By Pete Schroeder
WASHINGTON (Reuters) - The U.S. government and MetLife Inc (N:MET) announced on Thursday they would jointly seek to dismiss an appeal over whether the insurance company should face stricter oversight as a key part of the financial system.
MetLife and the Financial Stability Oversight Council (FSOC), a top federal panel of financial regulators, filed a joint motion to dismiss an earlier FSOC appeal, the company announced in a statement.
The move marks another significant shift for the administration of President Donald Trump in its efforts to ease back stricter rules established under former President Barack Obama.
"I am pleased that the Justice Department has settled the MetLife case, consistent with the recommendation by a majority of FSOC voting members," said Treasury Secretary Steven Mnuchin, who chairs the FSOC, in a statement. "I will be working with the Council to clarify and revise the non-bank designation rule and guidance."
Backers of tougher rules established after the 2007-2009 financial crisis insist allowing regulators to identify specific firms for stricter scrutiny as key cogs of the financial system is a critical tool. But conservative critics argued the FSOC applied the power in an inconsistent and opaque fashion.
In November, the Treasury Department recommended the FSOC shift away from singling out specific companies, and instead focus on broader risks facing the financial system.
After a handful of non-bank financial companies were designed as "systemically important financial institutions" meriting stricter rules under Obama, MetLife mounted a legal fight against the regulatory decision. The insurance company originally won a case at a U.S. district court, but the Obama administration appealed the ruling in 2016.
Thursday's agreement ensures MetLife will not face those stricter rules. The FSOC voted in September to remove a similar designation for American International Group Inc (N:AIG), and GE Capital was able to escape the label in 2016 after overhauling its business.
Prudential Financial Inc (N:PRU) now is the only non-bank SIFI still under stricter government oversight. That company is expected to argue for similar regulatory relief from the regulators in the months ahead.