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.The CNI should also have the power to establish areceivership for a national insurer for the purpose of rehabilitation or liquidation, as deemed to beappropriate.Intermediate-Term Recommendations 109Other regulatory powers granted to the CNI should include those to issue such rules,regulations, orders, and interpretations as deemed necessary to carry out the purposes of thelegislation establishing the ONI; to sue and be sued, defend, and otherwise litigate in anyfederal or state court (other than the Supreme Court of the United States in which theCNI shall be represented by the U.S.Solicitor General); and to provide for theregistration and oversight of an insurance self-regulatory organization(s) to carry out aspecific limited purpose authorized under the legislation establishing the ONI.In the international area, the CNI should have the power to engage in international effortsto secure bilateral and multilateral cooperation and agreements, as appropriate, withrespect to insurance regulation in global markets; to provide appropriate technicalassistance to, and cooperation with, individual foreign insurance regulators andregulatory organizations in insurance matters affecting international commerce; and toconsult and coordinate with the Executive Office of the President and the U.S.TradeRepresentative.Creation of an Office of Insurance OversightAcknowledging that the OFC debate in Congress is difficult and ongoing, Treasurybelieves that some aspects of the insurance sector and its regulatory regime requireimmediate attention.Treasury recommends that Congress create a national Office ofInsurance Oversight ( OIO ) within Treasury, which could be rolled into the ONI/OFCfederal regulatory regime once Congress passes significant insurance regulatory reform.TheOIO, through its insurance oversight, should be able to focus immediately on key areas offederal interest in the insurance sector and should not require the creation of a federalregulatory structure.The Secretary of the Treasury should appoint a director to lead theOIO.The OIO should be established to accomplish two main purposes.First, the OIO shouldexercise newly granted statutory authority to deal with international regulatory issues, suchas reinsurance collateral.Second, it should advise the Secretary of the Treasury on majordomestic and international policy issues.With regard to international regulatory issues, the OIO should be granted the authorityto recognize international regulatory bodies for specific insurance purposes.The OIOshould become the lead negotiator in the promotion of international insurance policy for theUnited States, and should have the benefit of consulting with the NAIC and state insuranceregulators, who should still be primarily responsible for implementing internationalregulatory agreements.However, if the NAIC and state insurance regulators wereunable to achieve the needed uniformity in implementing the declared U.S.internationalinsurance policy goals, the OIO should have authority to preempt inconsistent laws orregulatory actions of any state and assume an implementation role as to those matters.Thismodel of preemption was used successfully in the GLB Act when Congress authorized thecreation of a new non-profit entity to adopt uniform licensing standards for insurance agents orbrokers if a prescribed number of states failed to adopt a uniform approach on their own.[114]In its policy function, the OIO should advise the Secretary of the Treasury on variousdomestic and international insurance policy matters.For example, the OIO coulddevelop expertise on issues such as financial guarantee insurance (i.e., bond insurers),110 Martin T.Bannister (Editor)private mortgage insurance, and natural catastrophe insurance.This should enable thefederal government to have a repository of experts to respond to legislative andregulatory matters affecting consumers and insurers.While the OIO s statutory powersrelated to international regulation should be transferred to the ONI once it becomesoperational, the general policy apparatus should remain in Treasury to serve in anadvisory capacity to the Secretary of the Treasury.In: Department of the Treasury Blueprint for Actions ISBN: 978-1-60692-512-6Editor: Martin T.Bannister, pp.111-149 © 2009 Nova Science Publishers, Inc.Chapter 6THE OPTIMAL REGULATORY STRUCTUREThis chapter presents a conceptual model for an optimal regulatory structure.Thismodel is intended to begin a discussion about rethinking the current regulatory structure andits goals.It is not intended to be viewed as altering regulatory authorities within the currentregulatory framework.RECOMMENDATION OVERVIEWTreasury recommends a regulatory structure that recognizes the differences betweenbusiness models centered on transactions with consumers (i.e., retail transactions) and thosefocused on transactions with other businesses (i.e., wholesale transactions).Strong argumentsexist for distinguishing the regulation of businesses (or the portions of businesses) with explicitguarantees from the federal government (e.g., deposit insurance) from the regulation ofthose entities with no explicit guarantee from the federal government.Treasury proposes a modernized regulatory structure that recognizes the convergenceof the financial services industry.The proposed structure will be more efficient andstrengthen our capital markets.Treasury proposes the creation of three regulators focusedexclusively on financial institutions and two other key authorities, a federal insuranceguarantee corporation and a corporate finance regulator.Each of these authorities isdescribed below.The market stability regulator should be responsible for overall conditions offinancial market stability that could impact the real economy.Given its traditional centralbank role of promoting overall macroeconomic stability, the Federal Reserve shouldassume this role.A primary function of the Federal Reserve s market stability role shouldcontinue through traditional channels of implementing monetary policy and providingliquidity to the financial system.In addition, the Federal Reserve should be provided with adifferent, yet critically important regulatory role and broad powers focusing on the overallfinancial system.In terms of its recast regulatory role, the Federal Reserve should havespecific authority regarding the collection of appropriate information from financialinstitutions, disclosing information, collaborating with other regulators onrulemaking, and taking corrective actions when necessary in the interest of overallfinancial market stability.112 Martin T.Bannister (Editor)The prudential financial regulator should focus on financial institutionswith some type of explicit government guarantees associated with their businessoperations.Although protecting consumers and helping to maintain confidence in thefinancial system, explicit government guarantees often erode market discipline,creating the potential for moral hazard and a clear need for prudential regulation.Prudential regulation in this context should be applied to individual firms, and shouldoperate like the current regulation of insured depository institutions, with capitaladequacy requirements, investment limits, activity limits, and direct on-site risk managementsupervision [ Pobierz caÅ‚ość w formacie PDF ]