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 The U.S. government plans to appeal the court decision, a Treasury
spokesman said in a statement late on Thursday.
Treasury Secretary Jack Lew said he strongly disagreed with the
decision and the government would vigorously defend the work of the
Financial Stability Oversight Council (FSOC), made up of several
U.S. regulatory agency chiefs, which designated MetLife as a
systemically important financial institution in 2014.
The label has been given to four nonbank companies that the
government considers would pose a risk to the financial system if
they collapsed. MetLife, the largest U.S. life insurer, has said it
was considering breaking up its business to shed the designation,
which triggers more regulation.
"This decision leaves one of the largest and most highly
interconnected financial companies in the world subject to even less
oversight than before the financial crisis," Lew said in a statement
earlier on Thursday. "I am confident that we will prevail."
MetLife sued the U.S. government last year, saying FSOC used a
secretive, flawed process in determining that it could hurt the U.S.
financial system if it faces financial distress. On March 30, U.S.
District Judge Rosemary Collyer rescinded the designation, but her
opinion was put under seal until Thursday.
FSOC said in its designation that the insurer could cause
significant damage to the U.S. economy "but never explained how it
would result," Collyer wrote.
"That assumption reflected a change in policy, one that was neither
acknowledged nor explained in the final determination, and which was
therefore arbitrary and capricious," she wrote.
She added that during the designation process, FSOC ignored two of
its own definitions of "material financial distress" and "threat to
the financial stability of the United States."
"FSOC also focused exclusively on the presumed benefits of its
designation and ignored the attendant costs, which is itself
unreasonable," Collyer wrote. "FSOC's unacknowledged departure from
its guidance and express refusal to consider cost require the court
to rescind the final determination."
Authority to designate U.S. nonbank companies as "too big to fail"
is part of the Dodd-Frank Wall Street reform law passed after the
2008 financial crisis.
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Last week lender GE Capital, a unit of General Electric Co <GE.N>,
asked to have its designation removed, saying it had shrunk to the
point where it would not pose a threat to the financial system if it
experiences distress.
Prudential Financial Inc <PRU.N>, another insurer, said it was
"evaluating what is in the best interests of the company and our
stakeholders."
American International Group Inc <AIG.N>, which also has the label,
received a $182 billion U.S. government bailout to avoid collapse in
the thick of the financial crisis. AIG declined to comment on
Collyer's decision.
Lew said FSOC takes "a deliberative and data-driven approach,
relying on a careful analysis of available information, including
intensive engagement with each company" it designates.
"In overturning the conclusions of experienced financial regulators,
the court imposed new requirements that Congress never enacted, and
contradicted key policy lessons from the financial crisis," he
added.
(Additional reporting by Sarah N. Lynch and Eric Walsh in
Washington; Editing by Matthew Lewis, Richard Chang and Diane Craft)
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