Feds: Banks Aren’t the Only Things That Could Crash Our Economy

Keeping an eye on big banks isn’t enough, government regulators say. If they get their way, federal authorities will soon have greater oversight of certain major insurers, hedge funds, mutual fund companies and private equity firms, The Associated Press says.

The Financial Stability Oversight Council is pitching a list of businesses it believes need to be watched more closely because their actions could have far-reaching effects on the economy.

The firms’ names haven’t been released yet because they have a month to challenge being labeled a potential financial threat. But AIG, Prudential, and GE Capital have already revealed their status on the list, AP says. None have yet said whether they will challenge the government’s designation.

AIG is probably the most obvious name on the list, because the insurer’s near collapse was part of what triggered the financial crisis in the first place, and taxpayers had to bail it out with $182 billion. That money has been repaid. (Although you may recall AIG had the gall to consider suing the government for bailing it out. It wisely decided not to.)

What does it mean for these companies to be labeled as potential financial risks? They “would have to increase their cushion against losses, limit their use of borrowed money and submit to inspections by Fed examiners,” AP says. They would fall under the Federal Reserve’s supervision.

“The council took another important step forward by exercising one of its principal authorities to protect taxpayers, reduce risk in the financial system and promote financial stability,” Treasury Secretary Jacob Lew said in a statement.

U.S. Rep. Jeb Hensarling, R-Texas, accused the council of labeling the companies “too big to fail” and warned they could be creating a self-fulfilling prophecy by singling them out as more important than competitors.

Hensarling was an outspoken opponent of the financial reform law passed after the crisis, AP says. That’s the law that created the Consumer Financial Protection Bureau and many other consumer protections.