Systemic Risk Council

systemicriskcouncil.org/
systemicriskcouncil.org/who-we-are/
- The SRC was formed by CFA Institute and The Pew Charitable Trusts in June 2012 to monitor and encourage regulatory reform of U.S. capital markets focused on systemic risk. CFA Institute became the sole supporting organization in August 2015
CFA Institute
- cfainstitute.org/
2014 0310 – Letter – Sheila C. Bair – Systemic Risk Council to Senator Sherrod Brown (D-OH) – 6p
- 2014 0311 – GOV (Senate) – Finding the Right Capital Regulations for Insurers, Sherrod Brown (D-OH) — [BonkNote]

….former government officials and financial and legal experts committed to addressing regulatory and structural issues relating to global systemic risk, with a particular focus on the United States and Europe.
- Members:
  - Sheila Bair – Founding Chair of Systemic Risk Council Former FDIC Chair
  - Brooksley Born – Former U.S. Commodity Futures Trading Commission Chair
- Former SRC Member
  - Paul Volcker – Former SRC Senior Advisor and Former Federal Reserve Chair
The SRC was formed by CFA Institute and The Pew Charitable Trusts in June 2012 to monitor and encourage regulatory reform of U.S. capital markets focused on systemic risk. CFA Institute became the sole supporting organization in August 2015

systemicriskcouncil.org/who-we-are/

(p5) – Insurance companies are not risk-free
- Though insurance companies are different than banks, it is important to remember that they put their money in many of the same assets: government and corporate bonds, mortgage-backed securities, and real estate loans
  - Indeed, according to the American Council of Life Insurers’ data, life insurers have over a trillion dollars in real estate exposure, including $600 trillion in mortgage-backed securities and $354 billion in commercial and residential mortgages. [Bonk: Typo? Trillion – Billion]
  - Though their run-risk may be different from banks, it is real. While banks hold short-term deposits, most are backed by the FDIC, and are quite stable, as we saw during the crisis.
    - Even if we concede these differences, insurance policy holders can “run,” just differently.
  - A life insurance policy is not indentured servitude. Policyholders can cash out whole life and annuity products, and halt premium payments on term products. Indeed, one of the biggest life insurance failures – $15 billion Executive Life – suffered debilitating policy surrenders contributing to its failure in 1991.
- I question the argument that insurance organizations should have weaker bank/thrift holding company protections because their insurance policy holders can’t easily cash out if they make bad investments.
- Moreover, given the long-term nature of life insurers’ obligations to their policy holders, they are exposed to substantial risk based on market fluctuations and turns in the economic cycle. Thus, it could be easily argued that they need more, not less, capital than banks based on the long tail of their liability structure.
(p6) – Conclusion
- The Collins Amendment/Section 171 was designed to strengthen the integrity of capital standards by imposing a generally applicable floor that would constrain destabilizing leverage for all systemic institutions, regardless of business model, so that they would have to hold at least as much capital as that generally required of smaller banks.

2014 0310 – Letter – Sheila C. Bair – Systemic Risk Council to Senator Sherrod Brown (D-OH) – 6p

2014 0311 – GOV (Senate) – Finding the Right Capital Regulations for Insurers, Sherrod Brown (D-OH) — [BonkNote]