Losses from reinsurance are not covered by state insurance guaranty funds. If a bank loses money in a reinsurance venture, the bank will have to absorb that loss. I am certain that is no one's intent. The potential for financial catastrophe, not unlike that experienced when the banks failed during the Great Depression, simply is far too great to risk. Clearly, H.R. 10 raises serious regulatory issues that must be thoroughly evaluated, especially as they impact the safety and soundness of banks and the solvency of bank holding companies.
Reinsurance is a particularly risky activity.
I want to thank you for your cooperation and wise counsel. I look forward to hearing from you and request that you provide me with your response no later than the close of business on Wednesday, August 25, 1999. If you have any questions regarding this matter, please call me or have your staff call Bruce Gwinn of the Committee staff at 226-3400. With every good wish. Rayburn House Office Building, Washington, DC 20515 Select Feedback to let us know what you think.