'Not systemically important' under the Dodd-Frank Act;
Size doesn't matter
January 14, 2015 –(BUSINESS WIRE)–MetLife, Inc. (NYSE:MET) will file an action in the U.S. District Court for the District of Columbia today to overturn the Financial Stability Oversight Council’s (FSOC) designation of the company as a non-bank systemically important financial institution (SIFI). “We had hoped to avoid litigation after we presented substantial and compelling evidence to FSOC demonstrating that MetLife is not systemically important,” said Chairman, President and CEO Steven A. Kandarian.
“Now we will take the next step in the process established by the Dodd-Frank Act and ask a federal judge to review FSOC’s decision.” In Dodd-Frank (Section 113(h), “Judicial Review”), Congress specifically provided that any company designated as a SIFI may petition the federal courts for an order “requiring that the final determination be rescinded.”
Singling out only the largest companies
In taking the unusual step of providing for judicial review, Congress recognized that the implications of a designation were potentially so negative that independent review by the courts should be available. MetLife’s filing will be available online later today. “MetLife has always supported robust regulation of the life insurance industry and has operated under a stringent state regulatory system for decades,” Kandarian said. “However, adding a new federal standard for just the largest life insurers and retaining a different standard for everyone else will drive up the cost of financial protection for consumers without making the financial system any safer. The government should preserve a level playing field in the life insurance industry.
If additional regulation is necessary, the government has a superior tool at its disposal – an approach that focuses on potentially systemic activities regardless of the size of the firm. FSOC has already embraced that activities-based approach for the asset management industry.” Kandarian continued, “FSOC’s designation of MetLife is premature. FSOC has designated non-bank SIFIs before the rules governing these companies have even been written. The Council should wait until the rules are in place and it knows the impact on designated firms.” “It is not enough to designate companies as SIFIs merely because they are big,” Kandarian added. “The Dodd-Frank Act is clear that size alone does not make a company systemic. We look forward to a legal review of FSOC’s decision.” Gibson, Dunn & Crutcher LLP and Sullivan & Cromwell LLP are serving as outside counsel to MetLife, Inc. on SIFI-related issues.