[JURIST] U.S. District Court Judge Rosemary Collyer [official profile] on Thursday unsealed an opinion [text] from late March ruling that the government did not have grounds to designate the major insurance company, Metlife [official website], as “too big to fail.” The Financial Stability Oversight Council (FSOC) [official website] determined [WP report] in 2014 that financial distress at Metlife could significantly affect the national economy and therefore the company deserves increased federal scrutiny. Collyer held, however, that such a designation was unsupported by substantial evidence and disregards the costs that Metlife will inevitably suffer. While opponents of financial reform have praised the ruling, Treasury Secretary Jacob J. Lew [official profile] stated [official statement] that the ruling may hinder the FSOC’s ability to prevent another national financial crisis. The Justice Department [official website] is expected to appeal the ruling if it is not overturned.

Currently only four firms- AIG, Prudential, General Electric, and MetLife- have been labeled “too big to fail” by the FSOC. The FSOC was established under the Dodd-Frank Act [text] , which was signed into law [JURIST report] by President Barack Obama in July 2010 in response to the 2008 financial collapse and created new regulations designed to strengthen oversight of the financial industry and protect consumers. The Act also established the Commodities Futures Trading Commission (CFTC) [official website] to regulate the derivatives market. Additionally the Act gives the Federal Reserve new oversight over the largest financial institutions. JURIST guest columnist Louise Bennetts [official profile] of the Cato Institute argues [JURIST op-ed] that Dodd-Frank is a poorly drafted statute with unclear principles that gives regulators too much discretion to promulgate rules.