WASHINGTON--Rep. Barney Frank, D-Mass., chairman of the HouseFinancial Services Committee, voiced support yesterday for anoptional federal charter for insurance companies, especially forlife insurance.

At the same time, Rep. Melissa Bean, D-Ill., and Rep. Ed Royce,R-Calif., announced separately this week that they continue toretool their legislation that would create an optional federalcharter for all insurers and hope to have their bill introduced inthe House within several weeks.

Also yesterday Sen. Tim Johnson, D-S.D., and Don Kohn, vicechairman of the Federal Reserve Board, both cited an optionalfederal charter as something that should be explored. Theirseparate comments came at a Senate Banking Committee hearing on thelatest federal bailout of American International Group.

On another insurance legislation issue, Rep. Spencer Bachus,R-Ala., ranking minority member of the House FSC, said he wouldsupport legislation modernizing and reforming the surplus linesindustry. His remarks came at the same meeting where Rep. Beanoutlined what would be included in her optional charter bill.

Rep. Bachus was more vague when asked for his view on an OFC,saying he would support a more incremental approach to insuranceregulatory reform.

At the same time, Rep. Bachus indicated a measure of support forlegislation creating an Office of Insurance Information within theTreasury, a bill proposed last year by Rep. Paul Kanjorski, D-Pa.,chairman of the Capital Markets Subcommittee of the House FSC.

The bill passed the House last September.

In his comments, Rep. Frank said it is "overwhelmingly likely"that House Democrats will move to create an OFC for lifeinsurers.

Reiterating comments he has made in the past, Mr. Frank said oneof the factors has been requests from European regulators andinsurers for a more simplified approach to insurance regulation inthe U.S.

"Because of our European allies' concerns, we will have to thinkabout doing an optional federal charter for life insurance," hesaid.

But, also reiterating earlier comments, he expressedreservations about approving a federal charter for personal linesproperty-casualty insurers, especially laws preempting state rateregulation.

Rep. Bean made her latest comments at the annual InsuranceReform Summit presented by Networks Financial Institute at IndianaState University.

She said the bill will include provisions requiring a physicalpresence for the Office of Insurance Information that wouldregulate national insurers in each state.

The bill also would create a systemic risk regulator with theauthority to oversee insurance firms defined as "systemicallyimportant." Rep. Bean said the scope of the proposed systemic riskregulator's authority is still under discussion as well as thedefinition of the term "systemic risk."

Rep. Ed Royce, R-Calif., who plans to co-sponsor an OFC billwith Ms. Bean, noted that earlier this week, Federal ReserveChairman Ben Bernanke had expressed his frustration with theability of AIG to "exploit a huge gap in the regulatory system.This regulatory gap must be filled by a world-class federalregulator for insurance," Rep. Royce said.

"The various state insurance regulators simply do not have theability to oversee massive global financial firms like AIG," said.Rep. Royce.

He added that taxpayers "have a vested interest in the abilityof this Congress to establish a world-class regulatory alternativeto the fragmented 50-state system overseeing the insurancemarket."

At the Senate Banking Committee hearing on AIG, Sen. Johnsonsaid, "For many years I have advocated for a modernized system offederal insurance regulation; I am even more convinced after thepast six months that our current, outdated state-by stateregulatory system is ill-equipped to deal with a 21st Centuryinsurance company."

He added, "We cannot afford another situation like AIG, and wemust ensure that our regulators can assess the risks across allfinancial services including insurance."

Fed Vice Chairman Kohn, when asked his view as to whether thereis a need for federal insurance regulation, replied, "I thinkthat's something that should be considered as part of the overalllook at regulation.

"I think my first priority would be to get some umbrellaregulator, some overall regulator for every systemically importantinstitution, wherever that might be," he added.

"But, the federal charter is an option you should be looking at,I think...and we must ensure that our regulators can assess therisks across all financial services including insurance."

Sen. Johnson also asked Vice Chairman Kohn his view as towhether there is a need for federal insurance regulation.

Mr. Kohn replied, "I think that's something that should beconsidered as part of the overall look at regulation.

"I think my first priority would be to get some umbrellaregulator, some overall regulator for every systemically importantinstitution, wherever that might be," Vice Chairman Kohn said.

"But, the federal charter is an option you should be looking at,I think," he added.