This is the Cato Daily Podcast for Monday, April 11th, 2016.

I'm Caleb Brown.

When the feds designate a company systemically important, that comes with additional regulation and oversight,

in the case of insurer MetLife, comes with additional regulation and oversight.

In the case of insurer, Met Life, that designation didn't stick.

The judge in the case says the government used a flawed process

in claiming Met Life's failure could destabilize the U.S. economy.

They have Brooke Knight, Associate Director of Financial Regulation Studies at the Cato Institute,

offers her thoughts.

What does it mean when the federal government designates a company systemically important?

Well, the first thing that it means is that there's a signal to the market that the government

is behind this company. Now, they will argue that's not the case

that the entire idea behind this, what's called SIFI,

designation systemically important financial institution,

is that we're ending too big to fail by monitoring these companies.

But it's very hard for the government to designate a company as systemically important,

meaning that it could have wide-ranging effects on the American economy

to the point of destabilizing it and then not step in to backstop that company if there's

a problem down the road. So that to my mind is one of the important

parts of the designation. Now in practical terms it means that the Financial Stability

Oversight Council, which people call

Eppsock, has the authority to monitor the company to oversee it.

...