WASHINGTON BUREAU — The House Financial Services Committee today approved H.R. 3996, the Financial Stability Improvement Act bill, and H.R. 2609, the Federal Insurance Office Act bill.
H.R. 3996 passed with a 31-27 party line vote. That bill would require that financial services companies with $50 billion or more in assets to contribute to a fund that would be used to bail out troubled companies.
The committee approved H.R. 2609, the FIO bill, by a voice vote.
The FIO bill would create a Federal Insurance Office within the U.S. Treasury Department. The office would oversee international matters, provide information to a new systemic risk regulator about potentially risky insurers, and collect data on insurer solvency.
H.R. 3996, H.R. 2609 and other financial services bills, such as H.R. 3817, the Investor Protection Act bill, are on track to reach the House floor quickly.
Congressional staffers believe that the House could begin debate on financial services reform bills as early as Dec. 9, with bills coming up for final votes as early as Dec. 11.
The House Financial Services Committee passed H.R. 3817, the IPA bill, Nov. 4. Insurance agents are deeply concerned about a provision in that bill that would give the U.S. Securities and Exchange Commission the authority to “harmonize” the standards of care investment advisors and broker-dealers must use when selling investment products.
H.R. 2609 – The Federal Insurance Office Act
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., are backing the idea of creating an FIO.
“The Treasury Department needs to develop expertise on a $5 trillion industry that affects the lives of tens-of-millions of Americans,” ACLI President Frank Keating says in a statement. “In the aftermath of the financial crisis, it is important to eliminate the knowledge gap within the federal government. It is also important to enhance the ability of the federal government to negotiate international insurance agreements with foreign countries.”
NAIFA President Tom Currey says establishing a centralized body would help advance insurance expertise and understanding at the federal level.
An FIO also would bring “some degree of uniformity when dealing with domestic and international insurance regulatory and trade matters,” Currey says.
But the FIO would have no authority to regulate insurers, and, in the current version, its ability to negotiate international agreements would be weaker than in the original bill draft.
A manager’s amendment would require the proposed FIO to share the authority to negotiate international agreements with the Office of the U.S. Trade Representative.
Moreover, any agreements reached would only be effective after a “layover” period. Congress could take action on an agreement during that period.
The manager’s amendment also would provide for review in federal court for challenges brought against federal preemption of state insurance regulations.
Another amendment adopted by the committee would require the FIO to study and report to Congress in one year on how to modernize and improve the system of insurance regulation in the U.S.
The study would measure progress against the Obama administration’s six principles for insurance regulatory reform.