The Senate last night shoved through in virtually unprecedented fashion legislation that would clarify that the Federal Reserve Board can apply insurance-based capital standards to the insurance portion of any insurance holding company it oversees.
"Given the partisan gridlock we see every day in Washington, it should say something when legislation is passed with unanimous consent," says Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies. "We appreciate the work being done in both the House and Senate to clarify this issue," he added.
The bill is S. 2270, "the Insurance Capital Standards Clarification Act of 2014." It would revise Sec. 171 of the Dodd-Frank Act, the so-called "Collins Amendment." The Fed says its lawyers interpret the Collins Amendment" to require the Federal Reserve to apply bank capital rules to insurance companies it supervises.
S. 2270 and the companion House bill, H.R. 4510, clarifies that the Fed can apply insurance-based capital standards to the insurance portion of the business, while still keeping banking capital standards for the banking portion of the business.
Leadership of the Senate Banking Committee decided yesterday not to include the Collins Amendment in its TRIA-extension bill, opting instead to "hotline" S. 2270, which meant that as long as no senator objected, the bill would sail through the Senate under expedited procedures.
The Collins Amendment bill passed within hours of that decision. The bill is expected to get broad support in the House Financial Services Committee.
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