Skip First Level Navigation | Skip All Navigation

Site Map   Search INS

Augusta, Maine -

Treasury Secretary Henry Paulson has proposed an elaborate and far-reaching plan to overhaul the regulation of financial services, which includes extensive federal involvement in areas that have historically been regulated by the states.

The plan proposes an elective system of federal chartering, licensing, regulation, and supervision for insurance. Insurers would be allowed to choose regulation by the federal government and would then be exempt from state regulation. Some special interest groups pushing for federal regulation are looking to avoid strong state-based consumer protection standards and oversight.

“This is bad news for consumers,” stated Maine Insurance Superintendent Mila Kofman. “They need an accessible contact where answers to questions can be easily obtained, whether their issues are insurance, banking or credit. A huge bureaucratic office run by the federal government is not the answer. Last year, the Maine Bureau of Insurance handled 11,079 consumer calls and was able to obtain approximately $1,562,860 in restitution to consumers. I don’t see this happening if the federal government is in control.”

“An optional charter is designed to give companies the opportunity to follow the path of least regulation. This will erode consumer protection. State regulators will not be able to help consumers with coverage from a federally licensed insurer. The optional charter is equally bad for industry. The ability to choose and change regulation is a disadvantage to smaller Maine companies who may find that they do not have the resources (either financially or otherwise) to change regulatory control,” according to Kofman.

In addition to new federal insurance supervision, Paulson's plan would create a vast bureaucracy that would federalize the supervision and chartering of banks and credit unions. Maine Bureau of Financial Institutions Superintendent Lloyd P. LaFountain III agrees that the plan goes too far. "When a financial institution is federally chartered, preemption of state law significantly impairs the ability of state authorities to intervene on behalf of Maine citizens."

The Bureau of Insurance is part of the Department of Professional and Financial Regulation which encourages sound ethical business practices through high quality, impartial and efficient regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its web site at www.maine.gov/insurance; by calling 800-300-5000 in state; or by writing to Bureau of Insurance, 34 State House Station, Augusta ME 04333.

###

Last Updated: April 7, 2009 2:44 PM