The legislation seeks to ensure uniform and accurate credit ratings for municipal bond issuers and to provide the federal government with a mechanism to monitor systemic risks, without unduly impeding on state insurance regulation.
“Indeed, H.R. 6308 seeks to partner with state insurance regulators and the NAIC, without imposing unnecessary or redundant federal preemptions,” said NAIC President and Kansas Insurance Commissioner Sandy Praeger. “Most important, the bill explicitly affirms state-based insurance regulation.”
Frank’s legislation authorizes the U.S. Treasury to collect data on financial guarantors (i.e., bond insurers) from the NAIC, state insurance regulators and other sources for the purposes of monitoring their safety and soundness. The bill includes important privacy provisions for proprietary data, and it requires Treasury to report on the state of the bond market to the U.S. Congress every year.
“As we’ve testified before Congress,” Praeger added, “we believe it’s appropriate for an agency within the federal government to work with state regulators — to gather information that will provide Congress with access to data that will identify macroeconomic trends or potential systemic risks.”
About the NAIC
Headquartered in Kansas City, Mo., the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories.