Arguments in favor of a Federal regulator of Insurance Companies are presented by Tom Wilson, "Regulate Me, Please" p. A23, col. 2 (New York Times Nat'l Ed., Thursday, April 16, 2009). Mr. Wilson is identified as the chief executive of Allstate Insurance Company. Insurance Companies are regulated by the States.
The arguments include the assertion that States "lack the expertise" to regulate complex securitized financial instruments. See id. So does everyone else, as we can see with our own eyes. The Credit Collapse of 2007 - 2009 could not have happened without them.
This is really an argument for no regulation at all. If responsibility for regulation is shifted from those with experience at regulating Insurance Companies to those who have none, then there cannot be any regulation in any meaningful sense of the word, "regulation".
As for financial creatures developed since 1980 or so, like Credit Default Swaps, if no-one can understand complex securitized financial instruments enough to regulate them, why would a Federal regulator be desired? Why, especially, would this argument be made by an Insurance Company whose CEO writes that it did not trade in complex securitized financial instruments?
To say again, this is really an argument for no regulation at all. Business as usual benefitted some people very much, and most people not at all. Business as usual is done.
Parenthetically, this linked newspaper release contains a surprising admission. The admission is that Credit Default Swaps were really Insurance after all, all these years. Id. The Insurance industry was among the crowd of once-supposedly smart people who used to say that Credit Default Swaps should not be regulated. And that they were not "Insurance". Certainly that CDS's should not be regulated by Insurance Commissioners. Here is how many times the Insurance industry asked anyone to regulate Credit Default Swaps as Insurance: _________.
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