Calls for a major revamping of the U.S. financial services regulatory system reverberated here last week in the wake of the meltdown of Bear Stearns, and it was made clear greater federal involvement in insurance oversight might be part of the mix.

In comments at the annual Capital Markets Summit sponsored by the U.S. Chamber of Commerce, Treasury Secretary Henry Paulson Jr. said the Bush administration's "blueprint" for modernizing financial services regulation will address "the important role that insurance can play in today's interconnected financial markets."

At the same time, the chair of the Financial Services Roundtable, serving as keynote speaker at the Summit, proposed legislation that would mandate better coordination of financial services oversight.

The chair, Tom Renyi, executive chairman of The Bank of New York Mellon, cited the problems of the state-regulated bond insurance industry as one of the reasons such legislation--as well as an optional federal charter for insurance--is needed.

In his comments, Mr. Paulson was not specific as to when the administration's "Blueprint for Regulatory Reform" will be released. He said it will propose a financial regulatory framework "which we believe will more effectively promote orderly markets and foster financial sector innovation and competitiveness."

In a statement released after the speech, Mark Racicot, president of the American Insurance Association, "commended" the secretary for his comments. The AIA and the American Council of Life Insurers are among the industry groups supporting legislation creating an OFC, although many others oppose the concept.

Mr. Racicot said that through his speech, Mr. Paulson was "recognizing the need to address the important role that insurance has in modern financial markets, as well as the need to include insurance in a modern regulatory system."

"We look forward to the release of Treasury's 'blueprint' for an improved U.S. regulatory structure in the coming weeks and are committed to ensuring that the debate is comprehensive and leads to meaningful reform," Mr. Racicot added.

Mr. Renyi's comments along with statements by Steve Bartlett, president and CEO of the Roundtable, emphasized that an OFC for insurers would incorporate all three of the components of its legislative revamp proposal: coordination, principles-based regulation and prudential supervision.

In a statement released in conjunction with the meeting, Mr. Bartlett also "commended" the Chamber of Commerce for unveiling its new principles for insurance regulatory reform. (See NU, March 24, page 7, for details.)

Mr. Bartlett lauded the Chamber statement of principles, even though the Chamber, while voicing opposition to rate regulation, did not take a stand as to whether future insurance regulation should be state- or federally based.

In his statement, Mr. Bartlett said the 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.

"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," Mr. Bartlett said.

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

Bond insurers, Mr. Renyi and Mr. Bartlett noted, are "totally state-regulated, without any other regulator, in Washington, New York or Chicago."

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