Treasury Secretary Scott Bessent — Just Say No to the FIO

U.S. Treasury Secretary Scott Bessent believes insurance should be regulated by the states as set up in 1945 by the McCarren-Ferguson Act. It specifically gives state regulators the right to regulate insurance.

The federal government has zero responsibility — and legal authority — over insurance in the U.S. Period.

This question came up in a House Financial Services Committee hearing on Montana Republican, Rep. Troy Downing’s bill to permanently do away with the Federal Insurance Office (FIO). It was formed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2020.

Some members of Congress — mostly Democrats — felt the Great Recession of 2007-2009 was partly caused because the Treasury Department didn’t know enough about insurance.

Since then, the FIO has pushed for more power than it has from the Dodd-Frank Act. All Dodd-Frank gave the FIO to do is a responsibility to inform the U.S. Department of the Treasury about what’s happening in insurance, and to, once in awhile, represent insurance in international insurance negotiations.

Downing doesn’t find any of that necessary and wants the FIO gone. Thus the question to the Treasury Secretary in last week’s committee session. Downing asked him, "Do you believe that Treasury should minimize its insurance activities, to clearly define federal responsibilities and leave insurance regulation to the states?"

"One hundred percent," Bessent said and noted the regulation of insurance in the individual states is very robust.

"I had the regulators, the insurance commissioners, come to Treasury in the spring for some very uh detailed discussions on what's happening in private credit," Bessent said. "I was very impressed with the depth and breadth of their work.”

Bessent thinks his department needs to identify concerns it has about financial stability involving insurance and then let insurance regulators in the states know what is happening.

"I've often said that, in risk management, the biggest risk you're taking is the one you don't know you have," Bessent said.

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