WASHINGTON–Recent developments at American International Group are fueling both sides of the debate over federal regulation, with proponents and opponents each using the AIG mess to bolster their respective positions.

The National Association of Insurance Commissioners noted that AIG has remained solvent because of its insurance subsidiaries, and said calls for federal regulation of insurance in light of the AIG crisis are "simply unable to be supported."

But the two House sponsors of legislation creating an optional federal charter yesterday said the Federal Reserve Board's bailout of AIG was a "startling indication of the need to establish an optional federal charter for insurance."

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