The current turmoil in the bond insurance industry shows that insurers may need the option of choosing to be regulated by a federal agency, a key lawmaker said Monday.
Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House Financial Services Committee, made his comments in a signed article in Roll Call, a Capitol Hill newspaper. He aired his views in advance of a Thursday hearing dealing with state oversight of bond insurers.
The subcommittee plans to look at bond insurers’ decision to expand their business to include selling guarantees on structured credit insurance products.
The subcommittee has primary oversight over financial services regulation in the House and would be a potential starting point for congressional efforts to create an optional federal charter program.
Kanjorski writes in the Roll Call article that the “widespread effects of the bond insurers’ ratings downgrades … provide the strongest argument yet for why a federal insurance regulator may be needed.”