WASHINGTON, April 24 (Reuters) - MetLife Inc is asking a U.S. court to put on pause a case over how the government deems certain companies "too big to fail," one of the most significant reforms to come out of the financial crisis, while President Donald Trump's administration finishes reviewing the current regulatory approach.
In March 2016 U.S. District Judge Rosemary Collyer struck down the government's designation of MetLife as "systemically important," saying it was "arbitrary and capricious" in assessing the risks to the financial system of a possible failure by the largest U.S. life insurer.
The government, under former President Barack Obama, a Democrat, immediately appealed and the two sides squared off in court last October, with a decision expected next month.
Some companies are wary of the "too big to fail" designation because it forces them to hold on to capital and creates extra oversight they say is burdensome.
Last week, Trump ordered a review of the Financial Stability Oversight Council made up of the country's top financial regulators and how it makes the designations.
MetLife said in its filing the review could prompt the Trump administration to reconsider the case and whether "it is appropriate for the government to continue pressing this appeal."
"At a minimum, the findings of the forthcoming report may substantially illuminate this court’s consideration of the issues on appeal," the company wrote.
Two of the three judges on the panel considering the case were appointed by Obama, who signed the 2010 Dodd-Frank Wall Street reform law that created designations with the intent of preventing a repeat of the 2007-2009 financial crisis, when the government injected billions of dollars into failing banks and other companies in order to keep the financial system afloat.
The court appeared more sympathetic to FSOC's arguments than Collyer, who said it should have analyzed costs and benefits to MetLife, the likelihood MetLife would fail and possible counterparty losses.
Whoever loses the appeal had been expected to take the case to the Supreme Court. However, Trump's review and MetLife's Monday motion now cast doubt on that possibility.
The U.S. Treasury did not respond to a request for comment. Its secretary, Steve Mnuchin, is overseeing the review as chair of the FSOC.
The only nonbanks carrying the "too big to fail" label are American International Group, which received a $182 billion bailout during the crisis, and Prudential Insurance . MetLife is not considered designated during the appeal.
Editing by Matthew Lewis