WASHINGTON, April 7 (Reuters) - Federal regulators’ decision to designate major insurer Metlife as “too big to fail” was “arbitrary and capricious,” the U.S. judge who struck down the determination last month wrote in an opinion that was unsealed on Thursday.
MetLife sued the U.S. government, saying the Financial Stability Oversight Council (FSOC), made up of the heads of the country’s financial regulatory agencies, used a secretive and flawed process when in 2014 it designated the company as a systemically important financial institution.
On March 30, U.S. District Judge Rosemary Collyer rescinded the designation, but her opinion was put under seal until Thursday.
FSOC had said in its designation that the insurer could cause significant damage to the U.S. economy if it experienced financial distress, Collyer wrote.
“The final designation assumed such damage but never explained how it would result,” she wrote. “That assumption reflected a change in policy, one that was neither acknowledged nor explained in the final determination, and which was therefore arbitrary and capricious.”
Reporting by Lisa Lambert; Editing by Chizu Nomiyama