Judge Rips ‘Unreasonable’ Decision on MetLife in Order

Judge Rosemary Collyer’s full opinion, sealed since last week, is released without redactions.

A judge rescinded federal oversight of MetLife Inc. last week because regulators made an “unreasonable” decision to ignore the cost of stricter supervision of the firm, according to a court opinion unsealed Thursday.

U.S. District Judge Rosemary Collyer also wrote in her opinion that the Financial Stability Oversight Council, which had found MetLife to be a systemically important financial institution, abandoned a previous promise to consider MetLife’s vulnerability to financial distress, without explaining why it chose to do so.

The findings by Judge Collyer raise questions about the process used to bring MetLife and other large U.S. insurers, including American International Group Inc. and Prudential Financial Inc., under stricter federal rules. MetLife is the only firm to challenge regulators’ decision in court so far.

The Obama administration is expected to appeal the ruling in the coming weeks, but hasn’t said explicitly that it will do so.

A spokesman for U.S. Treasury Secretary Jacob Lew, who heads the oversight council, didn’t immediately respond to a request for comment Thursday. The Treasury Department last week said it would “vigorously” defend its process for designating systemically important firms.

“We remain pleased with the U.S. District Court’s decision,” a spokesman for MetLife said.

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