Eric Dinallo – Snippets

  • 2008 0924 – propertycasualty360.com – NAIC Members: AIG Mess Is Not Our Fault, By James Connolly – [link]
    • The nation’s insurance commissioners meeting here asserted that state regulation has ensured the solvency of carriers including insurance subsidiaries of financially challenged American International
    • AIG has raised the concerns of many insurance consumers. Mr. Dinallo said that in the first two days following the AIG crisis, his department received over 1,000 calls concerning AIG contracts.
  • (p46) – John F. TIERNEY (D-MA) – Let me follow up on that, Mr. Dinallo.
    • The State-regulated insurance subsidiaries remain solvent and able to that pay their claims, correct?
  • Eric DINALLO, New York State Superintendent of Insurance – Yes, sir.

 GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

  • (p54) – 1:34-1:41 – Bruce 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.
  • Eric DINALLO, Superintendent, New York State Insurance Department – 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 policyowners 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.

 GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

  • Mark SOUDER (R-IN). If I was trying to go through the different guarantee funds and so on, if insurance companies would start to need to be rescued, do you have a fee much like do we for FDIC–
  • Eric DINALLO (New York State Superintendent of Insurance. Yes.
  • Mr. SOUDER. And others like the insurance companies would kick in?
  • Mr. DINALLO. Yes, we have what’s called a guarantee fund.
  • Mr. SOUDER. Do you have right now-……
  • Mr. DINALLO. Yes.

GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

  • (p54) – 1:34-1:41 – Bruce 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 policyowners 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.

GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

  • (p54) – 1:34-1:41 – Eric DINALLO, Superintendent, New York State Insurance Department – 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.
  • Bruce BRALEY (D-IA) –  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.

 GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

  • (p46) – Eric Dinallo,Superintendent, New York State Insurance Department: But AIG is Exhibit A for how well the States did, not how poorly they did. And that has to be said clearly because it’s bad for policyholders if they think that actually their regulators did not execute well on that part of the industry.

GOV (House-OGR) – The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Henry Waxman (D-CA)  —  [BonkNote]

 

  • 33:00 – Eric Dinallo (NY / NAIC) – Securities Lending didn’t have anything/much to do with AIG Collapse, run on aig life, [Bonk: Reputational Risk] 

2009 0305 – GOV (Senate) – American International Group: Examining What Went Wrong, Government Intervention, And Implications for Future Regulation, (CSPAN) Government Intervention and Regulation of AIG, Chris Dodd (D-CT)  —  [BonkNote]

Testimony – Eric Dinallo (NAIC / NYSID) – 8p

  • (p112 / 113 of 251) – Dinallo here interjects with what he calls a “powerful” piece of information-that during this period when Goldman and all the other counterparties suddenly started pulling cash out of AIG’s securities-lending business, no other sec-lending firm on Wall Street was having anything like the same problems. If Neuger’s counterparties were pulling their cash out en masse, it didn’t seem to be because they were worried about the value of the  securities they were holding. Something else was going on.
  • (p113 of 251) – “So what’s the coincidence of that?” asks Dinallo. “It was clearly a result of what was going on in the financial products division.”

2010 – Book – Griftopia, by Matt Taibbi  —  [BonkNote]

  • What could the New York Fed be hiding?
  • For one thing, a clear explanation of why it felt it had to bail out AIG.
    • The story from regulators during the crisis was that credit-default swap counterparties had to be paid lest the financial system collapse.
    • The public became incensed about 100-cents on the dollar pay-outs to big banks.
  • Then last winter, Treasury Secretary Timothy Geithner, who ran the New York Fed in 2008, said the real problem had been AIG’s insurance business, threatening average consumers.

2010 0910 – WSJ – ‘Systemic Risk’ Stonewall: Some bailout questions the Fed still hasn’t answered  —  [BonkNote]  —  [link]

⇒  2010 0127 – GOV (House-OGR) – The Federal Bailout AIG, Edolphus Towns (D-NY)  —  [BonkNote] 

  • I realized, there was nobody else.
  • There was no one for me to get help on this. This was it.
    • I’m in the room.
      • Geithner’s asking.
      • Paulson’s listening. 
  • I finally had no one else to ask.
    • I mean, my experts obviously.
  • But it was one of those moments in life where you’re like, “Okay, this is it. You’re either going to get this right, or you’re going to get it wrong.
  • There’s no one else to go and chat with about it…

2021 0225 – Yale – YPFS Lessons Learned Oral History Project: An Interview with Eric Dinallo, Former New York State Superintendent of Insurance (2007-2009)  —  [BonkNote]  —   19p