Efforts by Congress and the Obama administration to provide federal aid to and greater oversight of life insurers are slowing down.

While the Treasury Department recently wrote a letter to the panel overseeing the Troubled Asset Relief Program that assumes some of the program’s funds will go to insurers, the government has shown no signs of providing actual aid to insurers.

In fact, some insurers recently said they are no longer candidates to receive funds under the TARP program, including MetLife and the Phoenix Companies.

But the Treasury Department did say it was “on track” to release on April 30 a report mandated by the Emergency Economic Stabilization Act of 2008. This report requires Treasury to tell Congress and the administration the effectiveness of the current regulatory system and its ability to oversee participants in the financial markets.

The report is also supposed to recommend improvements in financial regulation, including whether any participants outside the regulatory system, such as insurers, should be subject to it.

In other evidence of a slowing down, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, announced April 23 that he had decided to have his panel delay action on legislation that would allow the government to place large, non-bank financial services firms into receivership.

Earlier, he had told industry lobbyists he wanted his committee to act on such legislation before it left for the Memorial Day recess.

Just the day before, Treasury Secretary Timothy Geithner had told members of the TARP Congressional Oversight Panel that winning authority for the federal government to place such non-bank institutions as American International Group into receivership was a priority of the Obama administration.

He told the panel that even though the government now owns 80% of AIG, there is no “legal framework” for the U.S. government to place the troubled company into receivership.

Frank cited the complexity of the bill and the fact that the leadership of the Senate Banking Committee wanted to be more deliberative in their efforts to refashion financial services industry oversight as reasons leading him to delay action.

Instead, he said will attempt to deal with such authority as part of broader legislation that would create a systemic regulator over all financial services firms. Frank also said that legislation creating a system regulator to deal with large financial services firms like AIG would be more complex than he had envisioned. Specifically, he said that while the Federal Reserve Board would be “in the mix,” under pressure from the leadership of the Senate Banking Committee such authority would likely involve more than one current regulator.

At the same time, an amendment to a Senate mortgage bill added April 22 on the House floor calls for creating a Financial Markets Commission designed to study the relationship between insurance and other financial services firms.

The Senate bill, S. 386, the Fraud Enforcement and Recovery Act, is primarily a mortgage bill, but the amendment would create a commission to study the entire financial services industry. The bill was approved by the full Senate April 28 by a 92-4 vote.

The measure is aimed at stemming several types of fraud including stock market fraud and irregularities linked to institutions receiving public aid.

Topics covered would include credit ratings, the risk posed by financial institutions that are too big to fail, and “affiliations between insured depository institutions and securities, insurance and other types of nonbanking activities,” according to the amendment.

However, the commission would not have to report to Congress until December 2010, thereby delaying action on its findings until the next Congress.

Insurance industry trade groups had mixed reactions.

The American Council of Life Insurers, Washington, welcomed the amendment.

“The amendment reflects what we have been saying all along: That insurance is systemically important to the nation’s economy and interacts with other financial service providers–banks and investment firms–in increasingly complex and global transactions,” ACLI spokesman Steven Brostoff said in a statement.

“The federal government has to develop expertise in insurance regulation and the capacity to monitor the insurance marketplace and its relationship with banking and investments. Congress should move ahead expeditiously on insurance regulatory reform that includes establishment of a federal insurance regulatory option.”

A spokesman for the National Association of Insurance and Financial Advisors said the trade group has not taken a position on similar legislation pending in the House which calls for creating a 9-11 type commission to examine the elements that have led to the serious financial conditions the U.S. and world face today.

Lee Allen said NAIFA prefers to focus its attention on proposals that it hopes will lead to improving the overall regulatory environment for insurance consumers as well as the insurance industry that are currently being formulated in Congress and by the Obama administration.

“Should the findings of a commission be available in time to positively impact the development of regulatory restructuring legislation, no doubt such findings would be welcomed by Congress,” Allen said.