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Dinallo Concerned About Optional Regulation In Fed Plans

Mar 31, 2008 Market Outlook

Dinallo Concerned About Optional Regulation In Fed Plans

Last Update: 3/31/2008 12:20:42 PM

NEW YORK (Dow Jones)–New York State Insurance Commissioner Eric Dinallo called
U.S. Treasury Secretary Henry Paulson’s plan to overhaul the U.S. financial
regulatory structure “thoughtful,” although he questioned the idea of optional
regulation and asserted that state regulators had been successful with the
monoline insurers.

“If the federal government wants to regulate an area, of course it probably has
the right to do so. But I think optional regulation leads to regulatory
arbitrage, or a race to the bottom,” Dinallo said in a Monday CNBC interview.

Dinallo also defended the work of state regulators in finding a solution to the
recent struggles of the monoline insurers.

“Across the board, state regulators and the industry ought to be proud of what
has been a stable and consumer protective regime,” Dinallo said. “We did in fact
effectively regulate on behalf of the states.”

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