NU Online News Service, Oct. 1, 3:37 p.m. EDT
Treasury Secretary Timothy Geithner pledged at the first meeting of the new Financial Stability Oversight Council created by the Dodd-Frank law to "preserve the right balance" between the work of the group and existing regulatory agencies.
Amongst the members of the panel are John Huff, the Missouri insurance director. Mr. Huff is a non-voting member.
In his comments, Mr. Huff said creation of the FSOC indicates a "clear mandate" for state and federal regulators to work cooperatively in limiting systemic risk.
"As the sole insurance representative on this council, I look forward to working with the other members" in helping the group to do its job, he said.
He said traditional insurance products do not normally constitute a systemic risk, but interconnections with other institutions and other products could potentially create problems.
He noted that insurers are subject to strong solvency and other rules that "have proven resilient in this crisis," but acknowledged that it is "imperative" that insurance representatives offer their expertise to help the new group quickly "identify new markets and new products that could create or magnify financial crises."
Francine L. Semaya, a New York insurance regulatory attorney, said the role of the new panel will be to monitor and provide early recognition of ongoing and new systemic risks that could negatively impact the U.S. and world economic stability.
Ms. Semaya chairs the Federal Involvement in Insurance Regulation Modernization Task Force of the Tort Trial and Insurance Practice Section of the American Bar Association.
She said, "It is imperative that the FSOC and especially the new Federal Insurance Office continue to work with the NAIC and the state regulators as we all move forward to modernize and strengthen the current insurance regulatory system," she said.
Leigh Ann Pusey, president and CEO of the American Insurance Association, said in a statement that the FSOC "has a challenging assignment in monitoring the U.S. financial system to prevent the emergence of new systemic risks that could lead to a future financial crisis."
She added that, "While the [property and casualty] insurance industry did not contribute to the financial crisis and does not pose systemic risk, everyone recognizes the need to safeguard U.S. financial stability and minimize the potential for future crises."
David Sampson, president and CEO of the Property Casualty Insurers Association of America, applauded Mr. Huff's appointment.
"The nomination is a tribute to his leadership and experience in the insurance sector," he said.
Other members of the FSOC include the chairman of the Federal Reserve Board, the head of Federal Deposit Insurance Corporation, the head of the National Credit Union Administration, the Office of the Comptroller of the Currency, the head of the Securities and Exchange Commission, the Federal Housing Finance Agency and the Commodity Futures Trading Commission.
Other non-voting members include William Haraf, Commissioner, California Department of Financial Institutions; and David Massey, deputy Securities Administrator, North Carolina Department of the Secretary of State, Securities Division.
The Dodd-Frank law says that the FSOC will meet at least on a quarterly basis.
Other panel members will include the director of the Federal Insurance Office and an additional insurance expert.
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