Insurance is one of three primary sectors of the financial services industry. Unlike the other two, banks and securities, insurance is primarily regulated at the state, rather than federal, level. The primacy of state regulation dates back to 1868 when the Supreme Court found that insurance did not constitute interstate commerce, and thus did not fall under the powers granted the federal government in the Constitution. In 1944, however, the Court cast doubt on this finding. Preferring to leave the state regulatory system intact in the aftermath of this decision, Congress passed the McCarran-Ferguson Act of 1945, which reaffirmed the states as principal regulators of insurance. Over the years since 1945, congressional interest in the possibility of repealing or amending McCarran-Ferguson and reclaiming authority over insurance regulation has waxed and waned. In 1974, Congress passed the Employee Retirement Income Security Act (ERISA) preempting state laws governing many health benefit plans offered by employers, thus essentially federalizing much of the regulation of health insurance. In 1980, Congress curtailed the authority of the Federal Trade Commission (FTC) to investigate the insurance industry, reducing a small avenue of federal oversight on insurance. In the early 1990s, a bill to repeal the limited antitrust exemption granted insurers in McCarran-Ferguson, and thus expand federal oversight of insurance, was reported out of committee in the House, but never reached the House floor. In 1999, Congress passed the Gramm-Leach-Bliley Act (GLBA), which specifically reaffirmed the states as the functional regulators of insurance. GLBA may have statutorily reaffirmed the primacy of state regulation of insurance, but it also unleashed market forces that were already encouraging a greater federal role. GLBA removed legal barriers between securities firms, banks, and insurers, which, along with improved technology, have been an important factor in creating more direct competition among the three groups. Many financial products have converged, so that products with similar economic outcomes may be available from different financial services firms with dramatically different regulators. Insurers face 50 different state regulators and state laws, many of which differ on some particulars of insurance regulation. This has led to industry complaints of overlapping, and sometimes contradictory, regulatory edicts driving up the cost of compliance and increasing the time necessary to bring new products to market. These complaints existed prior to GLBA, but the insurance industry generally resisted federalization of insurance regulation at the time. Facing a new world of competition, however, the industry split, with larger insurers tending to favor some form of federal regulation, and smaller insurers tending to favor a continuation of the state regulatory system. Life insurers tend to more directly compete with banks and securities firms, so they have tended to favor some form of federal charter more than property/casualty insurers. Some members of Congress have responded to the changing environment in the financial services industry with a variety of legislation. In the 108 th Congress, Senator Ernest Hollings introduced S. 1373 to create a mandatory federal charter for insurance. In the 108 th and 109 th Congresses, Representative Richard Baker drafted, but never introduced, the SMART Act that would have left the states the primary regulators, but harmonized the system through various federal preemptions. The most consistent response has been the introduction of legislation calling for an Optional Federal Charter (OFC) for insurance. OFC legislation was first introduced in the 107 th Congress, with bills being introduced in the 109 th and 110 th Congresses as well. Specifics of OFC legislation can vary widely, but the common thread is the creation of a dual regulatory system, inspired by the current banking regulatory system. OFC bills generally would create a federal insurance regulator that would operate concurrently with the present state system. Insurers would be able to choose whether to take out a federal charter, which would exempt them from most state insurance regulations, or to continue under a state charter and the 50 state system of insurance regulation. Given the greater uniformity of life insurance products and the greater competition faced by life insurers, some have suggested the possibility of OFC legislation that would apply only to life insurers, but no such bills have been introduced. The recent financial crisis affected the debate over federal chartering for insurers in a variety of ways. Some aspects of the crisis gave additional arguments for federal chartering, whereas other aspects have given additional arguments against federal chartering. One specific concern that many have advanced in the crisis has been the negative aspects of allowing financial institutions to choose their regulators. The broad federal charter bill in the 111 th Congress, H.R. 1880 , addressed this by adding some mandatory aspects to a framework similar to the previous OFC bills. During the December 2, 2009, House Financial Services Committee markup of H.R. 2609 , a bill to create a Federal Office of Insurance, two amendments were offered to create federal licenses and regulation of specific lines of insurance. Representative Dennis Moore offered an amendment (no. 3) that would have created an optional federal license for reinsurers, while