Published on : Jan 14, 2015
MetLife filed a legal suit against a panel of U.S. regulators, which is led by the Treasury secretary on Tuesday, Jan. 13, 2015 with an intention to fight its position as systemically important, which makes it the first financial organization to seek the court over the issue since the government started pointing out the ‘so called too big to fail’ companies in an effort to curb any future financial crises.
The Financial Stability Oversight Council, which is the regulatory panel here, has been making a decision about which organization qualify as systemically important, a power given to it under the Dodd-Frank financial overhaul law. The main focus is at preventing the kind of domino effect, which brushed away the financial system in 2008, when the problems of some important organizations threatened to bring down innumerable others if taxpayers did not provide a gigantic bailout.
In the legal suit, MetLife said that the regulatory panel had made countless crucial errors in finalizing that MetLife was systemically important.
MetLife will be irreparably debilitated if the position is left as it is, the insurer stated in its complaint, which is filed in District Court of the United States for the District of Columbia. The lawsuit signifies a major challenge by one of the country’s largest companies in the way the council is wielding its powers.
MetLife called the position capricious and arbitrary, and asked the court to evacuate it, pointing out that the Federal Reserve has not yet passed the rules that systemically important nonbank organization, such as insurers, will have to follow.