Due to a previously-reported error, this story was updated at 10 a.m. EST on Aug. 16, 2016.
WASHINGTON — The Federal Financial Oversight Council failed to “adhere to its own regulatory standards and the basic precepts of reasoned agency decision-making” in inappropriately designating MetLife as a systemically important financial institution (SIFI), the company argued in a filing to an appeals court last night.
The brief was filed in the U.S. Court of Appeals for the D.C. Circuit as MetLife continued to seek to block the company’s designation as a systemically important financial institution (SIFI).
Related: MetLife defends its SIFI challenge
The brief was a reply to the appeal by the FSOC June 15 of a lower court decision that held that the FSOC designation of MetLife was arbitrary and capricious.
A ruling by Judge Rosemary Collyer on March 30 declared the government’s decision arbitrary and capricious, and had not taken into consideration the additional costs MetLife will bear as a SIFI, according to this latest filing.
The government is pushing for oral arguments in the case to be held in September, although no panel has yet been designated by the court to hear the case.
In its filing last night, MetLife said the district court simply required that FSOC adhere to its own regulatory standards and the basic precepts of reasoned agency decision-making.
Instead, the FSOC violated both the Dodd-Frank Act and fundamental principles of administrative law when it designated MetLife, MetLife argued in its brief.
“Having decided to target MetLife for designation, FSOC selectively applied the statutory criteria established by Congress, repeatedly departed from its own regulations in order to overcome MetLife’s evidence and analysis,” MetLife said in its reply brief.
Furthermore, the FSOC “consistently embraced unreasonable assumptions and counterfactual conjecture in the face of contrary historical examples,” MetLife said.
The brief also argued that the FSOC “disregarded representations by MetLife’s state insurance regulators and the views of the two independent FSOC members with insurance expertise” in deciding to designate MetLife.
In a brief filed by the Justice Department, the government held that “Nothing in the district court’s analysis casts any doubt on the reasoning of the Council’s 341-page decision.”
Amongst its arguments, the government brief held that Collyer “erred” in holding that the Council was compelled to assess the costs of designation to MetLife. “The ten statutory factors that the FSOC must consider in making a designation include neither cost nor any other effect of designation on the company,” the brief said.
In sum, the brief concluded, the FSOC “properly exercised its expert judgment in faithfully applying the governing statute and its own interpretive guidance. The designation of MetLife should be upheld.”
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