The Dodd-Frank Act — as most of you know — created the Financial Stability Oversight Council (FSOC) that is charged with determining which non-bank firms are a threat to the nation’s entire economic system. Those tagged with a significantly important financial institution (SIFI) designation are then subject to heavy financial rules.
So far the only companies — other than banks and General Electric — to be tabbed with the SIFI designation are insurers AIG, Prudential and MetLife. An appeal to a federal judge got MetLife off the hook but AIG and Prudential have stayed the course — at least so far.
That said, insurers and the insurance industry have long complained that the council’s make-up needs to have more insurance input. Dodd-Frank just gives the council one lone insurance representative and the rules don’t allow him or her to stay onboard longer than 18 months if the term expires and there is no new appointee for a replacement. The rules also don’t give that insurance representative a vote on the council which is another sticking point.
The U.S. House of Representatives wants the 18-month rule changed and voted 407 to 1 to keep that person on the council until a replacement can be found. That person right now is Roy Woodall. His six-year term expires September 27th.
The Senate is expected to pass it as well.
American Council of Life Insurers (ACLI) president and CEO Dirk Kempthorne put the insurer position in perspective. “This bill protects against an unintended vacancy of the independent member with insurance expertise by providing a contingency plan that is comparable to what is already in place for most of the other voting members of FSOC,” he said.
Source link: Reuters