Financial Services Reform Bill Passes Senate

Final bill recognizes strong state insurance regulation.

Last week, the United States Senate passed S. 3217, the “Restoring America’s Financial Stability Act.” The legislation was first introduced by Sen. Chris Dodd (D-Conn.), chairman of the Senate Committee on Banking, Housing, and Urban Affairs, and is meant to address the issues that caused the recent financial crisis.

In a huge win for the Big “I,” the Senate financial services regulatory reform legislation leaves day-to-day regulation of the insurance market at the state level. This was a position advocated for by the Big “I” and many property-casualty companies, which noted that they were not to blame in creating the crisis and pose no systemic risk to the overall economy.

During the debate, the Big “I” pointed out that the state regulatory system has a proven track record of ensuring insurer solvency, industry competition and growth, and consumer protection. The association was pleased that both the House and Senate recognized the strength of the state regulatory system for insurance in each of their respective financial reform bills.

Additionally, the Big “I” has encouraged those in the industry who have been advocating for the so-called “optional federal charter” (OFC) for insurance, which the association strongly opposes, to take note of the dangerous direction that federal regulation and oversight can sometimes take, as evidenced by the debate on the Senate legislation.

The House and Senate conference to reconcile the two bills is expected to begin on June 9. The House legislation, H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009,” passed that chamber in December 2009.

Earlier this week, the Senate named seven Democrats and five Republicans to the conference committee, hailing from the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry. The conferees are Senators Saxby Chambliss (R-Ga.), Bob Corker (R-Tenn.), Mike Crapo (R-Idaho), Chris Dodd (D-Conn.), Judd Gregg (R-Vt.), Tom Harkin (D-Iowa), Tim Johnson (D-S.D.), Patrick Leahy (D-Vt.), Blanche Lincoln (D-Ark.), Jack Reed (D-R.I.), Chuck Schumer (D-N.Y.) and Richard Shelby (R-Ala.). The House is expected to formally announce their conferees soon.

The Big “I” is urging the conferees to carefully weigh the impact of the final legislation on the financial services marketplace as a whole. A healthy and vibrant financial services market is of vital importance to the U.S. economy.

As the legislation is finalized, the Big “I” Capitol Hill team will continue to advocate on behalf of its members and relay developments.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs..