A U.S. appeals court on Friday granted a 60-day pause in the long-running case in which the country’s largest life insurer, MetLife Inc., has challenged the federal government’s labeling of it as “too big to fail,” as the Trump administration wrestles with reforms arising from the financial crisis.
More than a year ago, U.S. District Judge Rosemary Collyer struck down the government’s designation of MetLife as “systemically important,” which signifies it could devastate the financial system if it failed and triggers stricter oversight, saying the label was “arbitrary and capricious.” The administration of former President Barack Obama, a Democrat, immediately appealed.
In October, the government and insurance company had a rematch before two judges appointed by Obama, Sri Srinivasan and Patricia Millett, and one by former President George H.W. Bush, a Republican. At the time, most expected a ruling to soon follow, with the losing side possibly appealing to the Supreme Court.
Republican President Donald Trump, however, has expressed skepticism about the designation process and the council of regulatory heads that assign the labels, and has ordered the Treasury Department to review both. Treasury Secretary Steven Mnuchin also has said the council’s work should be evaluated.
The 2010 Dodd-Frank Wall Street reform law, intended to avoid a repeat of the 2007-09 crisis and recession, created the Financial Stability Oversight Council and empowered it to designate non-banks as systemically important.
Last week the council asked the court to put the appeal on hold for 60 days, saying it needed “additional time for deliberation.”
Previously MetLife had asked for a pause until Treasury completed its review. A spokesman for the company said it was pleased with the 60-day abeyance.
The company is not officially labeled “too big to fail” during the appeal. Currently, only two firms, both insurance companies, carry the label: American International Group, which received a $182 billion bailout during the crisis, and Prudential Insurance.
(Reporting by Lisa Lambert and Lawrence Hurley; Editing by Cynthia Osterman and Bill Trott)