On May 2, 2015, Warren Buffett (Trades, Portfolio), founder of the conglomerate Berkshire Hathaway Inc. (BRK.A) (BRK.B), denied its status as a possible too-big-to-fail risk to the U.S. economy joining GE Capital (GE) and MetLife (MET) in their dissidence against the SIFI label. On April 10, 2015, General Electric Co., one of the best known and highly respected American companies, announced the sale of the majority of its $500 billion banking assets in GE Capital, in a deliberate effort to unshackle from restrictive regulations, streamline the conglomerate and refocus on the best-performing segments in industrial operations.
Analysts predict that GE‘s poignant withdrawal from the banking business and subsequent consolidation may pose as a prelude for MetLife Inc., the largest life insurance company by assets in the U.S., to take similar action. Post recovery from the financial crisis of 2008-09, large non-banks like GE Capital and MetLife were branded SIFI – i.e. Systemically Important Financial Institutions – by U.S. regulators with supervised restrictions to ensure they do not fail. Like GE, MetLife has also expressed angst over these potentially burdensome regulations. Continue Reading »