Financial Reform Should Not Override State Protections, Says Consumer Watchdog
 
Washington, D.C. — Legislation to undermine state insurance protections, including laws requiring insurers to hold enough money to pay all claims, passed the U.S. House Financial Services Committee today. Insurance deregulation should not be part of a financial re-regulation package, said the nonprofit Consumer Watchdog, who called on members of Congress to reject preemption of state insurance laws when financial reform legislation reaches the House floor.
 
“A plan to roll back oversight of the insurance industry does not belong in the financial re-regulation package,” said Carmen Balber, Washington Director for Consumer Watchdog.
 
The bill, H.R. 2609 (Kanjorski, D-PA), would undermine state insurance protections by empowering a new Federal Insurance Office in the Treasury Department to preempt state capital, solvency, and other prudential measures on behalf of foreign insurance firms. International agreements made by unelected federal officials would allow foreign regulators to set their own rules for companies selling insurance in the United States, said Consumer Watchdog.
 
“This bill is part of the insurance industry’s ongoing push to deregulate insurance by limiting state regulators’ authority and is sure to weaken consumer protection. It would be a real mistake for Congress to weaken state insurance oversight when the failures of bank deregulation are all too obvious to every American who lost a job, home or business in the financial meltdown and its economic aftermath,” said Balber.
 
Legislation creating a Consumer Financial Protection Agency to improve oversight of consumer financial products, approved by the Financial Services committee in October, similarly allows for preemption of some state banking consumer protection laws.
 
“Members of Congress should stand strong against any efforts to weaken state protections through federal preemption as the financial reform package comes to the House floor,” said Balber.
 
Click here to download the letter outlining Consumer Watchdog’s opposition to the preemption of state insurance laws.