WASHINGTON BUREAU — Rep. Barney Frank, D-Mass., has asked federal regulators to put off classifying insurers as "systemically risky" until key insurance posts are filled, and other House Financial Services Committee members are making similar requests.
Frank was chairman of the House Financial Services Committee before the November 2010 elections. He says in a letter to U.S. Treasury Secretary Timothy Geithner that the financial services 
act that bears his name – the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — requires a major new federal risk tracking agency, the Financial Stability Oversight Council (FSOC), to include members with insurance expertise.
Those council members have not been named, and "I therefore urge that decisions affecting the status of the insurance industry with regard to the FSOC criteria be held off, if that is at all feasible, until the appropriate degree of expertise is brought to bear," Frank writes in his letter.
Frank says in the letter that he was asking other House Financial Services Committee members from both parties to sign a joint letter expressing similar thoughts.
Lawmakers who have signed a joint "go slow" letter with Frank include Rep. Spencer Bachus, R-Ala., the new chairman of the House Financial Services Committee; Rep. Judy Biggert, R-Ill., chairman of the committee's Insurance, Housing and Community Affairs Subcommittee; and Rep. Luis Guitierrez, D-Ill., the highest-ranking Democratic member of the insurance subcommittee.
Rep. Ed Royce, R-Calif., and Rep. James Himes, D-Conn., may be sending a similar request, industry sources say.
Representatives from three major insurance trade groups – the American Council of Life Insurers, Washington; the American Insurance Association, Washington; and the Reinsurance Association of America, Washington – made similar arguments earlier this week in a letter to U.S. Treasury Secretary Timothy Geithner.
The Property Casualty Insurers Association of America, Des Plaines, Ill., wrote to the Obama administration about the voting insurance member and FIO director appointment process in January.
THE FSOC
Insurers have concerns about the FSOC because, in theory, the FSOC might be able to put some large insurers under the jurisdiction of
the Federal Reserve Board.
The FSOC is an arm of the Treasury Department that is supposed to help the government identify 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.
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