Senators Urge Selection of Insurance Reps to Federal Posts

For example, in testimony last week about implementation of Dodd-Frank before the Senate Banking Committee, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, Washington, said that the law gives regulators the authority to ask the Federal Reserve Board to conduct an examination of a company that is being considered for designation as systemically risky.

“By collecting more information in advance of designation, the FSOC can be much more judicious in determining which firms it designates as systemically important financial institutions, or SIFIs,” Ms. Bair said.

“This will minimize both the threat of an unexpected systemic failure and the number of firms that will be subject to additional regulatory requirements under Title I [of the law],” she testified.

The FIO was established to provide the federal government and Congress with a resource for information, statistical and otherwise, about the insurance industry.

Its director will have the job of keeping the Treasury secretary and the FSOC updated on insurance issues, but the FIO will have no insurance regulatory oversight power, according to Dodd-Frank.

In comments late last year, Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America, Des Plaines, Ill., explained that Washington representatives of the insurance industry are “focused” on regulatory implementation and rule-making, including deliberations over the creation of the FIO and the FSOC’s methodology for determining systemically important companies.

“We want to preserve the legislative intent of the Dodd-Frank Act, as it appropriately distinguishes insurance as very different from other financial sectors and recognizes the strong consumer protections provided by the state regulatory system,” McKay said.