WASHINGTON — MetLife Thursday strongly defended its decision to challenge its designation as a systemically important institution (SIFI).
“Some of the commentary on our SIFI case has portrayed it as an effort to undermine the Dodd-Frank Act (DFA),” said MetLife chairman, president and CEO Steven Kandarian during the conference call with analysts on MetLife’s first quarter results.
He said “we strongly disagree with this characterization,” noting that the right to seek judicial review of a designation by the Financial Stability Oversight Council “is part of the DFA itself as enacted by Congress.”
“In seeking judicial review of FSOC’s designation of MetLife, we are upholding the process established by DFA, not undermining it,” Kandarian said. ”Let me be clear. MetLife supports prudent regulation of the U.S. life insurance industry … We make long-term promises and consumer confidence depends on the ability of the life insurance industry to honor its commitments.”
Kandarian’s comments followed comments by Treasury Secretary Jack Lew at a Beverly Hills, California, financial conference in which Lew said he believes the Treasury Department has a “strong case on appeal” against a court decision throwing out the designation of MetLife as a systemically important institution.
As Treasury secretary, Lew heads the FSOC.
Kandarian said that the decision by Judge Rosemary Collyer in the U.S. District Court for the D.C. Circuit March 30 indicated that the FSOC had failed to:
- Conduct a vulnerability assessment of MetLife as required by FSOC’s own regulations and guidance;
- Adhere to any discernible standard in determining that material financial distress at MetLife could threaten U.S. financial stability;
- Consider the consequences and cost of designation as required by Supreme Court precedent.
“None of these is purely a procedural matter,” Kandarian said. For example, he said the judge noted that FSOC defined a threat to financial stability as one that would “sufficiently be severe to inflict significant damage on the broader economy.” Yet rather than applying its own standard, the judge found that FSOC “hardly adhere to any standard when it came to assessing MetLife’s threat to U.S. financial stability,” Kandarian said.