WASHINGTON, D.C. ( The Deal) -- A council of regulators set up to identify emerging threats to the economy on Friday, Sept. 20, officially designated Prudential (PRU) as "systemically important," arguing that the big interconnected insurance firm would have a hard time selling assets in a period of financial stress, and as a result, it could eventually "inflict significant damage on the broader economy."
The categorization will likely eventually subject the insurance giant to additional capital, more liquidity and oversight by the Federal Reserve Board based on its potential risk to the financial system. Prudential is the third nonbank to receive the designation. A number of major U.S. banks have been given the designation.
The big insurer will likely be required to write a so-called "living will" and explain to regulators how it would dismantle itself in a way that does not cause collateral damage to the markets.The government council, which is made up of bank and securities regulators, defended its action. It noted that because of Prudential's "interconnectedness, size, certain characteristics of its liabilities and products,
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