BY TOM HESTER
The New Jersey state banking and insurance commissioner said Tuesday he opposes increased federal regulation of insurance companies and banks.
Steven M. Goldman told the Assembly Budget Committee that worldwide financial problems have led to calls for increased federal regulation of financial institutions, including an optional federal charter for the insurance industry.
"I strongly believe that any plan that calls for more federal preemption of state laws governing banks and insurers is the wrong approach,'' Goldman said. "There is broad consensus that lax federal regulations of financial institutions contributed mightily to the global economic downturn we are in today. We would not want to see the same thing happen in the insurance industry; likewise we don't want to see any further expansion of the federal regulatory system over financial institutions.''The state Department of Banking and Insurance licenses and regulates more than 272,000 banking, insurance and real estate licenses as well as over 1,100 insurance companies and 108 state charted banks and financial institutions.
Goldman said 15 New Jersey banks have received $619 million in federal trouble asset relief funds. Ten of the banks are state-chartered and five are federally charted. He pointed out that on May 1, Citizens Community Bank of Ridgewood was closed and the Federal Deposit insurance Corp. was appointed as receiver. Under FDIC supervision, a single branch reopened as North Jersey Community Bank and depositors were unaffected financially.
Goldman maintained that despite the economic downturn, state-chartered banks are doing what he described as relatively well. "Of course they are not immune to the forces of the larger economic downturn, but thanks to our strong state banking charter and prudent lending practices, our banks are in relatively good financial health.''
The commissioner said home foreclosures play a key role in New Jersey economic problems. He noted foreclosure filing have grown from 23,044 in 2006 to a present total of 47,989, He said the rate for all loans in foreclosure in New Jersey for the last quarter of 2008 was 3.58 percent, slightly higher than the national rate of 3.30 percent.
Goldman told legislators that one of the largest issues facing his department is the application of Horizon Healthcare Services to convert from non-profit to for-profit status.
"We are committed to a review process that is fair, open and transparent,'' he said. "All public information regarding the application is on the DOBI web site. Once the application becomes complete, we will have several public hearings at locations throughout the state.''
Goldman said Gov. Jon Corzine is committed to universal health insurance coverage and they are working with legislative leaders toward what Goldman described as reforming the healthcare market. "But achieving reform in the state's current economic environment is very challenging,'' he said.