Significantly, the Bill would consolidate regulation of holding companies so that the various regulators of a specific holding company system would have a complete picture of such company’s financial situation, leaving “no place to hide.” It would accomplish this by removing limitations on the Federal Reserves Board’s (the “Federal Reserve”) authority over companies, including insurance companies, subject to consolidated regulation under the Gramm-Leach-Bliley Act. Various players in insurance industry have issued statements in response to the draft Bill. For example, Connecticut Insurance Commissioner Thomas R. Sullivan testified before Congress on behalf of the National Association of Insurance Commissioners (“NAIC”) with respect to the Bill. During his testimony, stressed the effectiveness of state regulation, noting that the NAIC believes that “any new system must incorporate, but not displace, the state-based system of insurance regulation.” Click here for a copy of Commissioner Sullivan’s testimony.
Other significant aspects of the Bill include: (i) creation of a Financial Services Oversight Council to monitor and reduce threats that systemically significant firms may pose to the financial system; (ii) giving the Federal Reserve back-up authority to intervene if regulators do not quickly address issues identified by the Financial Services Oversight Council; (iii) establishing procedures for the orderly wind-down of failing firms; and (iv) requiring Treasury Department approval for the Federal Reserve to provide temporary liquidity assistance to companies.