Chairman Wagner, Ranking Member Green, and distinguished members of the subcommittee, thank you for convening today’s hearing on the FSOC non-bank SIFI designation process, and for inviting me to testify. I am a resident scholar at the American Enterprise Institute, but this testimony represents my personal views. My research is focused on banking, regulation, financial stability and systemic risk. I have prior experience working on these issues at the Federal Reserve Board, the IMF and the FDIC, including as chairman of the Research Task Force of the Basel Committee on Banking Supervision. It is an honor for me to be able to testify before the committee today.

I want to begin my testimony with an analogy that explains the deficiencies in the FSOC designation process using an everyday commuting experience to which many can relate.

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