The comfortable ride that Janet Yellen received through the Senate confirmation process as the first woman chairman of the Federal Reserve Board should send a large signal to the insurance industry — a signal that says Congress finds acceptable “having another pair of eyes,” especially one with the quantitative expertise of the Fed, looking over the shoulders of state regulators.
It also says that legislative adjustments in the current insurance regulatory system to limit the Fed’s involvement in insurance regulation will be difficult to come by, no matter how many lawyers, comment letters, legislative floor speeches, etc., opponents of any federal insurance oversight generate.
The insurance questions asked of Yellen during her November confirmation hearing were the usual ones, they were expected by the chairman-designate, and the answers were scripted.
Confirming this view with your favored member of Congress is a waste of time because the concept involved is this: A federal agency providing political cover to elected officials who are feeling political heat from anxious insurance carriers and agents deeply concerned about a federal takeover of insurance regulation.
The congressman will provide lip service to an anxious insurance industry official, especially when the constituent provides help and contributions to the politician’s political campaigns, but actions to thwart federal regulators from doing their jobs is not in the cards.
It just won’t happen. There is currently only limited political support for federal oversight of insurance, and those who do support it are not going to raise their hand if the question is asked.
However, at the same time, what the Yellen confirmation process showed is that the return to the old days of a cordon sanitaire between the federal government and state insurance regulation is over. Measured federal involvement through a process laid out via the Dodd-Frank Act is not going to be disturbed, and the Fed setting up a system to measure insurance industry financial performance will be encouraged and supported.