The disastrous economic events of the last few months have emptied our collective pocketbooks and raised our anxiety levels, especially as we have watched strongly performing insurance stocks suffer precipitous declines through no fault of their own.
But there is still more potential for coal for Christmas or early in the ensuing year coming from Washington for life insurance companies and agents.
The one event that everyone in the industry would view negatively is a bad ethics report on Rep. Charlie Rangel, D-N.Y., chairman of the House Ways and Means Committee.
Also on the radar screen is potential action by the Securities and Exchange Commission–possibly as early as the next few weeks–to rule that equity indexed annuities are securities, and therefore subject to federal regulatory oversight.
Another issue that could emerge from Congress next year, where liberals will have more sway than in recent memory, is a call from consumer advocates for a federal Consumer Product Safety Commission-type panel with a mandate to impose strong consumer protections on financial products, including insurance.
As for Rangel, he is under investigation by a House ethics panel for personal issues, mainly involving alleged failure to pay taxes on real estate investments and similar ethics lapses.
A first-glance perception is that a congressman from a liberal district in a liberal state would look askance at industry interests, especially on taxes.
That perception would be enhanced through his television and personal appearances, where Rangel gives the impression of an affable, grandfatherly type who is certain to pursue a liberal, partisan agenda as a committee chairman.
Perception, however, is not fact, at least in this case.
In fact, he is a tough-as-nails negotiator, knowledgeable not only of industry interests, but also a strong advocate for House interests on tax and similar issues.
Specifically, in talks with the Senate, Rangel is well-respected among his colleagues as a guardian of House prerogatives on those issues.
Added to that, Rangel’s ascension to the chairmanship was privately viewed with relief by even the most ideological of Republicans because his predecessor, Bill Thomas, was a single-minded, stern advocate of his own views, and just as likely to scold or rebuke a Republican colleague in public as a Democrat.
In practice, while he is soft-spoken, indeed close-mouthed, Rangel is aware that there are a number of big insurance companies in New York, and while he will be subject under a Democratic president to pressures to raise taxes, he has shown himself willing to take the lead in protecting insurance interests.
And with $3 trillion in taxes expiring in the next Congress, there are a lot of key products the life insurance industry has to protect.
These include fair and reasonable estate tax laws going forward, reasonable rules regarding non-qualified deferred compensation plans, executive compensation, and the mother of all issues, inside buildup.
Indeed, not since the Tax Reform Act of 1986 have so many issues of importance to life insurers been on the table at any one time. And based on his years of experience in dealing with them, Rangel has been a consistent advocate for insurance interests during his tenure on the committee.
It would be a blow to industry efforts and create vast uncertainty for the insurance industry if Rangel is forced to step down due to an ethics investigation that the Speaker of the House, Nancy Pelosi, D-Calif., says will be completed early next year.
As for a consumer protection agency for financial services, it was brought up as a priority at a recent Consumer Federation of America meeting. Its primary advocate is Elizabeth Warren, a law professor at Harvard University and a strong critic of credit card and mortgage practices of financial services firms.
She also has support from the emerging Chicago Dream Team that is moving to Washington effective Jan. 20, including Sen. Richard Durbin, D-Ill., who introduced such legislation this year.
Within the context of strong political support for an overhaul of financial services regulation and comments by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee at the CFA meeting that next year “would be the best year for public policy since the New Deal,” insurance interests should be on the alert.
A systemic regulator of all financial services firms, topped off by an independent consumer protection agency, is not what the insurance industry should have to be thinking about at holiday time.