A group of top financial regulators took the first step Thursday towards subjecting the life insurance company MetLife to merited stricter oversight, arguing it is critical to the financial system.
The Financial Stability Oversight Council (FSOC) voted unanimously that it should preliminarily designate the company as a “systemically significant” nonbank financial institution.
The panel of top regulators, created by the Dodd-Frank financial reform law to oversee the security of the overall market, did not name the firm receiving the designation, but MetLife was the only one under consideration. The council said all members approved the initial move, with one voting present.
In a statement, MetLife vowed to fight against the FSOC action, which carries with it heightened regulatory requirements.
“MetLife is not systemically important under the Dodd-Frank Act criteria. In fact, MetLife has served as a source of financial strength and stability during times of economic distress, including during the 2008 financial crisis,” said Steven Kandarian, the firm’s president and CEO.
Kandarian added that MetLife is not ruling out “any of the available remedies” to contest the designation. Under FSOC rules, firms have the chance to appeal such a designation, but no company has successfully avoided designation via appeal.
If the designation goes through, MetLife will join Prudential Financial and the American International Group as the insurance companies deemed systemically significant by the FSOC. The panel has also designated the financing arm of General Electric as meriting closer oversight, as well as several large banks.
The move, expected by most analysts, earned quick recriminations from the life insurance industry, as well as some members of Congress. Many Republicans have been critical of the FSOC, arguing it is too opaque. Several lawmakers have pushed legislation that would alter the FSOC or freeze it from making more designations.
Rep. Scott GarrettErnest (Scott) Scott GarrettOn The Trail: The political losers of 2020 Biz groups take victory lap on Ex-Im Bank Export-Import Bank back to full strength after Senate confirmations MORE (R-N.J.), who chairs a House Financial Services subcommittee, said he would be holding hearings at which FSOC officials would have to defend the decision.
“Today's irresponsible and inappropriate designation of another U.S. business as too-big-to-fail only strengthens my resolve to reform the out-of-control FSOC,” he said.
This post updated at 6:27pm.