WASHINGTON BUREAU — The Financial Stability Oversight Council has forbidden John Huff, the insurance regulator who represents the National Association of Insurance Commissioners on the FSOC, from briefing insurance regulators on FSOC activities, NAIC officials say.
Susan Voss, president of the NAIC, Kansas City, Mo., also complained Monday about the treatment the NAIC is getting from other FSOC members and from the staff of the FSOC.
While speaking at an insurance regulation conference in New York organized by the American Conference Institute, New York, Voss reportedly quipped that the FSOC has been putting the NAIC “at the children’s table.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act created the FSOC to help the federal government keep tabs on events and trends that could hurt the U.S. financial system.
Section 113 of the Dodd-Frank Act gives the FSOC the authority to call for extra federal oversight to be imposed on nonbank financial companies that appear to pose a threat to U.S. financial stability.
By law, the chairman of the FSOC is the Treasury secretary.
Most of the other voting members are heads of federal financial services regulatory agencies, such as the Federal Reserve Board and the Federal Deposit Insurance Corp.
The council also is supposed to include a voting insurance member to be nominated by the president and confirmed by the Senate.
The head of the new Federal Insurance Office (FIO), another Treasury Department agency created by the Dodd-Frank Act, is supposed to be a non-voting FSOC member.
The FSOC is still missing the voting insurance member and the FIO director.
The NAIC can appoint a non-voting representative to the council.
Huff, the Missouri insurance director, has been filling that slot since September 2010.
NO REGULATOR IS AN INSURANCE EXPERTISE ISLAND
Voss and other NAIC officers sent a letter about their concerns to
Treasury Secretary Timothy Geithner Feb. 9
The officials noted in the letter that the FSOC is still missing the independent member with insurance expertise and the FIO director.
The officials focused mainly on the restrictions the FSOC has placed on Huff’s ability to communicate with other state insurance regulators.
The FSOC staff apparently is barring Huff from discussing FSOC business with either the NAIC or with individual state insurance commissioners, and the same restrictions apply to the three NAIC staffers who are helping Huff with FSOC work, officials say in the letter.
“State regulation of insurance is a complex system that relies on the collaboration, information sharing, and expertise of regulators from around the country, and is built on a platform of robust financial reporting and analysis supported by the NAIC,” the NAIC officials say in the letter to Geithner. “While the NAIC staff members assigned to support Director Huff have valuable expertise, no three individuals can have the depth of knowledge with all insurance regulatory topics necessary for full, active, and effective participation in the activities of FSOC.”
The same confidentiality restrictions apply to a state securities regulator and a state banking regulator who are non-voting FSOC members, but the problems they face are not as serious, because they can get advice from federal securities and banking regulators, Voss reportedly said at the New York conference.