The Federal Reserve Board outlined for itself a very circumscribed role in regulating insurance companies. Specifically, it made clear that it doesn't want to preempt the role of state insurance regulators in overseeing the traditional activities of insurance companies.
In an appearance before the Senate Banking Committee, Daniel Tarullo, the Fed governor most directly associated with financial regulation, also emphasized that the Fed has a different role to play in overseeing insurance companies, a role only associated with assuring the safety and soundness of the U.S. financial system.
"We don't want to be in the business of regulating insurance companies the way state insurance commissioners do, which is trying to preserve the franchise for the benefit of the policyholders," Tarullo said. "Our purpose is a different one, which is assuring on a consolidated basis the safety and soundness of large financial institutions," Tarullo added.
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