Financial Crisis Accountability on the Cards
The recently released results of the review of the 2008 financial crisis by the Government Accountability Office (GAO) has revealed that federal and state insurance regulators helped to minimize the economic turmoil and maintain general stability in the market. The GAO found that, with a few exceptions, the effects of the 2008 financial crisis on policyholders and insurers were limited. A coalition of state regulators under the banner of the National Association of Insurance Commissions took action during the crisis by insisting on detailed reports from insurers, as well as altering reporting rules and criteria for determining the risk factor of securities.
Reforms mandated by the Dodd-Frank Act have allowed federal regulators to increase attentiveness to the insurance sector to ensure minimum negative impact in the event of any future financial crisis. The Dodd-Frank Act, or more specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act, has not yet been fully implemented, and President Obama met with regulators on Monday to receive an update on its progress. The discussion included representatives from the Treasury, the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, the Commodity Futures Trading Commission, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the National Credit Union Administration, and while the Obama administration provided no details on the meeting, they released a statement to the effect that President Obama was intent on conveying his view that the Dodd-Frank Act should be fully implemented as a matter of urgency.
It was recently reported that US Attorney General Eric Holder will soon be announcing new civil and criminal charges to be brought by the Department of Justice against parties found to be responsible for the 2008 financial meltdown. As reported by WSJ, Holder warned those who have ‘inflicted damage’ on the financial markets should not think that that they are ‘out of the woods because of the passage of time.’ The Obama-administration has received criticism from many quarters regarding the lack of accountability demanded from senior executives involved in the crisis – an issue which Holder has reportedly vowed to rectify while still in office.