"Insurance Experts Tongue-Tied on Ideas for Capital Adequacy, Too Big to Fail Rules
What is noteworthy about this session is that five experts were asked to opine on how to regulate capital adequacy and "too big to fail" and only one (Robert Hunter) made a serious, if sketchy, effort to answer the question. I can understand not having a simple answer to a complicated question (there are a lot of different products in insurance) but the flat-footedness is not encouraging.
The experts were:
Mr. Baird Webel, Specialist in Financial Economics, Congressional Research Service;
Ms. Patricia Guinn, Managing Director, Global Risk and Financial Services Business, Towers Perrin;
Mr. J. Robert Hunter, Director of Insurance, Consumer Federation of America;
Mr. Martin F. Grace, James S. Kemper Professor, Department of Risk Management and Insurance, Georgia State University; and
Mr. Scott Harrington, Alan B. Miller Professor, Wharton School, University of Pennsylvania."
Me:
It might help to know exactly what people mean by Systemic Risk. I see the current problem as Debt-Deflation. Consequently, I can propose various solutions to try and keep that from occurring again. For example, I like Narrow/Limited Banking. I can also see that as long as we have a Lender Of Last Resort, we cannot rule out Moral Hazard. No real government would tell people "Good luck" facing Debt-Deflation, especially if you have a LOLR. That's basically what it means to have a LOLR.
I guess I'm arguing that a Systemic Risk Regulator will be mainly window dressing, although it probably would do some good, assuming that people don't rely on its blessing as the word of God. Good luck.
Don the libertarian Democrat