Also in this playlist...
This transcript is automatically generated
Type of activity that look like insurance and look like directional bets.
But denied any of the capitol behind -- what should the capital requirement or collateral insurance companies being fair credit default twelve for holding companies are doing that kind of activity I think what you're going to see is a risk regulator I think job one -- such an it person entity.
Should you look.
Down and see the kinds of activities that are going on if it's really an insurance.
Activity than probably capital requirements are going to be very much like -- the states require for insurance policies.
This why did the losses of AIG's UK subsidiary which was the tiny little division that invested in all of these crazy things.
Why did that destroy the entire or nearly destroy the entire US insurance company.
Right what it didn't destroy but it put it into syrup what's a kind of a version of -- -- that sort of frozen because this is really.
Issue about which we're seeing previously about Glass-Steagall.
What we did after -- as we permitted through this risk taking enterprise.
To be put next to sort of secret depository institutions like insurance companies and commercial banks.
And what happens is when the risk taker gets in trouble everyone worries.
About the capital that was set aside for insurance in the commercial banks.
And they begin to sort of step away.
From that core business and I think that's what happened with AIG and we -- question whether we make a regulatory regime.
Our round too big to fail or begin to look at too big to feel and see what we did.
With changing Glass-Steagall and and -- they just said the laws and figure out whether we have to go back.
Well then may I ask should we bring back Glass-Steagall so you're saying deciding whether we should go back it seems evident to a lot of people and by the way the thing that we're reference in about 1907 was the commodities futures modernization act.
Putting into place after a banking crisis back in 07 and then.
What what -- -- what actually just to be just -- clear her.
We have laws in place after 1907 commodities futures modernization act took those laws away and permitted.
That -- derivatives become the severely under cap -- exactly and then.
Gramm Leach Bliley and indeed Glass-Steagall.
I think that we should if we're going to have.
Post Glass-Steagall the creation of these financial supermarkets.
You have to have the correct capitalization across the whole holding company -- have one piece of it doing stuff that.
Normally would require much more capital but because it's done in sort of a bolt -- on derivatives but -- of a vehicle it's severely under capitalized and that's a problem.
So we began this interview when we started talking about Obama's regulations you said it's a fantastic idea let me bring in representative Paul Kanjorski is comment he is of course a Democrat he was saying.
About insurance regular state regulation as part of this quote we can no longer sweep insurance regulation under the rug and cross our fingers that nothing will go wrong.
We tried -- before learned that such an action may hide the -- for the short term but pose greater problems in the long term I assume you agree with represented what made.
-- with them on that I don't agree with him focusing so much as he did today on the insurers I think insurers have not been part of the systemic risk.
I think the only way to Eric -- everybody kept saying stuff -- guess -- true but the part of the idea that caused the systemic risk was not part of the insurance companies it was a standalone.
-- vehicle that he engaged in.
What people -- thought was insurance activity but in fact was completely under capitalized.
And I think that's a -- distinctions -- support the president.
In going through and having a risk regulator and -- derivatives right that's all fantastic.
But -- conjures he was talking about today sort of pinning this crisis in any way on insurance.
As opposed to in investment.
Banking that pretends to be insurance that's a big problem.
Well it sounds like a lot of this for more use it could be fixed.
By simply making sure that there are margin requirements.
Capital require -- -- Proper collateral proper capital requirements and proper margin requirements which is what I assume.
They're going to do with CBS's on these clearing exchanges will go a long way.
The problem is if you do it right.
They become so expensive that you might as -- just be doing them at half old -- you know what here.
I never bought a CBS -- now on my taxpayer dollars are going to its earlier yesterday they should be outlawed or prohibit.
Did you kind of get there any any way that you make -- expensive enough and we're just gonna wanna do as plain old insurance has the president.
Asked you for your opinion on the -- the president got to accept that.
Cross time we have worked with the federal regulators while you're moving on to a new stage and that would be -- law professor at NYU where he went to the student congratulated you.
What would you tell students about getting into Wall Street jobs at this point if there's going to be regulation in the government breathing down at least some entities backs -- I think it's.
Great time for students to come out of the MBA programs -- sort of a fresh approach -- out sort of the pass which would normally weighed down they're the way of thinking.
I think actually with -- government -- involved you're going to have to have a new crop of students and executives.
Who really view it in this sort of futuristic way which is definitely different than before okay and after that you've run for governor always.
I thought that's very a very kind of you I'm very flattered that anyone would even ask me but.
Right now I'm just focused on our focus on two things -- focusing on exiting the insurance department in the same excellence that I founded in which is a fabulous fabulous place.
And a -- disengagement course -- together for NYU.
You good luck professor who.
Thank you very much Eric and -- New York State insurance superintendent speaking with us exclusively today on Fox Business thank you we hope to have you come again let us.
You know you come back when you're professing he'll say how -- how it's going along.
Filter by section