Rep. Barney Frank threw down the gauntlet last month on extensionof the Terrorism Risk Insurance Act, insisting that he would not bebullied by the U.S. Senate into abandoning his broader vision forthe program and swallowing the more limited Senate bill at the 11thhour. But with the federal reinsurance backstop set to expire Dec.31, the Senate showing no signs of caving in and a White House vetothreat looming, will Barney blink rather than let TRIA pass intooblivion? I think he must and he will.

I was impressed by Rep. Franks bravado when I watched him strideconfidently on stage and draw his line in the sand during a lateOctober speech in Boston at the annual meeting of the PropertyCasualty Insurers Association of America.

My concern is that the Senate will pass a [TRIA extension] billthat is better than nothing right at the end of the year, and thensay the House must take it or leave it, even if we believe it isinadequate, Rep. Frank said at the time. I will not be subjected tothis kind of tactic.

To defuse the tension, he said he would introduce a bridge billto extend the status quo on TRIA through April 30, 2008, to allowfor further debate and give us plenty of time to do what is bestfor this country.

Now that push is about to come to shove, however, I can't seethe Senate going along with a temporary extension. That would pushthe divisive TRIA debate deeper into the heart of next year'spresidential race, with dozens of members of Congress preparing tofight for their political lives.

The last thing Congress wants to do is leave the nationfinancially exposed to a terrorist attack, especially with so manyU.S. senators running for president–including the TRIA bill'sSenate champion, Connecticut Democrat Chris Dodd, who has somemajor insurers among his constituents back in Hartford.

Could you imagine the political fallout if we're hit by anotherterrorist attack early in the new year and thousands have noinsurance coverage? That's what would happen if TRIA is allowed toexpire, prompting all but legally-obligated workers' compensationinsurers to head for the exits on this catastrophic risk.

Rep. Frank, a heavyweight given his chairmanship of the powerfulHouse Financial Services Committee, wants a 15-year extension and amandate for insurers to cover nuclear, chemical, biological andradiological attacks. The Senate passed a more modest version,voting for a seven-year extension and adding coverage for domesticterrorism (like the Oklahoma City bombing) but–much to theinsurance industry's relief–leaving out NCBR exposures.

In my view, this is not enough of a substantial difference towarrant a showdown between the House and Senate.

And while I can appreciate Rep. Frank's personal distaste forallowing the Senate to dictate the terms of extension, the fact isthe entire argument is moot because of a looming veto threat fromPresident George W. Bush.

The White House is compromising by even going along withextension of any kind. Their opposition to government interventionin the terrorism insurance market is no secret. But recognizingthat fear of terrorism remains the most potent election issue(along with immigration) for Republicans, President Bush isn'tabout to pull the rug out from under his own party by leaving thenation exposed to catastrophic terrorism losses on his watch.

However, that doesn't mean he'll sign any extension billCongress dumps on his desk. The White House has made it quite clearthat while President Bush could reluctantly live with the Senate'smore modest version, he would veto the longer-term, morecomprehensive House bill. I don't think he's bluffing.

Game over.

The Senate bill is a decent compromise in its own right. Sevenyears is more than a reasonable term of extension. The Senateversion also buys time on two other contentious issues by orderingstudies by the Government Accountability Office on the risk of NBCRattacks and capacity restraints in high-profile-target areas, suchas lower Manhattan.

Rep. Frank may have been roaring like a lion at PCI, but hesounded more like a lamb after the Senate passed its limitedversion. Sen. Dodd also expressed confidence that a bill would passby Dec. 31 that President Bush could live with.

For all our sakes, let's hope his confidence is notmisplaced.

What do you folks think???