RELATED: Obama Regulatory Reform Plan Officially Establishes Banking Dictatorship In United States
Erik Holm
Bloomberg News
Friday, June 19, 2009
June 19 (Bloomberg) — President Barack Obama’s plan to create a U.S. insurance office after the $182.5 billion bailout of American International Group Inc. may take powers from the states that have overseen the industry for more than 135 years.
Obama called for the creation of a federal Office of National Insurance within the Treasury Department to monitor the industry, represent U.S. interests in international insurance agreements, and look for gaps in state oversight. The proposal was announced this week as part of Obama’s planned overhaul of the U.S. financial regulatory system.
The administration endorsed broader federal oversight of firms posing a threat to the financial system, and said more regulation may be needed for parts of companies outside the reach of state supervision. AIG’s Financial Products unit, which brought the company to the brink of bankruptcy after it sold credit protection to firms including Goldman Sachs Group Inc., wasn’t under the states’ umbrella.
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“AIG highlighted gaps in our insurance regulatory system,” said Leigh Ann Pusey, president of the American Insurance Association, which has pushed for federal oversight for a decade. “We had 20 different states with authority over 72 insurance subsidiaries of AIG just in this country.” The states didn’t work together “until the crisis hit,” she said.
The creation of a federal regulator is supported by some of the country’s largest insurers, including Allstate Corp. and Travelers Cos. Some smaller firms are opposed. The National Association of Mutual Insurance Companies, a trade group for policyholder-owned companies, said in a statement it had “concerns with some of the language in the draft paper” released by the Treasury to coincide with Obama’s announcement.
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