Fed hires Tom Sullivan as its insurance chief

The Federal Reserve Board has hired an insurance regulatory chief after a long search for an insurance expert to fill the new position. Former Connecticut insurance regulator and industry consultant Tom Sullivan has accepted a position as the senior advisor for insurance to the Board of Governors.
A Fed spokesperson for the board said he starts the high-profile post June 9.
As such, Sullivan will be representing the Fed at all domestic and international insurance forums, he stated in an email to colleagues in the insurance sector.
Sullivan has most recently been a partner at PricewaterhouseCoopers. Word was that the well-regarded insurance regulatory expert was also once on the short list for NAIC CEO before the organization hired Sen. Ben Nelson, D-Neb., for the post a year and a-halfago.
The Fed, as a prudential regulator of systemically important insurers (non-bank SIFIs) and insurers with thrift holding companies (SLHCs), has an ever-more powerful voice in insurance regulation. The Fed is well as a member of the Financial Stability Board (FSB), has a seat at every table now, including at the International Association of Insurance Supervisors, in Basel.
The Fed has been seeking an insurance leader for some time, and several names have come up on the short list.
“I am excited to be joining the Fed and there is a lot of work to be done given their statutory authority as consolidated regulator for the designated insurer non-bank SIFI’s and the insurer owned SLHC’s,” Sullivan said in an email.
Sullivan will be working with insurance supervisory cohorts the NAIC’s international team of state regulators Kevin McCarty (Florida), Tom Leonardi (Connecticut) and Michael Consedine (Pennsylvania), among others, as well as the Treasury’s Federal Insurance Office (FIO.)
Sullivan takes the helm of the key insurance official title at a critical time. Controversial proposed capital standards are under development globally for insurers that are not only systemically important but that are also internationally active, and these standards must be translated to and put up for acceptance by local jurisdictions like the United States.
Congress, the Fed and U.S. insurers are struggling with what to do with seemingly inflexible strict minimum requirement capital standards that would also hammer down on insurance  SIFIs and thrift holding companies under Sections 165 and 171 of the 2010 Dodd Frank Act. Legislation is pending, with the American Council of Life Insurance (ACLI) taking out a full-page ad last week “highlighting the life insurance industry’s support for critical legislation (S. 2270 and H.R 4510) that would clarify the Federal Reserve Board’s authority to apply insurance-based capital standards to insurance companies under the Fed’s supervision.”
 Indeed,  a similar ad from the ACLI will run in Politico on June 4.
Sullivan served as Connecticut insurance commissioner throughout the 2008 financial crisis and AIG’s downfall. He was appointed by Republican Gov. Mary Jodi Rell in 2007. As chair of the NAIC’s LIfe Insurance and Annuities Committee  and has testified before Congress as a state regulator that prudential oversight of insurers by the states works, citing solvency and capital standards that “have ensured that policyholder commitments are met  and that companies remain stable.”
Sullivan is a lifelong Connecticut resident who graduated from Western Connecticut Sate University and got his MBA from the University of Connecticut.
Early reaction was positive from those who have worked with the amiable, well-seasoned executive.
“The Federal Reserve Board has made a solid appointment in choosing Thomas Sullivan, who has keen regulatory and industry insight. He understands the importance of state-based regulation, and the difference between banking and insurance. This is a great step forward that will benefit consumers and insurers,” stated current Connecticut commissioner and IAIS Executive Committee member Tom Leonardi.
Leonardi sits on numerous supervisory colleges as commissioner and is extraordinarily active in international insurance supervision,and will be working closely with Sullivan on capital standards for  and oversight discussions embedded in the IAIS’ ComFrame initiative and in higher loss absorbency standards for global systemically important insurers and reinsurers. The latter group, the reinsurers, is expected to be identified this summer by the IAIS.
NAIC President and North Dakota Insurance Commissioner Adam Hamm stated,”Tom’s strong regulatory experience, comprehension of the insurance sector, and thorough understanding of America’s national system of state-based insurance regulation will be a tremendous asset to the Board on both domestic and international issues.We look forward to working with Tom in his new position as we continue to enhance our working relationship with the Federal Reserve.”

 

Author: Liz Festa,  June 2, 2014

 

 

Is FSOC exploring other options besides SIFI designations?

