On 24 June 2011, President Obama announced his intention to nominate Roy Woodall as the independent member of the Financial Stability Oversight Council (the “FSOC”) with insurance expertise. The FSOC was created pursuant to Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The FSOC’s mandate includes identifying risks to the financial stability of the United States, promoting market discipline, and responding to emerging threats to the stability of the United States financial system. The FSOC consists of fifteen members (ten voting and five non-voting). Three insurance representatives sit on the FSOC. Two of them, Missouri Insurance Director John Huff and Federal Insurance Office Director Michael McRaith, serve as non-voting members. Mr. Woodall, if confirmed, will serve as a voting member of the FSOC.
The FSOC has the authority to designate nonbank financial institutions, including insurance companies, as “systemically significant” under the Act. Such a designation would result in federal, in addition to state, regulators having the ability to examine an insurance company’s affairs and possibly the imposition of enhanced capital standards on such company. The nomination of Mr. Woodall is an important step towards having a voting member of the FSOC who understands and represents the interests and concerns of the insurance industry. As the FSOC has already been conducting meetings with the voting insurance member position vacant, there had been concerns in the insurance industry that the lack of adequate representation of interests of insurers could lead to certain insurance companies being inappropriately designated as systemically important nonbank financial institutions.
Prior to his nomination to the FSOC, Mr. Woodall worked in the insurance industry in various capacities, including serving as the Kentucky Commissioner of Insurance and most recently as the Senior Insurance Policy Analyst at the U.S. Treasury Department. Mr. Woodall’s confirmation hearing before the Senate Banking Committee took place on 27 July 2011, and he has yet to be officially confirmed as a member of the FSOC.