Decision on MetLife’s SIFI Unlikely this Year
March 5, 2015 by Arthur D. Postal, arthur.postal@innfeedback.com
WASHINGTON – A court decision on MetLife’s designation as a systemically important financial institution (SIFI) won’t come this year and may be late 2016, according to a Tuesday court filing.
A court hearing on the MetLife challenge to its designation is unlikely to occur before October or November, according to a timeline in a motion granting the Financial Stability Oversight Council until May 7 its initial filing in the case, a 52-day delay.
The delay was granted through an order by Judge Rosemary M. Collyer, who is hearing the case in the U.S. District Court for the D.C. District.
In its request, the FSOC said it would submit a motion to summarily reject MetLife’s argument that the FSOC to designate it was arbitrary and capricious. The FSOC filing in the case also said it would comply with MetLife’s request for the full administrative summary of its deliberations on the issue. That is likely to include the reasoning behind the FSOC decision, a document that other non-banks which could be subject to designation are anxious to get their hands on.
MetLife submitted to the request, and the FSOC in turn agreed to the court schedule in the documents released by the court Tuesday.
In seeking the delay, the FSOC said that responding to the complaint “requires coordinating a response with appropriate officials and staff, which in turn necessitates additional time for the necessary review and communication among FSOC members and member agencies.”
The FSOC also said that is in the process of compiling the administrative record supporting the FSOC’s designation, “which will form the basis for the summary judgment briefing.”
The FSOC brief noted that MetLife has already submitted more than 21,000 pages of material to the council. The government filing requesting the “extension of time will enable FSOC to complete compilation of the administrative record.”
It is unclear what will be in the administrative record that will help MetLife.
The FSOC submitted a detailed document Dec. 21 outlining its reason, just three days after its initial designation of MetLife.
In the document, the FSOC said it designated MetLife because it is a financial behemoth, a “significant participant” in the U.S. economy and in financial markets. It also notes that MetLife is interconnected to other financial firms through its insurance products and capital markets activities.
MetLife announced Jan. 13 that it would challenge the designation in court. The company contends that it had “provided substantial and compelling evidence demonstrating it is not systemically important under the Dodd-Frank Act criteria.”
MetLife said its designation will “harm competition among life insurers and negatively impact availability and affordability of financial protection for consumers. …The FSOC should not make non-bank SIFI designations until the rules are clear and the impact on designated firms and broader economy can be accurately assessed.”
The FSOC is being represented in the case by Elisabeth Layton and Deepthy Kishore, lawyers at the Department of Justice, which represents the government in these types of cases.
InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at arthur.postal@innfeedback.com.
