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MetLife CEO Kandarian: Stricter oversight could hurt economic recovery

metlifeSteve Kandarian, the CEO of MetLife, the nation’s largest life insurance firm, said last week that subjecting America’s largest firms to federal supervision may disrupt the economic recovery.

Federal regulators announced last Monday that they plan to vote soon on a measure that would place several large companies, including American International Group, General Electric and Prudential, under Federal Reserve oversight and subject them to a number of strict regulations, Delaware Online reports.

“The council will vote on designations in the next few months,” Mary Miller, the Treasury undersecretary for domestic finance, said, according to Delaware Online. “This is not a power the council wields cavalierly. We have designed a rigorous designation process that is thorough and fair.”

While many company heads have remained largely quiet on the issue, Kandarian has spoken out, saying that requiring firms to hold additional capital could force some companies to cut back or eliminate product offerings.

“Consumers could find lack of supply, higher prices, fewer features on products across the industry,” Kandarian said, Delaware Online reports.

Kandarian said that while MetLife has not been named as “systemically important,” the company may be designated in the future. The company is bigger than Prudential Financial, which is also being considered for stricter oversight by regulators.  

Legislators have called for enhanced oversight standards for firms like AIG, the insurance giant that received $182 billion in a taxpayer-funded bailout in 2008, leading to the passage of the Dodd-Frank Act, which mandates that the Financial Stability Oversight Council identify firms whose failure could pose a threat to the financial system, according to Delaware Online.

Some analysts maintain that the business model used by insurance companies is much safer than that of other financial firms, but Marcus Stanley, the policy director at Americans for Financial Reform, said that insurance companies offer financial products that are in direct competition with those offered by investment banks, so tighter regulation is required.

“When you have people selling financial products that are directly linked to the larger financial sector and, therefore, pose systemic risk…they have to be regulated on an even playing field,” Stanley said, Delaware Online reports.

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