WASHINGTON—A House subcommittee will hold a hearing Wednesday and the main subject will be three pieces of legislation seeking to severely roll back federal authority to oversee insurance companies gained in the 2010 Dodd-Frank financial services reform law.
The House Financial Services Committee (FSC) is not expected to announce until Monday at the earliest that its Housing and Community Opportunity Subcommittee Hearing will hold a hearing on the insurance oversight-related proposals.
Committee officials were not available to comment because the office was closed for Veteran’s Day.
The hearing will deal with three draft bills crafted by officials of the Property Casualty Insurers Association of America and officials with the National Association if Insurance Commissioners (NAIC).
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One would revoke the authority of the Federal Insurance Office (FIO) and the Office of Financial Research (OFR) within the Treasury to subpoena information from insurance companies.
The second would “explicitly and entirely” exclude insurance companies, including mutual insurance holding companies, from the Federal Deposit Insurance Corporation’s (FDIC) “orderly liquidation authority” for troubled large non-banks.
Moreover, the provision would limit the ability of federal regulators to ask large insurers to pay for the failure of a “too-big-to-fail” institution that is being liquidated.
It would do so by prohibiting the FDIC from counting insurance assets, liabilities, or revenues in its assessments on financial firms to pay for shortfalls when the assets of a failed firm are insufficient to pay for the failed firm’s resolution under the FDIC’s “orderly liquidation authority.”
Proposed legislation would also preclude the Federal Reserve from establishing higher prudential financial standards to troubled insurance companies it would oversee as ordered by the Financial Stability Oversight Council (FSOC).
Specifically, capital requirements, risk-based capital requirements and accounting standards on insurers overseen by the Fed as systemically significant could not be required to have higher capital requirements than those imposed by state regulators.
Testifying at the hearing on behalf of the NAIC will be Joseph Torti, III, head of the Division of Insurance in Rhode Island; Michael Lanza, executive vice president of Selective Insurance Group on behalf of the PCI; and Daniel Schwarcz, associate professor of law at the University of Minnesota and an NAIC consumer representative.