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From Banking and Finance Law Daily, September 5, 2014

MetLife tagged as systemically important, insurer disagrees

By Andrew A. Turner, J.D.

MetLife has acknowledged that it is the unnamed company that has been preliminarily designated a non-bank systemically important financial institution (SIFI) by the Financial Stability Oversight Council. However, the insurer “strongly disagrees” and “is not ruling out any of the available remedies” to contest a SIFI designation,” according to a statement issued by MetLife head Steven A. Kandarian.

Following a meeting convened by Treasury Secretary Jacob L. Lew, the FSOC said that it provided the company with a detailed written explanation of the basis of the proposed determination. The company has been given 30 days to request a hearing.

The FSOC is authorized under the Dodd-Frank Act to determine that a nonbank financial company’s material financial distress could pose a threat to U.S. financial stability. Companies designated as SIFIs are subject to consolidated supervision by the Federal Reserve Board and enhanced prudential standards.

Kandarian said that MetLife was a source of financial strength during the 2008 financial crisis and that the insurer is not systemically important under the Dodd-Frank Act criteria. He argued against imposition of “bank-centric capital rules on life insurance companies,” citing a regulatory scheme that oversees a stable industry.

Congressional reaction. In the view of Rep. Carolyn Maloney (D-NY), the FSOC action underscores the need for action on a bill carving out insurers from Dodd-Frank Act capital standards. The Insurance Capital Standards Clarification Act, S. 2270, was passed by the Senate, but is awaiting House action.

Rep. Scott Garrett (R-NJ) views the FSOC action as an expansion of too-big-too-fail, while calling for FSOC members to come before Congress to explain their actions.

Companies: MetLife Inc.

MainStory: TopStory DoddFrankAct FederalReserveSystem FinancialStability

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