The Treasury Department expects to issue recommendations before March 31 that if adopted will comprehensively overhaul the regulatory regimes supervising three major components of the financial services industry. The envisioned “blueprint,” first mentioned by Treasury Secretary Henry Paulson in June 2007, will outline a new regulatory regime for three financial services sectors: depository institutions, securities firms, and the insurance industry.
 
Speaking at the New York Society of Security Analysts’ annual Wall Street Forum, Treasury Undersecretary for Domestic Finance Robert Steel said, “We need a new, modernized approach to regulation--one that is risk-based, globally oriented, and flexible in scope."

While Steel did not disclose any specific items that will be included in the plan, he did say its philosophy would be to decide who should be protected, which market participants should be regulated, and how that regulation should be applied.

What It Means to Agents:  Treasury, in its recommendations for the insurance industry, may embrace “optional” federal charters. Proposals for an OFC have been pending in Congress since 2005, but while the bills have been given hearings and more are scheduled, the proposal has not garnered sufficient support for passage.

PIA objected to the Treasury’s call for comment as part of its study of financial regulation, because the questions posed relating to insurance were loaded, revealing a bias in favor of federal regulation. PIA remains steadfast in opposition to all proposals to federalize insurance regulation, including an OFC.  PIA supports state regulation of insurance and believes that modernization to the state system should be accomplished at the state level.

PIA Says Treasury Department is Biased in Questions for Study (PIA press release 11/13/07)

PIA Letter to Treasury Secretary Paulson (PDF file, 11/13/07)

February 12, 2008