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Member, Beacon International Group, Ltd.
SENATE DEBATE has begun in earnest over the future of the nation's financial services regulatory system thanks to removal of a roadblock that had threatened to scuttle the whole effort.
The roadblock was a provision of a bill that would have set up a new pre-funded $50 billion resolution fund to deal with failing financial institutions, an entity Republicans charged would create a perpetual bailout fund. Democratic leaders agreed to drop that provision as the price of getting the bill to the floor.
Now the Senate can move forward on the bill, which is certain to see further change. Property/casualty insurers, for example, are still concerned that large insurers will have to pay assessments to prop up endangered financial institutions even though insurers are covered by state guaranty funds. That's a legitimate concern that needs to be addressed. Insurers shouldn't have to foot the bill for two resolution mechanisms, even though persuading lawmakers that's the case may be a hard sell.
But we hope any changes do not threaten two key provisions supported by risk managers: establishing a streamlined system to allow risk managers easier access to surplus lines markets and establishing a new insurance office within the Treasury Department to provide insurance expertise at the federal level.
Both initiatives are more than worthy, and deserve to be part of any financial services regulatory reform law that emerges in this Congress. The removal of the resolution fund roadblock can only increase the odds that both reforms will become reality.