Fresh from his testimony in the House singing the praises of the Treasury Department’s blueprint for federal insurance regulation, Assistant Treasury Secretary for Financial Institutions David Nason was back over in London. He was reporting on his progress to participants in a financial conference held in London’s Chatham House, home to the Royal Institute of International Affairs.

This is the same official who, just two weeks after the comment period closed for the Treasury’s financial blueprint, gave a speech to bankers in London outlining what the Treasury would be proposing, and characterizing the opposition it would receive as “parochial.” [See related item.] The short time between the closing of the period for comments, along with the “loaded” questions on insurance in the request for comments, had led us to conclude that the Treasury wasn’t really conducting a study; it was just looking for comments to support its views. Our prediction turned out to be correct. 

Now, just two weeks after his House testimony, Nason is back in London giving a progress report. He told this most recent gathering that financial markets are interconnected like airports and that when a sector breaks down it “can turn into complete disarray.” Nason defended a Treasury proposal to establish greater Federal Reserve Board oversight of investments that borrow from the central banks discount window, but also reiterated that establishing that kind of permanent oversight over Wall Street would not pay off.

What It Means to Agents:  PIA’s concern is that our system of insurance regulation must serve our nation’s interests, which should not be dismissed as being “parochial.” Placing our nation’s interests on an equal par with the interests of the global economy calls into question whose interests the Treasury Department is seeking to advance. It might also help to explain Mr. Nason’s frequent trips to London to report on his progress.

May 6, 2008