Frank and Dodd Defend U.S. in Too-Big-to-Fail Clash With MetLifeby
Former Masschusetts lawmaker says MetLife case judge erred
Twenty past and present legislators file friend-of-court brief
Barney Frank, the former Massachusetts congressman, said the U.S. judge who rescinded a regulatory panel’s designation of MetLife Inc. as too big to fail erred by citing a requirement that doesn’t exist in his underlying 2010 Dodd-Frank reform legislation.
Frank and fellow Democrat Christopher Dodd of Connecticut are among 20 current and former lawmakers who filed a friend-of-the-court brief on Thursday with the U.S. appellate panel being asked to reverse Judge Rosemary Collyer’s March 30 ruling.
Collyer had said the Financial Stability Oversight Council analysis was “fatally flawed” in its determination that the biggest U.S. life insurance company could pose a threat to the financial system. She said the panel, which includes Treasury Secretary Jacob Lew and Federal Reserve Chair Janet Yellen, failed to conduct a cost-benefit analysis.
Cost-benefit analysis wasn’t part of the Dodd-Frank bill leading to FSOC’s creation, and lawmakers consciously rejected the idea of including it, Frank said a telephonic press conference discussing the court filing.
“People are for cost-benefit analysis for things they’re not in favor of,” he said. Among those joining in the appellate submission were U.S. Senators Charles Schumer of New York, Patrick Leahy of Vermont and Elizabeth Warren of Massachusetts, along with House of Representatives Minority Leader Nancy Pelosi of California, all of whom are Democrats.
Frank, who retired in 2013, said he’s troubled by the prospect of Collyer’s ruling ultimately being upheld on appeal, as it would erode legal principles that courts should defer to administrative expertise and could prompt other institutions to challenge regulatory limits.
FSOC’s systemically important financial institution designation has been applied to three other non-banks, Prudential Financial Inc., American International Group Inc. and the finance unit of General Electric Co., which has petitioned FSOC for relief from that label. The tag can lead to tighter capital rules.
The U.S. called Collyer’s ruling “profoundly mistaken,” in its brief filed with the Washington-based U.S. Court of Appeals on June 16.
“MetLife will respond to the government’s brief in its own filing by Aug. 15,” the New York-based company said in an e-mailed statement.
The case is MetLife Inc. v. Financial Stability Oversight Council, 16-5086, U.S. Court of Appeals, District of Columbia Circuit (Washington).