U.S. Oversight of MetLife Called Into Question at Court Hearing

WASHINGTON—U.S. oversight of MetLife Inc. was called into question Monday at a court hearing where the Obama administration sought to reassert the federal government's authority to regulate the large insurance firm.

Judges at the U.S. Court of Appeals for the District of Columbia Circuit asked pointed questions to government lawyers and at times appeared to express sympathy for MetLife during a hearing that lasted more than an hour.

But the three-judge panel didn't commit to a final decision and could still rule in the government's favor. It could take months before a written opinion is issued.

The Financial Stability Oversight Council, a group of senior regulators, is appealing to the court to reassert federal oversight of MetLife. It voted that the company was a "systemically important financial institution" deserving of stricter regulation in December 2014, but U.S. District Judge Rosemary Collyer earlier this year overruled that decision, saying it was unreasonable and based on a "fatally flawed" process.

Judge Collyer was appointed by President George W. Bush.

The three-judge panel hearing Monday's arguments included two appointees of President Barack Obama, Judges Sri Srinivasan and Patricia Millett, as well as Judge A. Raymond Randolph, an appointee of President George H.W. Bush.

Judge Millet, when discussing MetLife's contention that the Council hadn't adequately supported its conclusions, said part of the company's argument seemed "reasonable enough."

"You can't just say [MetLife] is so big" that if it fails, bad things will happen, she told Mark Stern, a Justice Department lawyer representing the government. "You're not specific enough when you say, 'It's a really really bad situation… so we assume that bad things are going to happen.'"

Mr. Stern said the Council had done an extensive analysis to support its decision.

Beyond issues related to MetLife directly, the case also holds broader significance. The ability to bring large financial companies such as MetLife under tougher rules was an important piece of the 2010 Dodd-Frank financial overhaul. Judge Collyer's decision, if upheld, would call into question other instances where the Obama administration has used that authority, especially in the cases of American International Group Inc. and Prudential Financial Inc.

The Obama administration is also trying to protect the legacy of Dodd-Frank. The law has faced other legal challenges as well, including a recent ruling finding the structure of the Consumer Financial Protection Bureau unconstitutional.

Write to Ryan Tracy at [e-mail]

(END) Dow Jones Newswires

October 24, 2016 12:05 ET (16:05 GMT)

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