NU Online News Service, May 5, 10:27 a.m. EST

WASHINGTON – The Senate Banking Committee on May 12 will hear from the industry and members of the Financial Stability Oversight Council on the criteria the agency will use in determining if an insurance company is eligible for federal oversight.

Meanwhile, the Obama administration is expected to nominate an independent member with insurance expertise to the federal Financial Oversight Council, as the administration promised both industry and members of Congress in recent weeks.

The hearing will deal with rules the FSOC will establish in determining whether a non-bank, such as an insurer, is interconnected with the rest of the financial system and otherwise potentially systemically risky.

Industry officials want a hard set of metrics adopted by the FSOC in setting out the criteria it will use to make such a determination. In part, the industry request for criteria is necessary in order to challenge an FSOC designation in court.

Current FSOC members want flexible criteria it can use to make such a determination – making it more difficult for the industry, a particular company, or even the independent member of the FSOC to challenge.

Members of the banking panel are expected to grill FSOC members on the issue during today's hearing. However, some of the drama has been dissipated by the decision of Treasury Secretary Timothy Geithner not to attend. Instead he is sending a substitute without his star power, according to several officials.