WASHINGTON — The government today renewed its call for prompt oral arguments in the case involving its designation of MetLife as a systemically important financial institution (SIFI), hopefully in October or “as soon thereafter as is feasible.”
See also: MetLife defends its SIFI challenge
The March 30 decision by Judge Rosemary Collyer declaring MetLife’s designation as arbitrary and capricious “nullifies an important action that the nation’s financial regulators collectively took in response to a potential threat to U.S. financial stability,” the Financial Stability Oversight Council (FSOC) said in a memo to the U.S. Court of Appeals for the D.C. Circuit. ”Prompt resolution is essential,” the brief said.
See also: Two Fed chiefs support MetLife as SIFI
The memo asked that oral arguments be scheduled for a time in the first three weeks of October. “If, however, argument cannot be scheduled in October, we ask that argument be scheduled for the earliest possible date thereafter,” the memo said.
The court has so far not designated a panel to hear the case.
The memo was filed by the Department of Justice, which is representing the U.S. in the case. The brief noted that the government’s response to MetLife’s reply brief is due Sept. 9th, and that the court issued an order for expedited handling of the case, and the order directed the clerk “to calendar this case for argument on an appropriate date following the completion of briefing.”
The government’s memo said it was seeking early arguments in the case based on a letter from MetLife’s chief counsel, Eugene Scalia, indicating that the trial on his calendar that took precedence for him had been moved from early October to Nov. 3, and that, therefore, he would be available for oral arguments in the MetLife case in October.
Ryan Schoen, a securities analyst with Washington Analysis, said that in most cases, the D.C. Circuit schedules oral arguments for between two and four months after the final briefing deadline.
However, it appears the government is confident in its case, and would like the case to be heard as soon as possible. And, Schoen added, “nothing appears to stop an October oral argument in the case.”
The FSOC brief said that agency as “consulted with MetLife’s counsel regarding this motion. MetLife has indicated that it intends to file a statement in response.”
An industry lawyer who asked not to be named interpreted this part of the letter as asking the court to schedule oral arguments before Scalia’s scheduled trial appearance in November, that is, sometime in October.
The FSOC letter to the court follows the Aug. 15 filing of the MetLife reply brief to the government’s appeal of Judge Collyer’s order for the Federal Reserve to cease its oversight of MetLife as a SIFI and return sole oversight of MetLife to state regulators.
In its brief, MetLife said Collyer’s decision should be sustained because the FSOC, which is head by the secretary of the Treasury and includes all federal financial regulators as well as an independent member with insurance expertise.
In its brief, MetLife said the FSOC failed to “adhere to its own regulatory standards and the basic precepts of reasoned agency decision-making” in inappropriately designating MetLife as a SIFI.
MetLife also discussed the issue with analysts at a meeting with investors Wednesday. At the meeting, it provided some more details on its plans to spin off its Brighthouse Financial unit, which houses its variable rate and universal life businesses, as of the third quarter.
After the meeting, Thomas Gallagher, an analyst with Evercore ISI, said
“It’s also worth pointing out that we believe the real motivating factor driving Metlife’s decision to break-up is due to defensive considerations regarding a potential negative outcome for SIFI rules and associated annual stress testing, [which would follow MetLife’s designation as a SIFI].”
Gallagher added that, “Along these lines, it is important to continue to monitor MetLife’s lawsuit with the Fed over its SIFI designation.
“We should note that even if MetLife is unsuccessful in its appeal, we would still expect there to be an exit ramp for the company related to the separation and the annual review process.”
MetLife CEO Steve Kandarian said during MetLife’s conference call with analysts Aug. 4 following its release of second quarter earnings that MetLife will begin reporting Brighthouse results separately as of the third quarter. He also said that MetLife will disclose a detailed plan as to when the spinoff plan will take effect following its Sept. 27 board meeting.
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