Member Login

Senate Committee Scrutinizes the Obama Plan for Financial Services Regulatory Reform | GovWatch | Advocacy | NAIFA
Advocacy

NAIFA GovWatch

Senate Committee Scrutinizes the Obama Plan for Financial Services Regulatory Reform

Treasury Secretary Indicates Potential for Broader Insurance Reforms

Issue: Insurance and Financial Services Regulatory Reform

Date: June 18, 2009

Why This Matters to NAIFA Members: Congress has signaled its intention to decide soon at what governmental level (state or federal) the insurance industry (including agents) may be regulated. Today’s hearing continues the decision making process.

Action Taken:  The Senate Committee on Banking, Housing and Urban Affairs (Chairman Christopher Dodd, D-CT) held a hearing today to discuss the Obama Administration plan to reform the regulation of the financial services sector. The hearing, entitled “The Administration’s Proposal to Modernize the Financial Regulatory System” saw Treasury Secretary Timothy Geithner as its only witness. Secretary Geithner fielded questions from the Committee regarding the various proposals introduced in its 85 page white paper released yesterday.

Systemic Risk Regulator:  The primary focus of Committee members was on the provision in the plan which would designate the Federal Reserve as the systemic risk regulator for financial markets. The Fed would have oversight of financial institutions whose size and interconnectedness with other financial institutions position them to pose large systemic risk to the economy should they fail. Several members, including Ranking Member Richard Shelby (R-AL) questioned whether the Fed was the appropriate agency in which to vest this authority. Many suggested that the Financial Services Oversight Council—proposed in the Administration’s plan to serve as an advisory council to the Fed on issues of systemic risk—should serve as the systemic risk regulator, with full enforcement authority.

Future of Insurance Regulation:  Senator Tim Johnson (D-SD) questioned Secretary Geithner on the Administration’s plan to create an Office of National Insurance (ONI) to serve as a repository for insurance information at the federal level.  Johnson, who for the last two congresses, served as the sponsor for Senate legislation to create an optional federal charter for insurance, asked Geithner if the creation of an ONI signaled the Administration’s intent to further modernize insurance regulation. Geithner said that no specific plans have been determined yet, but the provisions contained in the Administration proposal are the beginning of comprehensive thinking about broader insurance regulatory reform.

Next Steps:  Committee members indicated their willingness to work with the Obama Administration to further develop the ideas set forth in this proposal. The House Financial Services Committee hearing with Secretary Geithner scheduled for today was postponed until a later date. NAIFA will keep you informed of developments.

To view the complete Obama Administration White Paper go to: http://www.financialstability.gov/docs/regs/FinalReport_web.pdf

To view the complete analysis of the White Paper prepared by NAIFA outside counsel Steptoe and Johnson go to: http://www.naifa.org/advocacy/documents/obamaplan_06172009.pdf

NAIFA Staff Contact: Jill Edwards, Assistant Vice President, Federal Government Relations; or Jen Piantedosi, Legislative Assistant – Government Relations, at jpiantedosi@naifa.org.

Back to NAIFA GovWatch