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AIG Failure, Seward's Complicity In Insurance Company Shenanigans, Barber Demands Answers

by: robinia

Fri Oct 03, 2008 at 09:38:11 AM EDT

This bill, S.8446/A. 11432 would make these documents exempt from freedom of information laws, disclosure under public officers law, or subpoena.

It's passed through the Senate (with no sponsors, which, according to NYPIRG's Blair Horner, "is how you know a bill really stinks")

Robert questioned this move to let insurance companies count on the results of investigations being kept "confidential" (secret).  His post  features this bizarre quote from the bill's "justification"-- that justice will be served by making insurance companies less likely to hide malfeasance from the authorities, by ensuring them that the authorities would keep that malfeasance secret from the public.

Regulated persons and other entities are sometimes reluctant to provide the Superintendent with proprietary or other information with respect to an examination, investigation or inquiry for fear that this information may become publicly available pursuant to FOIL, a subpoena, or some other disclosure method. As a result, the Superintendent`s ability to identify potential problems concerning these regulated persons and entities, and to implement plans of corrective action in response thereto, has been hindered. This bill addresses this concern by making correspondence, memoranda and other documents concerning or arising out of an examination, investigation or inquiry presumptively confidential, unless the Superintendent deems disclosure to be in the interest of the policyholders, shareholders or the public.

Wow.  Roatti called this in another post a "line in the sand."  Righto, Roatti.  Now, with 20-20 hindsight, you have to wonder-- what were they working on covering up about AIG?

Think that they didn't know about it?  Well, back then, when I called the NYS Dept. of Insurance about this bill, the Deputy Commissioner of Insurance assured me that this move toward a different kind of regulation was absolutely necessary to ensure the competitiveness of NYS in keeping large, multinational insurance companies headquartered in NY.  That would be, I assume, AIG.  He also referred to a Blueprint for 21st Century Regulation of Financial Services, what was known at the time as the Paulson Plan, which stressed the need to deregulate financial services to maintain "global competitiveness" of US companies.   Irony, irony.

Who has been dogging this all along?  Don Barber.  Check out his hard-hitting news release on the subject-- and Insurance Committee Chair Seward's complicity-- on the flip.

State Senate candidate Don Barber (D-Caroline) continued to press Sen. Jim Seward (R-Milford) yesterday on his refusal to answer questions about the $85 billion taxpayer bailout of A.I.G., the New York incorporated insurance conglomerate. Seward, who heads the Senate's Insurance Committee, has refused to reply to a series of questions Barber posed about the collapse of the insurance giant.  

"Seward's silence speaks volumes. Not only are taxpayers on the hook for $85 billion. The Wall Street Journal reports that A.I.G. has lost more than $170 billion in value, including losses to retirement plans and employee stockholders. These are working people, and that's who I'm concerned about."

Sen. Seward has long been a supporter of deregulation policies, Barber explained. "Since the beginning of this campaign I have pointed out how much money Sen. Seward's actions have cost New Yorkers. He refused to regulate health insurance premiums, and they've gone up exponentially in a five year period. He pushed for weakening oversight of auto insurance rates. Now he won't say a word about the biggest bailout of the biggest insurance company in history. He's even cozier with the insurance industry than we first thought. Only New York State has oversight responsibilities over A.I.G, which is incorporated in New York. Shouldn't Sen. Seward, as Chairman of the Senate Insurance Committee, be demanding answers and calling for stricter oversight?"

Barber pointed to one obvious reason Sen. Seward has refused to explain the A.I.G bailout to the public. Seward is president of the National Conference of Insurance  Legislators (NCOIL) whose stated mission is to prevent federal oversight of the insurance industry. Robert Hunter, Consumer Federation of America's Insurance Director, said NCOIL "has taken a series of recent positions on high-profile insurance issues that are favorable, if not identical, to insurance interests. Too often, NCOIL's advocacy is virtually indistinguishable from those of insurance interests. Perhaps because so many of their members are affiliated with the insurance industry, NCOIL consistently promotes industry self-regulation and weak oversight of insurance abuses. I'm issuing a consumer alert to federal and state lawmakers that they cannot count on NCOIL as an unbiased source of information on pressing insurance issues."

"You can draw a straight line from the hundreds of thousands of dollars Seward has taken from insurance companies and lobbyists, to the policies that his organization advocates, to the collapse of A.I.G.," Barber said. "Strong oversight could have prevented A.I.G. from dealing in risky securities, and the people's money would have been protected. That's why Sen. Seward doesn't have a single answer to the questions I posed last week."

Barber pressed Seward again to answer a series of simple questions. Why did A.I.G. fail? Why didn't you advocate stronger government oversight of its risky practices before it was too late? How do you justify the use of taxpayer money to bail out the largest insurance company in the country? How can you explain to the citizens of our district taking hundreds of thousands of dollars from insurance companies?