All Banking Law, All in One Place. Bloomberg Law: Banking is the comprehensive research solution that powers your practice with access to integrated banking-related legal news, analysis,...
By Chris Bruce
Oct. 24 — A federal appeals court judge Oct. 24 raised the possibility that MetLife Inc. might be able to raise a second challenge of sorts even if the Financial Stability Oversight Council's systemic risk label is reinstated ( MetLife Inc. v. Financial Stability Oversight, D.C. Cir., argued 10/24/16 ).
At issue in the U.S. Court of Appeals for the District of Columbia Circuit is the FSOC's appeal from a March ruling that rescinded the FSOC's designation of MetLife as a risk to U.S. financial stability.
Judge Patricia A. Millett, one of three judges on a panel that heard arguments in the case, asked whether Federal Reserve Board regulations that apply to designated companies could themselves be challenged.
Justice Department attorney Mark Stern, who argued the case for the FSOC, said those regulations could be subject to challenge.
Among other points, MetLife Counsel Eugene Scalia of Gibson Dunn in Washington said the FSOC's December 2014 determination was “garden-variety arbitrary and capricious,” saying the FSOC's refusal to consider relevant data that had a bearing on the case.
“It's not that the government had bad arguments, “Scalia said. “It ignored us.”
It's not clear when the D.C. Circuit will issue its decision, but it may not be the last word in a case that could be on a path to the U.S. Supreme Court.
Judge Sri Srinivasan, frequently mentioned as a candidate for a U.S. Supreme Court nomination, asked Scalia whether the Dodd-Frank Act's $50 billion threshold for labeling systemically important banks suggests that the FSOC's designation of MetLife, a nonbank, has a solid basis.
No, said Scalia, because banks are more connected to the economy and because banks face a different kind of risk by being exposed to runs by depositors.
“Banks and insurance companies are different,” Scalia said.
And Judge A. Raymond Randolph asked both lawyers whether a Clinton-era executive order that requires cost-benefit analysis in rulemaking applied to the FSOC's analysis in this case.
Scalia said he doesn't know, while Stern said the FSOC's action is different from that contemplated by the executive order.
“This is a determination,” Stern said. “It's not a regulation.”
But Randolph pressed the point, saying the FSOC's guidance to MetLife during its assessment amounts to an interpretation of FSOC rules, and that the FSOC's final determination was an interpretation of its guidance.
The argument stretched well beyond the half-hour originally scheduled. The bulk of the extra time involved questioning of Scalia.
The D.C. Circuit released audio of the argument within hours or the hearing.
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Mike Ferullo at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)