WASHINGTON–The Bush administration today threw cold water onlegislation introduced earlier in the week providing a long-termextension of the Terrorism Risk Insurance Act.

David Nason, assistant secretary of the Treasury for financialinstitutions, testified before a House subcommittee that it isimportant that the program, which provides a federal backup forinsurers' losses after a major terrorist attack, “remain temporaryand short-term.”

“The following three elements are critical if TRIA is to bereauthorized for a second time: the program remains temporary andshort-term; private sector retentions are increased; and there isno expansion of the program,” Mr. Nason said. “Unfortunately, H.R.2761 does not meet these critical elements.”

He concluded by saying, “Without these critical elements, wewould not be supportive of extending TRIA as, in our view, theprogram would be moving in the wrong direction.”

H.R. 2761 “does not meet our objectives,” he noted. “InTreasury's view, from both a market and economic perspective, itwould be better to have no TRIA than a bad TRIA.

“We are willing to continue to work with Congress toward findingan appropriately balanced solution and to establish the appropriateincreases in private sector participation,” Mr. Nason said.

However, he did not say President Bush would veto thelegislation if the House bill, which calls for a 10-year extensionand adding coverage of nuclear, biological, chemical andradiological threats, made it to his desk. The legislation alsocontains special provisions relating to areas that have alreadysustained attacks, specifically New York, not contained in previousversions.

Mr. Nason made his comments in testimony before the CapitalMarkets Subcommittee of the House Financial Services Committee.