In a week when U.S. insurers flocked to testify or follow or promote Congressional hearings addressing easing Dodd Frank’s federal government powers strictures on insurance company oversight, U.S. Treasury Under Secretary for Domestic Finance Mary Miller opened the door to policy options for review of industries or companies under review for systemic risk.

But is it enough to allow insurers through? Or, has that door shut?

The Treasury Secretary chairs the Financial Stability Oversight Council (FSOC) that reviews threats to stability and designates financial institutions like Prudential Financial and AIG as systemically risky (SIFIs.) If FSOC identifies risks posed by asset managers or their activities that pose a threat to financial stability, it has a number of policy options, Miller stated during an FSOC-hosted conference on the asset management industry May 19.

These options include highlighting potential emerging threats in its annual reports to Congress, making recommendations to existing primary regulators to apply heightened standards and safeguards, and, of course, the SIFI-label: designating individual firms on a company-specific basis.

“If we identify risks that require action, we will seek to deploy the most appropriate remedy,” Miller stated in her remarks. However, “it is possible that at the end of this comprehensive review, the Council may choose to take no action,” she allowed.

Options seen as less radical than a SIFI designation which subjects  a company to enhanced (to put it mildly) prudential supervision under the Federal Reserve Board’s regime were previously raised in the dissent of then-acting director of the Federal Housing Finance Agency, Edward DeMarco, to the FSOC’s 7-2 vote on Prudential’s SIFI designation.

“To the extent that the Council has concerns about the potential for runs on standard products and existing regulatory scrutiny, those concerns would be better addressed by tools other than designation, such as the Council’s Section 120 authority,” DeMarco wrote in September in his dissent. Section 120 holds that FSOC may provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agencies to apply new or heightened standards and safeguards, including standards enumerated in section 115, for a financial activity or practice conducted by bank holding companies or nonbank financial companies under their respective jurisdictions, instead of blanketing the company itself with a SIFI designation.

FSOC’s plunge into the intense review of the asset management industry coupled with this apparent new tack doesn’t mean that MetLife is off the hook as a future SIFI, though, even though MetLife is a huge asset manager already.

The New York insurer, and one-time bank holding company, has been under Stage 3 review since mid-July 2013, likely the longest Stage 3 review thus far for a company.

If MetLife were cited as a SIFI on the same basis as Prudential, beginning with a distressed company and a run-on-the-bank by millions of policyholders and the ensuing contagion scenario, the oft-cited dissent from FSOC insurance expert Roy Woodall would probably be similar, which may be unpalatable to Treasury, even if the votes are there to designate MetLife.

At a hearing also this week on FSOC designations as a possible danger to the U.S. financial system, Woodall’s statement that FSOC’s “underlying analysis utilizes scenarios that are antithetical to a fundamental and seasoned understanding of the business of insurance, the insurance regulatory environment, and the state insurance company resolution and guaranty fund systems,” was quoted by Eugene Scalia of Gibson, Dunn & Crutcher LLP in Congressional testimony May 20.

Treasury probably wants to avoid listening to, over and over again refrains similar to, “the designation of Prudential purports to be based on a risk assessment, but a risk analysis that assesses neither the probability nor the magnitude of the event is not a risk assessment at all,” as stated by as Scalia in the Tuesday House Financial Services  hearing.

Also this week, House Financial Services Chairman Jeb Hensarling, R-Texas, called on FSOC to “cease and desist ” SIFI designations until it gets questions answered, and many are trying to push for greater FSOC transparency, so the FSOC bloom is off the rose, for now.

“Many think it odd that FSOC has chosen insurance companies and asset managers as targets for SIFI designation when there are others that pose far greater risks to financial stability.  Insurance companies are heavily regulated at the state level, and asset managers operate with little leverage. And since they manage someone else’s funds, it is almost inconceivable that an asset manager’s failure could cause systemic risk,” Hensarling stated.  

Treasury’s Miller also broached the  subject of the work of the Financial Stability Board (FSB) in ongoing work regarding the identification of global systemically important financial institutions. MetLife has already been identified as a global systemically important insurer (G-SII) by the International Association of Insurance Supervisors (IAIS), under the direction of the FSB, and some on Congress have expressed concern that a foreign body that is not a regulator is somehow directing domestic policy on U.S. capital and other standards. The NAIC, the state insurance regulators,  think the FSB mandate is so powerful, they want to be part of the group or its discussions.

Miller took the opportunity to try and allay these concerns.

