MetLife Inc. yesterday asked for another delay in the long-running case over whether the U.S. government should have labeled it as "too big to fail," warning that the Trump administration may want to withdraw the government's appeal, Reuters reported. A U.S. Appeals court in May granted a 60-day abeyance in the appeal filed by the administration of Democratic former President Barack Obama. The pause ends next week. Last year a U.S. district judge invalidated the government's designation of MetLife as "systemically important," a label signifying MetLife could devastate the financial system if it failed and triggering stricter oversight. The Obama administration immediately appealed, and a panel of three judges heard arguments in the case last October. Republican President Donald Trump, however, has expressed skepticism about designations and the council of regulatory heads that assigns the labels.
MetLife Inc. yesterday asked for another delay in the long-running case over whether the U.S. government should have labeled it as "too big to fail," warning that the Trump administration may want to withdraw the government's appeal, Reuters reported. A U.S. Appeals court in May granted a 60-day abeyance in the appeal filed by the administration of Democratic former President Barack Obama. The pause ends next week. Last year a U.S. district judge invalidated the government's designation of MetLife as "systemically important," a label signifying MetLife could devastate the financial system if it failed and triggering stricter oversight. The Obama administration immediately appealed, and a panel of three judges heard arguments in the case last October. Republican President Donald Trump, however, has expressed skepticism about designations and the council of regulatory heads that assigns the labels.
U.S. bank regulators yesterday disclosed how eight of the nation’s largest banks would wind themselves down in the face of collapse and gave American International Group Inc. and Prudential Financial Inc. an extra year to submit their doomsday plans, Reuters reported. The Federal Reserve and Federal Deposit Insurance Corp. (FDIC) posted the public portions of “living wills” submitted by banks including Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. Introduced in the wake of the global financial crisis of 2007-2009, the plans outline how banks would go bankrupt without needing a taxpayer bailout. Regulators will scour the documents to make sure they are credible. Under the 2010 Dodd-Frank Act, the federal government has the power to carve up a bank if regulators do not believe its plan is workable and in recent years they have faulted more than a dozen banks for drafting overly optimistic or not credible plans. The Fed and the FDIC gave insurers AIG and Prudential Financial until the end of next year to submit their living wills from an original deadline of the end of 2017. The extension was given to enable the companies to incorporate any guidance regulators may provide on their plans.
Millions of retirees are expecting to get a company pension check for the rest of their lives. Increasingly, the name on it is likely to be an insurance company, according to a Wall Street Journal commentary today. The reason is a growing business called pension-risk transfer, in which employers with old-fashioned pension plans, such as General Motors Co., cut deals with insurers to take responsibility for retirees’ monthly benefit. The movement is expected over time to transform the management of pensions for employers, which can slash their exposure to the volatility of the stock and bond markets, as well as for the insurance industry, which gains a source of growth at a time when some traditional businesses are slipping.
Prudential Financial Inc., facing regulatory scrutiny and a lawsuit over a sales relationship with Wells Fargo & Co., said it may press its partner to cover costs after halting the offering — another sign the bank has yet to contain the full fallout of its bogus-account scandal, Bloomberg News reported yesterday. Prudential “has provided notice to Wells Fargo that it may seek indemnification,” the Newark, New Jersey-based insurer said in a Feb. 17 regulatory filing, referring to their agreement to sell MyTerm life coverage to Wells Fargo customers. Prudential didn’t quantify the sum that it might pursue. Wells Fargo’s sales practices are being scrutinized on multiple fronts after authorities fined the bank $185 million in September for signing customers up for bank accounts and credit cards without permission. ProPublica said yesterday that the firm placed the head of a mortgage-lending unit in Los Angeles, Tom Swanson, on leave while examining allegations some customers were charged to lock in low interest rates when the bank delayed applications. Prudential suspended MyTerm sales through Wells Fargo in December.
U.S. insurers are buying corporate pension plans at a record clip as rising interest rates and all-time high stock-market values give companies the perfect excuse to offload them, Reuters reported yesterday. Calculating they can make more money from selling companies an annuity to cover the cost of the pension plans and then invest the proceeds in bonds and other securities, insurers are competing to persuade corporate America to sell them their pension risk. Last week, Prudential Financial Inc., the biggest player in pension transfers, said it had finalized $2.2 billion in pension deals during the fourth quarter, including a $1.8 billion deal with United Technologies Corp. With so much competition, many pension consultants expect 2017 to be a strong year for pension deals. Pension transfers totaling $8.1 billion were finalized in the first nine months of 2016, according to LIMRA, an industry trade group. The number of deals hit 225, the highest in more than 25 years. The biggest driver of the trend in recent years is the growing number of companies that are deciding to end their plans, said Scott McDermott, a managing director at Goldman Sachs Asset Management who advises companies on pension issues.
