulatory uncertainty. Companies that could be deemed systemically important may have to wait several months to find out if they will need to raise capital or reduce leverage to comply with the council's findings.

"Industries need to know what their cost of capital will be," said Douglas Landy, a partner at Allen & Overy LLP, who once worked at the Federal Reserve Bank of New York. "Will they be regulated? You can't have it be a guessing game."

Extra Scrutiny

The council, known as FSOC, completed a rule today determining when derivatives clearinghouses require extra scrutiny because of their importance to the financial system. It also released a study evaluating treatment of secured creditors when banks are shut down.

"We have an obligation together to do the most careful, best job we can to make sure we put in place reforms that are going to endure for generations and leave us with a more resilient, more stable system," Treasury Secretary Timothy F. Geithner, the council's chairman, said at today's meeting.

The FSOC, which also includes Federal Reserve Chairman Ben S. Bernanke and the chairmen of the Securities and Exchange Commission, Federal Deposit Insurance Corp. and Commodity Futures Trading Commission, was created by the Dodd-Frank financial overhaul law signed by President Barack Obama on July 21, 2010.

"After one year, it's already clear that the Dodd-Frank act is reshaping the regulatory landscape -- filling gaps, reducing systemic risk and helping to restore confidence in the financial system," SEC Chairman Mary Schapiro said at the FSOC meeting.

JPMorgan, Citigroup

Under Dodd-Frank, bank-holding companies with more than $50 billion in assets, which include JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc., are automatically considered systemically important. One of the tasks of the oversight council is to determine which non-banks, such as private-equity firms, money managers, hedge funds or insurers, need the same designation and will be subject to additional oversight by the Fed.

The FSOC is also working without a full lineup of 10 voting members because Obama administration nominees haven't been confirmed by the Senate. The Office of Financial Research, a data-collection and research unit created by Dodd-Frank to help the council, doesn't have a director and as of last week had only 24 of the 60 employees scheduled to be on board by September.

The research office will gather information that can be used by the FSOC to force firms to raise capital, increase liquidity and sell assets deemed too concentrated in any segment of the economy.

'Not Fully Functioning'

The FSOC "was supposed to be the centerpiece of Dodd-Frank and is not fully functioning," said Jaret Seiberg, a financial services policy analyst at MF Global's Washington Research Group. "A year into Dodd-Frank, our expectations were the FSOC would be running on all six cylinders, and it's just not there."

Plans to designate systemically risky firms were set back by at least several months when lawmakers and industry executives complained that proposed criteria were too vague -- a criticism Bernanke and other regulators didn't dispute.

"What you need is clarity so people inside the box or outside the box understand why they are inside or outside," Representative Randy Neugebauer, a Texas Republican and chairman of a House Financial Services Committee panel, said in an interview. A January proposal listing criteria for designating non-bank financial companies "just restated" the language in Dodd-Frank without adding detail on how the council would make decisions, he said.

Size, Leverage

Richard Spillenkothen, a former director of banking and supervision for the Fed, suggested that the council should tie some of the proposed criteria -- including size, concentration, interconnectedness and leverage -- to specific measurements.

The FSOC hasn't "put any numbers to those metrics," Spillenkothen said. He suggested a revision with "some numeric of what we are talking about, without making it exclusively formulaic."

The collapse of AIG's financial-products unit in 2008 was an impetus for Dodd-Frank and the FSOC's creation. Collateral payments to banks that had bought protection from AIG through credit-default swaps led to a $182 billion taxpayer-funded bailout that gave the government a majority stake in the insurer.

Industry Groups

Industry groups, including the Investment Company Institute, which lobbies for the mutual fund industry, and the Managed Funds Association, representing hedge funds, have pressed regulators to avoid being designated systemically important.

In addition to releasing preliminary rules for designating clearinghouses, the FSOC has conducted studies on the Volcker rule, which restricts banks from trading solely for their own profit; and concentration limits, or market-share size of the largest banks.

The FSOC's work on systemic risk shouldn't be done too quickly because it must be thorough, said Kim Olson, a principal at Deloitte & Touche LLP.

"The idea is to get it right," she said. "There are different things that can make you systemic, so how do you capture that and capture that in a balanced manner? These definitions, these concepts, don't come in precisely formed definitions."

Data Collection

The financial research office, set up to help the FSOC decide on systemic-risk designations, risks duplicating data- collection efforts at other regulators.

The Fed created the Large Institution Supervision Coordinating Committee last year to support the central bank in its systemic research, and the Federal Deposit Insurance Corp. formed the Committee on Systemic Resolutions to advise it on the systemic activities of banks.

The Office of Financial Research has been "way too slow," said Allan Mendelowitz, a former regulator of the Federal Home Loan Banks and one of the original creators of the idea for a research division. The Treasury, which houses the office, is "ambivalent" because it doesn't want the office contradicting its own views, he said.

Acting Leaders

FSOC is also tackling the issues with only half of the 10 voting members having been confirmed to their jobs. The FDIC, the Office of Comptroller of the Currency and the Federal Housing Finance Agency all have acting leaders that have yet to be approved by the Senate.

Former Ohio Attorney General Richard Cordray, introduced today as Obama's pick to lead the Consumer Financial Protection Bureau, will also need Senate confirmation. Retired Treasury official Roy Woodall is awaiting confirmation for an FSOC seat designated for an insurance specialist.