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 Senators unanimously agreed on Tuesday to give the U.S. Federal
Reserve more authority to tailor its capital requirements for
insurance firms such as Prudential Financial and American
International Group to reflect the ways their business models differ
from banks'.
The move stemmed from a portion of Dodd-Frank that directed the Fed
to ensure that large, risky non-bank firms face capital requirements
comparable to those placed on banks.
Lawmakers from both parties, including Maine Republican Senator
Susan Collins, who wrote the relevant section of the reform law,
said they did not intend for banks and insurers to follow the exact
same rules.
"I want strong capital standards but they have to make sense,"
Senator Sherrod Brown, a Democrat from Ohio who introduced the bill
with Collins and Republican Senator Mike Johanns of Nebraska, said
in a statement.
"Applying bank standards to insurers could make the financial system
riskier, not safer," Brown said.
Insurance executives and their state regulators have said insurers
are not subject to runs on the business in the way banks are in
crises and they do not hold the same types of assets.
Fed Chair Janet Yellen had told lawmakers her agency recognized the
differences between insurers and banks but needed more authority to
tailor its rules.
Democrats have long been hesitant to allow even bipartisan changes
to the sweeping 2010 law for fear its critics would seize the
opportunity to try to revamp large portions of it. The decision on
Tuesday could mean other adjustments to Dodd-Frank will be allowed
to move forward.
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The insurance measure, which gives the Fed flexibility as long as
insurers are regulated at the state level, is likely to pass the
U.S. House of Representatives, where a group of lawmakers introduced
a similar bill.
Congress passed the Dodd-Frank law in response to the economic
meltdown that began in 2008. It called for hundreds of new rules,
including new oversight of the massive swaps market, mortgages and
consumer financial products, and large non-bank financial firms.
(Reporting and writing by Emily Stephenson; Editing by Bill Trott
and Susan Heavey)
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