WASHINGTON–Treasury Secretary Designate Henry M. Paulson Jr., who has supported the government backstop for terrorism insurance, could be confirmed in his post next month, a key lawmaker said.
Mr. Paulson met yesterday with Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, who later told reporters Paulson could be confirmed and on the job by early July.
The nominee's chances apparently have not been impacted by the fact that his position on terrorism insurance would appear to be somewhat at odds with that of the Bush administration.
Mr. Paulson supported sustaining the federal terrorism insurance program in a letter he wrote in July 2005, to the House Financial Services Committee.
The letter to Rep. Richard Baker, R-La., chairman of the Capital Markets Committee of the House Financial Services Committee, varies from the line taken by the Bush administration during drawn-out talks leading to a narrow, two-year extension of the program approved by Congress last December.
In his letter, Mr. Paulson said the program, titled the Terrorism Risk Insurance Act, "has helped provide the underpinning to a robust economic recovery despite the ongoing threat of terrorism."
Few insurance representatives would comment on Mr. Paulson's letter, but David Winston, senior vice president, federal affairs, for the National Association of Mutual Insurance Companies, said the letter "is a resounding endorsement of the need for a permanent federal reinsurance backstop for terrorism risk insurance."
"Mr. Paulson discredits the argument that securitization will offer sufficient capacity to cover terrorism risk, and he is perhaps in the best position to know as chairman and CEO of Goldman Sachs," Mr. Winston added.
Sen. Grassley Monday praised Mr. Paulson, chief executive of the Wall Street investment firm Goldman Sachs, for the "vast amount of experience" he will bring to the job. The 45-minute meeting marked the beginning of a round of routine courtesy calls presidential nominees make to senators, especially those on the committee that must report their nomination to the full Senate.
In his July 2005 letter, Mr. Paulson said: "Notwithstanding Treasury's conclusion that TRIA has achieved its original purpose, we are not aware of any meaningful evidence showing that private terrorism risk insurance or reinsurance markets have developed ample capacity to rationally price and insure against terrorism on a scale that would adequately protect our nation's economy.
"In fact, current data suggests that reinsurance, and consequently insurance, participation in the terrorism insurance market likely will decline significantly if the federal terrorism insurance backstop is left to expire," Mr. Paulson wrote.
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