Life insurer MetLife asked a court on Monday to force federal regulators to hand over 500 pages of documents related to the decision to declare the company a potential threat to the financial system and regulate it as a bank.
MetLife is seeking more information about its designation as a “systemically important financial institution” late last year as part of a lawsuit against the government trying to reverse the decision.
The suit, filed in the U.S. District Court for the District of Columbia, is the first such challenge to the legitimacy of the super-group of financial regulators known as the Financial Stability Oversight Council. Tasked with identifying threats to the financial system wherever they may arise, the council has the authority to label any firm “systemically important” and subject it to strict regulations.
The MetLife suit, the first of its kind, is a challenge to the authority of the council, which is a new and controversial entity often criticized by the industry and Republicans. Under the terms of the 2010 Dodd-Frank financial reform law that created the council, MetLife must demonstrate that the regulators acted in an arbitrary and capricious manner.
By withholding 500 pages of documents relating to the its decision to designate MetLife, the council’s “continuing intransigence compounds the denial of MetLife’s due process rights and makes it impossible for this court to undertake a meaningful review of its actions,” MetLife’s lawyers told the court.
According to the motion filed by MetLife, the council is withholding the documents on the grounds that disclosing them to MetLife’s legal representatives would impede its ability to coordinate with state insurance regulators on oversight of insurance companies.
The motion states that “[f]undamental principles of administrative law and basic concepts of fairness guarantee MetLife the right to review and respond to the record that [the council] considered when designating the company.”
MetLife is one of three insurance companies that have been given the “systemically important” label. Neither of the other two, American International Group and Prudential, have sued to avoid the added regulations.
The financial services industry and congressional Republicans have faulted the council for a lack of transparency and accountability. Republicans also have claimed that designating a firm “systemically important” amounts to announcing that it is “too big to fail.”
The council took steps earlier this year to clarify its process for identifying which firms would risk toppling the financial system if they failed.
