Congressman Blaine Leutkemeyer (R-MO) is vice chairman of the United States House Financial Services Committee’s Subcommittee on Housing and Insurance, and previously worked in the insurance industry and as a bank regulator. He began his remarks by observing a recent expansion of federal authority, noting that insurance is fortunate to be largely regulated at the state level.
Congressman Leutkemeyer noted the pending deadline for TRIA extension as an area of concern, acknowledging that a more uncertain world means more problems, and that the insurance industry will be in the middle of such problems.
As the outcome of the 2012 elections means that the Affordable Care Act (ACA) is unlikely to be repealed, Congressman Leutkemeyer turned his attention to the DFA. He cited the CFPB as an example of an entity that may be granted too much autonomy, warning that such centralized power and authority can contrast with consumers’ opportunities for choice.
Duplication of services and the resulting higher costs to taxpayers was another theme Congressman Leutkemeyer addressed, particularly with regard to the FSOC. "Why do we need additional agencies if one is not doing its job? If you have a police department that is not doing its job, you don’t add another police department. This is runaway bureaucracy at its best," he said. As an example, he cited 68 rules that emerge from Washington, D.C. every day. He urged the industry to make its voice heard at the highest levels, particularly with regard to educating policymakers about the unique nature of the insurance sector.
As a former bank examiner, Congressman Leutkemeyer expressed concern that the DFA discriminates against mid-size and community banks in comparison to banks deemed "too-big-to-fail." The DFA’s focus on consumer protection has "flipped the model" according to the Congressman, prioritizing consumer protection over the safety and soundness of the institution. Such a model also leads to consolidation within the industry and potentially fewer choices for consumers, especially at a time when 46 percent of small business loans are made by community banks. "We can’t push community banks out of the picture with a doctrine that comes at the cost of U.S. taxpayers underwriting too-big-to-fail institutions," he said.
Additionally, liquidation powers that allow the FDIC to borrow to prevent an institution’s failing present concerns. "The greatness of this country is its willingness to take risks and to be able to fail. The private sector needs to undertake risk in order to grow the economy; otherwise, we risk false prosperity," he noted.
With regard to Basel III, the global voluntary standard for evaluating bank capital adequacy and liquidity risk, Congressman Leutkemeyer noted a letter he submitted to the Fed chair, asking that insurance be excluded from the onerous rules proposed, and asking that the Fed consider the cost of imposing such rules on the average person.
Problems in Cyprus and throughout the European Union as well as Japan present challenges, but also an opportunity for the U.S. to take a lead role in navigating the regulatory environment. When it comes to budgeting and growing the economy, nations around the globe look to the U.S. for leadership, noted the Congressman. He concluded that the U.S. is still the best place to grow capital. "We have an opportunity to solidify and build our economy; and lead the world," Congressman Leutkemeyer said.
Our partners for this event, Faegre Baker Daniels, have also published a brief report of the Summit.