WASHINGTON Major insurance companies are asking U.S. regulators to put the brakes on applying a key part of last year's Dodd-Frank financial reforms to their industry, according to a letter obtained on Wednesday.
The insurers want action deferred on a rule that could subject them to tighter oversight. The rule has to do with financial firms judged to be so large and interconnected that their stability is important to the overall economy.
The February 9 letter was signed by the general counsels of trade groups representing giants such as Allstate, MetLife and Prudential Financial.
Dodd-Frank, approved in July, aims to prevent a repeat of the 2007-2009 financial crisis. It orders regulators to label certain large companies as systemically important to the economy. Those tagged this way would face stricter oversight.
Banks and other financial companies, such as insurers and hedge funds, are seen as potential targets for the new regime.
The new Financial Stability Oversight Council, set up under Dodd-Frank and chaired by Treasury Secretary Timothy Geithner, will choose the companies. The Federal Reserve, which will oversee them, issued a proposal on Tuesday on how to decide which should be chosen.
In the letter, the insurers asked for postponement of applying the rule to them until appointments are completed for an independent FSOC member with insurance expertise, and a director of the new Federal Insurance Office.
"The importance of having council members with insurance expertise participate in the council's deliberations during its formative period cannot be overstated," the letter said.
In addition, it asked for deferral until the council "has proposed qualitative and quantitative standards that it may use to assess insurers, and has provided the insurance industry and the public with an opportunity to comment on such standards."
The insurers' letter was sent to Geithner and key lawmakers, including the senior Democrats and Republicans on the Senate and House committees that oversee the industry.
(Additional reporting by Dave Clarke; Editing by Lisa Von Ahn)