New Congress to Tackle TARP, OFC, Credit Scoring
With a workable majority in Congress and control of the White House, Democrats are preparing to deal with a faltering economy and several insurance issues that are likely to be on the front burner.
Democrats as of Wednesday, November 5, are projected to gain at least 18 seats in the House, giving them a 252-173 majority. In the Senate they appeared to gain only five seats for a 56-44 majority, short of the 60 needed to close off a filibuster.
The change comes amid speculation on a possible leadership change for the Senate committee that deals with insurance issues and industry concerns over how President-elect Barack Obama and the new Congress will handle issues ranging from an optional federal insurance charter to the Troubled Asset Relief Program (TARP) and credit scoring.
In a note to members of the Council of Insurance Agents and Brokers obtained just after 9 a.m. on Tuesday, November 5,, Joel Wood, CIAB senior vice president, said, “Regardless of the outcome of all of these races, the first order of business in the new Congress is going to be enactment of a comprehensive overhaul of financial services regulation, including insurance.”
He said the “over-arching theme of this epic battle, set into motion by the collapse of AIG [American International Group] and other major financial institutions, will be the management of systemic risk—particularly in complex financial services holding companies.”
Mr. Wood said, “In multiple conversations with key congressional staffers and members of Congress in recent weeks, it is my belief that this battle will not be about the Optional Federal Charter.”
He said the word “optional” might not survive the upcoming battle. “We are eager for this debate to be joined, excited about the prospects for some opportunities to improve regulation, yet wary about a potential federal overlay of laws that may do little to resolve the underlying inefficiencies of state-by-state regulation,” he added.
Last week, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, disclosed that members of Congress had asked her to consider the possibility of creating a deposit insurance program for insurance.
Adding to the problem is an apparent rift between the life and property-casualty industries over whether insurers should accept federal help under the Troubled Asset Relief Program (TARP).
Other issues are likely to include credit scoring, which is opposed by some key House members, and reauthorization of the National Flood Insurance Program, whose interim authorization runs out March 4.
A key issue there is whether the program should be extended to include wind coverage, which is strongly opposed by the insurance industry.
In other key developments for the insurance industry, Sen. Tim Johnson, D-S.D., was reelected and was expected to replace Sen. Chris Dodd, D-Conn., as chairman of the Senate Banking Committee when the Senate meets Nov. 17 to reorganize itself for next year.
Source: Source: National Underwriter | Published on November 6, 2008
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