NU Online News Service, Dec. 19, 1:05 p.m.EST

If a bill rolling back the Federal Insurance Office's authorityshould pass, it would limit financial transparency and theeffectiveness of regulatory supervision, according to Moody'sInvestors Service.

In its Weekly Credit Outlook, Moody's notes that a subcommitteeof the House Financial Services Committee has reported out legislation that would restrict the ability of theFIO to get financial information from insurance companies. Thebill, H.R. 3559, the Insurance Data Protection Act of 2011, wassponsored by Steve Stivers (R-Ohio) and was approved along partylines. The vote was 7-5, with Republicans supporting it andDemocrats opposing it.

The bill would revoke the authority of the FIO and the Office ofFinancial Research (OFR), two new entities created by theDodd-Frank Act, to subpoena data from insurance companies. It wouldalso force the FIO, the OFR, the Financial Stability OversightCouncil, and any other federal entity that seeks data aboutinsurance companies to obtain that data through the insurancecompany's state regulator, another federal agency, or a publicsource.

Moody's says, “Without subpoena powers, the FIO would be unable,in certain circumstances, to gather critical data for identifyingand managing systemic risk.”

The rating agency says the bill would limit the “free flow ofessential insurance data” to the parties responsible for overseeingthe industry, and adds the bill “would prevent sharing non-publiclyavailable information with both the general public and othergovernment agencies, even those charged with analyzing systemicrisk.”