Representatives Ed Royce and Melissa Bean offered an amendment (no. 7) that would have created an optional federal license for financial guarantee insurers. Both were withdrawn before votes were taken on the amendments. H.R. 2609 was incorporated into H.R. 4173 , which was ultimately enacted as the Dodd-Frank Act and included some insurance provisions, but did not include a federal charter for insurance. Representative Moore introduced his amendment creating a federal license for reinsurers as a standalone bill, H.R. 6529 , on December 16, 2010. Many different arguments have been advanced for and against a dual regulatory system for insurance. While taking no position in this debate, many of these arguments are listed below. In addition to the principal argument that the regulation of insurance companies needs to be overhauled at the federal level to enable insurers to become more competitive with other federally regulated financial institutions in the post-GLBA environment, other arguments advanced for dual chartering have included the following: The recent financial crisis has shown that some insurers can present systemic risk and therefore should be regulated by a regulator with a broader outlook. A federal insurance regulator could be a knowledgeable voice and an insurance advocate in Washington, DC. (The Dodd-Frank Act addressed this to some degree through the creation of a "Federal Insurance Office," though this office has no regulatory powers.) The Comptroller of the Currency has successfully promoted the expansion of bank products through preemption of state laws, providing a model for the insurance sector. The increase of "speed to market" for product approval so insurers will not be at a disadvantage in product creation and delivery. The creation of a regulatory environment more accommodating of growth and innovation as a result of competition between federal and state regulators. The ability to achieve national treatment, so that a single charter would allow insurers to do business in all states and avoid higher costs of state regulation due to the need to comply with up to 50 state regulators. Potential difficulty insurers face in international trade without a regulator at the national level. Greater supply of insurance and lower cost to consumers as insurance companies are forced to compete on a national scale. The arguments of those who oppose federal regulation of insurance companies, preferring that the state insurance regulatory system be maintained, have included the following: State regulated insurers have performed relatively well through the financial crisis, underscoring the quality of state regulation. State insurance regulators have a better understanding of local markets and conditions that would a federal regulator. State regulation is more flexible and adaptable to local conditions. The diversity of state regulation reduces the impact of any poor regulation and promotes innovation and good regulation. There are strong incentives, such as those provided by direct election, for state regulators to do the job effectively at the state level. The risk that the new federal bureaucracy would end up being redundant and costly. Fiscal damage to the states should state premium taxes be reduced by a federal system. The fragmentation of the overall insurance regulatory system that could result from dual chartering and state/federal oversight. The possibility of a "race to the bottom" as state and federal regulators compete to give insurers more favorable treatment and thus secure greater oversight authority and budget. In the abstract, the federal chartering question could be simply about the "who" of regulation. Should it be the federal government, the states, or some combination of the two? In practice, however, federal chartering legislation has had much to say about the "how" of regulation. Should the government continue the same fine degree of industry oversight that states have practiced in the past? Aside from Senator Hollings' bill in the 108 th Congress, the federal chartering bills that have been introduced to this point have tended to answer the latter question negatively—the federal regulator to be created would exercise less regulatory oversight than would most state regulators. This deregulatory aspect of past bills has been source of controversy in addition to the introduction of federal regulation itself. Representatives Melissa Bean and Edward Royce introduced H.R. 1880 in the House on April 2, 2009. The bill was referred to the House Financial Services Committee, House Judiciary Committee, and House Energy and Commerce Committee. No hearings or markups were held on this bill. H.R. 1880 would have created a federal chartering and regulatory apparatus for the insurance industry, including insurers, insurance agencies, and independent insurance producers. The Office of National Insurance (ONI) and a National Insurance Commissioner (NIC) would have been established in the Department of the Treasury, but with significant independence; the Secretary of the Treasury would have been forbidden from interfering in specific matters before the commissioner; the ONI's budget would have been funded by fees and assessments on insurers; and the commissioner would have been appointed by the President, and confirmed by the Senate for a five-year term. These terms are similar to those of other financial regulators, such as the Office of the Comptroller of the Currency. The federal regulatory system in H.R.