Federal Reserve Board chairman Ben Bernanke told House members today that it would be a “useful idea” to create a federal charter option for insurance companies, “particularly for large, systemically critical insurance companies.”
Bernanke made his comments during his semi-annual monetary policy report to the House Financial Services Committee, in response to a question from Rep. Ed Royce, R-Calif.
Royce is a cosponsor of a bill that would give insurers the option of choosing between a state charter and state regulation, or a new federal charter and oversight by a new federal agency.
Bernanke told Royce that the OFC issue is a “complex one” and that there “are a lot of issues involved.”
But, Bernanke added, “I think that it would be a useful idea to create a federal option for insurance companies particularly for large systemically critical insurance companies. In general, I believe that holding company level supervision of large systemically critical institutions is very important. We did not have effective holding company supervision in some of the cases where we have had problems. So I do believe an optional federal charter would be a direction worth giving serious consideration.”
The American Council of Life Insurers, Washington, and the American Bankers Insurance Association, Washington, put out statements welcoming Bernanke’s OFC remarks.