Hooray for the NAIC!

November 18, 2009 by · Leave a Comment
Filed under: Bond Regulation 

The Insurance Industry regulators made their choice yesterday. To give insurance companies accurate values on the downgraded mortgage bonds they own, the regulators made the common sense decision to abandon a ratings-based system and use an expert third party to measure the true economic value of holdings. By using Pimco, the industry will prevent an unnecessary drain from insurance companies’ balance sheets.

This is a logical, and effective solution that proves that regulation can work.

Hooray for the Insurance Commissioners. They saw an unintended consequence, and repaired it using a market based solution.

Pimco Chosen by Regulators to Review Insurer Home-Loan HoldingsBloomberg.com, November 18, 2009

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