MetLife Inc. asked a federal court on Tuesday to overturn its designation as a non-bank systemically important financial institution by the Financial Stability Oversight Council.
The company was designated systemically important by FSOC members in a closed session Dec. 18. In the action filed with the U.S. District Court in Washington, MetLife said that the FSOC “made numerous critical errors that fatally undermined the reasoning in its final designation.”
Steven A. Kandarian, MetLife chairman, president and CEO, said in a statement they had hoped to avoid litigation “after we presented substantial and compelling evidence to FSOC demonstrating that MetLife is not systemically important.” The insurer “has always supported robust regulation of the life insurance industry and has operated under a stringent state regulatory system for decades,” Mr. Kandarian said. He noted that the one non-voting FSOC member with insurance experience dissented from the designation.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the FSOC, established a process for petitioning federal courts to review and rescind council decisions. “In taking the unusual step of providing for judicial review, Congress recognized that the implications of a designation were potentially so negative,” MetLife said in the statement. A SIFI designation subjects firms to enhanced supervision by the Federal Reserve.
A Treasury Department spokeswoman said in an e-mailed statement that “the council's decision to designate a non-bank financial company is reached only after a thorough analysis and extensive engagement with the company, both of which occurred in this case. We are confident in the council's work.”
FSOC members designated three other non-banks — American International Group, General Electric Capital Corp. and Prudential Financial — but MetLife is the only firm to pursue judicial review.
