We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Federal Judge Questions Validity of MetLife SIFI Designation

    February 12, 2016 by Frank Klimko, Washington correspondent, BestWeek: frank.klimko@ambest.com

    WASHINGTON – A federal judge questioned the legality of how the Financial Stability Oversight Council designated MetLife Inc. as a systemically important financial institution, saying she doubted whether neutral adjudicators were involved in the decision.

    “What I’m trying to understand here is the council’s adjudication process,” said U. S. District Judge Rosemary M. Collyer, of the U. S. District Court for the District of Columbia. “As they (MetLife) moved through I don’t see where there was a neutral third party in this adjudication. In other agencies you see a separation of powers.”

    Attorneys for MetLife and the FSOC appeared Feb. 10 before Collyer. MetLife is asking Collyer to invalidate the designation, arguing the process was defective and the company never got a fair hearing.

    Collyer, a judicial appointee of President George W. Bush, focused on how companies become potential designees.

    Eric Beckenhauer, a U.S. Department of Justice attorney representing FSOC, called it a “blending of functions,” that did not deny MetLife due process under the law. “The record clearly shows that MetLife had a full and fair opportunity to be heard,” Beckenhauer said.

    In general, companies are evaluated for designation at the intake level, made up of council staff, which forwards the most compelling SIFI candidates to an internal Deputies Committee. That committee sends its recommendations to the full 15-member FSOC board, which has final say, Beckenhauer said.

    However, the judge pointed out the process doesn’t include a neutral mediator, like an administrative law judge, who could act as a check-and-balance to agency momentum building toward a designation.

    “The way this (process) is structured, there is no separate structure from those that are making the decision,” for a SIFI designation, Collyer said.

    Beckenhauer noted the final check does exist with the council itself, chaired by U.S. Treasury Secretary Jacob “Jack” Lew, which must vote in favor of a designation.

    “The council decision is not a punishment or a sanction,” Beckenhauer said, “but a judgment that a company could cause financial distress.”

    The judge’s questions about the structure of the SIFI process were a surprise for both sides because they had not addressed the council’s internal workings in their pre-argument briefs. MetLife attorney Eugene Scalia, of Gibson, Dunn & Crutcher, refused to declare victory on that point after the hearing. It is difficult to presage a judge’s decision from questions raised during oral arguments, attorneys from both sides agreed.

    Scalia said although the designation may not have been intended as a punishment, the consequences of a SIFI label were not appealing. Another SIFI, American International Group Inc. is under attack by a prominent shareholder who wants to break up the company to shed the SIFI designation and MetLife itself is considering a spin-off of some retail operations, he said.

    In general, the FSOC botched the job of culling the risky, over-leveraged companies from the vast pool of large corporations that are already sufficiently regulated and pose no threat, Scalia said.

    “FSOC failed on all counts. Its decision to designate MetLife as a nonbank systemically important financial institution was predicated on unbounded speculation, ahistorical analysis, shifting standards, and undisclosed evidentiary material,” Scalia said. “It departed from the controlling statutory standards, its own regulations and interpretive guidance, and the overwhelming evidence in the record.”

    The company is subjected to tight regulation and capital standards at the state level, where regulators are quick to step in to prevent a failing insurer’s problems from spreading beyond what its own assets can handle, Scalia said.

    And, the process was weighted against the company because FSOC refused to do a vulnerability analysis to see if MetLife could withstand a theoretical collapse.

    Collyer noted FSOC seemed to proceed from the suggestion that in a fiscal crisis, MetLife would immediately be at the brink of collapse. “That’s not risk analysis,” she said. “That’s assuming the worst of the worst of the worst.”

    MetLife was designated a SIFI in December 2014 and filed the lawsuit a month later. It is the only SIFI designee to bring such a legal challenge. The other insurance companies so designated are AIG and Prudential Financial Inc. (Best’s News Service, Feb. 3, 2016).

    Operating units of MetLife have current Best’s Financial Strength Ratings of either A (Excellent) or A+ (Superior). On the afternoon of Feb. 10, shares of MetLife Inc. (NYSE: MET) were trading at $37.32, up 0.43% from the previous close.

    Originally Posted at AM Best on February 10, 2016 by Frank Klimko, Washington correspondent, BestWeek: frank.klimko@ambest.com.

    Categories: Industry Articles
    currency