Lawmakers criticize financial panel for unfilled spots

“The U.S. insurance sector represents a critically important component of the US. economy, with substantial domestic and international operations. … The FSOC is currently at work developing rules, procedures and policies that will have long-term effects on much of the insurance sector,” the lawmakers wrote. “Given the unique nature of the business of insurance, we believe it is imperative that the insurance-related seats on the FSOC be filled without further delay.”

The letter was signed by House Financial Services Committee Chairman Spencer Bachus (R-Ala.), ranking member Rep. Barney Frank (D-Mass.) and Reps. Judy Biggert (R-Ill.) and Luis Gutierrez (D-Ill.). Biggert and Gutierrez are the chairwoman and ranking member, respectively, of the Financial Services Committee’s Subcommittee on Insurance, Housing and Community Opportunity.

The FSOC, created by the Dodd-Frank financial reform law, includes the heads of several major federal regulators. Geithner chairs the panel, which includes Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairwoman Mary Schapiro, among others.

However, two FSOC spots for insurance experts remain unfilled, including the only one granted voting authority on the council, the lawmakers said. Specifically, a director of the Federal Insurance Office has yet to be named, and more importantly, the council seat reserved for an independent insurance expert to be appointed by the president is empty. The presidential appointee would join Geithner and others as voting members on the panel.

Currently, John Huff, the director of the Missouri Department of Insurance, is the lone insurance expert on the FSOC. He was named to the panel as a representative of state insurance commissioners, and will serve a two-year term.

In addition, the lawmakers asked the FSOC to make sure that Huff and future state insurance commissioners have the ability to use state regulatory resources as needed to carry out his work on the panel, “just as other members of the council have ample staff support available to them,” they wrote.

The council, which has met twice since being created, is charged with providing broad oversight of the entire financial system, in an effort to prevent another financial crisis similar to the one experienced in 2008.

The first meeting was largely devoted to organizational issues. At the second meeting, held in January, the FSOC approved a study on implementing the Volcker Rule. That rule, also part of Dodd-Frank, is aimed at preventing banks from engaging in risky “proprietary trading,” which is when banks trade on their own funds without the input of customers.