{"id":349529,"date":"2010-02-22T05:01:24","date_gmt":"2010-02-22T10:01:24","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/02\/22\/qa-liberty-mutuals-ted-kelly-on-financial-regulation\/"},"modified":"2010-02-22T05:01:24","modified_gmt":"2010-02-22T10:01:24","slug":"qa-liberty-mutual%e2%80%99s-ted-kelly-on-financial-regulation","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/349529","title":{"rendered":"Q&A: Liberty Mutual\u2019s Ted Kelly on Financial Regulation"},"content":{"rendered":"

There\u0092s no mistaking the brogue of Edmund \u0093Ted\u0094 Kelly<\/strong>, the Irish-born chief executive of Liberty Mutual Group<\/strong> — or his views on politics and economics. The head of the Boston-based insurer has a PhD in mathematics from Massachusetts Institute of Technology and colorful ways of expressing his opinions. He talked with The Wall Street Journal about Washington\u0092s efforts to remake financial regulation after the worst financial crisis since the Depression. An edited transcript:<\/p>\n

What\u0092s your main hope for financial regulation legislation?<\/strong><\/p>\n

Our hope is that they will leave us alone, particularly the property and casualty industry. We don\u0092t create systemic risk (that can take down the financial industry). With us, if you want our money, you have to burn your house down.<\/p>\n

But didn\u0092t the meltdown of AIG show that insurance companies can help produce global panics?<\/strong><\/p>\n

AIG is everyone\u0092s favorite whipping boy. But it was a remarkably well managed company, except for one unit (that mishandled derivatives). It was much better managed than many banking behemoths that were at the heart of crisis.<\/p>\n

The bill that passed the House would ding large financial institutions to create a pool to pay for the dissolution of those financial firms whose failure would threaten the economy. Your view?<\/strong><\/p>\n

Under the House bill, we would be subject to an assessment because we are a financial services organization with more than $50 billion in assets. We have more than $100 billion.<\/p>\n

We\u0092re being tagged because of our size (not riskiness). There is religious theory of risk — if you have a concentration of wealth, God will find it and punish it.<\/p>\n

Among insurers, Hartford, AIG and others received bailout funds. Should any insurer be bailed out? <\/strong><\/p>\n

I don\u0092t think any company needs to be saved. But there has to be a way to put a company out of its misery without destroying everyone around it. Saving AIG and Hartford distorted the market. Why should someone be protected if they made a financial mistake?<\/p>\n

It wasn\u0092t a mistake to protect the problems AIG had with derivatives. That created a big crisis. But you could have protected that part of the business and liquidated the insurance companies to pay back (claimants). \u00a0The argument they needed to be saved it was totally specious.<\/p>\n

Most regulatory reform plans would require systemically important financial institutions to hold much more capital. What\u0092s your view? <\/strong><\/p>\n

Capital is not a protection against risk. It\u0092s a way of curbing growth.<\/p>\n

Look at Lehman Brothers. It\u00a0 was well capitalized (before it collapsed). \u00a0It ran out of liquidity.\u00a0In the end financial storms are caused by liquidity crises. You run out of money.<\/p>\n

But if you\u0092re worried about institutions being too big during crisis, constrain growth when there isn\u0092t a crisis.<\/p>\n

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There\u0092s no mistaking the brogue of Edmund \u0093Ted\u0094 Kelly, the Irish-born chief executive of Liberty Mutual Group — or his views on politics and economics. The head of the Boston-based insurer has a PhD in mathematics from Massachusetts Institute of Technology and colorful ways of expressing his opinions. He talked with The Wall Street Journal […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-349529","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/349529","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=349529"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/349529\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=349529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=349529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=349529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}