Roll Call headlined this story “Greater Insurance Regulation Sought: Some Say Obama’s Plan Doesn’t Do Enough.” It seemed fishy though, that the groups ostensibly looking for more regulation are the insurance and banking industries’ lobbying arms, including the American Insurance Association and the Financial Services Roundtable.
And sure enough, if you get down a few paragraphs in the story, what the groups are actually seeking is not more regulation, but the ability to avoid state regulations that they don’t like:
Groups like the American Insurance Association, the Financial Services Roundtable, and the American Council of Life Insurers support the White House’s efforts to create a national insurance infrastructure but are also pushing for the creation of an optional federal charter that would allow insurance companies to choose whether to follow state or federal rules.
Just like the Mortgage Bankers Association wants to avoid regulation of mortgage lending at the state level, insurance companies want to avoid state regulations when it suits their interest. Allowing insurance companies to opt out of state regulation — which is what an optional federal charter would do — would enable them to “shop for the lightest regulation,” which could be worth billions of dollars to the insurance industry.
Thus far, the Obama administration has been very conscious of ensuring that federal regulation doesn’t preempt state law, and acknowledging that states have a good grasp on what their regulatory needs are. Allowing an optional federal charter would fly in the face of that approach. As Charles Symington of the Independent Insurance Agents & Brokers of America’s said, “in many respects the battle over the optional federal charter has been between Main Street and Wall Street. The administration appears to have initially decided that the arguments are on the side of Main Street America, small business and consumers.”
Someone should tell Roll Call that looking for different regulation is not the same as looking for more regulation.