“While the FSB and the Council have a shared objective of promoting financial stability, it bears emphasizing that the domestic and international processes are entirely independent.  In its work, the Council adheres to the standard and considerations for designations that are listed in the Dodd-Frank Act and in the Council’s public guidance,” Miller stated.

The Council is the only authority that can designate an entity for Federal Reserve Board supervision and enhanced prudential standards,” she stressed.

Concerns about dealing with so-called bank-centric capital standards themselves also had another airing when the Housing and Insurance Subcommittee of the Committee on Financial Services heard testimony on H.R. 4510, the legislative fix to the Collins Amendment in Dodd Frank that would free Federal Reserve-supervised insurers from preparing statements in accordance with GAAP and their assets and liabilities from the minimum leverage capital requirements and risk-based capital requirements required under Sen. Susan Collins’, R- Maine, now infamous Section 171.

 

Author: Liz Festa, in Washington, May 21, 2014

Gov’t OIG audit: FIO has been busy, but needs to track work, meet deadlines

The Federal Insurance Office (FIO) should keep records and create a plan for its functions and operations, as well as mid its report deadlines, according to the Office of the Inspector General (OIG).

The audit offered insight into why the reports have been months late, into the focus of FIO to date, and into its apparent shortcomings in tracking its own activities.

Four of the five reports required by the 2010 Dodd-Frank Act were completed well after their due dates, from about 10 to 23 months, and the fifth one, on global reinsurance,  which was due Sept. 30, 2012, has not yet been completed, the report noted.

In addition, FIO hasn’t yet documented a strategy for accomplishing its legislative functions, or developed a comprehensive implementation plan to direct the development of operational processes and ensure critical deliverables are met, the May 14 report stated.

Thus, in the future, FIO will be timely of future reports document its priorities and implementation plan, provide for record keeping, and develop performance measures, according to the audit report’s agreement reached with the Treasury office.

According to FIO management, the reasons that FIO missed the required deadlines vary, the report stated. As expected, the modernization report went through many drafts: “FIO management told us that the insurance industry modernization report was highly anticipated by the insurance industry, and the report underwent an extensive review process to ensure that the information and recommendations contained within the report were not misinterpreted.”

Much of this review process was outside the hands of FIO, some have related. FIO had key drafts done months in advance of their final publishing date, but  reports went through a tough multi-agency vetting process.

FIO officials told the OIG auditor that the global reinsurance report has been delayed while FIO focuses resources on drafting a higher priority report by the President’s Working Group on the availability and affordability of insurance for terrorism risk.

According to Treasury officials, FIO’s primary operational focus to date, the report stated, has been on representing U.S. interests in international insurance matters and working to establish strategic relationships within the insurance industry.

FIO management also were reported to have stated that the delays were due, in large part, to the considerable amount of time required to identify, attract, and hire staff with the knowledge and experience in several areas of insurance regulation needed to perform its work relating to the reports.

Some in Congress have asked McRaith, referencing overdue or late reports, chief among them, the almost two-year overdue report on Financial Modernization, if his office is adequate for the needs of preparing the statutorily-required reports on time.

In this audit report, the OIG was told by an official that the  FIO staff of 15 was determined by using the human capital planning approach which apparently identified the purposes of the office, the skills required for the office, and the skills already available.

However, “FIO was unable to provide us with a copy of this analysis,” the auditor stated.

According to this official, once FIO reaches15 full time employees, an assessment will be made to further evaluate the sufficiency of the staff size, the report said.

The Dodd-Frank Act required FIO to issue five reports, of which two reports are an annual requirement and three reports were a one-time requirement. Four of the required reports, including both initial annual reports, were completed well after their due dates, and the other one has not yet been completed.

The audit report did find that FIO has engaged in numerous activities such as representing U.S. interests related to international insurance matters, worked to establish strategic relationships within the insurance sector, staffed the office, and drafted reports.
Although FIO has worked to develop the European Union- U.S. Insurance Regulatory Dialogue, participated in the U.S.–China Strategic and Economic Dialogue, is building relationships within the domestic insurance sector and has provided a forum for the discussion of insurance topics within the federal government and the insurance sector, the audit found that FIO was unable to provide formal documentation to support the extent of its involvement in such activities.

“We believe that FIO needs to maintain a more complete record of the material activities performed by the office and their results to provide for greater transparency and to conform to Treasury’s record policy,” the OIG report said.

However, the main audit objective was to evaluate the status and effectiveness of Treasury’s process to establish FIO in a way that enables it to perform its functions.

