On April 8, the Financial Stability Oversight Council appealed a federal judge’s decision that revoked the council’s decision to designate
MetLife Inc. as “a systemically important financial institution” (SIFI).
The designation would mean additional oversight and capital requirements for the company.
The appeal followed U.S. District Judge Rosemary Collyer’s assertion that the government had not backed up its claim that MetLife could endanger the economy. Collyer reasoned that the council failed to consider the potential costs of such a designation and relied on a “fatally flawed” process to reach its decision.
Collyer claimed that the government’s findings did not factor in-depth analyses of MetLife’s potential losses.
“Every possible effect of MetLife’s imminent insolvency was summarily deemed grave enough to damage the economy,” Collyer said.
The court order, released April 7, could encourage other insurance companies that have been designated as SIFIs to challenge the council’s regulatory authority, said an article on the Wall Street Journal.
Jacob Lew, Treasury Secretary and FSOC Chairman, said in a statement that the council’s “authority to designate nonbank financial companies is a critical tool to address potential threats to financial stability, and it has made our financial system safer and more resilient. “ He revealed that the council will continue to defend FSOC’s processes and integrity.
