The Senate today passed and sent to President Obama historic legislation that would make the most sweeping changes to financial services regulation since the Great Depression.
Members of the Senate voted 60-39 for H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act bill, after first clearing the bill for floor action by a 60-38 vote.
The House already has approved H.R. 4173, and Obama is expected to sign the bill soon.
H.R. 4173 provisions would affect the standard of care that applies when insurance agents and brokers sell investment products, create a Federal Insurance Office (FIO) at the U.S. Treasury Department, give states of domicile more authority over regulation of reinsurers, impose new standards on the rating agencies, classify indexed annuities governed by National Association of Insurance Commissioners standards as state-regulated insurance products, and impose new suitability standards on sellers of annuities.
The act also will subject large insurers to more federal scrutiny and give federal regulators a say over the fate of large, troubled insurers with problems that appear to be severe enough to threaten the stability of the financial system.
Senate Majority Leader Harry Reid, D-Nev., and Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, had been struggling to round up the 60 votes needed to get a bill to the floor in the Senate.
The death of Sen. Robert Byrd, D-W.Va., and the decision of Sen. Russell Feingold, D-Wis., to vote against both the bill itself and the “cloture motion” — the measure needed to limit debate and send the bill to the floor — caused delays. But bill backers ended up getting the votes they needed for the cloture motion by winning over Democrats such as Sens. Ben Nelson, D-Neb., and Maria Cantwell, D-Wash., and Republicans such as Sens. Scott Brown, R-Mass., Susan Collins, R-Maine, and Olympia Snowe, R-Maine.
The American Council of Life Insurers (ACLI), Washington, has put out a statement praising the work Dodd did to get the bill through the Senate.
Final Senate passage of the bill “represents the culmination of Senate Banking Committee Chairman Chris Dodd’s … career-long interest in financial services,” the ACLI says in the statement. “ACLI applauds Sen. Dodd for his many years of public service and his willingness to listen to the concerns of the life insurance industry.”
The Dodd-Frank bill will change financial services regulation in many important ways, the ACLI says.
The ACLI likes the FIO provision, but it is waiting to see how federal agencies will interpret other provisions, such as provisions affecting derivatives trading and problems at large, troubled financial institutions, before assessing their impact, the council says.
“ACLI will be very active in this process to assure the insurance marketplace remains vibrant and continues to provide consumers with innovative products,” the ACLI says.
Peter Ludgin, executive director of Agents for Change, Washington says, the group will continue its efforts to work to give insurance industry participants the option of adopting a federal charter and coming under the jurisdiction of a federal insurance regulator, rather than the current state-based regulatory system.
That “effort will not slow down due to the recent enactment of the bill,” Ludgin says. “The new law will aide our efforts to shine a light on the shortcomings of the current system and the hoops producers have to jump through to serve their customers.”