FSOC Appeals 'Profoundly Mistaken' MetLife Ruling
WASHINGTON — The Financial Stability Oversight Council fired another salvo late Thursday in an ongoing legal battle over its decision to designate MetLife as a systemically important financial institution.
The Obama administration argued in a brief to the U.S. District Court of Appeals that a ruling in March striking down the designation was "profoundly mistaken."
The FSOC, through the Justice Department, argued in the 98-page document that the designation had been issued in accordance with the council's "interpretive guidance" on 10 categories that should help assess a company's role in the U.S. economy.
Even if the lower-court decision against the Financial Stability Oversight Council is upheld, there remains a compelling case to reform how the council designates large nonbank firms.
The decision blocking the Financial Stability Oversight Council's designation of MetLife was presaged in factual and legal arguments made by trade associations and others for more than five years.
The DC District Court handed the insurance giant MetLife a big upset win when it struck down the Financial Stability Oversight Councils decision to apply a systemically risky label to the firm, but with few other firms facing similar designation, the practical impact of the ruling is uncertain.
The administration also argued that the FSOC is not obligated to factor in the costs of a systemically important designation to the targeted company when making its decision.
Specifically, the council argued that it is at liberty to interpret whether a "risk-related factor" should be taken into account.
"Congress allowed the council to take similar risk-related factors into consideration as it deems appropriate," the brief said.