When the insurer AIG failed, at a cost to taxpayers thus far of $150 billion, a few federal lawmakers felt they knew just whom to blame: ...
When the insurer AIG failed, at a cost to taxpayers thus far of $150 billion, a few federal lawmakers felt they knew just whom to blame: state regulators. "Clearly, some insurers have become too complex and too interconnected worldwide for the limited resources of state regulators to handle," four members of Congress wrote in the Wall Street Journal.
That assertion signals a reprise of one of the longest-running lobbying battles in Washington -- over whether to create a federal charter that would give insurance companies the choice between state or federal oversight. "We believe that this will be on the table again," concedes Roger Sevigny, New Hampshire's insurance commissioner, who is not glad to see it back.
Insurance regulation has long been the sole province of states. This fall, state regulators were quick to assure Congress -- correctly -- that their oversight of AIG's actual insurance business had been sound. AIG failed because of its misplaced bets as a quasi-investment bank in the great housing bubble sweepstakes. "AIG's problems came from its parent company and from its non-insurance operations, which are not regulated by New York or any other state," Eric Dinallo, New York's insurance superintendent, told a congressional committee.
But that argument may not carry much weight at a time when the idea of plugging just such regulatory holes has come into fashion. Congress is in the mood for tighter and more consolidated regulation of financial services, and insurance won't escape the debate. When it's over, there almost certainly will be a new role for the feds, either directly overseeing the broader financial machinations of insurance companies or providing firm guidance to state regulators when it comes to the insurance business proper.
The National Association of Insurance Commissioners -- made up of state officials who prefer the current system -- is getting ready. The organization is moving more of its operations to Washington -- not to lobby, it says, but to make industry data more easily accessible to Congress and the Treasury Department. One of the proposals that has been floating around Capitol Hill would create an Office of Insurance Information within Treasury -- a role NAIC feels it can essentially fill all by itself.
Providing more information to the feds will be a welcome gesture. But in the current climate, when Washington wants to bring its own financial regulatory bodies into greater harmony, it's unlikely that 50 versions of state insurance control will remain politically viable.
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
California City Appoints Undocumented Immigrants to Government Commissions1 hour ago
After a Few Years Afloat, Pension Plans Start Sinking Again33 minutes ago
Ex-Director Allegedly Used North Carolina Union's Money for His Vacations1 hour ago
Facing Near-Record Crime, Baltimore Enlists Feds' Help1 hour ago
Comedian Amy Schumer, With Cousin Chuck, Pushes Gun Control Measures4 hours ago
Scott Walker: The Only Governor to Expand Medicaid at State Taxpayers' Expense5 hours ago