Eric Dinallo

  • 2021 0225 - YPFS Lessons Learned Oral History Project: An Interview with Eric Dinallo - 19p  ---  [BonkNote]
  • 2021 - Lessons Learned: Eric Dinallo, Journal of Financial Crises - 6p
    • (p4) - Which is, even if I had caught it and demanded that we fix it, the amount of political energy that would have been leveled against me would be  inconceivable.
      • Until the crisis happened.
    • (p6) - I wrote an op-ed for the [Financial Times] that lays out that there's a law, that [hedge fund manager] Bill Ackman and I argued about.
      • About not disparaging or questioning the solvency of an insurance company.
      • You can short the stock all day, and you can go out there and trash MBIA stock all day.
      • ⇒  But when you start to question its solvency, that's actually against the law.
      • [2008 0731- FT (Financial Times) - Tackle false rumours about insurance companies, Eric Dinallo (New York Insurance Commissioner) - [link]
  • Paul Volcker - ".....insurance companies, which I would say parenthetically I hope better regulatory systems will be developed, maybe not as part of this legislation but next year."  (p7)

2009 0924 - GOV (Senate) - Systemic Risk and Resolution Issues / Experts’ Perspectives on Systemic Risk and Resolution Issues - [PDF-128p, VIDEO-CSPAN]

  • Dinallo thinks that we should look at insurance regulation as a model for what was done right in the financial crisis (responding to criticism from Volcker about failures in state regulation). 

2010 0610 - FCIC memo of staff interview with Eric Dinallo - [Link to page - Automatic Download - 7p]

  • 15. In March 2008, the New York State Assembly held hearings on the monolines.13
    • Eric Dinallo, at that time the superintendent of the State Department of Insurance (today amalgamated into the Department of Financial Services), reported that, while the Department was helping the monolines to recapitalize, it was already “studying what steps could be necessary if one of the bond insurers is unable to find the capital it needs to maintain its ratings and stabilize its business.”14
  • In other words, by March of 2008, the Department was acknowledging the possibility that monoline insurers could fail.  (p401)

LC - barclaysbankplcsecuritieslitigation.com/media/934797/sharan_nirmul_exhibits_211-234.pdf

See Eric Dinallo, What I Learned at the AIG Meltdown: State Insurance Regulation Wasn’t the Problem, Wall Street Journal (Feb. 2, 2010) (online at online.wsj.com/article/SB10001424052748704022804575041283535717548.html) (hereinafter “State Insurance Regulation Wasn‟t the Problem”)

  • (“If AIG had gone bankrupt, state regulators would have seized the individual insurance companies.
    • The reserves of those insurance companies would have been set aside to pay policyholders and thereby protected from AIG‟s creditors.
      • However, . . . AIG‟s insurance companies were intertwined with each other and the parent company.
      • Policyholders would have been paid, but only after a potentially protracted delay.
      • It would have taken time to allocate the companies‟s [sic] assets”).

But see, Panel staff conversation with Texas Department of Insurance (May 24, 2010) (the regulators would not necessarily have seized the subsidiaries, but would probably have monitored them closely); Panel staff conversation with New York Insurance Department (June 3, 2010) (the regulators would not have seized the subsidiaries, because they were well capitalized).

2010 0610 - COP - The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy - [PDF-337p]

  • 01:21:00 - Turner -  You didn't bail out the life insurance companies . .. Greenburg... Dinallo....
  • Geithner - 

 

 

  • 2008 0131 - Bill Ackman to Eric Dinallo Superintendent of Insurance State of New York, re: Monolines - 20p
  • 2008 0914 - Federal Reserve Bank re: Conference Call with Eric Dinallo ... on the Financial Condition of AIG - 4p
  • 2010 0608/04 - FCIC - FCIC memo of staff interview with Eric Dinallo - 7p
  • 2020 0202 - WSJ - What I Learned at the AIG Meltdown: State insurance regulation wasn't the problem, By Eric Dinallo - [link}
  • 2021 - Lessons Learned: Eric Dinallo - 6p
  • John MICA (R-FL). Mr. Turner, did you think Glass-Steagall, the repeal——
  • Lynn TURNER (SEC-former Chief Accountant). I think the repeal of Glass-Steagall was a contributing factor here.
  • Mr. MICA. OK, Mr. Commissioner?
  • Eric DINALLO -New York State Insurance Department-Superintedent / Commissioner). I agree.

GOV (House) - The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Panel 1 - [PDF-171p,

  • (p54) - 1:34 - 1:41 - Mr. BRALEY (D-IA) - Mr. Dinallo, I want to start with you.
    • Twenty-five years ago, I was a research assistant to Professor Alan Whitus, who was updating the Keeton and Whitus basic text on insurance law; and I think both Professor Whitus and Professor Keeton would be rolling over in their graves seeing what has happened to the industry that they were so passionate about.
    • I think you would agree with me that industry has changed radically in the 25 years that I’ve been talking about.
  • Mr. DINALLO. Yes. In particular going from mutual companies to publicly traded companies.
  • Mr. BRALEY. And a lot of those demutualizations resulted in a significant financial loss to policy owners who owned the shares of those mutual companies—who owned the mutual companies and during the conversion in many cases were screwed out of their financial share of those companies.
  • Mr. DINALLO. I might not use the same verb, but I will agree.
  • Mr. BRALEY. I think you get my point.
  • Mr. DINALLO. Well, I think it’s important for everyone to know there’s a very strong tension between policyholders’ interest and shareholders’ interest in a publicly traded company.
    • The board and management has a fiduciary interest to shareholders under our law, fiduciary interest to shareholders, but, at the same time, whenever they release capital to satisfy that to get a bigger return on equity, they are necessarily taking incremental protection against policyholders.
  • Mr. BRALEY. And you also have a fiduciary obligation to policyholders under their contractual obligation with the policyholder.
  • Mr. DINALLO. Sadly, there is some debate, actually, because they’ve been so trained under our law and after Enron, etc., to worry about fiduciary duty to shareholders that there is a good argument that, although it’s in their blood to worry about policyholders, the legal requirements are a little bit gray, actually.

In describing the recent events, Eric Dinallo, New York Insurance Superintendent, stressed:

  • “While AIG has many large insurance operations within its corporate structure, it is a financial services conglomerate.
  • The current crisis is a result of AIG’s non-insurance related business.”
  • Superintendent Dinallo added: “The Federal Reserve’s rescue offer would likely not have been made if it were not for the core value of AIG’s insurance subsidiaries, which exists due to sound solvency regulation and oversight provided by IAIS members worldwide.”

2008 10 - IAIS - International Association of Insurance Supervisors - Addendum to Annual Report 2007-08 - 1p

  • (p46) - Chairman Paul Kanjorski (D-PA). Do these insurance institutions have the rate to participate with Federal Home Loan Banks?
  • Eric Dinallo (New York State Insurance Department - Commissioner) - I am sorry. I did not hear the very last part.
  • Chairman Kanjorski. Why could the insurance companies not make an application to the Federal Home Loan Bank system for a line of credit?
  • Mr. Dinallo. I do not know the answer to that.
    • Certainly, the investment banks that are the counterparties to their policies could make such an application, and you could do the re-insurance that way.
  • Chairman Kanjorski. We should look into that. I certainly would be amenable, and that is one way to spread the risk.

2008 0214 - GOV (House) - The State of the Bond Insurance Industry - [PDF-473p] 

  • "good book" "bad book" "dinallo"