MetLife will plead against being branded a super-risky financial firm at a meeting next week with regulators, a company spokesman said, as the U.S. insurer tries to escape oversight by the Federal Reserve.
The Financial Stability Oversight Council, a group of the main U.S. watchdogs, last month proposed adding MetLife to a small group of non-banks subject to tougher supervision because of their critical role in the financial system.
MetLife has said it would contest the designation, which brings stricter capital requirements, arguing its business does not have the potential to destabilize the system and that it was a “source of strength” during the 2007-09 crisis.
FSOC, chaired by Treasury Secretary Jack Lew, has a policy of not naming companies until a decision is final. A Treasury spokesperson said FSOC had called the Nov. 3 meeting at the request of a firm it had proposed to designate.
Once MetLife has made its case at the closed meeting, FSOC must decide within 60 days. Eventually, MetLife could challenge that final designation in court.
The designations are part of an effort to rein in the largest and most risky firms after the credit crisis showed how the collapse of one such firm could roil global markets.
The Dodd-Frank Wall Street reform act identifies all banks with over $50 billion in assets as “systemic,” but left it to FSOC to determine whether some non-banks also deserve the tag.
So far FSOC has tapped two insurers – Prudential and AIG – for the designation which has subjected them to supervision by the Federal Reserve on top of existing oversight by state regulators. GE Capital, the financial services arm of General Electric, has also been put in the category.
(Reporting by Douwe Miedema; editing by Andrew Hay)
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