In a polite written response, the tone of both the audit report and the letters back, FIO Director Michael McRaith said it agreed with the recommendations and is taking steps to implement them by working to finish the global reinsurance report “with deliberate speed.”

McRaith wrote May 1 in a letter to James Lisle, Jr, the OIG auditor, a CPA, that FIO has built an office of 15 staff and increasingly serves a a resource of insurance expertise not only within Treasury but also for third parties, including the GAO, the Financial Stability Oversight Council (FSOC) and members of Congress.

McRaith wrote that FIO agreed with the recommendations and will document FIO’s priorities and implementation plan, undertake record-keeping and develop performance measures to document the office’s progress.

The auditor also stated that FIO must put the estimated dates for completing corrective actions in the Joint Audit Management Enterprise System (JAMES), Treasury’s audit recommendation tracking system.

Reference for audit: OIG-14-036; Treasury Made Progress to Stand Up the Federal Insurance Office, But Missed Reporting Deadlines

Photo:  A statue of Abraham Alfonse Albert Gallatin, the longest-serving Treasury Secretary (1801-1813) presides over Treasury’s section of Pennsylvania Avenue, NW

Author, Photo: Liz Festa

New York Life to take on insurance capital standards policy in Washington

Expect New York Life to become an engaged and active player, even a leader, on insurance capital standard discussions in the nation’s capital.

New York Life Chairman and CEO Ted Mathas galvanized a panel discussion on capital standards for insurers globally and domestically at the NAIC international forum by warning regulators that if standards aren’t properly developed, it might damage insurers’ ability to do some good in the marketplace.

Mathas said New York Life, a proud mutual insurance giant with assets under management of $425 billion in 2013 and a surplus and asset valuation reserve of $21.1 billion, an all-time high, said the company does not expect to be named systemically important either globally or by the Treasury-led Financial Stability Oversight Council (FSOC).

However, Mathas said the capital standards under development for internationally active insurers and the systemically risky or important global and domestic insurers will get worked into a broad part of the industry and possibly bleed into rating agency reviews and more broadly affect the role of insurance in society.

If assets are treated as short-term under accounting or capital rules, then insurers will not be there to buffer the risk they have taken on with huge pension plans, Mathas said, referencing Prudential Insurance and its pioneering of pension risk transfer mega-deals.

Prudential Vice Chair Mark Grier, who sat beside Mathas on the panel platform, slightly nodded. Grier already has been very active in talking to the Federal Reserve Board and other Washington officials given Prudential status as a global systemically important insurer (G-SII) and a U.S.  systemically important financial institution (SIFI).

If assets are treated as short term and there is a one size fits all market consistent methodology, you take away the value added benefits of the insurance industry, Mathas argued.

Mathas is currently making the rounds in Washington and plans to work with other parties to come up with a unified industry statement, or at least one for the company, in response to industry requests and an internal company decision to become engaged in the capital standards debate.

Yoshi Kawai, secretary-general of the International Association of Insurance Supervisors (IAIS) was just as excited to talk about the pursuit of capital standards.

“I cannot stop the feeling of excitement when I talk about capital,” Kawai offered.

Kawai did acknowledge that the market valuation issues are still open to debate and no decision has been made, although it was argued from the  audience that this market valuation debate has persisted for a decade or more and continually creeps into any discussion of global accounting standards.

“When we are regulators, we cannot communicate with the same number, we have to change. We have to change now. Otherwise, it is too late,” Kawai said. There is progress in supervisory colleges but when we compare numbers and discuss them, we do not have the same amount, Kawai lamented.

Kawai and those he works with are seeing an appetite and need for capital standards as European, U.S. and Japanese insurers press further into emerging markets for company growth. Developing markets are hungry for a capital standard too, Kawai noted. Kawai, also a member of the FSB, paid acute attention to a keynote presentation on market trends from Manuel Aguilera-Verduzco, president of the National Insurance and Sureties Commission, Mexico.  Aguilera-Verduzco was chairman of the IAIS between 2001 and 2004.

But Mathas tossed aside Kawai’s analogy on comparability which he made based on temperatures measured in Fahrenheit while landing in the United States on a particularly hot May day  when he is more familiar the lower Celsius number readings.

Mathas response to this was to put on a jacket or sport short-sleeves depending on how warm one’s body feels, respecting regional differences as one already does with climate differences.

