US government argues MetLife is “too big to fail”
A US government lawyer argued in the federal appeal court yesterday that regulators were right to designate life insurance firm MetLife as “too big to fail”.
The Financial Stability Oversight Council decided MetLife was a “systemically important financial institution” in December 2014 – a measure put in place after the financial crash of 2008.
Read more: MetLife found to be too small to count as too big to fail
This meant MetLife would be subject to tighter oversight and would have to set aside capital to ensure it did not need a bailout during a financial crisis.
A US judge threw out the government’s decision in March this year, pushing up the firm's share price.
The case has now progressed to the US appeals court.
MetLife’s lawyer, Eugene Scalia, told the court yesterday that MetLife’s chief executive felt the government’s decision was “the biggest threat to this company in its history”, Bloomberg reported.
The FSOC powers are granted under the 2010 Dodd-Frank law, brought in following the 2008 financial crisis, and means firms are given stricter oversight from the Federal Reserve.
MetLife rivals AIG and Prudential were both designated SIFI in September 2013.