Tuesday, October 27, 2009

Overriding State Insurance Protections Should Not Be Part of Financial Re-Regulation Package, Writes Consumer Watchdog to Geithner, Frank

/PRNewswire/ -- Consumer Watchdog sent a letter to Treasury Secretary Geithner, House Financial Services Committee Chair Barney Frank, and Financial Services Subcommittee Chair Paul Kanjorski today, arguing that legislation intended to undermine state insurance protections (H.R. 2609) is inconsistent with the re-regulatory promise of the financial reform package. The bill will be marked up in the House Financial Services committee today.

"We are at a loss to understand why you have proposed a measure to deregulate the insurance industry by preempting state laws as part of the financial re-regulation package," wrote Consumer Watchdog. "Each version of the bill would restrict the ability of state lawmakers and regulators to protect insurance consumers by granting the Treasury Department and a new Federal Insurance Office the authority to preempt state laws and regulations on prudential matters on behalf of foreign insurance firms."

"This proposal is even more perplexing in light of the strong fight, on the part of both the administration and majority members of the Financial Services committee, to preserve states' ability to protect their citizens during the debate over the Consumer Financial Protection Agency," the letter continued.

As Assistant Treasury Secretary Michael Barr put it to the Washington Post last week:

"'Washington doesn't always know what's best'... He said the administration wanted to restore the right of states 'to protect their citizens with the rules that they think make sense.'"

"If Washington doesn't always know what's best for American consumers, why would you expect foreign diplomats and regulators to know what's best for American insurance policyholders?" asked Carmen Balber, Washington Director for Consumer Watchdog.

The letter concludes: "Wall Street firms are again riding high a year after the crash, but the rest of the country continues to suffer rising foreclosures, increased unemployment, and a dearth of credit. With American homes, jobs and businesses already on the line, now is hardly the time for Congress to place our insurance policies at risk as well."

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