Mathas’ solution, which may be difficult to implement with the Collins Amendment in Dodd Frank as a barrier, is to have the Fed utilize stress tests on its insurance stable of companies. Just take prescribed scenarios and run them across cash flows of a asituation and see how they do, Mathas said.

Barring a loose or liberal interpretation of the Collins Amendment (Section 171 of Dodd-Frank) by Fed officials, who many agree are not inclined to monkey with the statute, or the industry-proposed legislative fixes awaiting action in Congress, such a simple or even elegant solution is going to have a very difficult path ahead.

Industry and regulators did agree there is a sense of urgency now with the capital standards under development at the IAIS  at the behest of the G-20‘s Financial Stability Board (FSB)and at the Fed.

Missouri Insurance Director John Huff, the non-voting NAIC appointee to the FSOC, described the capital standards a “bullet train coming down the track.”

Everyone knows the drill. BCR or backstop capital requirements are due this year, perhaps by this July, HLA or higher loss absorbency for global systemically important insurers net year, or 2015, ICS capital standards for  all internationally active insurance groups to be developed in 2016  and applicable in 2019, standards  Huff and others in the U.S. view as having “wide-ranging implications” coupled with unprecedented data collection.

“Someone needs to give the Fed flexibility administratively or legislatively,” Grier said.  “And then there has to be  convergence so we don’t have four different capital standards coming from G-SII, SIFI, ComFrame and the NAIC,” Grier added.

Day One of NAIC Int’l forum showcases CT — and corporate governance

“When it comes to insurance, we, the states,  are here to stay,” said Connecticut Gov. Dannel P. Malloy to attendees at the NAIC International Forum in Washington, D.C., today.

Malloy sought to turn the conversation about states versus federal regulation on its head by asking whether enough is being done in Washington to open up the door of opportunity for U.S. companies.

Malloy, whose appointed  insurance commissioner Tom Leonardi is traveling on international insurance supervisory business, acknowledged that the state system has to  “continuously evolve and consistently live up to the responsibility” of supervision, but expects to be nothing less than partners with the federal and international apparatus set up to also oversee insurers.

Connecticut is very active in international supervisory colleges overseeing insurance companies and Leonardi has made no bones about his distaste for the Federal Insurance Office (FIO) to join them.

Malloy made it clear he thoroughly backs the bold-speaking Leonardi.  When asked by NAIC President Adam Hamm about what advice he would give to the three U.S. federal officials who sit on the G-20’s Financial Stability Board (FSB) about the  lack of a state regulatory  voice in global insurance supervisory deliberations at thee top level, Malloy answered, “Give up your seat to Tom and myself.”

The three FSB members are Treasury Secretary Lew, SEC Chair Mary Jo White and Federal reserve Chair Janet Yellen.

“We are wasting a lot of time and  a lot of energy with a debate that has no chance of success, so let’s get to work and get it working for all of us,” he said to a room of European and U.S regulators and lobbyists.

Malloy said he takes his state as an insurance capital seriously, and means to supervise companies doing  business in his state so risk “has no safe place to hide.”

Connecticut made a strong showing at the forum this year, with Kathy Belfi, director of financial regulation for the state insurance department speaking on best practices for supervisory colleges.

On Belfi’s wish list for future  supervisory colleges are long term relationships with non-US supervisors and increasing the number of participants.  Belfi would also like to see a more coordinated approach on target exams, she said.

The ascendance of corporate governance as a focus formed a large part of the panel discussions Tuesday. More questions keep arising and it will be a large part of reviews, of the IAIS’ ComFrame process and of just assessing other insurers, Belfi and non-U.S. regulators agreed.

It is part of “everything we think and do from now on,” said Vermont Insurance Commissioner Susan Donegan, who had just returned from Kuala Lumpur for the NAIC. Donegan even wrote a haiku on corporate governance during a panel discussion

“You know if there is a company failure,  you know there re corporate governance failures,” said Christina Urias, a seasoned regulator  on the state and international arena and  now an insurance consultant for the IMF.

Whatever happens on the world stage with respect to international standards and reviews, Gov. Malloy stressed that the states will not be “dictated to.”

“We may get a set of regulations that we significantly embrace,” Malloy said, noting there was a lot of room for modernization but that the supervisory apparatus should go slower.

