“The Financial Stability Oversight Council, the country’s top financial regulatory body, moved closer on Tuesday to increasing its oversight of nonbank financial institutions, like hedge funds, private equity firms and insurers.”

“The 10-member council, headed by the Treasury secretary, Timothy F. Geithner, voted unanimously to adopt a rule that will designate some of those firms as “systemically important financial institutions,” and put them under stronger regulatory supervision.”

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“’It’s a very big disappointment,’ said Dennis M. Kelleher, the president of Better Markets, a nonprofit group that pushes for financial regulatory reform. ‘They have proposed a rule that will almost certainly result in most of the shadow banking system not being regulated.'”

“Mr. Kelleher said that a number of firms that helped precipitate the crisis in 2008, like money market funds, would fail to be subject to the additional scrutiny as the rule is currently written. He said smaller but highly interconnected or otherwise important firms still pose a risk. ‘If you only worry about the big dogs,’ Mr. Kelleher said, ‘you’re nonetheless going to get chewed to death by the other dogs.'”

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Read full New York Times article here.