This week brings an important editorial from the Wall Street Journal on the continued overreaching and regulatory creep oozing out of Washington.
Today’s editorial, perfectly titled “The Financial Instability Council” discusses the bass-ackwards attempts of power hungry legislators to roll perfectly stable insurance companies up in a regulatory coffin and sink consumers with higher premiums to pay for this added compliance nightmare.
Rock solid insurers Met Life and Prudential are at risk of being tarred with the regulatory stigma of “Too Big To Fail. Thankfully, they are valiantly fighting this mess. Let’s hope the win, and write your representatives to fight this off.
“Too Big To Fail” now has a special meaning, and Dante is working on a special 10th Circle for firms labeled this way. Banks known as “Too Big To Fail” were of course all overseen by the Treasury’s Office of Thrift Supervision up thru and including the financial crisis… meaning, they were under the watchful eye of the Treasury as the financial crisis unfolded, and as the US Taxpayer was thrust into the fire to backstop the mess…
As the Journal states,
“So of course Treasury’s solution is to expand federal regulation to the businesses that weren’t overseen by the department and didn’t fail. Makes perfect Beltway sense.”
Firms now deemed as ‘systemic risks’ are saddled with added regulation and capital requirements.
“Along with the “systemic” designation comes regulation that was created for banks, not for insurance companies, and that will create problems for taxpayers and policyholders. Any firm dubbed “systemically important” will be regulated by the Federal Reserve. This will likely mean heavy new capital requirements designed to prevent problems that generally don’t exist at an insurer.”
Another great quote from the article is this:
It’s a giant and counterproductive leap to conclude that the insurance business presents a systemic risk to the financial system.
Read the whole piece online HERE and be sure to write your representatives and senators to resist this continued counterproductive bureaucratic expansion.