I was reading a blog by Steve Piontech, Editor-in-Chief of the National Underwriter Life & Health. His remarks seemed to add another valid reason why federal charter and the choice of a sole federal regulator needs to be avoided:

“Whatever the results of these tests, one thing is fairly clear to me: Banks, no matter what size, need to be reined in. They’ve gotten way too big, way too wayward and way too brazen. And all of this was under federal regulation and oversight!

It seems to me that when you get to a certain age you lose faith in panaceas. Federal regulation is not the panacea a lot of folks would like to believe it is or could be.

Those who are looking at tougher federal regulation as a panacea (now that the horse is out of the barn and is dragging our financial system with it) are chasing some kind of pipe dream.

Part of the problem has been that federal regulators, as I’ve pointed out in the past, have been more cheerleaders for their wards than overseers. They enabled the unbridled growth and inordinate amount of risk-taking that brought the system perilously close to collapsing. Has that really changed?

Did I mention before that the one insurer in this group of 19 was judged not to need more capital? Yes, I did.

It makes me think that any federal regulator or agency needs to get some stiff training from their state insurance counterparts so that they can recognize that regulation means strict oversight with regard to solvency and leveraging, not thrusting pom-poms as forcefully as you can, while shouting, “Give me a B, give me an A, an N, a K! Go banks!

One of my points against federal charter is that federal regulations do not mean efficiency or a better property and casualty insurance system. Indeed, it only takes one regulator to mess it up, whereas fifty state regulators may have a much better chance to notice and correct a problem. The federal banking system failure is proof enough of this point.