Rep. Keith Rothfus (R-PA)
- The Hill
- January 17, 2017
The traditional business of life insurance does not pose systemic risk.
In the wake of the financial crisis of 2008, Congress passed the Dodd-Frank Act which created the Financial Stability Oversight Commission (FSOC) and charged it with identifying “risks to the financial stability of the United States.” The FSOC has the authority to designate firms it determines to be Systemically Important Financial Institutions (SIFIs) and subject them to heightened supervision including higher capital requirements. In December, 2014 MetLife was designated as a SIFI by FSOC. MetLife challenged FSOC’s designation in the U.S. District Court for the District of Columbia. On March 30, 2016, the U.S. District Court ruled in MetLife’s favor and the SIFI designation was rescinded. The decision is now pending appeal.
Why did MetLife get designated in the first place?
The Financial Stability Oversight Council (FSOC) was created by the U.S. Congress in the wake of the 2008 financial crisis. FSOC is charged with identifying risks to the financial stability of the United States. In that role, the FSOC has the authority to designate companies as SIFIs. In addition to MetLife, FSOC designated one other life insurance company as a non-bank SIFI – Prudential. The U.S. District Court’s decision means that MetLife is no longer a non-bank SIFI and it is not subject to Federal Reserve regulation. MetLife does not believe the business of life insurance creates systemic risk. On the contrary, we believe life insurance companies are a source of financial stability.
Why is MetLife concerned about the SIFI designation?
MetLife has always supported strong regulation of the life insurance industry and believes that all companies should be treated the same. Companies designated as SIFIs are supervised by the Federal Reserve and could be subjected to more onerous regulations than their competitors, which limits competition and choice for consumers.