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Home / Insurance / Metlife can't be "too big to fail", but is it "too big to handle" for state insurers?

Metlife can't be "too big to fail", but is it "too big to handle" for state insurers?



On March 31 and April 15, we wrote blog posts (which can be accessed here and here) about a federal judge's decision to revoke MetLife's systemically important financial institution (SIFI) status. On October 24, a Judicial Committee of the D.C. heard an oral argument on the appeal of that decision. The federal government advocated reintroducing MetLife's "too large to failure" designation by claiming that regulators were not required to prove that the insurance giant would likely collapse before introducing increased federal surveillance. Conversely, MetLife lawyers have argued that the Financial Stability Oversight Council (FSOC) was doing good by not participating in any threshold analysis of how MetLife would be vulnerable to an economic collapse.

This issue has attracted much attention for the dissolution of MetLife's SIFI status highlighting a major dispute over federalism and the role of state insurance regulators ̵

1; as opposed to the federal government – to prevent a catastrophic financial crisis.

One side of the argument is that the FSOC exceeds its limits and regulates the insurance giant because of its sheer size. State Regulators have argued that FSOC overruled the balanced goals of the Dodd-Frank Law by "ignoring [ing] or rebate [ing]". . . State Regulatory System and State Supervisory Authority's point of view and their own insurance expert to speculate, assumptions about consumer and regulatory responses to distress lacking ground or cause and a defective analysis of insurance operations and its regulation. "Shayna Posses, MetLife gets support in DC Cir. Appeal over the SIFI mark Law360 (August 23, 2016, 8:18).

The other side of the argument is that state regulation of aggregate risk in the insurance system is insufficient because government regulators would face extreme difficulties in managing the risk associated with a company with MetLife's size and scope, therefore, FSOC should regulate companies as large as MetLife to minimize the risk of preventing another AIG, requiring the federal The government would come in with $ 182 billion of public funds.

If the DC circuit confirms the court's revocation of MetLive's "big-to-fail" title, the decision would be a big gain for state insurance regulators. for big to failure "title, the decision would push the federal government to take a more pronounced role in the watch none of the companies as big as MetLife. We continue to monitor the decision for our readers.


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