FSOC Appeals Judge's MetLife Ruling
09 April 2016 - 3:40AM
Dow Jones News
The Financial Stability Oversight Council on Friday appealed a
federal judge's decision rescinding the council's designation of
MetLife Inc. as a systemically important financial institution, a
ruling that calls into question the council's ability to impose
tighter regulation on large insurers.
The appeal follows U.S. District Judge Rosemary Collyer's
determination that the government had not properly backed up its
claim that MetLife could put the economy at risk. Her ruling also
puts pressure on FSOC to defend its designation process, which
Judge Collyer said doesn't consider potential costs and relies on a
"fatally flawed" process.
Last week's court order, released in full on Thursday, could
encourage other large insurance companies that have been designated
as systemically important, including Prudential Financial Inc. and
American International Group Inc., to challenge FSOC's regulatory
authority.
The judge took regulators to task for what she called an
"unreasonable" decision that didn't consider potential costs and
relied on a process that was "fatally flawed."
Judge Collyer said the government's findings included
assumptions that weren't backed up by analysis of potential losses
at MetLife and its counterparties. "Every possible effect of
MetLife's imminent insolvency was summarily deemed grave enough to
damage the economy," she wrote.
Her findings challenge one of the major changes the Obama
administration and Congress enacted after the 2008 financial
crisis, when financial institutions that weren't subject to strict
federal oversight put the economy at risk. Her opinion contradicts
some of the top financial regulators on the FSOC and sets up a
legal battle that will determine whether they continue to supervise
some of the largest U.S. insurance companies.
Write to Gabriel T. Rubin at gabriel.rubin@wsj.com
(END) Dow Jones Newswires
April 08, 2016 13:25 ET (17:25 GMT)
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