WASHINGTON–Treasury Secretary Timothy Geithner today pledged to “preserve the right balance” between the work of the new Financial Stability Oversight Council and existing regulatory agencies.
Geithner made the pledge at the first meeting of the Financial Stability Oversight Council (FSOC), which was created by the Dodd-Frank law. Among members of the panel are John Huff, Missouri insurance commissioner. Huff, a non-voting member of the council, said creation of the FSOC indicates a “clear mandate” for state and federal regulators to work cooperatively in limiting systemic risk.
“As the sole insurance representative on this Council, I look forward to working with the other members” in helping this group do its job, he said.
Traditional insurance products do not normally constitute a systemic risk, but interconnections with other institutions and other products could potentially create problems, Huff said.
He said that insurers are subject to strong solvency and other rules that “have proven resilient in this crisis,” but called it “imperative” that insurance representatives offer their expertise to help the new group quickly identify new markets and new products that could produce or expand financial crises.
Echoing Geithner’s comments in opening the meeting, Francine L. Semaya, a New York insurance regulatory attorney, said the role of the new panel will be to monitor and provide early recognition of continuing and new systemic risks that could harm U.S. and world economic stability.