Measure Ensures State Regulator Perspective and Input on Financial Stability Oversight Council
WASHINGTON, D.C. (May 14, 2010) — The National Association of Insurance Commissioners (NAIC) expressed support this week for Senate Amendment 3754 to S. 3217, the Restoring American Financial Stability Act, that would provide for non-voting membership for state banking, insurance and securities regulators on the Financial Stability Oversight Council (FSOC).
In a joint letter with the Conference of State Bank Supervisors (CSBS) and the North American Securities Administrators Association (NASAA), regulators praised Sens. Patty Murray (D-WA) and Susan Collins (R-ME) for considering a comprehensive approach to addressing the accumulation of risk in the financial system.
“State regulators are uniquely positioned on the front lines of financial regulation and offer critically important perspective, expertise and regulatory data necessary to assess systemic risk,” said Jane L. Cline, NAIC President and West Virginia Insurance Commissioner. “The Council would benefit tremendously from the shared insights and knowledge of regulators who work vigorously each day to maintain an effective financial structure.”
The joint letter from leaders of the three regulatory groups stated, “In all financial sectors, state regulators gather and act upon large amounts of information from industry participants and from investors. State regulators would bring to the FSOC the insights of a team of ‘first responders’ who see trends developing at the state level, which have the potential to impact the larger financial system. Consequently, they serve as an early warning system identifying practices and risk-related trends that are substantial contributing factors to systemic risk.
“Matters of financial stability and systemic risk have far-reaching implications and benefit from a diversity of regulatory perspectives. By including state regulators in the FSOC, your amendments create a more comprehensive and efficient approach that will benefit from access to all relevant information regarding the accumulation of risk in our financial system.”
Inclusion of a state insurance regulator is critically important because the current FSOC provision does not include any insurance regulatory input or information. As the officials directly responsible for the safety and soundness of the insurance sector and the protection of insurance consumers, this amendment fixes this glaring omission. State insurance regulators urge adoption of this critical amendment.
Click HERE to view full text of the letter.
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.