MetLife has asked a federal judge to dismiss once and for all its designation as a systemically important financial institution (SIFI), a move that would lead to more regulatory oversight of the company, according to court documents filed Friday.
The Financial Stability Oversight Council (FSOC) labeled MetLife a SIFI last year because of its global reach and its interconnection to the U.S. and world financial system. In an initial response, MetLife argued in January that the designation is unwarranted.
In a 45-page filing with the U.S. District Court for the District of Columbia, MetLife counsel Eugene Scalia said the Oversight Council’s “unprecedented assertions” violate the Dodd-Frank Act, the Administrative Procedure Act and the Due Process Clause.
“FSOC erred at the very outset of its designation inquiry when it classified MetLife as a U.S. nonbank financial company eligible for designation,” Scalia wrote.
In its arguments, MetLife said the FSOC, an arm of the U.S. Treasury Department, applied the SIFI designation “in a manner that violated Dodd-Frank and conflicted with the FSOC’s final rule and interpretive guidance.”
The FSOC also ignored basic principles of risk analysis, statutory language and evidence, and refused to consider the effects of the designation on shareholders and customers, MetLife argued in the court filing.
A SIFI designation would subject the company to oversight from the Federal Reserve and “enhanced prudential standards,” according to the FSOC.
But MetLife said meeting another layer of regulatory standards would drain the company of more resources and capital that should instead be used to serve customers, distributors and shareholders.
In July, the FSOC filed documents reiterating its position.
The move followed the May filing by the U.S. Department of Justice, which argued that the company’s attempt to dismiss the SIFI label was “meritless.”
In papers filed with the court, the DOJ contends that the FSOC acted appropriately because given its size, influence and reach, MetLife is more than just another insurance company.
Accepting MetLife’s arguments would “frustrate the express statutory purpose of the Council: to address potential risks to financial stability posed by the distress of certain companies before that distress occurs and poses an imminent, grave threat to the nation’s economy,” the Justice Department argued.
MetLife’s response to the FSOC is the final brief in the case.
U.S. District Judge Rosemary M. Collyer may choose to call the parties back for oral hearings, likely in the fall, after which she would issue a ruling in the case.
MetLife is one of four nonbank companies designated as a SIFI.
Other nonbank companies are Prudential, AIG and GE Capital.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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