US Treasury Office of National Insurance to advise the Fed
The Obama administration will call for a new US Treasury Department office on insurance but won't propose federal regulation of the industry in the sweeping financial reform plan it will reveal today, Reuters reports.
The proposed Office of National Insurance would monitor all aspects of the industry and flag any risks that could contribute to a future financial crisis.
It could recommend to the Federal Reserve that large insurers be subjected to strict capital and risk rules that would apply to large financial holding companies.
It would coordinate industry policy, but stop short of being a direct regulator.
Federal charter backers have their say
Dow Jones reported that supporters of creating an optional federal charter for the insurance industry, which is currently regulated by individual states, put their case before a House panel.
"Absent a federal insurance regulator, there is a very real question regarding how national policy will be implemented vis-a-vis insurance," Aegon USA chief executive Patrick Baird argued on behalf of the American Council of Life Insurers.
Paul Kanjorski, D-Pa., the chairman of the House Financial Panel's Subcommittee on Capital Markets, said he hoped the administration would call for tougher oversight of the industry and certain insurance activities that may pose a systemic risk.
"We can no longer sweep insurance regulation under the rug and cross our fingers that nothing will go wrong," he argued in opening remarks at the hearing. "We tried it before and learned that such an action may hide the mess for the short term, but pose greater problems in the long term."
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