Insurers Jump on TARP Despite Concerns

Paulson's supporters are wide-ranging, even if they have not committed to his entire process. Congressman Paul Kanjorski (D., Pa.), chairs a House Financial Services subcommittee sponsoring H.R. 5840, the Insurance Information Act of 2008, which proposes creating a new Treasury department called the Office of Insurance Information. According to the Library of Congress, this office will assist the Secretary of the Treasury "to advise the president and Congress on domestic and international policy issues regarding all lines of insurance except health insurance."

Although Kanjorski's bill is enthusiastically supported by Barney Frank (D., Mass.), chairman of the House Financial Services Committee, the NAIC fears that any introduction of legislation bringing an element of federal oversight will be the thin end of the wedge and that there is a misconception as to what happened with AIG.

AIG: The Misperceptions

President and Kansas Insurance Commissioner Sandy Praeger stated the following at the time AIG received its first bailout funds:

"Both the American Insurance Association (AIA) and the American Council of Life Insurers (ACLI) released statements saying that the recent crisis and the $85 billion line of credit offered by the Federal Reserve to American International Group, Inc., demonstrate the need for a federal insurance regulatory presence. An examination of the facts will clearly show that these organizations have gotten it wrong and are letting their desire to have an optional federal charter get in the way of making a common sense recommendation to address the problem."

Praeger went on to discuss what is now more widely and better known, that the insurance companies of AIG were not the cause of the problems at the company and continue to meet capital requirements set by the state insurance commissioners.

Appearing in front of the U.S. House Committee on Oversight and Government Reform at the beginning of October, New York State Insurance Superintendent Eric Dinallo outlined the steps that the New York State Insurance Department -- and state insurance regulators from across the nation -- have taken to protect policyholders and ensure the solvency of AIG's insurance subsidiaries.