NU Online News Service

The Senate will take a fresh look at federal regulation of insurance in the wake of the effective nationalization of American International Group Inc., Sen. Richard Shelby, R-Ala., said today.

“I want to pick up on regulatory reform,” Shelby said today at a confirmation hearing for Mary Schapiro, who has been nominated by President-elect Barack Obama to be chairman of the U.S. Securities and Exchange Commission.

“You and I know we have to face reality,” Shelby said. “I never thought I would say this, but I think we have to visit insurance–look at AIG. Who regulated AIG? Primarily the New York insurance commissioner. My gosh. Does anybody in this room believe the New York insurance commissioner knew anything of the risk they were taking, [that] they have on their books? The answer is obviously, ‘no.’”

Shelby is the highest ranking Republican member of the Senate Banking Committee.

Under President Bush, Shelby has had a powerful role in shaping legislation affecting insurance into the version ultimately signed into law.

The American Council of Life Insurers, Washington, supports the concept of giving life insurers the option of choosing between state and federal regulation.

“Sen. Shelby’s comments were certainly interesting, and we look forward to working with him as we promote optional federal insurance charter legislation this year, ACLI spokesman Jack Dolan says.