MetLife Inc. was designated a non-bank systemically important financial institution by the Financial Stability Oversight Council on Thursday.
The company was notified after FSOC members met in a closed session. A Treasury spokeswoman said FSOC's designation decision will be formally announced shortly.
In a statement, MetLife said it was “disappointed” in the decision, which was made after Metlife presented “substantial and compelling evidence” to the contrary. On Sept. 4, FSOC members voted to consider Metlife for the designation, which is already held by three non-banks — American International Group Inc., General Electric Capital Corp. and Prudential Financial. Designation requires approval by two-thirds of FSOC members. MetLife has 30 days to seek judicial review of the FSOC decision.
Also, in an open session of Thursday's meeting, FSOC members agreed to ask for public input as it scrutinizes potential risks from the money management industry.
Council members voted unanimously to seek public comment on the potential risks to the U.S. financial system associated with liquidity and redemptions, leverage, operational functions, and resolution in the money management industry.
The move to add public input “is broadly in line what we were looking for,” said Justin Schardin, associate director of the financial regulatory reform initiative at the Bipartisan Policy Center. “Where the dangers tend to come from are the individual practices, not the institutions themselves.”
Once the notice is published in the Federal Register, the public will have 60 days to comment.
In a statement announcing the vote, FSOC officials said that money management “is a vital segment of the financial services sector, with a high degree of diversity in investment strategies, corporate structures, regulatory regimes, and customers.”
“The council's focus on the asset management industry is directed at assessing whether asset management products or activities could create, amplify, or transmit risk more broadly in the financial system in ways that could affect U.S. financial stability,” said the document submitted to the Federal Register. “Financial stability risks may arise even where existing measures protect individual market participants (including particular asset managers, investment vehicles, and investors) because these measures may not fully take into account the effects of possible stress on other market participants, markets themselves, or the broader economy. Similarly, risks to financial stability might not flow from the actions of any one entity, but could arise collectively across market participants.”
