White House Says Nix To Long-Term TRIA

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

David Nason, assistant secretary of the Treasury for financial institutions, testified before a House subcommittee that it is important that the program, which provides a federal backup for insurers' losses after a major terrorist attack, “remain temporary and short-term.”

“The following three elements are critical if TRIA is to be reauthorized for a second time: the program remains temporary and short-term; private sector retentions are increased; and there is no 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, we would not be supportive of extending TRIA as, in our view, the program would be moving in the wrong direction.”

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

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

However, he did not say President Bush would veto the legislation if the House bill, which calls for a 10-year extension and adding coverage of nuclear, biological, chemical and radiological threats, made it to his desk. The legislation also contains special provisions relating to areas that have already sustained attacks, specifically New York, not contained in previous versions.

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