The Dodd-Frank Wall Street Reform and Consumer Protection Act created, among other things, the Financial Stability Oversight Council (FSOC), an entity within the U.S. Department of the Treasury tasked with assessing and mitigating financial risk. Financial institutions with over $50 billion in assets are automatically deemed “systemically important.” However, under the Dodd-Frank Act, FSOC has the authority to designate non-bank companies engaged in financial activity as systemically important as well. Once designated as a systemically important financial institution (SIFI), these companies are subject to enhanced regulation and supervision by the Federal Reserve. Because the costs associated with such enhanced regulation are significant, most companies do not actively welcome a SIFI label. In 2016, two of the four non-bank SIFIs (GE Capital and MetLife, Inc.) had their SIFI labels rescinded. GE was able to shed its SIFI label by minimizing the size of its assets and operations. MetLife chose to challenge FSOC’s designation in federal district court. This Note reviews the available methods for challenging SIFI designations and proposes alternative methods to increase fairness in these challenges, including amending FSOC’s evidentiary hearing procedures to more closely resemble federal court proceedings, and creating an internal appeals process within the U.S. Department of the Treasury as an alternative to bringing suit in district court.
Challenging Nonbank SIFI Designations: GE, Metlife, and the Need for Reform,
11 Brook. J. Corp. Fin. & Com. L.
Available at: http://brooklynworks.brooklaw.edu/bjcfcl/vol11/iss2/11