The U.S. government and the country's largest life insurer are set for a rematch in a U.S. appeals court today over how federal regulators decide a company is "too big to fail," one of the most significant reforms to come out of the financial crisis, Reuters reported. The heart of the fight is whether the Financial Stability Oversight Council should have designated MetLife Inc. as a "systemically important financial institution." The label indicates that MetLife's collapse could devastate the financial system, and it triggers tighter oversight. MetLife would also have to set aside capital to ensure that it would not need a government bailout during a crisis. In March, U.S. District Judge Rosemary Collyer struck down the designation, saying that the council used an "arbitrary and capricious" process in assessing MetLife's vulnerabilities. She also said that the government should have analyzed costs and benefits to MetLife, the likelihood that it would fail and possible counterparty losses.
