Federal reinsurance regulation gains support

Federal reinsurance regulation gains support: "Support for allowing reinsurers to choose federal rather than state regulation may be growing on Capitol Hill.

During a Tuesday hearing on insurance regulation before the Senate Banking, Housing and Urban Affairs Committee, two senators said federal regulation might make sense for reinsurers.

And the committee's ranking member and former chairman—Sen. Richard Shelby, R-Ala.—said problems with American International Group Inc.'s securities lending operations 'raises some serious questions about the adequacy of state regulation.'

Banking Committee Chairman Christopher Dodd, D-Conn., opened the hearing with a blast at AIG's decision to issue bonuses to employees of its financial products division, whose credit default swap transactions are blamed for much of AIG’s current financial crisis. As the committee heard witnesses speak in favor of and in opposition to allowing insurers to choose federal regulation in place of the current state regulatory regime, some lawmakers voiced support for allowing reinsurers and life insurers to choose federal regulation."

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