MetLife May Be Next to Lose ‘Too Big to Fail’ Label
By John Heltman
After the Financial Stability Oversight Council voted to rescind its systemic designation for insurance giant American International Group, observers are wondering why the interagency council is continuing to appeal a ruling overturning MetLife’s designation. Some say there is little question that the council could simply ask the Department of Justice to drop its appeal of a District Court opinion from 2016 that found that the FSOC had overstepped its bounds in designating MetLife as a systemically important financial institution. Karen Shaw Petrou, managing partner at Federal Financial Analytics, said that Yellen’s vote for AIG dedesignation reflects a broader acknowledgment that the designation process, while cathartic in the wake of the financial crisis, was not a tenable long-term strategy. “The global regulatory consensus of people like chair Yellen has, I think rightly, moved away from the initial decision to designate SIFIs to a framework of activity and practice regulation,” Petrou said. “They have come to recognize that targeting one or another company leaves everybody else unscathed, even if they’re correct that a target is particularly systemic.” That may not mean a “yes” vote from Yellen when it comes to dropping the MetLife appeal, she said, but the timing and process of rescinding the designations of Prudential and MetLife is less important than what comes next.