By Chris Bruce
Aug. 23 — A federal appeals court has scheduled argument Oct. 24 in MetLife Inc.’s bid to stay off the U.S. government’s too-big-to-fail list ( MetLife Inc. v. Fin. Stability Oversight Council, D.C. Cir., No. 16-cv-05086, scheduling note 8/23/16 ).
The case is the first challenge to Dodd-Frank Act provisions that allow the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC) to designate nonbank financial companies as risks to U.S. financial stability.
In March, Judge Rosemary Collyer of the U.S. District Court for the District of Columbia rescinded the FSOC’s designation of MetLife as a “systemically important” company subject to enhanced regulatory supervision (62 BBD, 3/31/16).
The government has appealed to the U.S. Court of Appeals for the District of Columbia Circuit, saying Collyer was “profoundly mistaken” in undoing the SIFI designation, leaving “one of the largest, most complex, and most interconnected financial companies in the country without the regulatory oversight that Congress found essential.”
Collyer's ruling marked a setback for the FSOC and, if upheld, could encourage more challenges by other companies, even in other regulatory and enforcement contexts. Among other points, she said the FSOC failed to follow its own standards.
However, some expect FSOC to face a more forgiving stance by the D.C. Circuit, which they say may view the case and its stakes somewhat differently.
MetLife's action was the first direct challenge to an FSOC systemic risk designation. The FSOC tagged three other nonbanks as risks to the system — American International Group Inc., Prudential Financial Inc. and GE Capital Inc.
None of those took legal action. In June, the FSOC took GE off the systemic risk listing after a restructuring.
To contact the reporter on this story: Chris Bruce in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Seth Stern at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
Notify me when updates are available (No standing order will be created).
Put me on standing order
Notify me when new releases are available (no standing order will be created)