Assistant Treasury secretary tells NU, ‘We oppose inclusion’
The Bush administration is adamant about opposing inclusion of group life in any form in an extension of the Terrorism Risk Insurance Act.
In an interview last week with National Underwriter, Emil W. Henry Jr., new assistant secretary of the Treasury for financial institutions, said point blank, “We oppose inclusion of group life in any extension of the TRIA program.”
That position is consistent with the Treasury Department’s report on the program released late in June.
The administration wants fewer lines covered in any extension of the program than currently covered in the existing law, clearly ruling out adding any program because group life is not covered in the existing law.
“We want fewer lines and a smaller overall program” in any extension, Henry said.
Treasury’s position on group life could spell the death knell on its inclusion in any extension of TRIA because time is running short for congressional action.
The current program expires Dec. 31 unless extended, and, especially in the Senate, there is great pressure for Congress to finish its work before Thanksgiving.
There is broad, bipartisan support for such a provision in legislation being drafted by the majority staff of the House Financial Services Committee. But lobbyists say the administration is concentrating its efforts on imposing its will on what will be included in a TRIA extension in the Senate, something the Treasury Department doesn’t deny.
Work there is being conducted by the staff of the Senate Banking Committee, where a narrow extension of TRIA with a firm sunset date is being drafted.
Henry said the administration opposes inclusion of group life in any TRIA extension for several reasons. “First, it is certainly not consistent with reducing the number of lines of business covered by any extension,” he said.
Moreover, he added, “I don’t believe there has been any private market failure [to provide group life insurance].
“Group life has been a line that has been offered extensively [by the private market] even though it has been excluded as a TRIA line,” Henry added.
In his comments, Henry cast a strong shadow over the chances of TRIA being renewed against the background of a huge backlog of must-do business Congress has to conduct in the short period of time remaining before it adjourns for the year.
He did so by confirming that the Bush administration is insisting, while engaged in talks over the bill in the Senate, that the bill bar any government liability for punitive damages stemming from a terrorism attack.
Such a position almost killed the bill when it came up on the House floor in November 2002 because Democrats ruled out inclusion of such language in any TRIA legislation, and would be in a position to stop it in cases where there is a tight deadline to act.
“We much believe and the administration has long stated that punitive damages should be excluded from any TRIA reform program,” Henry said. “The administration has long stated its distaste for government dollars being paid for punitive damages.”
Henry added, “Secretary [of the Treasury John] Snow sent a letter to Congress June 30 where he said specifically that current litigation rules would allow unscrupulous trial lawyers to profit from a terrorist attack and would expose the American taxpayer to excessive and inappropriate costs.
“We are committed to the notion that the Terrorism Risk Insurance Act was and is a temporary program, and we believe that the private market will adjust better if the government can get out of the way,” said Henry.
If there is an extension, he said, “We would like to see directionally a smaller program, a tighter program and an extension where the private market’s skin in the game continues to go up while taxpayer exposure continues to go down. Those are essential elements of any program, in our view.”
He also said that the administration is “trying to maintain our principles that this is a program that should be temporary and should not crowd out private initiatives. To the extent something is permanent, it serves to dampen innovation in the private markets.”
->”[Inclusion is] not consistent with reducing the number of lines of business covered by any extension.”
->”There’s been no private market failure [to provide group life insurance].
->”Group life is a line that has been offered extensively [by the private market] even though it has been excluded as a TRIA line.”
Source: Emil W. Henry Jr., assistant secretary of the Treasury for financial institutions.