By Nick Thornton
The Financial Stability Oversight Council will meet Sept. 4 in a closed session to identify non-bank financial institutions that may be designated as systemically important financial institutions.
Established by Dodd-Frank Wall Street Reform and the Consumer Protection Act, the FSOC is charged with monitoring the U.S. financial system, identifying systemic risks to market stability, and responding to risks when the arise.
A post on the FSOC website announcing the meeting did not say which institutions the committee is vetting.
But MetLife acknowledged publicly in 2013 that it had reached “Stage 3” in the FSOC’s process for designating a non-bank entity systemically vital to the economy, according to a letter recently sent to Treasury Secretary Jack Lew.
Lew chairs the FSOC. New York state’s superintendent of financial services
, Benjamin Lawsky, sent the letter.
In it, Lawsky suggests that the FSOC consider the extent to which MetLife is already regulated under New York state laws.
“It is our understanding that the FSOC soon will be voting on whether MetLife should be designated as a SIFI,” wrote Lawsky. “Before rendering that determination, we believe that FSOC must carefully consider three critical factors.”
Lawsky argues that MetLife doesn’t engage in any non-traditional insurance activities that create systemic risk. MetLife is already carefully regulated, he said, and New York’s Department of Financial Services has the ability to address risks if they were to arise.
If the FSOC determines MetLife to be a SIFI, the insurer would be subject to oversight by the Federal Reserve, which may require it to increase its cash reserves.
The FSOC has already tagged Prudential Financial and AIG with the SIFI designation.
The Federal Reserve’s Board of Governors, the chair of the Securities and Exchange Commission, and members from the IRS sit on the FSOC, among other federal regulators.
Originally published on BenefitsPro.com