I can’t remember for a fact, but it seems to me that I’ve already used the mythic image of Sisyphus to describe the life insurance industry’s seemingly doomed challenge of getting Congress to approve an optional federal charter. Just when the king of Corinth gets the stone almost to the top of the hill, down it goes.
So, not to repeat ourselves, let’s turn to another myth to describe where the industry is now in what has come to be a decade-long quest. My Webster’s gives this description of Tantalus: “a son of Zeus, doomed in the lower world to stand in water that always recedes when he tries to drink it and under branches of fruit that always remain just out of reach.”
Needless to say this is where the word tantalizing comes from. And tantalizing is a good word for how the life business (or at least many of its companies) sees the prospect of an optional federal charter. We’re not really sure how it’s going to work, but we know we’re going to like it.
Actually, not knowing how it’s going to work may be part of the attraction for these companies, since they feel they are quite familiar with what they perceive as the clunkiness and annoyance of state insurance regulation.
There’s another factor going on here. In two words: Regulatory envy.
Life insurers are such a well-behaved bunch, but among those businesses that are financial colossi (banks, mutual funds, life insurers), they get the least respect. This, of course, brings to mind another mythic figure: Rodney Dangerfield.
Life insurers look at banks, for instance, and are just green over the fact that banks can pick their charter and thus choose to be either federally or state regulated. And if they choose to be federally regulated, boy oh boy, what a bag of goodies that brings with it. Banks don’t have to be well-behaved, always minding their P’s & Q’s. Banks can do all sorts of things that life insurers in their wildest dreams wouldn’t think of doing and their regulators will usually cheer them on or, at the very least, bite their tongues.
Life just isn’t fair when you don’t have a federal regulator in your court.
So, what happens when–once again–the water seems to be within the reach of Tantalus? What else? The New York Times writes an editorial saying in effect that drinking the water is the worst thing that could happen anyway for poor old Tant and everybody else.
And so on May 21 the Times blasted the OFC bill introduced by Rep. Melissa Bean, D-Ill., and Rep. Ed Royce, R-Cal., saying, “If the bill were enacted, the race to the regulatory depths would continue, and the nation would be headed in exactly the wrong regulatory direction.”
Needless to say, those officials who have been doing the heavy lifting on this issue for years reacted with fury. The Times “has it wrong,” said the American Council of Life Insurers. The “editorial is misleading at best,” said a spokesman for the Financial Services Roundtable.
Pretty strong words for organizations that usually step more gingerly when criticizing the newspaper of record.
Then, providentially it would seem, the very next day Rep. Paul Kanjorski, D-Pa., introduced his own bill that creates an Office of Insurance Information in the Treasury Department. The OII is often seen as a precursor to an OFC, a foot in the door of federal regulation, so to speak. Life insurance officials applauded.
This bad news-good news rhythm should now be second nature to the life industry in regard to an OFC. And as every setback makes the prospect of success so much more tantalizing, the water seems more and more like nectar and the fruit positively ambrosial.