S-5158-119
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sponsored by Ted Cruz (R-TX)
What it does
This bill would eliminate the Federal Insurance Office (FIO) — a unit within the Department of the Treasury created by the 2010 Dodd-Frank Act — and abolish the position of its Director. It would remove the FIO from its advisory and consultative roles on the Financial Stability Oversight Council (FSOC) and from stress-testing and orderly liquidation processes. The Secretary of the Treasury would retain general insurance-related authority, and references to the FIO in existing law would be replaced with references to the Secretary or removed entirely.
Who benefits
State insurance regulators (such as those organized under the National Association of Insurance Commissioners), who would see federal monitoring of their domain reduced. Insurance companies that prefer state-level oversight over federal involvement. Taxpayers who favor reducing the size of the federal bureaucracy. Senators and policymakers who argue that insurance regulation is constitutionally reserved to the states under the McCarran-Ferguson Act framework.
Who is hurt
Policyholders and consumer advocates who rely on FIO reports on insurance market access, affordability, and gaps in coverage — particularly in underserved communities. Federal financial regulators who use FIO data and expertise in systemic risk assessments. International trade negotiators, as the FIO currently represents the U.S. in international insurance regulatory forums. Researchers and analysts who use FIO's publicly available data and annual reports. Workers in the FIO whose positions would be eliminated.
Supporters argue
Supporters argue that insurance regulation has been the exclusive domain of the states since the McCarran-Ferguson Act of 1945, and that the FIO represents an unnecessary federal encroachment on a system that already functions through 50 state regulators. They contend the FIO duplicates existing oversight capacity without direct regulatory authority, adding bureaucratic cost with minimal benefit, and that the Tenth Amendment supports returning this monitoring function to the states where it has historically resided.
Opponents argue
Opponents argue that the FIO fills a critical gap by providing a federal vantage point on systemic risk in the insurance sector — a gap exposed by the near-collapse of AIG in 2008, which required a $182 billion federal bailout. They contend that eliminating the FIO would remove the U.S.'s primary voice in international insurance regulatory bodies and strip FSOC of specialized insurance expertise precisely when climate-related insurance market disruptions are increasing in scale and frequency.
Constitutional context
The Tenth Amendment and the Commerce Clause are both relevant here. Insurance regulation has historically been treated as a state function, affirmed by Congress in the McCarran-Ferguson Act, though the Commerce Clause gives Congress authority to regulate it. This bill does not delegate new authority to an agency, so the major questions doctrine (West Virginia v. EPA, 2022) and post-Chevron scrutiny (Loper Bright, 2024) are not directly implicated — the bill reduces, rather than expands, federal agency power.
Checks and balances
Congress would reduce executive branch capacity by eliminating the FIO; the Secretary of the Treasury retains general insurance authority, but without a dedicated office, congressional oversight of federal insurance monitoring would have fewer institutional focal points.
Historical precedent
The FIO itself was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 in response to the 2008 financial crisis; prior to Dodd-Frank, no permanent federal office was dedicated to insurance monitoring at the Treasury level.