U.S. Judge Questions Regulators on MetLife Designation

WASHINGTON—A U.S. District Judge questioned government lawyers in a hearing on MetLife Inc.'s push to overturn its designation as a "systemically important financial institution"—a tag created by the 2010 Dodd-Frank law that comes with strict oversight.

Judge Rosemary Collyer told Justice Department lawyers, representing the Financial Stability Oversight Council, or FSOC, that she was "trying to figure out" how their process for tagging the company was reasonable, while also stating that the legal standard for their decision was a relatively low bar.

The court was set to resume arguments later Wednesday morning. A decision from the U.S. District Court for the District of Columbia would likely be appealed by the losing side, so the case could drag on for months without a final resolution.

MetLife, the largest U.S. life insurer by assets, contends that regulators erred when they declared the firm to be a so-called systemically important financial institution, or SIFI, in December 2014. But the company is also mounting a broader legal attack that could limit future actions by FSOC, the regulatory group created by Dodd-Frank to identify firms for which failure could bring down the entire economy.

MetLife is the first and only SIFI to sue the oversight council. But three other SIFIs—insurers American International Group Inc. and Prudential Financial Inc. and General Electric Co.'s financing arm, GE Capital—could file similar lawsuits if MetLife prevails. Those firms have been facing investor pressure to shrink in light of tighter SIFI regulation.

An FSOC victory, on the other hand, would protect a major plank of Dodd-Frank designed to extend tighter supervision to the nation's largest financial firms.

Write to Ryan Tracy at [e-mail]

(END) Dow Jones Newswires

February 10, 2016 12:55 ET (17:55 GMT)

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