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By Michael R. Crittenden
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–The U.S. federal government should probably have some
role in regulating the insurance industry, the head of bond insurer MBIA Inc.
(MBI) said Monday.

MBIA Chairman and Chief Executive Joseph Brown told students at Georgetown
University that some sort of federal charter for insurers makes more sense than
the current state-based regulatory system. This is particularly the case for
non-consumer lines of insurance, including the insurance on bonds and securities
offered by companies like MBIA, he said.

“Insurance is too big for the federal government not to have a bigger role,”
Brown said.

The comments come just weeks after the Treasury Department unveiled a sweeping
“blueprint” to overhaul regulation of the U.S. financial markets. Included in the
plan was an optional federal charter that insurers could choose over the current
state-by-state system.

The proposal has set off a heated debate within the insurance industry, pitting
life insurers and larger property and casualty firms that favor the federal role
against the insurance agents and smaller companies that want to maintain the
current regulatory environment.

U.S. lawmakers are also looking at the issue, though the House and Senate are
unlikely to seriously address it this year.

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