She also asked the government’s lawyer why FSOC assumed that MetLife would be at the brink of collapse. in the event of a fiscal crisis.

“That’s not risk analysis,” she said. “That’s assuming the worst of the worst of the worst.”

Beckenhauer said it’s the nature of such crises to be unanticipated. MetLife is asking her to override the “considered judgment” of the heads of nine major financial regulators, he said.

The government lawyer also said the council was acting upon its congressionally granted authority to assess which nonbank financial companies pose a possible risk to the broader economy. He focused on MetLife’s ties to other firms around the world -- its interconnectedness -- a factor that was crucial in the 2008 financial crisis.

MetLife’s lawyer, Eugene Scalia, son of the late Supreme Court Justice Antonin Scalia, said his client isn’t a financial institution that should be subject to such oversight. He also said the methods used by the council to arrive at its conclusions violated federal administrative procedure law and the company’s right to due process.

“Clouded in Mystery”

The designation process, he said, was “clouded in mystery.” Collyer expressed sympathy for his assertion that the FSOC had said it would conduct a study on MetLife’s risks, or vulnerabilities, but failed to do.

Scalia, a partner at Gibson Dunn & Crutcher LLP who has filed several cases seeking to overturn Dodd-Frank regulations, said companies hit with the FSOC designation were trying to restructure themselves to avoid the extra oversight and associated costs.MetLife has said the FSOC relied on “unsubstantiated speculation” and that it poses no risk to the financial system.

In January, Kandarian announced MetLife plans to pursue a spinoff, sale or public offering of much of its U.S. retail business, which sells variable annuities and life insurance policies and could be subjected to higher capital rules although they’ve not yet been finalized.

While the insurer hasn’t outlined a precise plan, it struck a deal in February to sell a distribution network with 4,000 financial advisers to Massachusetts Mutual Life Insurance Co.