An optional federal charter for life insurers appears to be “inevitable” in the next Congress, according to officials of life insurance trade groups, but they caution the industry must remain vigilant to ensure Congress doesn’t overdo federal regulation.
“We think an OFC has moved from a possibility, maybe even an probability, to an inevitability [in the next Congress],” said Mike Hunter, chief operating officer of the American Council of Life Insurers during a post-election webcast sponsored by the Association for Advanced Life Underwriting.
“Clearly, there is going to be far-reaching financial regulatory reform that is going to occur in Congress over the next year or two,” he added
But, cautioned Ken Kies, AALU senior counsel and a former chief of staff of the Congressional Joint Committee on Taxation, the industry “must be on our toes to make sure Congress doesn’t overdo it.
“Congress has a habit when a problem comes up of sometimes going a little too far, and we have a huge problem here, so we don’t want to end up with something like a Sarbanes-Oxley Act on steroids,” Kies said.
There “is a real risk that could happen,” he added. “We must be very involved in helping to shape a bill so we don’t end up with a regulatory environment so burdensome that it stifles normal business activity.”
During times like these, he said, “there is an eagerness to do dramatic things.”
That could spill over into a number of areas, he added, noting that “executive compensation is getting a lot of attention.”
He also cited demands for stronger information reporting. “We must ensure that the final [regulatory reform legislation] product doesn’t impede the ability of the industry to do normal business,” he said.
Despite the fact that the industry has been dealing predominately with Republicans over the last 8 years, another advisor, Steve Richetti, who worked in the Clinton White House, said the industry “will have friendly ears” in the incoming Obama administration.
Richetti, an adviser to the Obama campaign, said the Obama staffers coming in are “seasoned, ready and experienced, particularly in the economic space.”
In other comments during the webcast, AALU officials and outside advisors said Congress will move during the next two years to deal with “durable” estate tax reform, and might decide to delay final action on comprehensive tax legislation until 2010.