Fed Rejects MetLife Plan, Likely Speeding Mortgage Exit

In a setback for ""MetLife"":http://www.metlife.com/, the ""Federal Reserve"":http://www.federalreserve.gov/ rejected a plan by the nation's biggest life insurer to move forward with stock repurchases and capital redistribution plans, likely accelerating the company's departure from the mortgage markets.

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The news arrives on the heels of an announcement by the company to sell off MetLife Home Loans, the division responsible for originating residential and reverse mortgages.

In a ""statement"":http://www.metlife.com/about/press-room/index.html?compID=61948, MetLife said that it had recently sent a capital redistribution proposal to the Fed in order to shore up annual dividends.

After sizing up the plan as one that needs testing under a ""revised adverse macroeconomic scenario,"" the statement said, ""the Federal Reserve did not approve the company's planned dividend increase and other proposed capital actions at this time.""

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MetLife ""President and CEO Steven Kandarian"":http://www.metlife.com/about/corporate-profile/corporate-governance/executive-officers/steven-a-kandarian.html described his disappointment in the statement, calling the company ""well capitalized and├â┬ó├óÔÇÜ┬¼├é┬ª firmly committed to creating shareholder value and returning capital to its shareholders.

""We are disappointed that we cannot commence increased capital actions now, as our analysis shows that the company's current capital level and financial strength support capital action increases,"" he added. ""We look forward to seeking and gaining approval of our capital plan from the Federal Reserve early next year.""

Kandarian referenced the mortgage unit selloff toward the end of the statement, saying that MetLife plans to ""move forward on... plans to explore the sale of the depository business and the mortgage origination activity... and take the necessary steps to no longer be a bank holding company.

He characterized the move as one that ""will ensure that MetLife is able to operate on a level regulatory playing field with other insurance companies.""

""My sense is Met is going to accelerate its plans,"" ""_Bloomberg News_"":http://news.businessweek.com/article.asp?documentKey=1376-LTNA821A1I4H01-46GEDFV7H2M8RSTARM202D33KG quotes Dan Theriault, an analyst with ""Portales Partners LLC"":http://portalespartners.com/, as saying, chalking up the rejection to ""an embarrassment for the company.""

The news service also quoted ""FBR Capital Markets"":http://www.fbr.com/ analyst Randy Binner as describing MetLife's setback as ""a delay, not a denial, longer-term, adding that ""we have little doubt that Met will aggressively pursue the sale"" in lieu of the rejection.