MassMutual is hoping to hear “any day now” from the Federal Reserve Board on its application to deregister its trust company, MassMutual Trust Co., and therefore escape oversight by the Federal Reserve Board, a MassMutual executive said today.
Dennis Herchel, MassMutual assistant vice president, made his comments as a member of a panel discussion on regulatory issues held as part of the American Council of Life Insurers annual meeting in Washington, D.C., and in a brief interview afterward.
He made his comments a day after the comment period closed on a proposal by the Fed and other banking regulators that would subject thrifts owned by non-banks to consolidated regulation by the Fed as part of a provision of the Dodd-Frank financial services reform law.
Comments to the Fed on the proposal by insurance executives paint the proposal as a “sea change” for the insurance industry.
The comments to the Fed contend that the proposal would allow the Fed to impose “bank-centric” standards in regulating insurance companies which operate thrifts.
In a key letter, the chief financial officers of eight insurance companies, including Prudential, TIAA-CREF and the Principal, say that the proposal, if adopted, would require all insurance organizations subject to the Fed’s supervision, “regardless of size, to meet new minimum capital requirements beginning Jan. 1, 2013.”
In his comments, Herchel said that MassMutual has met all the requirements spelled out by the Fed to restructure the business so it won’t fall under consolidated Fed supervision.
But, he said, “federal regulators are still interested in getting into our business.”
One member of the panel referred to a late night TV remark about Fed oversight, calling it a “big, fat, wet kiss on the lips,” but that no one is looking for that kiss.
“No, they aren’t,” Herchel retorted.
“We are trying to structure the way our business so we would not be subject to Fed regulation and … I think that the federal regulators are interested in getting to our business,” Herchel said.
“The last thing we need is another regulator who is really not familiar with our business … and to change the way we measure things, the way we manage our risk,” he said.
Herchel said that his regional Fed, the Federal Reserve Bank of Boston, is not at issue in wanting to oversee insurers like MassMutual—the concern for MassMutual is Washington, which does not understand insurers’ concerns.
Some at the regional Fed insurance oversight staff come from a state insurance background, Herchel said.