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Regulation and Compliance > Federal Regulation

Obama Wins, Dems Increase Senate Majority (Updated)

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The insurance industry is facing a whole new world in Washington.

Sen. John McCain, R-Ariz., the Republican presidential nominee, tonight has conceded the presidential election to Sen. Barack Obama, D-Ill.

Current tallies show Obama will have a 252-173 Democratic majority in the House.

It appears to be unlikely that the Democrats will emerge with a filibuster-proof 60-seat majority in the Senate.


At this point, the Democrats seem to have won at least 54 seats in the Senate.

Independents who have caucused with Democrats in the past – Joseph Lieberman of Connecticut and Bernie Sanders of Vermont – hold 2 other seats.

The 4 Senate races without clear-cut winners are in Alaska, Georgia, Minnesota and Oregon.

In Alaska, Sen. Ted Stevens, R, is leading 48-46.5% over Mark Begich.

In Georgia, Sen. Saxby Chambliss, R, is ahead of Jim Martin. Chambliss has 49.9% of the vote, Martin has 46.7% of the vote, and Libertarian Allen Buckley has 3.4% of the vote.

Although Chambliss is leading, he may be headed for a December run-off if he fails to get 50% of the total vote.

In Minnesota, Sen. Norm Coleman, R, and comedian Al Franken, D, appear to be on the path to a recount. Coleman now has 1,211,616, or 42%, of the votes cast; Franken has 1,210,895, or 41.97%, of the votes cast; Dean Barkley, an Independence party candidate, has 437,373 votes, or 15.16% of the votes cast; and Charles Aldrich, a Libertarian candidate, has 13,915 votes, or 0.48% of the votes cast, according to Minnesota election officials.

In Oregon, Sen. Gordon Smith, R, has 586,499 votes, or 47.57% of the votes cast; Jeff Merkley, D, has 574,865 votes, or 46.63% of the votes cast; and Dave Brownlow, a Constitution party candidate, has 68,086 votes, or 5.52% of the votes cast.

One senator of importance to the insurance industry who was reelected today is Sen. Tim Johnson, D-S.D

Some speculate that Sen. Christopher Dodd, D-Conn., could succeed Sen. Joseph Biden, D-Del., the vice president-elect, as chairman of the Senate Foreign Relations Committee.

Johnson then might succeed Dodd as chairman of the Senate Banking Committee.

But Joel Wood, a senior vice president at the Council of Insurance Agents and Brokers, Washington, has written members a note predicting that Dodd will stay at the Senate Banking Committee to help oversee a comprehensive overhaul of federal financial services efforts.

Sen. Elizabeth Dole, R-N.C., a member of the Senate Banking Committee, was defeated for reelection.

Also defeated was Sen. John Sununu, R-N.H., who joined with Johnson to sponsor a bill that could create a federal charter option for insurers. He left the banking panel earlier this year to become a member of the Senate Finance Committee.

Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House Financial Services Committee, another lawmaker of interest to insurers, has been facing a strong challenge from Lou Barletta.

At press time, with 98% of Pennsylvania election districts reporting, Kanjorski was leading 142,720-133,365, with 51.7% of the vote.

Rep. Christopher Shays, R-Conn., another member of the House Financial Services Committee and the Capital Markets Subcommittee, lost to James Himes, D, a Rhodes scholar who has worked for Goldman Sachs Group Inc., New York, as an investment banker handling Latin American clients and clients in the telecommunications technology industry.

Himes received 126,439 votes, and Shays received 112,701 votes, according to Connecticut election officials.

Also in the House, there are indications that the Republican leadership may name Rep. David Dreier, R-Calif., to succeed Rep. Spencer Bachus, R-Ala., as the top-ranking Republican member of the House Financial Services Committee.

Dreier is now the top-ranked Republican on the House Rules Committee. He was a top-ranking member at the Financial Services Committee for several years, and he served on the committee when it dealt with the thrift crisis in the late 1980s and early 1990s.

Dreier is seen as a strong supporter of “optional federal charter” proposals – proposals that would give insurers the option of choosing between a traditional state charter and a new federal charter that would involve oversight by a new federal insurance regulatory agency.


For the insurance industry, another key concern will be the appointment of the new Treasury secretary.

The Treasury Department is expected to ask Obama to move quickly to open the Troubled Asset Relief Program to life insurers.

The Treasury Department has held off approving giving such aid pending election of a new president, and Robert Reich, an Obama economic advisor, questioned during a television appearance Tuesday whether Obama’s economic team would support extending the TARP program to insurers.

The leading candidates for the Treasury secretary position appear to be Timothy Geithner, 61, president of the Federal Reserve Bank of New York, and Lawrence Summers, who served as Treasury secretary in the last years of the Clinton administration.

Geithner was promoted in 1999 to undersecretary of the Treasury for international affairs.

He now oversees New York Fed efforts to aid American International Group Inc., New York.

Gov. Jon Corzine, D-N.J., a former chairman of Goldman Sachs, may be another contender for a post in the Obama administration.

Corzine himself has said that he believes Paul Volcker, the former Federal Reserve Board chairman, would be a good candidate for Treasury secretary.

Another possibility could be Laura Tyson, who served as chair of the Council of Economic Advisers under President Clinton and is now a professor in the business school at the University of California at Berkeley.

At CIAB, Wood writes in his note to CIAB members that the first order of business in the new Congress will be enactment of a financial services regulation overhaul that will include insurance and emphasize efforts to manage systemic risk inside complex financial services holding companies.

“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,’” Wood writes in the note.

The word “optional” might not survive the upcoming battle, Wood warns.

“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,” Wood writes.


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