Does Prudential have a chance of beating the systemically important label? While analysts agree that the challenge will be an uphill battle, they say the outcome could have significant bearing on how regulators proceed with future designations. Any decision will be closely watched by Wall Street, since the designation signals a major shift in the oversight of a broad swath of big companies that play in financial markets. "This is something to watch with fascination," said Donald Lamson, a banking attorney at Shearman & Sterling. There may come a point in the proceedings where the parties agree on a designation where the terms would be less onerous than what Prudential fears. At issue is the unknown, but potentially damaging, ramifications of being designated by the Financial Stability Oversight Council, the new interagency panel of regulators tasked with policing systemic risk. The label comes with higher capital requirements and other restrictions that could eat into a firm's profitability. Treasury Secretary Jack Lew, who heads the council, has said enhanced oversight of firms whose failure could threaten the financial system is essential to protecting taxpayers and promoting economic stability. But Prudential argues that it is not the kind of behemoth company that could destabilize the financial markets. "We will continue to work closely with regulators to demonstrate our belief that the company does not meet the requirements of the SIFI designation," the company said in a statement Tuesday. We have faith in the integrity of the FSOC's review process, which provides for the ability to contest the proposed designation. Prudential has requested a closed-door hearing before FSOC, which has until August to schedule the meeting. After that, the council will make a final decision within 60 days. Treasury spokesperson Suzanne Elio said FSOC is not at liberty to discuss the designations until the process is completed, but she insisted the council did not enter into its decision lightly. "The council has developed a robust process for evaluating whether a nonbank financial company should be subject to Board of Governors supervision and to enhanced prudential standards," Elio said in an e-mail. Just a handful of companies have acknowledged that they were named by FSOC. American International Group and GE Capital said the council notified them last month that they would be designated. Neither company has chosen to challenge the decision. We have strong capital and liquidity positions and we are already supervised by the Fed. Accordingly, we have decided not to appeal or ask for a hearing," said Russell Wilkerson, a spokesman for GE Capital. We have been and will be prepared to meet the requirements for SIFIs.