MetLife Wins Short Hiatus in Litigation Over SIFI Designation
May 15, 2017 by Frank Klimko
WASHINGTON – A federal appeals court has ordered a brief delay in MetLife Inc.’s legal challenge to its systemically important financial institution designation while the U.S. Treasury Department reviews the SIFI selection process.
The postponement, until July 11, is short of the full delay sought by the company in its litigation before a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit. MetLife asked for all proceedings to be suspended until the Treasury Department review is delivered to the White House in October (Best’s News Service, April 24, 2017).
However, the court sided with U.S. Justice Department attorneys, who argued for a shorter delay.
“We do not take a position at this time on MetLife’s motion to hold the case in abeyance until the report is issued,” said a motion filed by DOJ attorney Daniel Tenny. “We consent, however, to a more limited period of abeyance to allow the council (Financial Stability Oversight Council) and the Department of Justice to complete their deliberations.”
The request for a delay was initiated by attorney Eugene Scalia, of Gibson, Dunn & Crutcher, who represents MetLife, after President Donald Trump in April ordered Treasury Secretary Steven Mnuchin to review the SIFI process and the authority of the FSOC. Scalia argued the litigation would be rendered moot if Mnuchin concluded the SIFI process used to designate MetLife was flawed.
The case before the federal court is an appeal filed by the DOJ under the Obama administration after it lost a first round in a lower court.
The DOJ is seeking to reverse a March 30, 2016 decision by U.S. District Judge Rosemary M. Collyer, of the U. S. District Court for the District of Columbia. Collyer ruled the FSOC did not follow its own rules (Best’s News Service, Aug. 16, 2016).
In seeking the appeal, government attorneys argued Collyer ignored the broad discretion given to agencies in applying regulations.
The ruling is an incremental win for MetLife, said Ian Katz, director of Capital Alpha Partners.
“The development gives the Trump administration time to either try to withdraw the case or at least explain why it doesn’t agree with the appeal,” Katz said in a research note. “It would be better for MetLife if the Trump administration is able to withdraw the case or if the appeals court upholds the lower court ruling. However, sooner or later, one way or another, this is going MetLife’s way.”
Two other insurers have also been designated — American International Group Inc. and Prudential Financial Inc. Neither has sued.
Most operating units of MetLife have current Best’s Financial Strength Ratings of A (Excellent).
On the morning of May 15, shares of MetLife Inc. (NYSE: MET) were trading at $51.59, up 1.33% from the previous close.
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)
