Geithner To Congress We'll Back Bills For U.S. Insurer Oversight

NU Online News Service, March 26, 4:04 p.m. EDT

WASHINGTON–Treasury Secretary Tim Geithner voiced support today for any legislation creating an optional federal insurance charter or Office of Insurance Information that would help the White House improve its oversight and understanding of insurance.

His comments came in response to questions from Rep. Ed Royce, R-Calif., and Rep. Paul Kanjorski, D-Pa., about apparent "gaps" regarding the regulation of insurance in the 61-page proposal for overhauling financial services regulation that he unveiled today.

They asked Secretary Geithner to respond with further details in writing on how insurance should be treated.

Answering a question from Rep. Royce, Mr. Geithner said "there's a very good case for optional federal charter legislation to be introduced."

Rep. Royce is a co-sponsor of legislation expected to be introduced next week that would create an optional federal charter for insurers and impose strong consumer protections. Mr. Royce and Rep. Melissa Bean, D-Ill., were the lead sponsors of such legislation in the last Congress.

In response to a question by Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House Financial Services about an Office of Insurance Information, Secretary Geithner replied, "I would not be opposed to an OII being established quickly" so as to create more insurance expertise in the Treasury Department.

"We would look forward to any help you could provide to us in that area," he said.

Rep. Kanjorski was the sponsor of OII legislation introduced last June in the prior Congress. The bill passed the House Financial Services Committee last June, but stalled on the House floor last September.

Mr. Geithner was questioned at a hearing of the House Financial Services Committee where he unveiled the blueprint for the Obama administration's ideas on how regulation of financial services companies going forward.

He asked the House for authority to create what is being termed a "super-regulator," which would have authority to oversee all kinds of financial institutions which could potentially impose a systemic risk on the financial system.

He also outlined a plan to give authority to a regulator to oversee large, troubled financial institutions.

This regulator would have the power to impose conservatorship or receivership on financial institutions that impose a potential risk to the financial system, and also to institute prompt, corrective action regime that would allow the regulator to force protective actions as regulatory capital levels decline.

He also said that in coming weeks the administration will unveil other proposals in four broad areas: "systemic risk, consumer and investor protection, eliminating gaps in our regulatory structure, and international coordination."