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October 21, 2008 at 11:54 AM
Financial services industry representatives today called for Congress to expand the federal government’s role in insurance regulation.
The House Financial Services Committee held a hearing on how financial regulation should be restructured to reflect the lessons learned from the current meltdown.
The witness list included Edward Yingling, president of the American Bankers Association, Washington; Timothy Ryan, president of the Securities Industry and Financial Markets Association, New York, and a former director of the Office of Thrift Supervision; and Steve Bartlett, president of the Financial Services Roundtable, Washington.
“Given the current problems in the financial markets, it would be a remarkable oversight for Congress not to develop a federal approach to insurance regulation,” Yingling said.
The “difficulty of entering the U.S. markets under the current state regulatory system dissuades foreign capital from investing in the U.S., thereby restricting overall insurance capacity and reducing the number of insurance products available to U.S. consumers,” Yingling said. “Relatively few foreign companies are willing to expend the time and resources necessary to navigate all of the harbors in our state-based regulatory system.”
Ryan suggested that, at the very least, Congress should consider creating a financial markets stability regulator.
This regulator should at least have power “over systemically important financial institutions,” Ryan said.
The office should have the authority, alone or in coordination with a large insurer’s functional or prudential regulator, to set consolidated capital requirements at the parent company level and to recommend capital requirements at any subsidiary level, Ryan said.
The office also should have the authority to examine the parent company and any of its subsidiaries, and to bring enforcement actions, Ryan testified.
