A Boston fraud investigator who raised questions about Bernard Madoff’s investment management operations early on says insurance should be federally regulated.
Harry Markopolos made his case earlier this week at a House Financial Services Committee Capital Markets Subcommittee hearing on the Madoff scandal,
Congress should create a “super financial organization with the departments underneath,” with the departments being agencies such as the U.S. Securities and Exchange Commission, “some bank regulator,” and “a national insurance regulator,” Markopolos said.
The departments should “have one super regulator above them, so that there’s no drop in coordination,” Markopolos said.
To maximize coordination, minimizing the number of subregulators under the super regulator is also important, Markopolos said.
“I want one centralized database of all enforcement actions, so that the banking regulators know what the capital markets regulators are doing, and also know what the insurance regulators are doing, because right now, you have these conglomerate firms that deal with all aspects of finance,” Markopolos said.
The conglomerates “have insurance,” Markopolos said. “They do banking. They do securities. And you need to combine the regulations database, so that people are aware of all the infractions…. You can’t afford to be split into an army of ants. You need to be as giant as the conglomerates that you are regulating.”