Congress Still Going Through Motions

"Probability of movement" means that some legislative panel, perhaps even the entire Congress, takes an up-or-down vote on an actual bill.

Class-Action Reform.

Probability of Motion: Very high.

Probability of Movement: Moderate.

Analysis: Paul Simon of Simon and Garfunkel fame once wrote a song that said "There must be 50 ways to leave your lover." There must be at least twice as many ways to stop legislation in the Senate.

Toward the end of last year, class-action reform was the hot issue which the conventional wisdom said would surely be passed by the Senate early in 2004.

A bipartisan agreement had just been reached on a watered down reform bill that assured 61 votes in favor of passage, enough to prevent a filibuster. The legislation, S. 2062, contains a complicated formula for determining when federal courts could assert jurisdiction over major class-action lawsuits.

While S. 2062 does not go as far as many reform advocates would like, it is a step forward, and the prospect of enacting any reform bill over the objections of the trial bar is viewed as no small achievement.

But all the momentum from the bipartisan agreement quickly dissipated. Opponents of S. 2062 attached non-germane amendments to it which prevented the Senate leadership from bringing it to the floor.

After a lot of wrangling and months of delay, an agreement appeared to emerge that would allow the leadership to bring up a clean bill. This was supposed to happen before the July 4 recess. Then, the leadership announced that S. 2062 would be delayed again and would not come up until after the recess.

Again, a lot of reform advocates seem optimistic that this time S. 2062 will go, but I remain skeptical. I think we are too far along in the political season for something like class-action reform.

No matter how much bipartisan support S. 2062 has garnered, passage will be touted as a victory for President Bush, who ran in 2000 partly on a tort reform agenda. I have a lot of trouble believing that Democrats, including those who signed on to the bill, will hand the president a major legislative victory when we are so close to a toss-up election.

Maybe it will happen, and I wouldn't bet my house against it. But I would bet whatever chump change I have in my pocket right now that S. 2062 will not make it to the finish line.

TRIA Reauthorization.

Probability of motion: Very high.

Probability of movement: Moderate.

Analysis: Legislation to extend the Terrorism Risk Insurance Act was introduced in the House of Representatives recently on very short notice. Indeed, the press got very little advance notice of the event and a press conference conducted by the sponsors of the legislation drew more lobbyists than reporters.

The legislation, H.R. 4634, has the same flaws as the existing TRIA legislation. In particular, it forces insurance companies to offer terrorism insurance to all comers, with no protections against adverse selection.

In addition, it forces insurers to assume a substantial portion of a risk that they cannot predict or properly price.

H.R. 4634 drew strong support from insurance buyers, but insurance companies issued very carefully worded statements appreciating the introduction of the legislation but withholding comment on the specifics.

There will likely be some action in the House Financial Services Committee on H.R. 4634, perhaps a hearing or even a vote in a subcommittee. But prospects in the Senate are uncertain.

A recent article in the Capitol Hill publication Roll Call quoted unnamed sources as saying that Democrats were going to punish the insurance industry for supporting the Republican challenger to Sen. Tom Daschle in the tight South Dakota senate race by delaying TRIA extension.

This may not reflect the ideals of representative government that we all learned in Civics 101, but it probably represents the reality. My guess is that TRIA will wait until next year.

Regulatory Reform.

Probability of Motion: High.

Probability of Movement: Low.

Analysis: I'm hearing that the House Financial Services Committee staff is working hard on putting together a discussion draft of regulatory reform that would keep regulation with the states.

It is a daunting task, since Committee Chairman Mike Oxley, R-Ohio, has outlined a vision for reform that raises constitutional questions about enforcement and oversight.

While details are hard to come by, the smart money is saying that the legislation will not mandate pure market-based rating but instead will allow states to adopt flexible rating bands. This is less than the industry would like, but it is better than prior approval rating.

The hope is to get a discussion draft finished within the next couple of weeks. Then, the Capital Markets subcommittee would likely conduct a hearing and perhaps even vote out a bill.

But that will be the end of it for this Congress.

Reproduced from National Underwriter Edition, July 1, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.