Momentum for an optional federal charter for insurers is building on Capital Hill and in the White House, according to one of the bill’s House sponsors.
Rep. Ed Royce, R-Calif., said the OFC concept is “gaining a lot of momentum.”
Speaking at the Networks Financial Institute Reform Summit here Wednesday, Royce said Treasury Secretary Henry Paulson has expressed “very positive sentiments” on a potential OFC in comments to the Senate Banking committee.
Royce also expects the OFC to be included in the report the Treasury is expected to make on its recommendations for reforming the financial regulatory systems. “From what I’ve heard, this is going to be a part of that report,” he said.
Royce noted that insurance is alone among financial markets in that many of its primary regulators earned their position through the ballot rather than through expertise and experience.
“I don’t think there’s anyone who thinks it’s a good idea” if the same concept were applied to other regulatory agencies such as the Securities and Exchange Commission or the Federal Reserve, he said.
In addition, he contrasted the positions of the SEC and the Federal Reserve with that of the insurance industry in international policy. When the U.S. is involved in trade discussions, representatives for the Fed, the SEC and the Office of the Comptroller of the Currency all play a role, while the National Association of Insurance Commissioners does not.
“They are not a part of that process, and it’s a problem,” he said.
Also speaking at the event was Illinois Insurance Director Michael McRaith.
He acknowledged that work remains to be done by the states but disputed the notion that consumers would be better served under a federal regulatory scheme.
“We need to look at the consequences” of federal regulation, he said. “And I don’t think you need to look very far.”