Does the crisis at AIG and the fear of a meltdown in the U.S. financial services system prove Washington should be allowed to regulate insurance–or exactly the opposite? The answer depends on whether you're for or against an optional federal charter, a debate between leaders of one pro-OFC insurer group and a state lawmaker association opposing the concept revealed.

"The recent turmoil in our economy highlights a number of flaws in financial services regulation, including insurance," according to American Insurance Association President Marc Racicot, whose group strongly supports an OFC.

But George Keiser, a Republican representative in the North Dakota legislature, as well as secretary of the National Conference of Insurance Legislators, begged to differ. He suggested that the recent troubles on Wall Street and with AIG demonstrate that Washington shouldn't be trusted to impose a "one-size-fits-all" regulatory system on the industry.