The U.S. Court of Appeals for the District of Columbia has ended the epic legal battle between the Financial Stability Oversight Council and MetLife Inc.
FSOC formally joined with MetLife last week to ask the appeals court to drop the case.
The appeals court shut down the case with two sentences.
“Upon consideration of the joint stipulated motion to voluntarily dismiss appeal, it is ordered that the clerk note on the docket that this case is dismissed,” the court said in the order, which was filed Tuesday. “No mandate will issue.”
A copy of the order is available here.
SIFI Designation Program
A meltdown in the U.S. residential mortgage loan market started in 2007 and led to a massive wave of financial institution rescue efforts in 2009 and 2010.
Many federal regulators, members of Congress and others blamed the Great Recession on the effects of mortgage market problems on mortgage-backed securities, credit default swaps and other financial instruments that typical federal policymakers knew little about.
(Related: The Sovereign-Debt Doom Loop Still Threatens Banks)
When Democrats in Congress were drafting the Dodd-Frank Act, they added the FSOC provision because they wanted to give federal financial services regulators, who were involved mainly in the banking and securities sectors, a way to understand problems at “systemically important financial institutions” (SIFIs), or critical entities outside the banking and securities sectors.
The organizers of FSOC tried to create a broad, flexible program for identifying entities as SIFIs, to keep important entities from making relatively minor changes in their operations simply to avoid SIFI oversight.
FSOC v. MetLife
Under former President Barack Obama, FSOC tried to classify MetLife and several other insurers as SIFIs.
MetLife, a company founded in 1868, ended up putting its individual life and annuity operations in a separate company, Brighthouse Financial Inc., in part because of concerns about the SIFI designation.