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Member, Beacon International Group, Ltd.
WASHINGTON—An influential congressman wants the new Financial Stability Oversight Council to postpone any decisions regarding the insurance industry until insurance industry representatives have been appointed to the panel.
The council, which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, has the power to determine that nonbank financial companies—including insurers—present systemic risks to the economy and therefore must be subject to heightened supervision. Insurers have argued that they don’t present systemic risk.
The law also says that a presidentially appointed member with insurance expertise as well as the head of the new Federal Insurance Office should sit on the council. President Obama has yet to appoint the insurance expert and no one has been nominated to head FIO.
The council is seeking comments on proposed criteria that regulators would use to determine whether a nonbank financial company poses a systemic risk.
In a letter sent this week to Treasury Secretary Timothy F. Geithner, one of the principal Dodd-Frank architects—Rep. Barney Frank, D-Mass.—said that “it would be a mistake to have important decisions involving the insurance industry made in the absence of those positions being filled.”
Rep. Frank asked that decisions affecting insurers “with regard to the Financial Stability Oversight Council criteria be held off, if that is at all feasible, until the appropriate degree of expertise is brought to bear.”
Also this week, three Washington-based insurance trade groups—the American Council of Life Insurers, the American Insurance Assn. and the Reinsurance Assn. of America, wrote Mr. Geithner and asked that the council postpone making decisions that affect insurers until, among other things, the vacancies are filled.