This bill clarifies that state insurance regulators are authorized to wall-off insurance companies that are affiliated with bank holding companies from being held financially responsible for an affiliated bank’s failure under financial stress and is required to support the holding company.
The FDIC would be authorized to place financially insolvent bank holding companies under the state’s jurisdiction if a state regulatory agency hasn’t stepped in, to ensure that state agencies can intervene to protect insurance policyholders.
Before placing a lien on a bank holding company’s assets, the FDIC would be required to inform the state insurance authority promptly of their intentions. If the state insurance regulators notify them that doing so would have a materially adverse effect on the insurance company’s policyholders.
Under current law, there is a possibility that state insurance regulators would be kept from participating in the orderly liquidation of a bank by the Federal Deposit Insurance Corporation (FDIC) to ensure that insurance policyholders are protected.