Enter your email address and start getting breaking law firm and legal news right now!
Insurance Companies Seek to Escape Bank Capital Standards
Insurance companies, according to Bloomberg News, are urging U.S. lawmakers to stop the Federal Reserve from imposing bank-like capital standards on their industry. The insurance companies report that these bank capital standards don’t fit their business. There was no federal consolidated capital requirement for subsidiaries and affiliates of insurance companies prior to the Dodd-Frank. The Dodd-Frank Reform Bill and Consumer Protection Act was passed as a response to the Great Recession and it brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.
“It’s like trying to put the safety standards of airplanes on cars,” reported the senior vice president of insurance regulation and deputy general counsel for the American Council of Life Insurers, Julie Spiezio, also stating that, according to Bloomberg News, “It’s a difference in the fundamental business model.”
A Maine Republican, Senator Susan Collins, stated in letters last year that she did not intend for the Fed to subject insurance companies to bank standards. Both Federal Reserve Chair Janet Yellen and her predecessor, Ben S. Bernanke, have agreed that insurance companies should meet different capital standards than banks.
Janet Yellen said at a February hearing that, “We recognize that there are very significant differences between the business models of insurance companies and the banks that we supervise, and we are taking the time that’s necessary to understand those differences and to attempt to craft a set of capital and liquidity requirements that will be appropriate to the business model of insurance companies.”
President Barack Obama’s administration has previously opposed any legislation to amend Dodd-Frank. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation’s financial services industry.
According to Jaret Seiberg, policy analyst at Guggenheim Securities LLC’s Washington Research Group, an amendment to the capital provision would probably be welcomed.
Image credit: www.finance.fortune.cnn.comInsurance Companies Seek to Escape Bank Capital Standards by Jaan
|Job of the Day|