WASHINGTON BUREAU – S. 3217, the financial services bill now on the floor of the Senate, does too little to increase federal oversight over large insurance companies, Senate Republicans contend.

Senate Republicans make the argument in an analysis of S. 3217, the Restoring Financial Stability Act of 2010.

The lack of a provision increasing federal oversight over large insurers is a “glaring omission” in S. 3217, Senate Republicans write in the analysis.

The need to provide funds to American International Group Inc., New York (NYSE:AIG), to keep it from becoming insolvent revealed the need for regulators to study the “adequacy of state guaranty funds to handle the failure of large, interconnected, and international insurance companies,” the Senate Republicans write.

Other prominent insurers also received help, but S. 3217 lacks a requirement that the Treasury Department study the adequacy of state guaranty funds to handle the failure of these large insurance companies, Senate Republicans write.

Senate Republicans also criticize a bill provision that would create a new federal insurance information office.

The office would come up with recommendations for updating the current, predominately state-based insurance regulatory system. The office should have more authority to look into the ability of guaranty funds to handle failures of large insurers, Senate Republicans write.

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Please see S. 3217: Dodd Wins Over Collins and S. 3217: The Ice Broke.