Independent Insurance Expert To Join New Financial Stability Oversight Council

Business_Finance_57127President Obama will select an independent insurance expert to join the new Financial Stability Oversight Council.  The FSOC has put out a pair of public notices, one announcing upcoming rule-making for future regulatory supervision of nonbank financial companies — a group in which insurers hope they aren’t included — and a request for public comments on implementing the so-called “Volcker Rule” to limit proprietary trading.

The council, in the wake of its first meeting and not yet fully staffed, is already working toward its mission: protecting the wider U.S. economy from the failures of large, systemically risky companies. More specifically, as it notes in the public notices, the council can subject a company to supervision by the Federal Reserve and hold it to prudential standards “if the council determines that material financial distress at such a firm, or the nature, scope, size, scale, concentration, interconnectedness or mix of the activities of the firm, could pose a threat to the financial stability of the United States.”

So, the panel — still without the independent insurance expert to be named by President Barack Obama and the director of the new Federal Insurance Office — is beginning work on defining its approach to overseeing nonbank companies. The rule-making announcement is also an opening for public comment, a one-month period in which the insurance industry will continue pushing the argument that it’s sufficiently regulated and that the specific business of insurance was not a source of systemic risk during the financial crisis.

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About Karen Olson

Information Professional with twenty years experience in legal, public record, and business research. Fifteen years law firm experience.

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