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The U.S. government on Thursday requested a 60-day pause in a case involving MetLife Inc,. the country’s largest life insurer, and how regulators designate certain companies as “too big to fail,” a major reform arising from the 2007-09 financial crisis.
MetLife had asked for a delay in the case last month, saying the court should wait until President Donald Trump’s administration finishes its financial regulation review.
The Republican president has ordered Treasury Secretary Steven Mnuchin to look into the designations and the 2010 Dodd-Frank Wall Street reform law that established how to identify “systemically important” firms so big they could devastate the financial system if they failed.
The Financial Stability Oversight Council, chaired by Mnuchin, said in a court filing it did not take a position on waiting until Treasury reports the review’s findings.
It said, however, that council members, including Federal Reserve Chair Janet Yellen and new Securities and Exchange Commission Chair Jay Clayton, needed “additional time for deliberation.”
The council will delve into the designation process and Trump’s review at a meeting next Monday, according to a notice from Treasury.
In March 2016, U.S. District Judge Rosemary Collyer struck down the FSOC’s designation of MetLife as “systemically important,” saying it was “arbitrary and capricious.”
The administration of former Democratic President Barack Obama appealed and the two sides squared off in court last October, with a decision expected this month.
Some companies are wary of the “too-big-to-fail” designation because it forces them to hold on to capital and creates extra oversight they say is burdensome.
The only two nonbanks now carrying the label are American International Group, which received a $182 billion bailout during the crisis, and Prudential Insurance. MetLife is not considered designated during the appeal.
Critics of the designations have said the Trump administration should be able to withdraw the appeal or the court should at least consider the new president’s views and his review’s findings, which are expected to call for changes to designations.
(Reporting by Lisa Lambert; Editing by Peter Cooney)