Allowing an independent insurance expert to serve as a member of the Financial Stability Oversight Council, or FSOC, up to 18 months after their term would have minimal cost, according to the Congressional Budget Office.
Enacting H.R. 3110, the “Financial Stability Oversight Council Insurance Member Continuity Act,” sponsored by Reps. Randy Hultgren, R-Ill., and Maxine Waters, D-Calif., “would not significantly increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2028,” the CBO said in a just-released analysis.
H.R. 3110, CBO said, “contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would not affect the budgets of state, local or tribal governments.”
The bill, which passed the House Financial Services Committee on July 25, would allow the independent member with insurance expertise, after the expiration of his or her term, to serve on the FSOC for up to 18 months after the date when the term of service ends or until a successor to such member is appointed and confirmed.
FSOC is composed of 10 voting members and five nonvoting members, bringing together the expertise of federal financial regulators, state regulators and an independent insurance expert appointed by the president, with the advice and consent of the Senate. The independent member serves a six year term.
Based on information from the FSOC, CBO estimates that implementing H.R. 3110 would cost less than $500,000.
“That amount would cover the additional personnel costs for the independent member until a successor is appointed,” CBO said.
Under current law, expenses of the FSOC are considered to be expenses of the Office of Financial Research (OFR), which is direct spending.
The Trump administration as well as the Financial Choice Act, legislation introduced by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, to derail the Dodd-Frank Act, would also abolish the OFR.
As CBO explains, the OFR is authorized to levy assessments, which are recorded in the budget as revenues, on certain financial institutions to offset its operating costs.
Accordingly, “CBO estimates that the bill’s net effect on the deficit would be negligible. Because enacting H.R. 3110 would affect direct spending and revenues, pay-as-you-go procedures apply.”
Insurers have argued that FSOC has made decisions affecting the insurance industry without demonstrating much understanding of the industry, and that the absence of an independent member with insurance expertise could make that problem worse.
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