Life insurance company MetLife will challenge regulators’ proposal to label it a “systemically important” financial firm and regulate it like a bank.
The company filed notice Friday that it would challenge the designation made Sept. 2 by the Financial Stability Oversight Council, the new super-regulator created by the 2010 Dodd-Frank financial reform law to identify threats to the financial system wherever they originate.
By appealing, MetLife will receive a closed-door hearing with the council within 30 days, during which it will have the opportunity to convince the heads of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation and the other financial regulators that make up the council that the insurer would not present a threat to the financial system if it failed. The council will make a final determination on the company’s status within 60 days.
If officially designated a systemic threat, MetLife would join three other non-bank financial firms given that label: The insurance company Prudential, General Electric Capital Corp. and American International Group. It was AIG’s 2008 failure that partly prompted Congress to create a super-regulator capable of looking outside of Wall Street for companies that could a risk to the broader economy.
The “systemically important financial institutions,” as they are known, are subjected to higher capital standards and supervision from the Federal Reserve.
The council is scheduled to meet Monday to discuss non-bank financial companies. It also will continue examining whether asset management firms such as BlackRock and Vanguard are candidates for being declared systemically important.
