While endorsements of an optional federal charter for insurers were easy to come by during the previous administration, the Obama administration has largely avoided offering an opinion on the controversial issue.
Yet, in testimony today before the House Financial Services Committee, Paul Volcker, Chairman of the Obama administration's Economic Recovery Advisory Board, did advocate support for an OFC.
While the bulk of Volcker's testimony concerned systemic risk and resolution authority, he ended his remarks with several suggestions to improve financial regulation, one of which was establishment of an OFC. "I also urge consideration of making a national insurance charter available to insurance companies willing to accept Federal prudential standards," he said. "Large issues with accounting and credit rating agencies remain. Those are matters for another day."
According to a report by Dow Jones, House Financial Services Chairman Barney Frank agreed, telling Volcker that efforts to establish a federal charter would not form part of current regulatory reform efforts, but was on the agenda for 2010.
It is unknown how much the opinion of Volcker, who served two terms as Chairman of the Federal Reserve, reconciles with the official stance of the administration. Elsewhere is his testimony, Volcker argued that the administration's approach to financial regulation will not alleviate the "too big to fail" problem, seemingly contradicting the assessment Treasury Secretary Timothy Geithner gave the committee one day earlier.
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