The results of the election will generate substantive change in who makes the decisions affecting the insurance industry in Washington. Here is a look at the key people certain to be impacted by the change.
Timothy Geithner, Treasury secretary. Geithner has made it clear he will not serve a second term as Treasury secretary. Initial speculation was that he will be replaced by Jacob Lew, currently President Obama’s chief of staff. Geithner is a key player in Washington on insurance issues. He was chairman of the New York Fed when it was forced to provide federal assistance to American International Group (AIG) in September 2008, and took the heat as the government was first required to provide more aid than the initial $85 billion to AIG, and then for not stopping AIG executives from getting huge compensation despite their flawed decisions. He helped draft the initial versions of the Dodd-Frank financial services reform law, helped steer it through Congress, and now heads, amongst other jobs, the Financial Stability Oversight Council, which could designate such non-banks as AIG as systemically significant and therefore subject them to federal regulation as earlier as December. Other likely candidates are MetLife and Prudential Insurance.
He also took the heat, hearing such talk as “You should resign!” and “I have no confidence in you” from Republican members of House committees seeking to distance themselves from taking campaign contributions from AIG in its prime. The government still owns 16 percent of AIG, and could decide to sell its remaining stake by the end of the year, at the moment, at a profit. Potential replacements cited by SNR Denton are Erskine Bowles, Gene Sperling, and Lael Brainard, currently Under Secretary of the Treasury for International Affairs. Earlier this year, she was forced to field tough questions on insurance regulatory issues from hostile House Financial Services Committee members.
Image: U.S. Treasury Secretary Timothy Geithneron Monday July 30, 2012. (AP Photo/dapd/ Philipp Guelland)
Michael McRaith, director of the Federal Office of Insurance. The former Illinois insurance commissioner is likely to stay. He was the key drafter of a report on how insurance regulation should be modernized going forward mandated under the Dodd-Frank financial services reform law. The report has likely been in the can for six months and its release is probably imminent. He has strong bipartisan support in Congress, as well as support from the industry and state regulators. He has made a strong point of involving state regulators in his job. One of his most important tasks going forward will be on international capital standards and in negotiating international trade agreements that strengthen the role of U.S. insurers in international markets.
Image: Michael McRaith, left, and New York Superintendent of Insurance Howard Mills, right, listens. Insurance regulators from four states, including representatives from others, meet to devise a national catastrophe insurance program in the wake of a devastating hurricane season, increasing terrorism threats and earthquake fears. (AP Photo/Paul Sakuma)
Rep. Jeb Hensarling, R-Texas, will succeed Rep. Spencer Bachus, R-Ala., as chairman of the House Financial Services Committee because of party term-limits. One of the reasons Hensarling will get the job is because he is a prodigious fund-raiser and a prime supporter of insurance interests in Congress. He is a former aide to Sen. Phil Gramm, R-Texas, and helped write the Gramm-Leach-Bliley Act, which the insurance industry sought as a means of keeping banks out of their business. He will work to limit federal regulation of insurance, but will be unable to roll back the current federal initiatives, such as consolidated regulation of insurance companies which own thrifts, as well as designation of non-banks such as insurers as systemically significant. The first of the latter designations is likely to occur as early as next month.
Image: Rep. Jeb Hensarling, R-Texas.(AP Photo/J. Scott Applewhite)
Rep. Maxine Waters, D-Calif. With the decision of Rep. Barney Frank, D-Mass., to retire, she will join Hensarling as part of a new leadership team for the House Financial Services Committee, a critical venue for insurance interests. They are already being described as the “odd couple.” Waters is an avowed liberal firebrand and her interests are likely to be focused in the insurance area on credit scoring and consumer protection standards.
Image: Rep. Maxine Waters, D-Calif. speaks on Capitol Hill in Washington. (AP Photo/Susan Walsh, File)
Rep. Judy Biggert, R-Ill. Biggert was defeated for re-election in Illinois, and she will be missed. Joel Wood, senior vice president of congressional affairs of the Council of Insurance Agents and Brokers, called her defeat, “extremely disappointing to the insurance industry.” As chairman of the Subcommittee on Insurance, Housing and Community Opportunity of the House Financial Services Committee, she worked across the aisle and with the Senate to ensure passage of legislation providing for a 5-year extension of the National Flood Insurance Program after a 5-year tortuous legislative path. She was also a strong ally of the industry in opposition to federal regulation, and supported MetLife in its battles with the Federal Reserve Board. Wood called her a “thoughtful, moderate ally of the industry.” It is unclear who will succeed her.
Image: Sen. Richard Durbin, D-Ill., center, flanked Rep. Judy Biggert, R-Ill., right, and Rep. Melissa Bean, D-Ill. discusses the next steps on the proposed Canadian National purchase of the Elgin, Joliet & Eastern Railway, Tuesday, Dec. 9, 2008 on Capitol Hill in Washington. (AP Photo/Lauren Victoria Burke)
Rep. David Camp, R-Mich., Sander Levin, D-Mich., chairman and ranking minority member of the House Ways and Means Committee. The fiscal cliff looms on January 1, and President Obama made clear Friday that any compromise would have to include higher taxes levied on wealthier Americans. That places the life insurance industry in the cross-hairs. The primary issue in the short term is estate tax policy but also likely to be on the table for a long-term solution to be negotiated next year includes inside buildup, Corporate-Owned-Life-Insurance and Bank-Owned-Life-Insurance (COLI), general federal tax rates, non-qualified deferred compensation plans and the dividend-received deductions on variable annuity contracts. The likelihood is that any deal will include a one-year extension of the Bush tax cuts, perhaps a compromise that would have estate tax policies revert back to 2009 levels, and an increase in the federal borrowing limit. Camp is a moderate, as is Levin, and the two work together well. They also are knowledgeable about life insurance issues, and, since tax policy must be initiated in the House, industry focus will be on persuading them on the importance of life insurance. As stated by officials of the American Council of Life Insurance, “As with every new Congress, there is a renewed need for us to inform and educate members about the vital role our industry plays in securing the financial and retirement security of 75 million American families. For example, we will make the point about the role we can play in the lives of future retirees.”
Image:House House Ways and Means Committee Chairman Rep. David Camp, R-Mich., left, and the committee’s Ranking member, Rep. Sander Levin, D-Mich., arrive on Capitol Hill in Washington, Wednesday, Oct. 5, 2011, for the committee’s hearing on the three trade bills. (AP Photo/Harry Hamburg)
Sen. John Tester, D-Mont. Tester won re-election, with strong insurance industry support, in a very red state. He was a key supporter of critical insurance industry issues, such as the legislation extending the National Flood Insurance Program. He has also taken the lead on insurance regulatory issues, such as uniform agent/broker licensure standards, a priority of the National Association of Insurance and Financial Advisors. He could be a key ally on the Senate Banking Committee for passage of an extension of the Terrorism Risk Insurance Act, the No. 1 legislative priority of the insurance industry.
Image: In this Oct. 23, 2012, photo, Sen. Jon Tester, D-Mt., rallies supporters in Helena, Mont. Rep. Denny Rehberg, R-Mt., has been turning to out-of-state surrogates to help him rally his base in the election’s closing days. (AP Photo/Matt Gouras)