Is the Joint Decision to Withdraw Met Life’s SIFI Designation a Hobson’s Choice?

With the consent of the Trump Administration, on Thursday, January 18, 2018, the Financial Stability Oversight Council (FSOC), a Federal government organization established by Title I of the Dodd–Frank Wall Street Reform and Consumer Protection Act during the Obama administration, and MetLife jointly filed a motion with in the United States Court of Appeals for the D.C. Circuit. FSOC empowers the government to designate non-banks as SIFI’s, which subjects them to heightened supervisory requirements by the Federal Reserve.

The motion effectively ends a nearly two-year

Continue Reading

What Would the Insurance Provisions of Dodd-Frank Look Like Under the Trump Administration?

The incoming Trump Administration has already signaled its intent to repeal, or at the very least reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). To date, President-elect Trump has not signaled what changes he would make with respect to the insurance provisions of Dodd-Frank.  However, there is a bill in Congress that provides at least some insight as to what these changes might look like.

In September 2016, Congressman Jed Hensarling (R-TX), Chairman of the House Financial Services Committee, introduced H.R. …

Continue Reading

And Then There Were Two — GE Capital No Longer a Nonbank SIFI

GE Capital is no longer a nonbank SIFI. The Financial Stability Oversight Council (FSOC) formally announced on June 29, 2016 that it voted unanimously on June 28, 2016 to rescind the designation. In conjunction with the vote, FSOC released a 23-page opinion outlining the basis for its decision. In short, FSOC determined that GE “executed significant divestitures, transformed its funding model, and implemented a corporate reorganization.” It determined that “these and other changes at GE . . . have significantly reduced the potential for [GE’s] …

Continue Reading

Federal Reserve Takes Steps on Capital Standards for Nonbank SIFIs

The passage of the Dodd-Frank Act led to an increased role for federal financial regulators in regulating insurance companies. While insurance companies are still primarily regulated at the state level, certain insurance companies also qualify for federal regulation. For example, Dodd-Frank explicitly requires that the Federal Reserve Board (FRB) regulate all financial institutions designated as systemically important financial institutions (nonbank SIFIs) by the Financial Stability Oversight Council (FSOC). Currently, FSOC has designated two insurance companies as nonbank SIFIs: Prudential and AIG. The FSOC also designated …

Continue Reading

Federal Judge Overturns MetLife’s SIFI Designation

In a first-of-its-kind decision, U.S. District Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia granted MetLife’s motion to remove the non-bank SIFI designation imposed by the Financial Stability Oversight Council (FSOC). This is a highly significant case, as it represents the first time a SIFI-designated company has challenged the designation. However, the order and opinion are currently under seal, possibly due to the inclusion of confidential and proprietary information on both sides. The parties have until April 6, 2016 …

Continue Reading

U.S. District Judge Explores the SIFI Designation Process

For the first time since the passage of Dodd-Frank, a U.S. District Judge is exploring the process by which the Financial Stability Oversight Council (FSOC) designates non-bank financial institutions as systemically important financial institutions (nonbank SIFIs). On February 10, 2016, U.S. District Judge Rosemary Collyer of the U.S. District Court for the District of Columbia heard arguments in the matter of MetLife v. FSOC.

In January 2015, MetLife filed a lawsuit challenging the FSOC’s designation of MetLife as a nonbank SIFI. Specifically, the lawsuit …

Continue Reading

FSOC Replies to MetLife Lawsuit Challenging Nonbank SIFI Status

In early 2015, MetLife filed a lawsuit challenging its designation as a nonbank systemically important financial institution (nonbank SIFI). On May 11, 2015, the Financial Stability Oversight Council (FSOC) filed a redacted motion to dismiss (or in the alternative a motion for summary judgment) in response to MetLife’s lawsuit.

One of MetLife’s key arguments in its complaint is that FSOC’s designation was arbitrary and capricious. FSOC argues in its motion to dismiss, dated May 11, 2015, that its decision to designate MetLife as a nonbank …

Continue Reading