(Bloomberg) — A U.S. lawyer defending the government’s decision to designate MetLife Inc. a threat to the American economy if it were to falter was questioned sharply by a federal judge who was asked by the company to remove the label.
The nation’s biggest life insurance company is one of four companies tagged as a systemically important financial institution by the Financial Stability Oversight Council. The designation means it may be subject to tougher capital and leverage requirements.
The agency on Wednesday asked U.S. District Judge Rosemary Collyer in Washington to throw out the insurer’s 2015 lawsuit, which contends the FSOC designation was arbitrary and unjustified. The suit by New York-based MetLife is the biggest challenge yet to the regulatory council led by Treasury Secretary Jacob Lew since its creation as part of the 2010 Dodd- Frank law meant to reduce the chances of future financial crises.
Collyer asked Justice Department lawyer Eric Beckenhauer why the FSOC seemed to proceed from the proposition that in a fiscal crisis, MetLife would be at the brink of collapse.
‘Assuming the worst’
“That’s not risk analysis,” she said. “That’s assuming the worst of the worst of the worst.”
Beckenhauer responded that it’s the nature of financial crises to be unanticipated.
He said the insurance company was asking her to override the “considered judgment” of the heads of nine major financial regulators.