The Federal Reserve Board announced that it will be seeking detailed financial and other data from the insurance companies and insurers with thrifts it regulates as it starts the process of tailoring its regulatory metrics to coincide with its mandated role of overseeing them.
Sources familiar with the Fed’s thinking said it will be a voluntary data collection from insurance companies designated as systemically significant and insurance companies designated savings and loan holding companies.
“They will be asked to fill out the questionnaire, provide data for us, which we’ll then aggregate and use to evaluate the agency’s options for a capital regime under the Collins amendment,” according to sources. The data is due Dec. 31.
One source noted that, “This is not like a typical comment proposal.” The decision to do so was signaled through testimony to the Senate Banking Committee on Aug. 9 by Daniel Tarullo, the member of the Board who oversees the agency’s regulatory responsibilities.
But the timing is also noteworthy. MetLife has been preliminarily designated a systemically significant financial institution (SIFI) and has until Friday to disclose to the Financial Stability Oversight Council (FSOC) whether it will appeal the decision. Under the Dodd-Frank financial reform law, MetLife has 30 days from data of designation to petition the FSOC for a hearing.
Less than 20 firms are involved, another source said. These include American International Group and Prudential Financial, the two insurance firms the FSOC has designated as SIFIs.
The Fed’s announcement that it will seek detailed data from the insurance companies it is mandated to regulate before implementing its oversight would seem to signal that a key argument of MetLife, that it is not acceptable to oversee insurers through use of bank metrics, would be negated. It would seem to add to the already high hurdles MetLife would face if it decided to bear the expense of challenging such a designation in court.
That is so, especially since the entire U.S. Court of Appeals for the D.C. Circuit threw out a 2-1 decision by a panel of the court and ordered a en banc, or full court, hearing on the issue of whether the federal government has the authority to provide subsidies to people under Obamacare, the Patient Protection and Affordable Care Act (PPACA), if they are served through a federal exchange, rather than through a state exchange.