NU Online News Service, June 11, 3:50 p.m.EDT

The conference panel charged with reconciling the House and Senate financial services reformbills will take up the powers of a federal insurance office andsurplus lines reform on June 15.

The conference panel held its organizational meeting on thebill, H.R. 4173, on Thursday, and later released a document statingit will deal with Title V, which would create an Office of NationalInsurance (ONI), on Tuesday.

Conferees will be using the Senate bill as the base text, whichgives the Treasury Department strong authority to preempt state lawin negotiating bilateral trade agreements with foreigncountries.

The House bill effectively gives state regulators veto authorityover foreign trade agreements negotiated by the TreasuryDepartment, and allows courts and Congress to pay a role in theprocess.

State legislators and the National Association of InsuranceCommissioners have written several letters to conferees supportingthe weaker Federal Insurance Office contained in the House bill,but nine insurance trade associations wrote a letter to conferees supporting the Senate version'sONI.

The industry letter argues that the Senate version only allowsthe Treasury Department to exercise "narrow preemption" of stateinsurance measures in order to effectuate international regulatoryagreements on prudential insurance matters "under clearly definedcircumstances and with appropriate due process."

The bill's surplus lines reform section aims to eliminate the currentstate-by-state system of making reports and tax payments by excessand surplus lines companies and managing general agents, andinstead have the state in which the insured is domiciled collectand distribute reports and monies.

Officials of the House Ways and Means Committee confirmed thatneither the imposition of a "bank tax" nor the controversial tax on offshore insurers currently being debatedwill be used to help fill a $20 billion budget gap over 10 yearsthat the Congressional Budget Office says the new financialservices bill will create.

The committee is now working on legislation that would fill thebudget gap.

Specifically, the CBO projected that the bill would increasebudget deficits by $12.9 billion over the next five years, and$19.7 billion over the next 10 years.

The bank tax, proposed in President Barack Obama's 2011 budget,would apply to bank, thrift and insurance companies with more than$50 billion in assets.

It would not apply to certain holdings, such as customers'insured savings, but would apply to assets in risk-takingoperations.

The levy would raise an estimated $90 billion over 10 years,according to the White House.

The offshore tax issue deals with H.R. 3424, legislation proposed by Rep. Richard Neal, D-Mass.It would deny tax deductions for reinsurance premiums paid tooffshore affiliates.

The Ways and Means Committee would not confirm why the Bermudatax would not be used as a revenue-raiser, but severalcongressional sources said the provision "just isn't ready."

The conferees plan to hold three sessions next week and threesessions the subsequent week, and plan to work Saturday, June 26,in order to ensure that a final bill is on the desk of PresidentObama by Independence Day.