Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The MetLife building in New York on Jan. 31, 2005.

Chip East

Shaking a financial watchdog is no easy feat.

MetLife has been trying to do so for nine months, yet still has the Federal Reserve's teeth sunk into it. It's now taking a different breed of regulator for a walk in a case that epitomizes the folly of U.S. bank regulation.

Back in December, the U.S. insurer with $825-billion (U.S.) of assets struck a deal to sell a business to General Electric.

Story continues below advertisement

The relatively small size belied its bigger implications.

Unloading $7-billion of deposits would free MetLife from Fed oversight.

The urgency became evident in March when the company failed the agency's stress test, which prevents the return of cash to shareholders.

As originally structured, the sale to GE Capital's commercial banking division required a nod from the Federal Deposit Insurance Corp.

Yet, the regulator, which is still operating with an acting chairman, failed to take any action after eight months.

Last week, the two companies revamped the deal in a way that could speed things along.

GE Capital's retail bank will now be the buyer. The switcheroo means the FDIC is out and the Office of the Comptroller of the Currency steps in as the one to give approval.

Story continues below advertisement

It's not obvious why the FDIC hadn't signed off.

It could be a simple case of bureaucratic red tape rather than anything worrisome about insuring deposits sitting with GE.

Even if it's a benign case of regulatory arbitrage, however, it's a stark reminder that large financial institutions still have room to shop around for more favourable treatment among a multitude of overlapping overseers.

It's hardly reassuring in the post-Office of Thrift Supervision age. The agency was the only one eliminated after its pre-crisis failings supervising the likes of American International Group and Washington Mutual. The irony for MetLife is that even if the sale to GE goes through, the insurer would still potentially be big enough to be classified a systemically important institution. That would mean it would remain under the Fed's paw.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies