UPDATES with second House Financial Services Committee hearing regarding insurance this week, page two:
As anticipated, MetLife Inc. will be testifying at a previously scheduled Congressional hearing on the impact of the Dodd-Frank Act's designation of systemically important financial institutions (SIFI) Wednesday before a House Financial Services subcommittee, but the news of JPMorgan Chase's $2 billion in trading losses is sure to color the questioning of the panel, which includes banking regulatory experts.
MetLife President, Americas, William J. Wheeler is scheduled to testify on the second panel of the hearing before the Financial Institutions and Consumer Credit Subcommittee on May 16, along with Scott Harrington, of the Wharton School at the University of Pennsylvania, as well as representatives from the Brookings Institution and the US Chamber of Commerce.
MetLife was one of four large financial institutions that on March 13 deemed to have failed a "stress test" imposed on large banking institutions by the Federal Reserve Board.
Harrington is a healthcare economics and insurance and risk management specialist with expertise in financial regulation and capital requirements. He is also a liability auditor for insurer bankruptcy, and is a member of the Federal Advisory Committee on Insurance governed by the Treasury and reporting to the Federal Insurance Office (FIO) Director and U.S. Treasury official Michael McRaith.
The witness list names Treasury's Deputy Assistant Secretary for Financial Institutions Lance Auer, and a seasoned hand at the Volcker rule, on the first panel.
The Committee did not return requests for comment on the hearing.
What may concern lawmakers, who will also be questioning Michael Gibson, director, of banking supervision at the Board of Governors of the Federal Reserve System, is the Volcker Rule created by Section 619 of the Dodd-Frank Act.
Auer has worked on the question of designating financial market utilities as SIFIs and is a point man for lobbying meetings with bank and finance companies as well.
Auer had met with several JPMorgan Chase executives last September at the Treasury, according to the Dodd-Frank meeting logs provided by the Sunlight Foundation.
Of course, a SIFI-designated company would be subject to consolidated supervision by the Fed regardless of whether the company owned a bank or not.
The rule is supposed to limit the ability of systemically important, federally insured banks and SIFIs from engaging in speculative trading or investing in hedge funds or private equity funds with their own money. This is what JP Morgan has been faulted with, and it, along with many other companies including insurers, have heavily lobbied the Fed against a too stringent or encompassing interpretation.
Insurance companies, especially, would argue the Fed needs to tread lightly, but in light of JPMorgan Chase's trading oversight failures, insurers may have to pay the price. Political capital to take swings at the Volker Rule may be pinched back after the trading fiasco.
The insurance industry was granted a limited exemption to the rule through its lobbying efforts and the work of both former Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass.
