A deal struck by Senators Christopher Dodd (D.-Conn.) and Richard Shelby (R-Ala.) removes a proposed $50 billion resolution fund from financial service reform legislation, permitting the bill to move to the next stage. The resolution fund proposal could have required financial services companies, including some insurers, to contribute to a $50 billion pool to help faltering companies.
An amendment to the bill allows the creation of new tools that the government can use to break up failing companies in order to prevent a domino effect among other financial services companies without using public funds to rescue them, according to the Wall Street Journal.
The National Association of Mutual Insurance Companies (NAMIC) has welcomed the news to drop the resolution fund.“By removing this fund, the Senate has taken another important step toward ensuring that mutual and reciprocal insurance companies and their policyholders should not be held responsible for saving large and systemically significant financial firms from their own risky behavior," says Charles M. Chamness, president and CEO, NAMIC.
“We have expressed our concerns throughout the legislative process, noting that property/casualty insurers pose no systemic risk and should not be held accountable for the failures the systemically significant firms,” Chamness adds. “While the legislation is by no means final, we feel that the agreement between Sens. Dodd and Shelby is a positive development that will help ensure that NAMIC members, and their policyholders, will not be asked to pay for the failures on Wall Street.”
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio