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The Current Financial Crisis; Implications for Insurance Regulation in the United States

The Current Financial Crisis; Implications for Insurance Regulation in the United States. Presentation to The International Judicial Academy Lawrence H. Mirel, Esq. Wiley Rein LLP May 25, 2009 Washington, DC. The Current Financial Crisis; Is Regulatory Failure to Blame?.

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The Current Financial Crisis; Implications for Insurance Regulation in the United States

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  1. The Current Financial Crisis; Implications for Insurance Regulation in the United States Presentation to The International Judicial Academy Lawrence H. Mirel, Esq. Wiley Rein LLP May 25, 2009 Washington, DC

  2. The Current Financial Crisis;Is Regulatory Failure to Blame? • The rationale for regulation, especially of insurance • The current state insurance regulatory system, strengths and weaknesses • The proposed federal alternative, strengths and weaknesses • Laws vs. enforcement of those laws • Was SEC asleep at the switch?

  3. What Went Wrong? • Unregulated products (credit default swaps) • Conflicting or overlapping regulatory authority (variable annuities) • Gramm-Leach-Bliley and the repeal of Glass-Steagal • AIG’s problems; are they unique?

  4. Is more regulation the answer? • Limits on what regulators can do • Prevent greed? • Curb unreasonable exuberance? • Wipe out fraud? • Separation of powers; the U.S. fear of unlimited authority • Legislative vs. Executive vs. Judicial • Federal vs. State • Private vs. Public

  5. A Systemic Risk Regulator? • What is “systemic risk”? • Who will regulate? The Fed? FDIC? New agency? • What authority will the regulator have? • Exclusive authority? • Standby authority? • Oversight authority? • Coordination only?

  6. Too Big to Fail? • Who will systemic regulator regulate? • How and when will decision be made? • Would any insurer—other than AIG—qualify as “systemically important?”

  7. Consider the Alternatives • Beefing up the current regulators • Closing the loopholes to ensure complete regulatory coverage of financial activities • Oversight and coordination instead of new regulation • Greater participation in global systems

  8. Mirel’s crystal ball • Something will be done; the Obama Administration has promised • Most likely an added regulator with limited powers • To collect data, conduct studies, and issue warnings • To represent U.S. in international for a • But current regulators, state and federal, will retain their current authority

  9. Contact Lawrence H. Mirel Wiley Rein, LLP 1776 K Street, NW Washington, DC 20006 (202)719-7449 Lmirel@wileyrein.com

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