US Lays Path for More Financial Giants to Get Fed Oversight (2)

The US government laid out a pathway for placing firms other than banks under strict Federal Reserve oversight, a major regulatory threat to hedge funds and investment companies.

After months of back-and-forth, Washington’s top financial officials on Friday released a new framework for designating financial firms as systemically important. That too-big-to-fail tag, which brings significant compliance costs and regulatory headaches, has mostly been applied to large Wall Street banks since its introduction more than a decade ago.

During a Friday meeting of the Financial Stability Oversight Council, Treasury Secretary Janet Yellen and other authorities didn’t identify any firms that ...