Bob Graham, Executive Editor

The stock market had been open for just seven minutes Monday before the first call for federal regulation of insurance was made on CNBC.

This day of Wall Street panic over the bankruptcy filing by Lehman Brothers, the acquisition of Merrill Lynch by Bank of America and concern for AIG Group’s ability to raise capital was tailor-made for Henry Paulson, the secretary of the U.S. Treasury who wants federal control of insurance. Working for the Bush administration, Paulson has talked about how federal regulation of insurance, especially life insurance, would protect consumers, and help insurers compete nationally and globally.

Jim Cramer, the mouth, sounded the bell strongly on CNBC. “I don’t know why we don’t have it,” he said, referring to federal regulation of insurance.

Linking the federalization of insurance to Wall Street’s woes is good politics. People woke up this morning seeking any solution to the growing crisis. If Jim Cramer, a few newshounds and Paulson, scheduled to speak later today, say it would make a difference, then most people are going to accept it as fact.

Sadly, the state-based system that has worked so well and so long doesn’t have the same kind of firepower. The success of the state-based system is by nature always on a far smaller scale. Its numerous successes, including rehabilitations of countless insurers, don’t play well for talking heads filling time from the opening bell to closing bell on Wall Street.

The feds have the stage with AIG, Lehman Brothers and Merrill Lynch, and Paulson and others are going to use it to try to garner more support for the federalization of insurance.