Senators push to keep insurance expert on Financial Stability Oversight Council

A quirk of the Dodd-Frank Act may deprive a regulator of its only insurance expert – but a bipartisan bill aims to fix that

Senators push to keep insurance expert on Financial Stability Oversight Council

Insurance News

By Ryan Smith

Two US senators introduced a piece of legislation Wednesday that would prevent a prolonged vacancy at a federal insurance regulator.

Senate Banking Committee Chairman Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) have proposed legislation that would allow Roy Woodall, the independent insurance expert on the Financial Stability Oversight Council (FSOC) to stay on the job until a replacement can be nominated or confirmed, according to a Reuters report.

The FSOC has the authority to define large financial firms, including insurers, as systemic, a designation that carries greater oversight by the Federal Reserve. FSOC has designated a number of insurers as systemic, including Prudential Financial, AIG and MetLife – although MetLife successfully fought the designation in a court case.

Woodall is the only member of the panel with insurance expertise, according to Reuters. He also voted against designating MetLife and Prudential as systemic. With no official federal insurance regulatory body, Woodall is, for all intents and purposes, the country’s most important figure when it comes to the regulation of insurers.

However, his six-year term ends in September. While all other FSOC members are allowed to continue serving when their terms expire – or be replaced by an acting member until an official appointment is made – a quirk in the Dodd-Frank Act makes it illegal to hold over or temporarily replace Woodall when his term is up.

Crapo said that Wednesday’s proposed legislation would provide “much-needed clarity regarding the independent insurance member’s term.”

The bill is backed by a large number of committee members from both sides of the aisle, according to Reuters.


 

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