2010 0318 - GOV (House) - Insurance Holding Company Supervision, Paul Kanjorski (D-PA)

  • 2010 0318 - GOV (House) - Insurance Holding Company Supervision, Paul Kanjorski (D-PA)  --- [BonkNote]
    • [PDF-183p, VIDEO-?] - <mp3, mp4> - R
    • NAIC / WI - Sean Dilweg, Commissioner, State of Wisconsin, Office of the Commissioner of Insurance
    • NAIC / NE - Ann Frohman, Director, Nebraska Department of Insurance  
    • OTS - Grovetta Gardineer, Managing Director for Corporate and International Activities, Office of Thrift Supervision
    • FRB - Jon  Greenlee, Associate Director, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System
  • House - Committee on Financial Services - Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
  • (p1) - Paul Kanjorski (D-PA):  The Federal Government’s intervention in American International Group has raised many questions about the existing oversight of holding companies with insurance operations.
    • While AIG’s insurance companies may not have directly caused the conglomerate’s downfall, the actions of the holding company and other subsidiaries within AIG certainly could have led to serious consequences for insurance policyholders if the government had not stepped in.
  • (p19) - Ed ROYCE (R-CA) -  There is a lot of blame to go around in the case of AIG, but to say the various State insurance commissioners are not to be included in that group is a failure to look at the facts.
    • Further, there are at least seven State-regulated insurance subsidiaries that were participating in AIG’s Securities Lending Division that would have been insolvent but for the American taxpayers.
    • I would like to ask the insurance commissioners, I understand that every State has an insurance company, holding company law, and that those laws give the insurance regulator the authority to examine the activities of the holding company or other affiliates to ensure the ongoing health of the insurer itself. With regard to AIG, how were those holding company laws and the authority they granted to insurance commissioners used prior to the time the AIG crisis came to a head?
  • Ms. FROHMAN. I guess in terms of where we have been with securities lending, we have in the lessons learned imposed a risk capital charge. We have also enhanced our disclosures, and prior to the credit crisis, we were well aware of the issue and the insurance regulators had required a reduction I think by 50 percent in the securities lending activity.

  • (p21) - Mr. DILWEG. I think one important point going back to Congressman Royce’s question is, should we have seen it coming sooner? Should we have done something on securities lending? You are stuck looking at securities that are rated triple A. Now, once they all collapsed, all the various regulators were coordinating basically through New York, Pennsylvania, and Texas on the AIG side from the insurance side.