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Greater Transparency Needed From Fed on Insurance Regulation

During a U.S. House Financial Services Oversight and Investigations Subcommittee hearing, experts testified that lawmakers should impose better transparency on the Federal Reserve as it takes a larger role in the regulation of insurance companies, which if left unchecked could supplant the current state-based regulatory system...
July 22, 2015

During a U.S. House Financial Services Oversight and Investigations Subcommittee hearing, experts testified that lawmakers should impose better transparency on the Federal Reserve (Fed) as it takes a larger role in the regulation of insurance companies, which if left unchecked could supplant the current state-based regulatory system.

"Many in the insurance industry believe that the Fed is using its new Dodd-Frank powers to become the de facto national insurance supervisor," said American Enterprise Institute (AEI) resident scholar Paul Kupiec. Mark Calabria, director of financial regulation studies at the Cato Institute, agreed. "The Federal Reserve played a starring role in both creating the financial crisis and in its response," Calabria said. "Despite that role and the Fed's numerous failings, Dodd-Frank largely expanded its responsibilities."

Rep. Sean Duffy (R-Wis.), panel chairman, encouraged support for his bill, the International Insurance Standards Transparency Act (H.R. 2141). The bill would prevent federal regulators from transferring the assets of state-regulated insurance companies to rescue affiliated, failed non-insurance financial firms without the consent of state insurance regulators, and it clarifies that state regulators should have primary authority to resolve a failing insurer. PIA has endorsed H.R. 2141; read our letter of support.