our national groups have filed Amici Curiae briefs supporting MetLife‘s lawsuit against the Financial Stability Oversight Council (FSOC) to remove the nonbank systemically important financial institution (SIFI) designation, more commonly known as “too big to fail,” according to media reports.
The National Association of Insurance Commissioners (NAIC), the American Council of Life Insurers (ACLI), the Academic Experts in Financial Regulation (AEFR), and the U.S. Chamber of Commerce all filed briefs backing the New York-based global insurance provider’s attempt to remove the SIFI tag.
NAIC’s main argument in support of MetLife was that the FSOC designated the insurance provider as too big to fail based on its large size alone instead of conducting an analysis to determine if supervision from the Federal Reserve would do more to mitigate the “alleged threat” MetLife poses to U.S. financial stability than existing state regulations. ALCI argued that the FSOC used a bank-centric model to designate MetLife as SIFI and ignored insurance regulations. AEFR’s arguments in favor of MetLife were similar to the NAIC’s and ALCI’s briefs, but AEFR argued that the FSOC should have performed a cost-benefit analysis. The Chamber of Commerce, meanwhile questioned in its brief whether or not MetLife is susceptible to material financial distress, as mandated by Section 113 of Dodd-Frank.
The FSOC notified MetLife in December 2014 that it had received the nonbank SIFI designation. MetLife countered by suing the FSOC in the U.S. District Court for the District of Columbia in January to have the SIFI designation removed. MetLife is trying to have the designation removed because as a nonbank SIFI, it is subject to heightened regulation which the company says will increase compliance costs, hence increasing costs to consumers without any added safety benefit for the financial system.
“The company continues to believe that MetLife is not systemically important under the Dodd-Frank Act’s criteria and has asked the U.S. District Court for the District of Columbia to review the decision,” MetLife wrote on its website.
In mid-May, the U.S. Department of Justice made a non-public motion to have MetLife’s suit against the FSOC dismissed. MetLife filed a motion for summary judgment with the U.S. District Court in the District of Columbia on June 16. Earlier this week, MetLife asked the court to force the FSOC to produce hundreds of pages of documents related to the December decision to designate MetLife as a nonbank SIFI.
MetLife has set up a portion of its website devoted to providing a “central point for information related to the judicial review of FSOC’s designation.” Other nonbanks to receive the SIFI designation were American International Group (AIG), Prudential Financial, and General Electric. MetLife is the first institution to challenge the SIFI designation.