WASHINGTON–An organization of top financial services executives proposed legislation today that the group said would mandate better regulation and coordination of the sector.

In calling for the measure, Tom Renyi, chairman of the Financial Services Roundtable, cited the problems of the state-regulated bond insurance industry and the lack of an optional federal insurance charter system as reasons it is needed.

Mr. Renyi, who also serves as executive chairman of The Bank of New York Mellon, and Steve Bartlett, president and chief executive officer of the Roundtable, noted in separate statements that an optional federal charter for insurers would incorporate all three of the components of the Rountable's legislative revamp proposal: coordination, principles-based regulation and prudential supervision.

Mr. Renyi unveiled the proposal while delivering the keynote talk at the annual Capital Markets Summit, sponsored by the U.S. Chamber of Commerce and held at their facilities here.

In a statement released in conjunction with the meeting, Mr. Bartlett also “commended” the Chamber for unveiling a set of new principles for insurance regulatory reform.

But, while the Chamber principles voice opposition to rate regulation, they do not express a viewpoint as to whether the locus of future regulation should be state- or federal based.

Mr. Bartlett said in his statement that the Chamber's principles would “ensure a uniform and efficient supervisory system in the insurance market,” and noted that the Roundtable has long supported uniform national standards and an optional federal insurance charter.

Mr. Bartlett added, “Americans must still navigate an insurance system that was created for the business and financial practices of the 19th, not the 21st Century; and the current patchwork of state-by-state regulation costs American consumers millions of dollars every year. I commend the U.S. Chamber for recognizing the need to modernize insurance regulation for the benefit of all Americans.”

In his keynote speech, Mr. Renyi said that one portion of the Roundtable legislative proposal would “expand and enhance” the mission of the President's Working Group on Financial Markets to ensure that all regulators at the national and state levels are cooperating effectively and have an affirmative mandate to be more forward looking.

A second part of the measure would establish six overarching “guiding principles” for all financial services providers and regulators that can act as a “compass.”

The first guiding principle is “treat consumers fairly.” Others address risk-based regulation, prudential supervision, competitiveness and management responsibilities, Mr. Renyi said.

He told the Chamber a third segment of the proposed legislation is designed to ensure the uniform application of prudential supervision by all financial regulators.

“Prudential supervision is defined as a form of regulation that encourages full compliance with rules and regulation based upon an open, ongoing and constructive engagement between individual financial services firms and their regulators,” he said.

“This is not just an industry issue–it's a national economic issue,” Mr. Renyi said. “It's time to move from talking to taking action, with all the urgency the situation warrants.”

He said the nation “can't risk an avoidable market disruption any more than we can risk our position as the world leader in financial services.”

“What's at stake is nothing less than our future prosperity,” he added.

In the question-and-answer, Mr. Renyi cited a lack of coordination between state and federal regulators in overseeing bond insurers as playing a role in the so-called “meltdown” of the mortgage market.

“It is totally state regulated,” Mr. Renyi and Mr. Bartlett noted, “without any other regulator in Washington, New York or Chicago.”

The market didn't realize it was only overseen by state regulators, Mr. Bartlett said in commenting on Mr. Renyi's remarks.

“The OFC [optional federal charter] is clearly a part of our proposed regulatory approach,” Mr. Bartlett said.

He also noted regulation of the life insurance industry, saying that some products, like variable annuities, are regulated by federal financial overseers such as the Securities and Exchange Commission.