New York's insurance regulator told a congressional oversight hearing today that it "would be a broad misunderstanding, bordering on inappropriate," to view the American International Group liquidity problems as an argument for federal regulation.

Eric Dinallo, New York insurance superintendent, made his comment at a House Committee on Oversight and Government Reform hearing on the events leading to the government bailout of AIG.

Mr. Dinallo later said that "it is important to have the states in the solvency business," and that while the states have been "clunky" on other issues, they've done very well at insurer solvency regulation.

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