Treasury's OFR to Cast Wide Net for Data Pool from Insurers

Another concern that could result in roping in insurance industry data into a central repository, is the perceived need by OFR for a central information source in the securities lending market comparable to what is available in the repo markets. Typical lenders for securities are insurance companies along with pension funds and investment companies, and they usually lend to borrowers such as hedge funds.

At present, the OFR stated, supervisors receive very little information about securities lending, and private vendors of information about the market rely on voluntary reporting by market participants.

(According to the OFR, securities lending is similar to repo in that both involve a temporary exchange of securities and cash, with an interest payment when the exchange is reversed. The difference is that repo is mainly a mechanism for collateralized lending and borrowing, while securities lending is driven primarily by demand for holding a security temporarily—for example, for purposes of short selling.)

“Given the prominence of these markets in the financial crisis and their anticipated renewed importance as lending rebounds, the absence of a complete picture presents a significant data gap,” the reported concluded.

The OFR said it plans to work closely with FSOC agencies to develop strategies to close this gap weighing different strategies, of course.

Geithner is due to testify before both chambers of Congress this week (the House on Wednesday and the Senate on Thursday) on FSOC’s annual report to Congress.

Meanwhile, the Federal Insurance Office report on modernizing the insurance industry is six months overdue to Congress. Its delay is chalked up to the Treasury Department’s heavy workload with other agencies, sources say. 

However this lynchpin in U.S. insurance regulation’s direction still needs to come to the fore publicly, some say, to offer some sort of clarification. Members of the Federal Advisory Committee on Insurance (FACI) due to meet Aug. 6 have had nothing to say on their work or lack of work since their inaugural meeting in the spring, with  at least a couple pointing to the report’s absence from the scene.

“It’s disappointing that several FIO report deadlines have come and gone. Secretary Geithner assured me several months ago that the reports were nearly ready, but we’re still waiting. If FIO is to become “the” insurance expert on which Members of Congress can depend, it must meet deadlines, especially those Congress establishes in law,” stated Rep. Judy Biggert, R-Il., in response to a press query last week.

Of course, much of its work is likely happening behind the scenes, or in arenas other than preparation for insurance industry data collection or review.

“…FIO’s number one priority should be to continue to partner with USTR and our state insurance regulators, engage in international forums, and strengthen our competitiveness abroad…we need a strong U.S. voice at the table during important regulatory negotiations – particularly those in Europe,” stated Biggert, who serves as chair of the U.S. House Financial Services Subcommittee on Insurance Housing and Community Opportunity, and who was involved in the insurance provisions of Dodd-Frank.