U.S. Oversight of MetLife Called Into Question at Court Hearing
October 24 2016 - 12:20PM
Dow Jones News
WASHINGTON—U.S. oversight of MetLife Inc. was called into
question Monday at a court hearing where the Obama administration
sought to reassert the federal government's authority to regulate
the large insurance firm.
Judges at the U.S. Court of Appeals for the District of Columbia
Circuit asked pointed questions to government lawyers and at times
appeared to express sympathy for MetLife during a hearing that
lasted more than an hour.
But the three-judge panel didn't commit to a final decision and
could still rule in the government's favor. It could take months
before a written opinion is issued.
The Financial Stability Oversight Council, a group of senior
regulators, is appealing to the court to reassert federal oversight
of MetLife. It voted that the company was a "systemically important
financial institution" deserving of stricter regulation in December
2014, but U.S. District Judge Rosemary Collyer earlier this year
overruled that decision, saying it was unreasonable and based on a
"fatally flawed" process.
Judge Collyer was appointed by President George W. Bush.
The three-judge panel hearing Monday's arguments included two
appointees of President Barack Obama, Judges Sri Srinivasan and
Patricia Millett, as well as Judge A. Raymond Randolph, an
appointee of President George H.W. Bush.
Judge Millet, when discussing MetLife's contention that the
Council hadn't adequately supported its conclusions, said part of
the company's argument seemed "reasonable enough."
"You can't just say [MetLife] is so big" that if it fails, bad
things will happen, she told Mark Stern, a Justice Department
lawyer representing the government. "You're not specific enough
when you say, 'It's a really really bad situation… so we assume
that bad things are going to happen.'"
Mr. Stern said the Council had done an extensive analysis to
support its decision.
Beyond issues related to MetLife directly, the case also holds
broader significance. The ability to bring large financial
companies such as MetLife under tougher rules was an important
piece of the 2010 Dodd-Frank financial overhaul. Judge Collyer's
decision, if upheld, would call into question other instances where
the Obama administration has used that authority, especially in the
cases of American International Group Inc. and Prudential Financial
Inc.
The Obama administration is also trying to protect the legacy of
Dodd-Frank. The law has faced other legal challenges as well,
including a recent ruling finding the structure of the Consumer
Financial Protection Bureau unconstitutional.
Write to Ryan Tracy at ryan.tracy@wsj.com
(END) Dow Jones Newswires
October 24, 2016 12:05 ET (16:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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