Dinallo: Confluence risk regulations are based AIG Meltdown

 

Thursday, Mar 26,2009, 1:49:55 PM   Click:

(BestWire Services Via Acquire Media NewsEdge) Financial Regulations which made possible the supermarkets have led them to take on the hedge fund type of risk, New York Insurance Superintendent Eric Dinallo said in an interview Monday with BestWeek.

"We created these financial supermarkets, but we never put the regulatory oversight of the holding company level," he said, referring to the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, which repealed part of Glass-Steagall Act of 1933, opening up competition among banks, securities firms and insurance companies.

One of the holding companies of insurance allowed to choose their regulator. "AIG has chosen the Office of Thrift Supervision, a regulator responsible, but only one-thousandth of their balance sheets. And that to me is very difficult," he said.


In the case of American International Group, an important factor required insurance firm. "Fortunately, we did not remove the regulation of ditches around the holding companies," he said.

Dinallo said more federal oversight of insurance, tax relief can compete with other homes and opportunities for new types of risk sharing, as a New York Insurance Exchange that would encourage the syndication of catastrophic risks.

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(By Marilyn Ostermiller, Assistant Vice President, news) Copyright? 2009 h Best Company, Inc.