Insurance regulation

AIG's need for $60 billion to stay afloat raises some interesting questions. Who regulates the insurance companies that have expanded into IRA and annuity providers. AIG has become a trillion dollar company. Who is watching the store? Insurance companies and fixed rate annuities are regulated by the states. What states, with all their financial problems, have the resources to oversee these huge multinational corporations? Can Nebraska, Delaware, Ohio, or even New York do this? Variable rate annuities are regulated by the federal government.

The regulators do have their national organizations to provide networking, training, and uniform codes, but is this the best way to do this? There are advantages to decentralization, it increases the number of possible whistle-blowers. But where were they as this was becoming a crisis, who was speaking up? Can the states bail out these companies?

Obama said that if these companies want the federal government to bail them out, "they need to live by our rules." McCain said that these problems are caused by greed and he is going to straighten all this out. The solvency of our life insurance policies and pension programs are at stake, but how do we prevent these companies from investing too much in high risk schemes, putting too many eggs in one basket? Is too much being spent on very high salaries and too little being put into prudent reserves?