Warning: Be Careful What You Say
The New York State Insurance Department today issued a [press release] announcing that it sent a letter to Tom Wilson, CEO of Allstate after he authored an [Op-Ed piece] for the New York Times on Wednesday, published yesterday. As many know by now, in that piece Mr. Wilson pushed for federal regulation and indicated that his company "played only a small role in unregulated insurance markets."
Well, not surprisingly, now the New York State Insurance Department wants to know more about that role so that these state regulators can determine the scope of their actions, and has sent them a [letter] demanding information under Section 308 of the NY Insurance Law. Mr. Wilson must have thought through the possible consequences of submitting that Op-Ed piece to the major newspaper in one of the NY Department's home cities, but it is sure hard to see that from the piece. It not only makes the usual claims of a "hodgepodge" of state regulations, but it seems to place responsibility for much of the economic meltdown at the feet of state regulators. It insults the very people who now regulate them. To their face, in a major newspaper and in their hometown.
As I have said here I understand there are problems with state regulation that cannot and should not be ignored. However, I do not know how it can be said with sincerity that federal regulators would somehow, by definition, be more "sophisticated" than state regulators have been. Recent examples are numerous of exactly how unsophisticated federal regulators have been in many industries and surely in every type of financial institution they have regulated. Sophistication clearly does not come merely because one works for the federal government rather than the state government.
The New York Insurance Department is acting in a way that could have been predicted and I think that this company may see in the review of the information provided in response to today's letter that some sophisticated minds can be brought to the task they now have at hand.
