Acting Deputy Treasury Secretary Mary Miller today convened a meeting of the Financial Stability Oversight Council (FSOC) in a closed session at the Treasury Department that made no apparent movement toward designating MetLife a systemically important financial institution (SIFI) as it is expected to do at a later date.
MetLife has been under Stage 3 review consideration as a nonbank SIFI for about six months now. Today’s FSOC meeting shows that the book on MetLife is not closed on it yet, indicating the controversial “run on the bank” scenario roadmap provided by AIG and Prudential Financial, designated last year, may not be the same as used for MetLife.
In an Aug. 1 earnings conference call, MetLife CEO Steve Kandarian said that it’s unclear how long MetLife will remain in Stage 3 of the designation process, noting MetLife’s only frame of reference from the insurance industry is the experience of AIG and Prudential, both of which spent more than seven months in Stage 3.
However, in the meeting today, Federal Reserve Board staff did give a presentation on enhanced prudential standards that apply to SIFIs, which at the moment include Prudential and AIG as insurers. The enhanced prudential standards for maintaining stability of large U.S. financial institutions globally and domestically are mandated under Dodd-Frank Wall Street Reform and Consumer Protection Act and will be applied by the Fed.
The Fed would not elaborate beyond that but the enhanced prudential standards would require SIFIs to meet liquidity and capital standards.