FINANCIAL SERVICES RANKING MEMBER BARNEY FRANK EXPRESSES SUPPORT FOR STATE REGULATION
Longtime Massachusetts representative also praises agents for effective grassroots efforts
WASHINGTON, D.C., April 23—Rep. Barney Frank (D-Mass.) expressed his support today for state-based insurance regulation in remarks to 900 members of the Independent Insurance Agents & Brokers of America (IIABA) during a breakfast session at their National Legislative Conference taking place in Washington.
Frank, the ranking Democrat on the House Financial Services Committee, drew enthusiastic applause from independent insurance agents and brokers when he succinctly stated that Congress would not support optional federal chartering for the insurance industry. IIABA and its 300,000 members steadfastly oppose creation of a federal insurance regulatory role or an optional federal chartering system.
In making the case against a federal role, Frank said state agencies are better equipped to deal with consumer-protection issues than federal agencies, because federal policy making is done more at a macro level, with lesser emphasis on consumer protection than is done at the state level.
“We have found consumer protection tends to be done better at the state level,” Frank said. “Some old woman who has been treated badly by her bank is probably not going to get through to Alan Greenspan.” Greenspan is chairman of the Federal Reserve Board.
“If you are a federal regulator, you are concerned with the functioning of the system. You have macroeconomic concerns. You’re trying to avoid major failures,” he said.
Frank said the pitfalls of federal regulation had been highlighted in a controversial recent preemption rule issued by the U.S. Office of the Comptroller of the Currency (OCC) that exempts national banks from many state consumer protection and anti-predatory-lending laws. He expressed the opinion that this type of system, with decision-making that would possibly enable similar exemptions in the insurance industry, was not desirable. Frank also expressed the concern that “optional” federal chartering would allow federal regulators to entice insurance companies to opt out of state regulation.
“If we allow the OCC precedent to stand, I think we’re going to see a substantial alteration in the state-federal system, to the disadvantage of the states, and I don’t want to see that. That’s why I don’t think the optional federal charter makes any sense,” Frank said.
Frank also praised independent insurance agents and brokers for their strong and effective grassroots efforts and called them one of the three most influential groups on Capitol Hill in the financial services arena.
He said IIABA members are influential with elected leaders due to their persistence, their numbers, the fact that they do business in every state and congressional district, and what he called their “pleasantly aggressive” approach.
“In the financial services area … the three most influential groups are independent insurance agents, Realtors and credit unions,” Frank said. “Now, you are not the three biggest givers (financially). What you are are the three biggest grassroots representatives.”
Frank said the fact that independent insurance agents and brokers could have a high degree of influence without being one of the top financial givers was a testimony to their method of approach and a positive thing for the country.
“It’s not simply that you are present in our districts, but you are popular, on the whole, with the people you deal with,” Frank said. “The fact that you are influential, I think…speaks well of that aspect of our political system.”
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—employee benefit plans and retirement products. Web address: www.independentagent.com.