NU Online News Service, April 15, 2:32 p.m. EST
WASHINGTON– Sen. Ben Nelson, D-Neb., said he is withholding support of financial services regulation because he fears it could unnecessarily regulate insurers.
Meanwhile today, Sen. Bob Corker, R-Tenn., a member, like Sen. Nelson, of the Senate Banking Committee, said he would be "stunned" if there is ultimately no bipartisan agreement on financial services regulation.
Mr. Nelson said he is not backing the bill in its current form believing that certain provisions could regulate insurers on matters unrelated to the financial crisis.
"I don't want to see any kind of solutions that get involved in insurance company operations," Sen. Nelson said yesterday.
For insurers, the Senate bill creates an Office of National Insurance, makes systemically risky insurers subject to federal oversight and contains provisions similar to the House financial services reform bill that would modernize and streamline the surplus lines and reinsurance industry by facilitating regulation of such insurers by the state they are domiciled in.
The bill makes insurers as well as other large, complex, financial services companies subject to oversight through the Federal Reserve Board and a new Financial Stability Oversight Council.
The Senate bill was drafted by Sen. Chris Dodd, D-Conn., chairman of the committee with the help of Sen. Corker and other members of the committee.
Under the bill, federal oversight, in addition to current state oversight, would be applied to nonbank financial companies that are determined by a two thirds majority vote of the Financial Stability Oversight Council to be subject to prudential supervision by the Board of Governors of the Federal Reserve System.
The Council majority would have to make a finding that 'material financial distress' at the company 'would pose a threat to the financial stability of the United States'."
Under the bill, the Office of National Insurance created would have limited powers, such as authority to seek information from state regulators about the health of the industry and particular insurers. The ONI would also have the authority to recommend to systemic risk regulators that a particular institution is insolvent or needs stronger oversight.
The bill would also require that a person with expertise in insurance issues be appointed to the Council by the president.
In comments this morning on "Good Morning America," Sen. Corker said that, "Unfortunately, the winds are blowing — there's lots of things happening here that don't aid that effort, but at the end of the day, I think we're going to have a solid bipartisan effort."
Sen. Corker played a key role in drafting some provisions of the Senate financial services reform legislation reported out in late March by the Senate Banking Committee.
However, because of concerns raised by the Senate Republican leadership, no Republicans voted to send the bill to the Senate floor.
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