Lamson added that the council hasn't really provided any clear indication about whether it believes one sector might be more risky than another. He said that the only thing regulators have made clear is that if the financial institution is big, it could be designated.
"If I were a large insurance company, private equity firm or other asset management firm I would wonder: 'Am I next?' " he said. "There's little limit to the type of entity that could be designated."
Prudential is the third nonbank subjected to the new oversight and the third firm to decide not to challenge the designation in court. American International Group and GE Capital, a unit of General Electric, both have been designated and neither filed lawsuits. The major U.S. banks have been given the designation as well. A Treasury official declined to comment on Prudential's decision.
However, an attorney close to Prudential's designation process noted that the fact that three nonbank designated firms decided not to file lawsuits challenging the decision is an indication that others won't do so either.-- Written by Ronald Orol In Washington