WASHINGTON BUREAU — The House Ways and Means Committee trade subcommittee apparently wants to exercise jurisdiction over a bill that could create a Federal Insurance Office.
The House Financial Services Committee, which has been working on H.R. 2609, the Federal Insurance Office Act of 2009, today announced that it will delay action on the bill to consult with the trade subcommittee.
Any FIO bill that the Financial Services Committee approves will include a strong role for the U.S. Treasury Department in negotiating international insurance agreements, Rep. Barney Frank, D-Mass., the committee’s chairman, said today.
The Financial Services Committee has been preparing to “mark up,” or revise, H.R. 2609, but Frank said he had not had “appropriate conversations with members of the House Ways and Means Committee about the international preemption provisions.”
Rep. Sander Levin, D-Mich., chairman of the Ways and Means trade subcommittee, brought the matter to his attention, Frank said.
“I am delaying the markup to allow the appropriate conversations to take place,” he said.
Frank said he wants the Financial Services Committee to report legislation that will give the FIO the power to effectuate international agreements.
Action on the FIO bill will take place in a “a very short period of time,” Frank said.
Frank made the comments as his committee began marking up several pieces of financial services legislation other than H.R. 2609.
The American Council of Life Insurance, Washington, says in it “strongly supports enactment” of the prudential measures provision.
The National Association of Insurance Commissioners, Kansas City, Mo., and the National Conference of Insurance Legislators, Troy, N.Y., have been lobbying to limit the authority of the proposed FIO to preempt the authority of state insurance regulators.
The NAIC and NCOIL object to a provision that would let the Treasury Department enter into “international agreements on prudential measures.”
Rep. Paul Kanjorski, D-Pa., the sponsor of H.R. 2609 and chairman of the Financial Services Committee’s capital markets subcommittee, said he wants the FIO do more than gather information, and that the Obama administration wants the proposed agency to have the same authority that other countries’ national insurance regulatory agencies have when negotiating international agreements.
Today, there is no U.S. national insurance regulator sitting at the international negotiating tables, Kanjorski said.
“American interests are at a disadvantage under the current system with only a state commissioner at the table,” Kanjorski said. “There is an inequality in negotiating.”
NAIC Chief Executive Officer Therese Vaughan has sent House members a letter stating that the prudential measures provision in the latest draft of H.R. 2609 constitutes “a significant shift of authority from the states to the federal government” and ought to be removed.
An exception in trade agreements “allows a country to exempt broad regulatory power from trade discussions under the premise that preserving that authority is necessary for the solvency and stability of domestic financial markets,” Vaughan writes in the letter.
“Granting such broad authority to the Treasury to negotiate these types of agreements over insurance would unravel the exception,” Vaughan warns.
It “is also important to note that the federal government already has broad authority to enter into binding trade agreements to open foreign markets for U.S. insurers and to open U.S. markets for foreign insurers, and there is extensive consultation with Congress, governors, state legislators and regulators before any agreement preempts state insurance regulation,” Vaughan writes.
In a similar letter to members of Congress, NCOIL officers write that the latest version of H.R. 2609 “moves well beyond previous committee discussions and towards the establishment of a federal insurance czar at the U.S. Treasury Department–a kind of slippery slope that NCOIL cautioned against throughout 2008.”
“The office’s enhanced preemptive power and lack of answerability are alarming to state officials who have seen the success of checks and balances in the state system,” NCOIL officers write in their letter.
H.R. 2609 would permit the FIO — “led by an unconfirmed appointee of the [Treasury] Secretary –to override existing law without meaningful dialogue with the states,” the NCOIL officers add. “In fact, as currently drafted, the FIO only must consult the states prior to requesting insurance data from the private sector and after a determination that a state law will be preempted.”
Allison Bell contributed information to this report.