Author: Liz Festa

I

HSFC targets ‘secretive’ financial authority process in designations of nonbank SIFIs, G-SIIs

The leadership  of the House Committee on Financial Services (HFSC) is seeking answers on the national and international apparatus that is creating systemically risky designations for nonbank financial institutions, trying to pry the lid off what it sees as a “black box.”

 Led by Chairman Jeb Hensarling, R-Texas, key FSC majority members late last week decried  what they is a lack of transparency on the process of the Financial Stability Oversight Council (FSOC)  and the G-20’s Financial Stability Board (FSB), and pressed the FSOC members who also serve on the FSB for an explanation on how companies can take steps to remove these designations.

The critique alleging “sweeping powers” by “an unincorporated Swiss ‘association,'” in the FSB, and a lack of clarity by the FSOC designation process was delivered in a May 9 letter to U.S.Treasury Secretary Jacob Lew, Federal Reserve Chairwoman Janet Yellen and Securities and Exchange Chairwoman Mary Jo White.

The HFSC wants FSOC to halt any further designations of insurers until this regulatory gap is resolved and “it is clear that insurers will not be subject to bank capital standards.”

The letter went so far as to suggest that the FSB, which is directing the International Association of Insurance Supervisors (IAIS) to come up with adequate capital standards for the systemically risky insurers as well as globally active insurers, an international “old boy’s club”  that “deliberates” in secret.

Both FSOC and FSB appear to take a “we-know-it-when-we-see-it” approach to identifying firms that pose a risk to financial stability. In particular, there do not appear to be clear rules or criteria to determine when a nonbank financial institution qualifies as a “systemic risk” to the U.S. or global financial system, the letter charged.

Moreover, “..there still is no universally–accepted definition of the term “systemic risk.” Nor have the FSOC or the FSB ever adequately explained the degree of systemic risk needed to merit designation as a SIFI [systemically important financial institution],” the letter stated.

In the U.S., three nonbank companies, AIG, Prudential and then GE, have already been designated as SIFIs. AIG has been a SIFI now for almost a year. The FSOC is now reviewing major asset managers as possible non-bank SIFIs.  Last July, the IAIS designated major international insurers as global systemically important insurers. These global G-SIIs included AIG, Prudential and MetLife. MetLife is currently under FSOC review as a possible SIFI and has been for almost a year.  It has made no secret of the fact it is not happy with the potential outcome. Reinsurers worldwide, such as Berkshire Hathaway, are to be considered by the IAIS this year for a possible global designation.

The HFSC letter made a number of demands for clarification, participation and transparency from both the FSOC and the FSB, calling for an end to secrecy in the SIFI designation process domestically and globally.

The Committee asked Lew, Yellen and White to  provide by May 16  “all memoranda or communiques (including drafts)  between the Basel Committee, the International Organization ofSecurities Commissions (IOSCO), and the IAIS  concerning the designation or methodologies used to designate G-SIIs and determine additional capital or other prudential regulatory measures.

Also of note, the letter made note of what is becoming an oft-cited dissent in the young FSOC annals, the argument against the Prudential SIFI designation early last fall by Roy Woodall  the independent member of FSOC with insurance expertise. Woodall, the letter noted, expressed concern that the international and domestic designation processes are not entirely separate and distinct. The Woodall dissent made a point of noting that  an unnamed U.S. “national authority” apparently agreed to the international designation of Prudential before the company‘s evidentiary hearing and final determination by the FSOC.

This apparently rankled Hensarling, who was joined by HFSC members Rep. Randy Neugebauer, chair of the Subcommittee on Housing and Insurance,Scott Garrett, chair of the Subcommittee on Capital Markets,  Shelley Moore Capito, chair of the Subcommittee on Financial Institutions and Consumer Credit, Patrick McHenry, chair of the Subcommittee on Oversight and Investigations and  John Campbell, chair of the Subcommittee on Monetary Policy and Trade.

“It is contrary to basic standards of administrative procedure for policymakers to draw conclusions prior to the consideration of relevant facts and public input,” the HFSC  leadership team wrote in their letter.

Treasury and the Fed have previously  repeatedly cleaved to the Dodd Frank Act  language giving them certain process and oversight powers written into Dodd Frank that make the burden to undo or change the process in place very high.

It is unclear why the letter has been sent now, months after much of the designation process work has been underway in the U.S. and abroad. It has been suggested MetLife and the asset managers are bracing for designations they do not want, coupled with some mounting state regulatory concern in the U.S.

Author: Liz Festa