U.S. insurer MetLife to sue regulators over high-risk tag

Tue Jan 13, 2015 5:15pm EST
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By Douwe Miedema

WASHINGTON (Reuters) - MetLife Inc (MET.N: Quote) on Tuesday sued U.S. regulators over a decision to subject the insurer to tougher oversight because it harbors enough risk to endanger the financial system if the next crisis hits.

The largest U.S. life insurer unsuccessfully contested a ruling by the Financial Stability Oversight Council (FSOC) last month, and a lawsuit is its last resort to escape being overseen by the U.S. Federal Reserve.

"We just think that FSOC got this call wrong, and we believe that an appeal in this case is the right thing for our customers and for our other stakeholders," MetLife Chief Executive Officer Steve Kandarian told Reuters in an interview.

MetLife shares closed down 1.2 percent on Tuesday.

The lawsuit will renew scrutiny of the process laid out in the 2010 Dodd-Frank financial reform law, which gives FSOC, the top U.S. risk council, the power to designate large financial companies as "systemically important," imposing tougher rules and oversight by the Fed on them.

The lawsuit is also important for large asset managers such as BlackRock Inc (BLK.N: Quote) and Fidelity Investments that could be added to the list of risky firms, though they have aggressively campaigned to avoid the FSOC designation.

Lawmakers and companies alike have complained that the designation process is opaque and that the risks are not sufficient to warrant the tighter rules.

"This is the first real challenge to the FSOC's deeply flawed ... designation authority," said U.S. Representative Patrick McHenry, a Republican from North Carolina. "It is my hope this case will begin to shed some light on what metrics - if any - are used in the arbitrary and opaque FSOC review process."   Continued...

The MetLife building is seen in New York, March 8, 2010.  REUTERS/Shannon Stapleton