Testifying before the House Financial Services Committee, Treasury Secretary Timothy Geithner sketched out an ambitious plan to restructure the way financial services firms are regulated.
The administration plan rests on four large pillars: addressing systemic risk, protecting consumers and investors, eliminating gaps in the regulatory structure and fostering international coordination. The pillar with the most urgent implications for insurers seems to be the first. Geithner called for creation of a federal systemic risk regulator imbued with broad powers to monitor companies, including insurers, which pose a systemic risk. Geithner posited that such an entity would require resolution authority, similar to that of Federal Deposit Insurance Corp. (FDIC), to force troubled institutions into receivership or conservatorship.
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