Treasury Secretary Jacob Lew on April 7 said he disagrees witha court decision to rescindthe nonbank systemically important financial institution designation of
Lew in a statement claimed that the ruling left one of the mostinterconnected financial companies in the world subject to even less oversight thanit had prior to the financial crisis.
The aggregate effects of direct and indirect exposures to a highlyinterconnected financial institution can give rise to market disruptions, Lew said.Every relevant regulatory agency agreed with the Financial Stability Oversight Council'sdetermination that material financial distress at MetLife would be a threat to financialstability, he noted.
Lew argued that the court's decision contradicted key policylessons from the financial crisis, pointing out that it is the FSOC's duty to addressthe risks associated with very low probability events as the financial crisis demonstratedthat the strongest companies can collapse with little warning. Responding to risksafter they are likely to threaten financial stability only paves the way for thenext crisis, Lew added.
"We intend to continue defending vigorously the processand the integrity of FSOC's work, and I am confident that we will prevail,"he said.