MetLife has come out swinging.
On Thursday, an obscure but powerful federal body called the Financial Stability Oversight Council designated the New York-based insurance giant as “too big to fail,” meaning if it went belly up it would pose a “systemic risk” to our financial system. Some execs might like that designation, because it implies government will bail them out for any bad decisions.
But MetLife wants none of it, and for good reason: the conditions that come attached.
With this designation, the company becomes subject to a host of bureaucratic requirements that will affect what has been a highly successful business model, for example, requiring MetLife to keep more cash in reserve or drop some business deemed too risky. Which means higher costs and less revenue.
Who would pay for that? The answer is MetLife customers, with fewer benefits and premium hikes.
There may also be fewer MetLife employees, which should be important to a city that has 2,000 MetLife workers.
The move is ridiculous, especially for a well-run company that hasn’t needed to be bailed out by the taxpayer.
It’s telling that even former Rep. Barney Frank — the “Frank” in the Dodd-Frank legislation that created this monster — is not sold on the idea that rules aimed at banks ought to be imposed on insurance companies.
The company says it “strongly disagrees” with the FSOC designation and is “not ruling out any of the available remedies under Dodd-Frank to contest the designation.”
Good for MetLife. Let’s hope the company — and common sense — prevail.