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For 135 years insurance has been regulated at the state level. While at the federal level, laws are enacted that will filter down to the state level, all regulation is handled in each state by the DOI (Dept of Insurance).
States have been allowed not only to regulate the insurance industry, but most states rely heavily on the tax collections from premium taxes to support state services. In almost every state, premium taxes are the top 1, 2 or 3 source of revenue.
State premium taxes are usually 2% of collected premium or less yet the funds that fill state coffers usually eclipse collections from state sales or income taxes.
Now the Obamanation want's to change that.
According to Bloomberg,
Obama called for the creation of a federal Office of National Insurance within the Treasury Department to monitor the industry, represent U.S. interests in international insurance agreements, and look for gaps in state oversight.A division of the Treasury Department.
Seems to me the head of the U.S. Treasury had some oversight problems of his own. Now he wants to be responsible for finding gaps in state oversight?
Yeah, that's the ticket.
The justification for this move is the collapse and bailout of AIG.
Of course AIG's problems were mostly the result of the collapse of the mortgage market.
The mortgage market failed because of a government insistence that poor people and those with bad credit deserve to have a home just like the rest of us. The Pied Piper of the mortgage calamity was led by Fannie Mae and Freddie Mac.
Who was watching them?
The federal government.