What does MetLife’s win in court mean for other big businesses?
By If you ask people what they remember about the financial crisis, they may recall the stock market crash, the Great Recession, zillions of foreclosures and thousands and thousands of jobs lost. Most people will also surely remember “Too Big To Fail.” This was the idea that the government needed to bail out banks and other companies because if they failed, they would take a big chunk of the economy down with them. In order to keep companies from taking advantage of this safety net, the Dodd-Frank financial reforms of 2010 required the government to review and designate these “too big” companies as “systemically important financial institutions,” subject to additional regulations meant to protect the rest of us should they go under.  Karen Petrou, the managing partner of Federal Financial Analytics, hoped this decision pushes regulators to focus less on size, more on the types of risk a company takes. “There’s a growing recognition among the regulators, including Treasury, that that’s a better way to go,” she said. “They’re fighting for their designation framework, but they are increasingly moving to what people are calling an ‘activity and practice approach,’ in which they look not at the company, but what it does.” While many companies are not as large as those that have received the systemically important designation, she said, “when they’re doing the same thing, particularly in risky ways, I think the rules should be the same.