Roy Woodall's nomination as the independent member with insurance expertise on the Financial Stability Oversight Council (FSOC) is being welcomed by the insurance industry—but don't expect him to immediately be able to play a role there.
That's because the appointment is subject to Senate confirmation, and Congress is dealing with the upcoming summer recess—and it is in the midst of an intense political battle over fiscal issues, including raising the debt ceiling.
Given this reality, the only way Woodall can have an expedited confirmation process is if the rank-and-file members of the Senate have time on their hands while their leaders battle it out.
Under the confirmation process, Woodall must forward substantive documents to the Senate Banking Committee, and that is only after the nomination is formally forwarded to the Senate. The banking panel must evaluate the documents and then could ask for more data or schedule a public hearing. In most cases, the committee requires at least a one-day delay following a hearing before it reports a nomination to the Senate floor.
INDUSTRY APPROVES
Insurance-industry officials, who have long made clear that filling this post should be a government priority, are lauding the Woodall nomination and say they look forward to working with him. They hope that with his decades of insurance-regulatory experience, he can help explain to bank-centric federal regulators the difference between the banking and insurance businesses.
Insurers raise this issue because the FSOC has the power to determine which institutions will be subject to federal oversight and greater capital requirements under the Dodd-Frank financial-services reform law.
David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), says, "We are pleased that the Department of Treasury has listened to the calls from the insurance sector to fill this critically important position. [Woodall] brings extensive experience in the insurance sector and an understanding of the state insurance-regulatory system."
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, says: "As a former Treasury official and state insurance regulator, [Woodall] understands the role of insurance in the economy and is well aware that mutual [P&C] insurance companies did not contribute to the economic crisis or pose an ongoing risk to economic stability. With this knowledge, [Woodall] will help focus the designation process for systemically important financial institutions [SIFI] on those companies that, through their participation in high-risk activities, pose a true [economic] risk."
Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), adds: "Woodall also has an intimate working knowledge of our industry and will be a strong voice in helping inform the other FSOC members on the distinctions between the property and casualty business model and other, bank-centric financial services. This will be especially critical as the FSOC deliberates on which non-bank financial firms it will designate as systemically important."
She notes, "AIA continues to believe the FSOC should adopt a risk-related, activities-based approach to the SIFI designation process under Dodd-Frank for non-bank financial companies, rather than reverting to size as the primary determinant."
Regarding the role the FSOC will play and the insurance expertise it will contain—should Woodall be confirmed—PCI explains: "The FSOC is comprised of the nation's top financial regulators and will monitor systemic risk in the financial-services sectors. Three insurance representatives will sit on the FSOC, including: Missouri Insurance Director John Huff, representative of the National Association of Insurance Commissioners, as a non-voting member; Michael McRaith, the new Federal Insurance Office director, as a non-voting member; and Woodall as a voting member."
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