Summer 2016 – Too Big to Fail? Judge says no

A federal judge ruled that MetLife, which has $877,933,000,000 in total assets, is not too big to fail and therefore should not be subjected to compliance with stricter regulations that follow the 2008 mortgage meltdown.

The ruling by Washington, D.C. federal judge Rosemary Collyer, said that MetLife is not a “systemically important financial institution” or “SIFI”. This decision represents a major victory for the insurer meaning “less government scrutiny and lower reserve minimum” according to Fortune Magazine.

In December 2014, the federal Financial Stability Oversight Council, which was set up in the wake of the financial crisis, ruled that MetLife’s could likely pose a threat to U.S. financial stability should it be destabilized and should therefore be subjected to stricter oversight by the Federal Reserve.

MetLife sued saying the Council’s decision was “arbitrary and capricious.”

The federal government plans to appeal the ruling, as United States Treasury Secretary Jack Lew said he strongly disagreed with the judge’s decision. “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. “I am confident that we will prevail.”

In symbolic unison with the U.S. Treasury, days after the ruling, the International Monetary Fund also issued yet another of its warnings about “too big to fail” insurers.