Amicus Brief of Scholars of Insurance Regulation in MetLife v. FSOC

Abstract

This Amicus Brief of Scholars of Insurance Regulation involves MetLife's challenge to the Financial Stability Oversight Council’s (FSOC) determination that material financial distress at the company could pose a threat to U.S. financial stability. The brief focuses on one central element of MetLife’s challenge -- that FSOC failed to adequately consider the strength of the state insurance regulatory system in designating MetLife as a systemically significant nonbank financial company. The amicus brief argues that FSOC’s designation of MetLife fairly accounts for state insurance regulation’s focus on protecting policyholders rather than mitigating systemic risk. It argues that advancing these two regulatory goals often requires very different types of prudential safeguards and supervisory scrutiny. Many of the central features of U.S. state insurance regulation, the brief suggests, are inadequate in their capacity to prevent, anticipate, or respond to systemic risks. This problem is structural and cannot be remedied by state reforms, as states lack the inherent jurisdiction and ability to properly monitor and regulate systemic financial risk.