By Arthur D. Postal
WASHINGTON – Reauthorization of the Terrorism Risk Insurance Act (TRIA) hangs on a thread, with industry officials privately saying that either the Senate passes the House bill intact, or Congress is likely to go home without action on the TRIA bill, with its attached language re-creating the National Association of Registered Agents and Brokers (NARAB).
“Either the Senate passes the House-passed bill, which is 90 percent Senate bill anyway, or the program expires. That's it. Period,” said an industry lobbyist involved in the talks.
At the same time, a member of a property and casualty insurance trade group said he received an alert this morning indicating that the earliest the impasse over TRIA can be resolved is likely Saturday, and then only if Senate Democrats accept the House version, as is.
The House bill is a slightly modified version of Senate Bill 2244, which reauthorized TRIA and re-established NARAB, 417-7. The bill was originally passed by the Senate in June. However, it contained baggage unacceptable to Senate Democrats.
The provision would prevent financial regulators from imposing margin and other requirements on farmers, ranchers and nonfinancial firms that engage in derivatives trading to protect them against setbacks in their businesses. Democrats in both the House and Senate object because it rolls back provisions in the Dodd-Frank Act without the added scrutiny allowed through normal legislative procedures.
An added complication was disclosed this morning when Sen. Charles Schumer, D-N.Y., who negotiated the TRIA/NARAB deal with the House, disclosed that Sen. Tom Coburn, R-Okla., plans to oppose Senate passage of the TRIA bill revised by the House yesterday and sent to the Senate. Coburn’s opposition was expected because he wants the NARAB provision “sunsetted,” that is, repealed, after two years. That would require Congress to re-pass legislation that it has debated for 14 years.
“By playing games and refusing to pass a clean extension of terrorism insurance, the House Republicans have put terrorism insurance at risk,” Schumer said in a statement.
“To ensure that terrorism insurance does not lapse, the House should pass the bipartisan bill that passed the Senate with 93 votes before they leave town today,” Schumer said.
“Terrorism insurance is essential to construction projects that create thousands of jobs, and the House passing the overwhelmingly bipartisan Senate bill is the only way to guarantee that this critical program remains in place,” he said.
After the debate on TRIA/NARAB, the House approved legislation that would clarify that the Federal Reserve Board can apply insurance-based capital standards, rather than bank-centric rules, to the insurance portion of any insurance holding company it oversees.
The bill now heads to the president's desk “where approval is widely expected,” said John M. Nadel, an analyst at Sterne, Agee & Leach in New York, in a flash investor’s note this morning.
The legislation clarifies Sec. 171, the so-called “Collins amendment,” a provision of the Dodd-Frank Act. Congress acted after the Fed said its lawyers interpret the Collins amendment to “require” the Federal Reserve to apply bank capital rules to insurance companies it supervises.
Arthur D. Postal has covered regulatory and legislative issues for more than 30 years in Washington, D.C. He can be reached at [email protected].
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