New York’s financial regulator questions Fed oversight of MetLife
August 5, 2014 by Ryan Tracy and Victoria McGrane
Bloomberg
WASHINGTON–New York’s top insurance regulator and members of Congress are raising questions about federal efforts to subject MetLife Inc. to additional regulation as the company mounts a late push to avoid Federal Reserve oversight.
Benjamin Lawsky, New York’s superintendent of financial services and the current regulator of New York-based MetLife, told a council of top financial regulators last week that the company “has an active primary regulator carefully monitoring the conditions of the firm.”
The comments put pressure on the Financial Stability Oversight Council as it nears the end of its review of the risks posed by MetLife. If a supermajority of regulators on the council determines trouble at the company could put the financial system at risk, they could designate the insurer as “systemically important” and subject it to oversight from the Federal Reserve, including potentially requiring MetLife hold additional capital.
Lawsky’s July 30 letter stopped short of directly opposing federal oversight for MetLife and instead outlined why the company doesn’t pose risks to the broader financial system. “MetLife doesn’t engage in any non-traditional, non-insurance activities” and could be unwound in an orderly way if it was failing, he wrote.
Several lawmakers also peppered the council with letters last week raising questions about its process for evaluating firms like MetLife. The 2010 Dodd-Frank law created the council to plug holes in financial regulation and gave it the power to bring “systemically important” firms that aren’t closely regulated at the federal level under the Fed’s thumb. It has already applied the “systemic” designation to two other insurance companies: American International Group, Inc. and Prudential Financial Inc.
An expanded version of this report appears at WSJ.com.
