NU Online News Service, May 5, 10:27 a.m.EST

WASHINGTON – The Senate Banking Committee on May 12 will hearfrom the industry and members of the Financial Stability OversightCouncil on the criteria the agency will use in determining if aninsurance company is eligible for federal oversight.

Meanwhile, the Obama administration is expected to nominate anindependent member with insurance expertise to the federalFinancial Oversight Council, as the administration promised bothindustry and members of Congress in recent weeks.

The hearing will deal with rules the FSOC will establish indetermining whether a non-bank, such as an insurer, isinterconnected with the rest of the financial system and otherwisepotentially systemically risky.

Industry officials want a hard set of metrics adopted by theFSOC in setting out the criteria it will use to make such adetermination. In part, the industry request for criteria isnecessary in order to challenge an FSOC designation in court.

Current FSOC members want flexible criteria it can use to makesuch a determination – making it more difficult for the industry, aparticular company, or even the independent member of the FSOC tochallenge.

Members of the banking panel are expected to grill FSOC memberson the issue during today's hearing. However, some of the drama hasbeen dissipated by the decision of Treasury Secretary TimothyGeithner not to attend. Instead he is sending a substitute withouthis star power, according to several officials.