(Adds details of statement, background on political debate)
By Douwe Miedema and Sarah N. Lynch
WASHINGTON, July 31 (Reuters) - The top U.S. regulatory panel tasked with policing the safety of the financial system said on Thursday it is launching a review of potential risks in the asset management industry.
But the Financial Stability Oversight Council was unlikely to designate any asset management firm as "systemically important" as part of the review, a source familiar with the council said, a tag that carries more regulatory scrutiny and oversight by the Federal Reserve.
Instead, the review was focused on "industry-wide products and activities", the FSOC's statement said.
Still, the council could designate any firm as systemically important at any later stage, the source said.
The FSOC is considering whether to add insurance firm MetLife to a handful of other non-banks it has already identified as systemically important, but it did not vote to designate any new companies.
FSOC said it had agreed in its closed-door meeting not to rescind the designations of two other non-banks, American International Group and GE Capital. FSOC has to renew the designations each year.
The third non-bank that has been designated by FSOC is insurance firm Prudential.
The process has caused a fierce debate on Capitol Hill, where many lawmakers from both political parties have vocally opposed efforts by the FSOC to impose more regulations on insurers and other financial firms.
Some of the concerns stem from a measure in the 2010 Dodd-Frank law to rein in Wall Street after the financial crisis, drafted by Maine Republican Senator Susan Collins.
That provision would require U.S. regulators to impose leverage limits on non-bank systemic financial firms, which are as stringent as the ones banks currently face.
Insurance companies have complained that this measure makes no sense because they are not structured like banks and should not face the same capital rules.
The U.S. Senate passed a bill in June that would fix the problem by giving regulators more flexibility to customize capital requirements for insurance firms.
The bill is likely to win enough support in the U.S. House of Representatives to pass, but it is unclear when it might come up for a vote or whether Republicans would be willing to pass it without tacking on other amendments.
The three non-banks were designated by FSOC last year, but the Fed has told lawmakers that without a legislative fix to the Dodd-Frank capital measure, it lacks the proper legal authority to tailor the capital rules for insurers, leaving them in limbo.
(Reporting by Sarah N. Lynch; Editing by Steve Orlofsky and Ken Wills)