NAIC Response to Treasury Report
April 1, 2008
ORLANDO, Fla. — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger today issued the following statement in regard to the U.S. Treasury Department’s Blueprint for Financial Regulatory Reform:
“State regulators are glad that someone at the federal level is finally paying attention to the financial crisis facing our nation. In our comments to the Treasury as this report was being developed, we noted that better coordination and communication among federal and state regulators is essential to effective oversight of the financial services sector. However, any change should not put the needs and convenience of Wall Street ahead of the cares and concerns of Main Street.
“Clearly, the current climate of less regulation and less accountability has led to the turmoil affecting broad sectors of our nation’s economy. We agree that federal action to look at system risk is long overdue. We agree that the federal government needs to remodel their financial regulatory house, but they need to leave the insurance “room” alone!
“While we certainly support better coordinating and modernizing of their oversight efforts, “Modern” does not mean “Federal.” State insurance regulators are marginalized in this report and, frankly, for our sector it looks more like a solution in search of a problem.
“State insurance regulators are accused of inefficiencies in oversight, but we need look no farther than Hurricane Katrina to see how well federal solutions serve the nation.
“State regulators challenge the proponents of a federal solution to trace the origins of the current problems in the housing and bond insurance markets … and they will find that the true failures lie with a lack of coordinated federal oversight.
“This voluminous plan only seems to offer more preemption of state oversight, not less. Not only does the plan not address the roots of the problem, but the proposed “solution” is needlessly complex. While we welcome a review of the federal failures, we strongly caution against federal intervention in a state-based system that is working for consumers and industry alike.”