FSOC has joined with MetLife to ask the U.S. Court of Appeals for the D.C. Circuit to cancel FSOC’s appeal in the fight over whether MetLife should be classified as a systemically important financial institution (SIFI).
FSOC and MetLife filed a motion seeking voluntary dismissal of the appeal Thursday.
“There are no outstanding fees due to the court, and the parties have agreed that each shall bear its own costs on appeal,” FSOC and MetLife told the court.
Eugene Scalia of Gibson, Dunn & Crutcher L.L.P. is listed as the counsel of record for MetLife.
FSOC listed a team of five lawyers. Daniel Tenny, a lawyer with the U.S. Department of Justice civil division, provided the attestation that MetLife agreed with the filing’s content, and Tenny certified that the document was 72 words long.
Tenny told the court he counted the document’s words with the word-count function of Microsoft Word 2013.
A copy of the motion is available here.
The Great Recession began in 2007, after many home buyers defaulted on their mortgages, and after some mortgage-backed securities, credit default swaps, collateralized debt obligations and other instruments typical members of Congress knew little about went bad.
Drafters of the Dodd-Frank Act created FSOC in response to the Great Recession.
The Dodd-Frank drafters hoped FSOC could warn federal policymakers about any entity, including entities other than banks, that could somehow bring down the world financial system.
When FSOC developed rules for identifying SIFIs, during the administration of former President Barack Obama, it made the rules flexible and the determination system secretive, in an effort to keep problem entities from gaming the system.
Early on, some insurers praised FSOC’s efforts to identify and monitor SIFIs.
(Related: AIG CEO supports Fed on SIFI)
Later, MetLife and other insurers identified as SIFIs argued that the extra requirements FSOC imposed on alleged SIFIs were too complicated, too impractical and too expensive, and that the rules were a poor fit for insurance companies.
Treasury Secretary Steven Mnuchin (Photo: Treasury)
Insurers also argued that the process FSOC designed for identifying SIFIs was too opaque to be fair, and that companies had no clear, practical way to escape from SIFI status.
President Donald Trump said when he entered the White House that he would try to ease regulatory constraints on financial services companies. In April 2017, Trump signed an order shielding insurers from the SIFI designation process for at least 180 days.
U.S. Treasury Secretary Steven Mnuchin is also the head of FSOC. The Treasury Department announced in November that it agreed with life insurers that FSOC should improve its system for identifying SIFIs.
There was still some question about how exactly FSOC would handle its reappraisal of the SIFI designation rules.
Trump’s U.S. Department of Labor, for example, started out by postponing the effective date of major new Obama-era group disability claim rules that were set to take effect Jan. 1. But DOL officials decided earlier this month, after reviewing new comments on the rules, to let the rules take effect April 1.
Trump’s FSOC is continuing to monitor potential threats to the financial system, including potential problems as insurance companies. FSOC noted in December that it has concerns about insurers lowering commercial real estate lending standards and making too many commercial real estate mortgage loans.
—Read FSOC Eyes Insurers’ Commercial Real Estate Loan Holdings on ThinkAdvisor.