Senate Banking Committee Chairman Christopher Dodd (D.–Conn.) has unveiled a discussion draft of his ambitious plan to revamp oversight of the financial services sector. The plan calls for the creation of a Financial Institutions Regulatory Administration (FIRA) that would assume the role as the top regulator of the financial services sector. Under Dodd’s plan, the Office of Thrift Supervision and Office of the Comptroller of the Currency would be eliminated and their regulatory roles would be assigned to FIRA and the Federal Reserve and Federal Deposit Insurance Corp. would also relinquish their regulatory roles.
While the 1,136-page proposal is aimed primarily at banks and hedge funds, there are large implications for insurers, even those that do not operate swifts. Per the draft, FIRA would be imbued with broad resolution powers to unwind financial institutions deemed too big to fail. Leigh Ann Pusey, president of the American Insurance Association expressed concern that the resolution authority was too broad and that insurers may be asked to contribute to a fund to resolve failing non-depository institutions.
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