Financial Services Committee Moves Legislation to Protect Military Personnel, Extend Terrorism Insurance, and Implement 9/11 Commission Recommendations
The House Financial Services Committee today successfully moved three pieces of bipartisan legislation to: protect military personnel from unfair financial products and bad sales practices; extend the terrorism reinsurance program for two years; and implement the recommendations of the 9/11 Commission.
By a vote of 68-0, the Committee passed H.R. 5011, introduced by Rep. Max Burns (GA). The legislation would ban the sale of contractual mutual funds, an obscure product that disappeared from the civilian market more than two decades ago. Additionally, the bill would clarify that State insurance commissioners do have jurisdiction over military bases located within their borders, as well as military installations overseas. The legislation would require that military personnel be informed about life insurance available from the Federal government prior to the sale of any private insurance. The States are directed to develop standards to further protect members of the armed services. House Financial Services Committee Chairman Michael G. Oxley (OH) offered a manager’s amendment with the support of Rep. Rahm Emanuel (IL).
Rep. Jim Ryun (KS) offered an amendment to create a registry of barred insurance agents and financial advisors that would be made available nationally to all military installations and Federal and State financial regulators. Rep. Steve Israel (NY) offered a second-degree amendment to the Ryun amendment to require notification of military installations and regulators when there is a change in the registry. The Ryun amendment, as amended by Israel, passed by voice vote.
The full Committee also passed by voice vote H.R. 4634, the Terrorism Insurance Backstop Extension Act of 2004, offered by Rep. Pete Sessions (TX). The legislation would extend for two years the terrorism risk insurance program, which was created in 2002 to ensure the continued availability of commercial property and casualty insurance and reinsurance. A manager’s amendment was offered by Chairman Oxley and supported by Ranking Member Barney Frank (MA); Subcommittee Chairman Richard H. Baker (LA); Subcommittee Ranking Minority Member Paul Kanjorski (PA); Subcommittee Chairwoman Sue Kelly (NY); Rep. Michael E. Capuano (MA); and Rep. Steve Israel (NY). To protect taxpayers, the bill steadily increases the industry’s retention of risk and insurer deductibles in order to encourage the private insurance marketplace to develop long-term solutions for handling the risk of terrorism.
The Committee passed by voice vote its portion of the package of 9/11 legislation put forward by the House leadership to respond to the recommendations of the 9/11 Commission. While the Commission’s report cited with approval the anti-terror finance and anti-money laundering provisions in Title III of the USA Patriot Act, it went on to say that the terrorists are motivated and highly adaptive, and efforts to block their finances will need to continue to evolve and improve.
The legislation would make technical corrections to Title III and includes provisions that would: require the Treasury Department to develop a national money laundering strategy; grant the Securities and Exchange Commission emergency authority to respond to extraordinary market disturbances; boost the authority of the Financial Crimes Enforcement Network, the U.S. Governments financial intelligence unit; and equate the possession of counterfeiting tools with the intent to use them with the actual act of counterfeiting.
The so-called “netting” provision included in the bill would revise the banking and bankruptcy laws to provide for the orderly unwinding of certain financial contracts where one party to the transaction becomes insolvent, thereby minimizing the risk of market disruption. Federal Reserve Chairman Alan Greenspan has stated his belief that this measure is vital to the financial system’s ability to endure a future terrorist attack.
Also included in the legislation is a provision that passed the House last year that would bar Internet gambling sites access to the U.S. financial services system by preventing the use of credit cards, wire transfers, or any other bank instruments to fund illegal Internet gaming transactions. The Committee has previously heard testimony from the Federal Bureau of Investigation that Internet gambling is vulnerable for use in terrorist financing schemes.
To ensure that the government’s efforts against terrorist financing are matched throughout the world, the legislation would direct the Secretary of the Treasury to establish an international terrorist finance coordinating council.
The Committee adopted the following amendments by voice vote:
Rep. Kanjorski (PA) to require a study on the business continuity planning of the financial services industry by the Federal Reserve, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
Subcommittee Vice Chair Judy Biggert (IL) and Subcommittee Chairman Peter King (NY) to strengthen the hand of the Treasury Departments role in multilateral negotiations on international financial issues.
Rep. Joe Baca (CA) expressing the sense of Congress, that the insurance industry and credit rating agencies should consider a companies compliance with emergency preparedness standards when considering its insurability or credit worthiness.
Subcommittee Vice Chair Judy Biggert (IL) to commend the Department of Treasury for its work on emergency preparedness and anti-terrorist financing. Expressing the sense of Congress, that the Secretary of Treasury in conjunction with the Department of Homeland Security should encourage public-private sector initiatives on counter-terrorist financing plans and submit an annual report to Congress.
Rep. Rahm Emanuel (IL) requires the Secretary of the Treasury to report to Congress on the progress of public and private sector counter-terrorism initiatives.
Rep. Jay Inslee (WA) to make a technical clarification to the internet gambling provision in the legislation.
Subcommittee Chairwoman Sue Kelly (NY) calling for the Secretary of the Treasury to draft regulations requiring the reporting in certain circumstances of cross-border wire transfers.
Subcommittee Chairwoman Sue Kelly (NY) and Rep. Luis Gutierrez (IL) to impose a one year cooling off period for senior bank examiners who leave a regulatory agency to accept employment at a bank they examined.
