Insurer MetLife contests official tag as super
Credit: Reuters/Shannon Stapleton
The MetLife building is seen in New York, March 8, 2010.
The company had asked the Financial Stability Oversight Council (FSOC) to call a meeting at which it could give written and oral evidence of why it disagreed with the proposed determination, it said in a regulatory filing.
FSOC now has to schedule a meeting in 30 days, and must make a final decision within another 60 days. Eventually, MetLlife could challenge a final designation - which would subject it to oversight by the Federal Reserve - in court.
The Dodd-Frank Wall Street reform act automatically identified banks with over $50 billion in assets on their books as 'systemic,' but left it to FSOC to determine whether some non-banks also deserved the tag.
The designations are part of an effort to rein in the largest and most risky firms after the collapse of investment bank Lehman Brothers during the credit crisis showed how trouble at just one firm could roil global markets.
Prudential Financial Inc and AIG have already been deemed 'systemic' by FSOC, which is comprised of the country's top financial regulators and was formed after the financial crisis to better coordinate the agencies.
MetLife has more ardently argued against the designation as a Systemically Important Financial Institution (SIFI) than the other insurers, saying that unlike banks, its business does not have the potential to destabilize the system.
Banks that are SIFIs are subject to tougher capital requirements than their smaller peers, and need to pass an annual test of their financial health that determines whether they can raise dividends.
The Fed has acknowledged it cannot tailor capital requirements for insurers without a legal fix to the Dodd-Frank act, and would have to treat them the same as banks, something the industry says would have detrimental effects.
The fix to a part of the Dodd-Frank act that is known as the Collins amendment has passed the Senate but is stuck in the House.
(Reporting by Douwe Miedema; Editing by Chris Reese and Diane Craft)
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