One of the House GOP’s favorite pastimes is to pass bills to weaken Dodd-Frank in order to appease their financial backers. Over the past few years, those bills have rarely become laws—unless they are slipped into an end-of-year omnibus bill (Cromnibus, anyone?).
The Transparent Insurance Standards Act of 2016, passed today, will likely see the same fate as such bills, although it may provide indications as to how the Trump administration will roll back Dodd-Frank through its executive powers (or what the GOP may stuff into future omnibus bills without a Democratic president to have to negotiate with).
So what does the Transparent Insurance Standards Act of 2016 do? Create administrative obstacles to the adoption of international insurance standards and make international coordination on financial regulation more difficult:
H.R. 5143 would severely weaken critical Wall Street reforms enacted to protect the U.S. and global financial system from risks posed by large insurance companies. In the aftermath of the 2008 Great Recession, which was precipitated by the near-collapse of the international insurance giant American International Group (AIG), the Dodd-Frank Act significantly improved and strengthened regulatory oversight of the insurance industry.
With respect to robust and prudent regulation of the insurance industry, Dodd-Frank established a system to examine risks posed by the insurance industry to both the U.S. and global financial system. For example, Dodd-Frank provided for the establishment of the Federal Insurance Office (FIO), which is authorized to "coordinate federal efforts and develop federal policy on prudential aspects of international insurance matters, including representing the United States, as appropriate, in the International Association of Insurance Supervisors (IAIS) and assisting the Treasury secretary in negotiating covered agreements." Dodd-Frank also expanded the Federal Reserve's supervisory authority so that it now serves as the consolidated supervisor of insurance holding companies that own either a Federally chartered thrift or a bank, as well as non-bank financial companies designated by the Financial Stability Oversight Council (FSOC).
Significantly, Dodd-Frank recognized and protected the critical role that state insurance commissioners play in regulating insurance companies doing business in their jurisdictions. To that end, Dodd-Frank provides that state insurance commissions, the Federal Reserve, and FIO work together and coordinate with one another in negotiations over insurance standards at IAIS to ensure that that the state-based system of insurance regulation, which has worked well for decades to protect consumers, is represented and respected in international negotiations.
….
H.R. 5143 would hamstring U.S. representatives in international negotiations regarding international insurance standards, and establish several new and cumbersome processes and reporting requirements to be completed before any international standard could be agreed to. These requirements would cause significant delays and impose limitations for developing an international insurance capital standard, and weaken the ability of U.S. regulators to negotiate standards that both accommodate the U.S.’s unique insurance regulatory system and strengthen oversight of insurance companies whose size and complexity could pose a risk to the global financial system. They would also undermine the president's constitutional authority to determine the time, scope, and objectives of international negotiations.
The bill passed 239 to 170.
Four Democrats joined the GOP in voting for it:
Brad Ashford (NE-02)
Henry Cuellar (TX-28)
Ron Kind (WI-03)
Collin Peterson (MN-07)
Ashford recently lost his seat. Maybe he’s angling for a new job?