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John Bair
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Too Big To Fail – MetLife Sheds Its Label, Dodd Frank Takes a Step Back

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Too Big To Fail? Not MetLife, says U.S judge in a court record released this past Thursday.

The recomelife copyrd, which outlines a case brought against the federal government by MetLife, the nation’s largest insurance provider, marks a major setback for supporters of the Dodd-Frank Act, where a judge rejected federal regulator’s designation of MetLife as “systematically important” to our nation’s economy, and noted that regulators failed to properly account for the expected costs of heightened oversight required by such a designation. But if our nation’s largest insurance provider isn’t “systematically important” to our economy, then what is?

The decision has been poorly received by members of the federal government, with the Treasury Department noting that: “In overturning the conclusions of experienced financial regulators, the court imposed new requirements that Congress never enacted, and contradicted key policy lessons from the financial crisis” – Jacob Lew, Treasury Secretary.

For some, like economist Paul Krugman, continued financial consolidation and asset accumulation isn’t necessarily a bad thing, where it is assumed that economies of scale and reduction in banking risk is more important than breaking the institutions up; but the events of 2008 tell a much different story.

Of course financial institutions like MetLife love the idea of shedding their “too big to fail” designation, where federal regulators require that companies designated as such beef up their capital reserves and write their own “living wills”, planning for their eventual demise; but shouldn’t we expect all of our “big” financial institutions to plan for the worst? With millions of policy holders and billions of dollars in cash on it’s balance sheet, we can be rest assured with or without this additional scrutiny, Metlife policy holders are safe and secure.    See Paul Krugman article here.