WASHINGTON BUREAU – Several senators are crafting a compromise that could keep the financial services bill “Volcker rule” provision from applying to life insurers.
Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking, Housing and Urban Affairs Committee and primary overseer of the drafting of the “Dodd bill,” and other supporters are hoping the compromise could persuade Sen. Scott Brown, R-Mass., to cast the 60th vote that Democrats need to have the bill come up for a vote on the Senate floor.
The Volcker rule, named after White House economic advisor Paul Volcker, would prohibit banks and possibly other large, non-bank financial firms from engaging in proprietary trading, or trading unrelated to customers’ needs.
Brown said Sunday on “Face the Nation” that he would support a filibuster of the bill in its current form, because, in its current form, the bill would hurt Massachusetts companies such as Liberty Mutual Insurance Company, Boston, and Massachusetts Mutual Life Insurance Company, Springfield, Mass., and cost the country as many as 25,000 to 35,000 insurance jobs.
Senate Democrats greeted Brown’s job loss estimate with skepticism.
Rep. Barney Frank, D-Mass., told the Boston Globe that, “No one has argued to us this is going to be cutting jobs as an overall in the economy. I have no idea where that figure came from. I don’t think anybody does. It may have just been spewed out by the Icelandic volcano with some of the other debris.”
“We’ve lost 8.5 million [jobs] under the present system,” Dodd said. “Frankly, I don’t want to go back to that. I’m sure [Brown] doesn’t either.”
According to several sources, a group of Senate Democrats led by Sen. Jeff Merkley, D-Oregon, and Sen. Carl Levin, D-Mich., are working under Dodd’s auspices to craft narrow language that would exempt insurers from a Dodd bill provision that would limit some investment activities of financial companies that include deposit-taking banks.
The issue is key to Massachusetts insurers, according to the sources, because the current version of the Dodd bill would limit their ability to operate a consortium formed in 1977 that provides venture capital for firms doing business in Massachusetts.
The consortium, the Massachusetts Capital Resource Corp., a limited partnership owned by Massachusetts life insurers, has invested about $575 million in 300 businesses.