(Adds background on MetLife's case.)
WASHINGTON, March 2 (Reuters) - The Financial Stability Oversight Council, made up of all major U.S. financial regulators, met late on Thursday afternoon and reviewed its designation of a nonbank firm as "too big to fail," according to a statement from the Treasury Department.
While the statement did not name the firm, only three nonbank companies have been labeled "systemically important financial institutions," (SIFIs) a designation that triggers tougher oversight and requires firms to hold more capital.
According to a source familiar with the meeting, the council discussed rescinding the firm's designation, but no decision has been made.
The council analyzes its designations each year to see if they are still relevant, but the Thursday discussion stood out because it was the first meeting chaired by newly confirmed Treasury Secretary Steven Mnuchin.
During his confirmation hearing, Mnuchin said he would like to review the council's work. President Donald Trump has said he wants to cut a lot out of the 2010 Dodd-Frank Wall Street reform law that created the council and the designations.
"The council discussed the ongoing annual reevaluation of its designation of a nonbank financial company, including the review of materials submitted by the company and engagement with the company," according to the statement.
One of the three, insurer American International Group, received a $182 billion government bailout during the 2007-09 financial crisis, which led lawmakers to include the "too big to fail" label for nonbanks in Dodd-Frank.
The others are Prudential Financial and MetLife Inc. A judge last year struck down the designation of MetLife, and the government is appealing the ruling. Until the appeal is decided MetLife is not considered systemically important.
Of late, AIG has been selling assets and reducing its size, raising the possibility it will follow in the footsteps of General Electric Co, which last year persuaded the council to remove its systemically important label by shedding its capital unit and many of its ties to the financial system.
Billionaire activist investor Carl Icahn, currently advising Trump on federal regulation, had pressed AIG to become a leaner company in order to lose the SIFI designation. After Trump's surprise election win in November, Icahn said AIG was still undervalued, but doing better after the asset sales. He also said some Dodd-Frank measures went too far.
AIG last week said in an annual filing that the label creates "considerable uncertainty" for insurers. (Reporting by Lisa Lambert; Additional reporting by Suzanne Barlyn in New York; Editing by Jonathan Oatis and Sandra Maler)
