“WASHINGTON — Lawmakers will hold their first hearing Tuesday on an issue that has largely mystified regulators: how to craft capital rules for insurance companies.

“It is one of the biggest unanswered questions of the post-financial regulatory system nearly four years after the passage of the Dodd-Frank Act, and has been raised frequently at other hearings on Capitol Hill. But regulators have thus far provided no clarity.

“At issue is how the Federal Reserve Board will interpret a universal capital minimum in Dodd-Frank, authored by Sen. Susan Collins, R-Maine, for insurance giants that fall under the Fed’s watch as a result of new powers to supervise nonbanks. The central bank has signaled that it is willing to tailor capital rules as best as possible for insurers, but have repeatedly acknowledged they face constraints in how regulators must implement the Collins Amendment.

“But lawmakers such as Sen. Sherrod Brown, D-Ohio, who will chair next week’s hearing before his Senate Banking Committee subcommittee, want the Fed to be more flexible. His hearing will feature testimony from Collins, who agrees the Fed should take a lighter approach.”

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