A draft of Obama administration financial services regulatory reform principles suggests that some large insurers may come under the jurisdiction of a general federal insurance regulator.
The federal insurance regulation system would be part of federal systemic risk regulation, and it might not be voluntary, according to a draft obtained by National Underwriter.
The draft has been circulating on Capitol Hill today, according to several sources, but a Treasury Department official who was told about the draft said he was “very skeptical” about whether the draft is accurate.
The draft that National Underwriter reviewed:
- Suggests that the federal system might preempt some state insurance laws and regulations, but that the federal preemption would not “deregulate” the large insurers.
- Says national insurers would likely be subject to new financial product safety commission regulations.
- Proposes making the Federal Reserve Board the systemic risk regulator and giving the board the authority to set capital, liquidity and other safety and soundness requirements. But the draft says the Obama administration “would be open to a strong council as long as the chair would have sufficient authority to be effective.