Drafters of the new systemic risk bill proposal have applied roughly the same to rules to insurers that they apply to other financial services companies.
Obama administration officials and members of Congress have been talking for months about creating a new body that would keep tabs at financial services giants and giving the Federal Deposit Insurance Corp. or another agency the authority to resolve problems at troubled financial services companies outside the banking sector.
Staffers in the U.S. Treasury Department and at the House Financial Services Committee now have come up with a proposal that mostly lumps insurers together with other types of financial institutions.
In a bill proposal, the staffers have proposed a definition of “primary financial regulatory agency” that includes “the state insurance authority of the state in which an insurance company as domiciled.”
The Financial Services Oversight Council created by the draft would include a state insurance commissioner chosen by state insurance commissioners.
The draft would recognize the “state insurance authority of the state in which an insurance company is domiciled” as the “appropriate financial regulator” for an insurance provider, and it would create a definition of the term “financial institution” that would include “an insurance company (as defined in section 2 of the Investment Company Act of 1940).”
When the Federal Deposit Insurance Corp. resolved problems at a financial services company, it would impose assessments on financial companies with more than $10 billion in assets to help cover the cost.
When imposing assessments on insurers, the FDIC would have to take into account any assessments imposed on an insurance company subsidiary that is responsible for helping to fund state efforts to resolve insurance company problems, according to the text of the bill draft.
The bill draft calls for folding the Office of Thrift Supervision into the Office of the Comptroller of the Currency, an arm of the Treasury Department. Many references to insurance in the draft involve FDIC deposit coverage or the employee benefits of the OTS employees who will be transferred to the OCC or to other federal agencies.
A copy of the draft is available here.