DATE: JANUARY 22, 2010
DATE: JANUARY 22, 2010
TO: NCOIL LEGISLATORS
FROM: SUSAN NOLAN
RE: FEDERAL FINANCIAL SERVICES REGULATORY REFORM UPDATE
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Members of the U.S. Senate Banking Committee continue to meet privately to develop bipartisan legislation to replace the Restoring American Financial Stability Act, which was circulated for discussion by Chairman Chris Dodd (D-CT) in November. We understand that the Committee hopes to reconvene its markup—which began in November—in a few weeks.
The initial Dodd draft included concepts similar to those in the House-passed H.R. 4173, the Wall Street and Consumer Protection Act, (12/11 NCOIL Legislative Alert available here), particularly related to the insurance.
In meeting with Senate staff regarding their ongoing efforts, we understand that:
• Office of National Insurance (ONI) language will remain in the legislation and that Ranking Member Richard Shelby (R-AL), and insurance industry OFC proponents, have pushed for a stronger office—though it does not appear likely as Chairman Dodd and other interests have pushed against such a move.
• Nonadmitted/Surplus lines insurance language—which requires home state regulation of the transactions, taxes, and broker licensing—will likely remain in the bill and there is a chance that the reinsurance reform component could be dropped.
• There are no plans to add a state banking and/or securities regulator to a proposed nine-member Agency for Financial Stability, nor does staff plan to substitute a state insurance regulator for the existing independent member with insurance experience.
• An independent, stand-alone Consumer Financial Protection Agency (CFPA) is likely dead and will give way to a new consumer division within an existing federal regulator.
• Any new consumer entity will not have authority over insurance, including over credit, mortgage, and title insurance products.
• Most failing financial firms will be directed through an enhanced bankruptcy proceeding, though an FDIC-like resolution authority will handle particularly complicated failures.
• Most insurer failures would still go through the state guaranty fund process.
For more information contact Mike Humphreys by reply e-mail or at 202-220-3014.
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