| WASHINGTON, March 11
WASHINGTON, March 11 A U.S. senator who backed
tougher capital rules for nonbank financial firms said on
Tuesday that regulators misread how that requirement applied to
insurance companies, and she has proposed new legislation to
clear up the confusion.
Senator Susan Collins, a Republican from Maine, introduced
an amendment to the 2010 Dodd-Frank Wall Street oversight law
that said large nonbank firms should meet leverage limits that
are at least as stringent as the rules that banks follow.
Insurance companies have since complained that they are
structured differently than banks and already meet leverage
requirements imposed by state regulators, so they should not
have to follow the same capital rules.
Officials with the U.S. Federal Reserve, which now regulates
American International Group Inc and Prudential
Financial Inc, have questioned whether Dodd-Frank allows
them to tailor the rules for insurers.
Collins told the Senate Banking Committee on Tuesday that
the Fed has flexibility to tailor its rules. She introduced a
bill on Monday that she said would make that clear.
"My legislation would ... clarify that, in establishing
minimum capital requirements for holding companies on a
consolidated basis, the Federal Reserve is not required to
include insurers so long as the insurers are engaged in
activities regulated as insurance at the state level," Collins
said in remarks prepared for the hearing.
Senators Sherrod Brown, a Democrat who called the hearing,
and Mike Johanns, a Republican, introduced legislation in 2013
to address the same issue. That bill has not yet been considered
by the banking panel.
The squabble stems from the 2007-2009 financial crisis, when
AIG nearly collapsed and had to be rescued by U.S. officials.
Reform advocates said nonbank financial companies had never been
held to the same leverage and other rules that big U.S. banks
had to meet.
The Dodd-Frank law allowed regulators to subject nonbank
firms deemed "too big to fail" to bank-like rules. AIG,
Prudential and General Electric Co's finance arm have
been named already, and insurer MetLife Inc is being
considered for heightened scrutiny.
Insurance executives, their state regulators, many lawmakers
and some Fed officials all have said insurers are not subject to
runs on the business in the way banks are in a crisis and do not
hold the same types of assets.
Collins, who is not a member of the banking panel but was
asked to testify about her amendment, said she would work with
the committee to give the Fed more flexibility as long as "we
not take action that would diminish taxpayer protections."