By Ryan Tracy
Published: Mar 30, 2016 12:05 p.m. ET
Ruling gives insurance company a reprieve from the decision it has been fighting for more than a year
WASHINGTON—A federal judge has rescinded the Financial
Stability Oversight Council’s determination that MetLife Inc. is a systemically important financial institution that should be subject to stricter regulations.
The ruling, which could be appealed by the government, gives the insurance company a reprieve from the decision it has been fighting for more than a year.
The decision is a setback for the Obama administration and a victory for MetLife MET, +5.00% which had argued that the council made an arbitrary and capricious decision that failed to assess MetLife’s vulnerability to financial distress and failed to consider the economic effects of roping MetLife into stricter regulation. Under the 2010 Dodd-Frank law, the designation as a “systemically important” firm comes with stricter oversight from the Federal Reserve.
Judge Collyer issued a two-page court order saying she sided with MetLife on two counts of its legal complaint, and partially sided with MetLife on a third count accusing the council of making unsubstantiated assumptions. It said she sided with MetLife on some, but not all, of its arguments. The order said the council’s final determination on MetLife was rescinded and that “judgment is entered in favor of MetLife.”
Investors welcomed the news because it means those firms are likely to have to meet new requirements from regulators to hold more capital as protection against possible losses. Assuming the ruling holds, it also means they wouldn’t face the stringent bank-like regulatory oversight and compliance requirements that come with the “systemically important” designation.
Credit By:http://www.marketwatch.com/story/metlifes-systemically-important-label-rescinded-by-federal-judge-2016-03-30:
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