Government to appeal MetLife decision

Government to appeal MetLife decision
© Cameron Lancaster

The federal government plans to appeal a recent court ruling that barred the use of a significant new financial regulatory power.

A Treasury spokesperson announced late Thursday the government will appeal a judge's ruling that stated the government was incorrect to subject the insurance company MetLife to higher regulations as a firm critical to the financial system.

Treasury Secretary Jack LewJacob (Jack) Joseph LewThe Hill's Morning Report - Biden argues for legislative patience, urgent action amid crisis On The Money: Senate confirms Yellen as first female Treasury secretary | Biden says he's open to tighter income limits for stimulus checks | Administration will look to expedite getting Tubman on bill Sorry Mr. Jackson, Tubman on the is real MORE trashed the court ruling in a lengthy statement issued earlier in the day.

Lew said the decision by a judge to overrule financial regulators on whether MetLife merited stricter regulation was misguided and dangerous.


“I strongly disagree with the court’s ruling,” he said. “This decision leaves one of the largest and most highly interconnected financial companies in the world subject to even less oversight than before the financial crisis.”

At the end of March, U.S. District Judge Rosemary Collyer ruled that the government improperly deemed MetLife a “systemically significant financial institution,” which carries with it heightened regulation. The insurance company challenged the decision by a government panel known as the Financial Stability Oversight Council, which Lew chairs. The company was the first to challenge new regulatory powers, created by the Dodd–Frank Wall Street Reform and Consumer Protection Act, to identify firms critical to the financial system and subject them to stricter oversight.

Collyer’s decision was originally sealed, but was made public Thursday. In it, she ruled that the government was focused “exclusively” on the benefits of designating MetLife as systemically significant, and ignored the ensuing costs for the firm from harsher rules.

In his rebuttal, Lew argued that the judge was overruling the nation’s top financial regulators and charging them with requirements never intended by Congress.

He argued that lawmakers never required the FSOC to conduct a cost-benefit analysis before designating a firm as systemically significant, and expecting such analysis would “impair” regulators’ ability to guard against future crises.

Furthermore, Lew argued it is the FSOC’s job to identify potential risks that are not obvious. After all, he said the collapse of giant firms like AIG or Lehman Brothers would have seemed inconceivable before the crisis.

“If the Council only responds to risks after they are likely to threaten financial stability, we will pave the way for the next crisis,” he said.

This post updated at 7:22 p.m.