SCOTTSDALE, Ariz.–The chief insurance regulator of Illinois told a gathering of insurers here yesterday that the nation's financial crisis was a failure of federal regulators, not U.S. corporate governance laws.

"It's a failure of federal regulators not regulating where they have jurisdictions," said Insurance Director Michael McRaith in an address to the Property Casualty Insurers Association of America (PCI) annual meeting here.

Earlier, he noted that the American International Group Financial Products unit, which brought about the company's financial distress and need for a federal bailout, had chosen to be regulated by the U.S Office of Thrift Supervision (OTS).

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