Blaine Luetkemeyer

  • Congressman - (R-MO-2009-Current, as of 2022)

2015 0429 - GOV (House) - The Impact of International Regulatory Standards -  [PDF-125p, part 1 - VIDEO-youtube , Part 2 - VIDEO-youtube] 

(p19) - Mark Van Der Weide - (Deputy Director, Division of Banking Supervision and Regulation, at the Federal Reserve Board of Governors)

The FSOC publicizes a summary of its decision whenever it designates a non-bank SIFI.

  • And that was true as well for the three insurance non-bank SIFIs that the FSOC has designated.

They have also put out a public framework to describe the factors that they used to assess whether a particular non-bank financial firm is a SIFI.

  • And those procedures were followed in the process that led to the designation of the three U.S. insurers as non-bank SIFIs.

I think the FSOC recognizes that traditional insurance activities tend to generate low amounts of systemic risk.

  • But there are a fair amount of nontraditional insurance activities that are engaged in by those three firms, and those did generate some amounts of systemic risk.
  • Some of the key factors that were cited in the FSOC’s decisions included:
    • the extent of short-term funding activities at those organizations,
    • the extent of their capital markets activities— repos, securities, lending, OTC derivatives—which create interconnectedness with the rest of the financial system,
    • and also the runnable liabilities of some of those firms embedded in their insurance or annuities products, which would enable the annuitant or the insurance policyholder to potentially take out its money from the firm on short notice.
    • But those are some of the factors that...

(p21) - Chairman LUETKEMEYER. Thank you. Mr. Van Der Weide, I want to let you know that you gave us more information in your 2 or 3 minutes’ response here than all of the other folks we have had before this committee, put together, when we asked that question about SIFIs. Thank you for your response.

2014 1118 - GOV -The Impact of International Regulatory Standards...Part II” - [youtube] - pdf-140p

  • 00:58:00 - Mr. LUETKEMEYER. Okay. If you agree with them, on what basis do you agree?
  • That we have three insurance companies in this country that are systemically important enough they could bring down the entire economy?
  • When in 2008, during the most disastrous economic financial debacle since the Great Depression, there were no insurance companies that were a problem. 
  • Mr. LUETKEMEYER. Mr. Paulson, one of the things that we are looking into here with AIG, can you explain to me, AIG and their Financial Products, was that a subsidiary of AIG or was that part of their business model?
  • Mr. PAULSON. I believe it was part of the business model.
  • Mr. LUETKEMEYER. There wasn’t a separate entity that was separately capitalized?
  • Mr. PAULSON. It was clearly at the holding company and it was part of——
  • Mr. LUETKEMEYER. The thing that makes——
  • Mr. PAULSON. It wasn’t part of an insurance business model, but it was sure part of the company’s business strategy.
  • Mr. LUETKEMEYER. Because it makes a big difference. If it is not part of the insurance product company and it is a subsidiary that is separately capitalized, you can let that thing go down and it doesn’t impact the insurance part of it, which I believe it was. Is that not correct?
  • Mr. PAULSON. Well, I would say this to you. This company was so big and intertwined that it was—if there was any way that the people who were working on this could have found a way to just hive off and let one small part of the company go down——  (p140)
  • Mr. PAULSON. So to just be clear, there was no way to hive off and handle this situation differently. There was a very few days to act to prevent bankruptcy with no wind-down powers to let this company be liquidated and avoid bankruptcy.
  • Mr. LUETKEMEYER. Well, with all due respect, if it is a separate entity, a subsidiary, it could go beyond and the rest of it could still stand on itself, sir, but that being——
  • Mr. PAULSON. Well——

2010 0127 - GOV - The Federal Bailout AIG