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MetLife, regulator ask for dismissal of ‘too big to fail’ case

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MetLife Inc. and the Financial Stability Oversight Council have jointly asked a federal appeals court to dismiss the litigation regarding the insurer’s being tagged as “too big to fail.”

The New York-based insurer and federal regulator filed a motion on Thursday with the U.S. Court of Appeals for the District of Columbia Circuit to voluntarily dismiss the government’s appeal with prejudice, according to court documents.

In December 2014, the council voted to designate MetLife as a systemically important financial institution, subjecting it to stricter oversight and stricter capital requirements, but the insurer won a court challenge against the designation in March 2016 — a decision the government had been appealing.

“MetLife has also agreed that, upon dismissal, it will join FSOC in filing a motion asking the district court to vacate the portion of its opinion concluding that FSOC failed to undertake the required cost-benefit analysis when designating MetLife,” the insurer said in a statement Thursday. “The parties will not be asking the district court to set aside any other aspect of its opinion.”

“These motions will bring the litigation between MetLife and FSOC to an end and preserve the district court’s ruling rescinding FSOC’s designation of MetLife,” the insurer continued.

The council has held the responsibility of evaluating companies and had designated four nonbank institutions as SIFIs since the financial crisis, but the regulator’s designation authority has been challenged by Republicans and businesses subject to the designation.

In November, the U.S. Treasury Department recommended a different approach to evaluating the potential risks posed by nonbank financial companies rather than the current method that led to several major insurers being tagged as “too big to fail.”

The House Financial Services Committee this week adopted a bill that would require the FSOC to consider the appropriateness of imposing heightened prudential standards as opposed to other forms of regulation to mitigate identified risks to U.S. financial stability when determining whether to subject a U.S. or a foreign nonbank financial company to supervision by the Federal Reserve.

An FSOC spokesperson could not be immediately reached for comment.