Playing the savior
Bad mortgage-backed securities. Federal bailouts. Stock market woes. And now, a wolf lurking in sheep's clothing: Some of nation's biggest financial institutions, their trade associations and a few congressional supporters are using the current problems to push - once again - for a federal takeover of insurance regulation. Their ploy? Play the savior role in times of economic uncertainty. The result? Less regulation for the big guys and less protection for the consumer. And all of that instead of the proven system we've had in place for years.
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Under the current system, state officials oversee the safety and soundness of insurance regulation. They do a great job of making sure that insurance companies are financially sound and that consumers are protected.
The federal government, on the other hand, has a rickety track record when it comes to overseeing financial services. Commercial banks and investment firms are prime examples. And who could forget the savings and loan mess of the 1980s?
Need more proof? Take the AIG bailout. It wasn't the traditional insurance side of AIG that landed the complex company in trouble. Many of the company's non-insurance entities, which invested in complex credit-back securities, were regulated by a U.S. federal regulator. Meanwhile, AIG's state-regulated insurance subsidiaries have remained stable and safe.
The old adage applies here: If it ain't broke, don't fix it.
Norman Basso
York
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