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FSOC Asks Court for Time to Study MetLife Request for Pause

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The Trump administration’s version of the Financial Stability Oversight Council may not automatically give life insurers what they want.

Lawyers for FSOC raised that possibility today in a document they filed with the U.S. Court of Appeals for the D.C. Circuit. The document is part of the long-running FSOC legal battle over whether MetLife Inc. is too important to fail.

President Donald Trump asked Treasury Secretary Steven Mnuchin in April to conduct a 180-day review of FSOC’s procedures for designating financial services companies as systemically important financial institutions.

(Related: Trump Issues Dodd-Frank Executive Order)

MetLife asked the appeals court to put its own SIFI case on hold, to give Mnuchin time to weigh in.

Instead of immediately supporting that request, lawyers for FSOC have asked the court to give FSOC 60 days to consider and respond to the request.

“We do not take a position at this time on MetLife’s motion,” the lawyers for FSOC write in their response to the motion.

Mark Stern, an attorney at the U.S. Department of Justice, filed the response on behalf of FSOC together with two department colleagues, Daniel Tenny and Nicolas Riley.

All three lawyers were working on the case in October 2016, when President Barack Obama was still in office, according to a pleading filed in October.

Congress created FSOC in an effort to give federal regulators a way to monitor for signs of problems that could grow to cripple the economy. The Dodd-Frank Act gives FSOC broad authority to designate organizations other than banks as SIFIs.

FSOC designated MetLife as a SIFI in December 2014.

MetLife sued, arguing that FSOC made the determination in an arbitrary way, and that the designation was one of the factors that led it to begin the process of spinning off its retail life and annuity operations in a separate company, Brighthouse Financial.

A district court judge sided with MetLife in March 2016. Obama administration lawyers appealed the district court ruling. The appeals court heard oral arguments on the case in October.

The new FSOC response to the MetLife motion appears to be the first document in the case filed on behalf of FSOC since Trump became president.

— Read Bill to Be Introduced Exempting Insurers From SIFI Designation.

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