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Waters Strongly Opposes Radical Changes to TRIA, FSOC

In today’s full committee markup, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Financial Services Committee, voiced her strong opposition to Republican measures to radically change the Terrorism Risk Insurance Act (TRIA) and undercut the Financial Stability Oversight Council (FSOC).

On TRIA, Waters blasted Republicans for drafting legislation that jeopardizes a program that has created jobs, spurred economic growth, and protected our nation’s economy from the costs of a terrorist attack. She expressed her disappointment that Republicans refused to work with Committee Democrats to make the reauthorization bipartisan. In sharp contrast, on June 3, the Senate Banking Committee unanimously approved bipartisan legislation to extend TRIA for seven years. Waters further noted TRIA’s success ensuring that our largest venues, attractions and businesses could get back to work quickly and affordably in the aftermath of the September 11th attacks.

For months, Waters and Democrats have pressed Republican leadership to make TRIA a priority. In January, She convened a  panel discussion on the importance of TRIA.

Today, Democrats on the Financial Services Committee released an interactive TRIA web resource, which provides examples of how the Act is playing an important role protecting venues and businesses in every state.

Ranking Member Waters also expressed her opposition to the two measures related to the FSOC, criticizing Republican efforts to disrupt its important work ensuring the stability of the financial system under the guise of transparency. She once again noted that the FSOC was expressly created to fill a void that existed in the lead up to the crisis – looking at every aspect of our financial system for possible risk.

She made the following statement, which can be found online here.

As prepared for delivery:

“Thank you, Mr. Chairman. I have significant concerns with the three pieces of legislation this Committee will consider today.

I want to thank you for responding to the calls of this Committee’s Democrats in finally making the renewal of the Terrorism Risk Insurance Act (TRIA) a priority.  TRIA was signed into law by President Bush in the aftermath of the 9/11 attacks. During a time of uncertainty, it ensured that our largest venues, attractions and businesses could get back to work quickly and affordably.
Post-9/11, the mere threat of terrorism caused many insurers and reinsurers to back out of the market or raise premiums to a level that was prohibitively expensive. In its current form, TRIA keeps terrorism coverage affordable and available by creating a limited federal backstop in the event of a tragic attack.

For months, Democrats have been trying to impress upon the majority the importance of the TRIA program, underscoring the need for a quick, clean reauthorization to provide certainty to many of our nation’s largest job creators. At a panel discussion I held in January, the consensus was unanimous – TRIA is a resounding success that policyholders depend on. The panelists all urged Congress to enact a long-term reauthorization of the program without changes. And Mr. Chairman, it’s worth noting that eight Republicans on this committee agree, co-sponsoring legislation to renew TRIA cleanly and for the long-term.

Under pressure to put forth a plan, several weeks ago, Subcommittee Chairman Neugebauer released an outline of a plan to radically remake the program.  This proposal, aptly known as the “TRIM Act,” was completely untenable.

After its release, concerns by policyholders,  industry stakeholders and Democratic members of this Committee sparked improvements to that proposal – now known as the “TRIA Reform Act.”
But while the proposal we consider today has come a long way from those initial drafts, I join with lawmakers, policyholders and insurers in continuing to express serious concerns. I’m disappointed that Republicans would not work with us to make changes that would have made this markup a bipartisan one.

In its current form, I believe that, like TRIM, this bill will jeopardize a program that has created jobs, spurred economic growth, and protects our nation’s economy from the costs of a terrorist attack.
Mr. Chairman, to use a phrase you are often very fond of using – this bill picks winners and losers.

I say that for several reasons. First, this proposal arbitrarily bifurcates types of terrorist attacks – forcing insurers to pay significantly more should an attack be of “conventional” means, rather than one that is Nuclear, Chemical, Biological or Radiological.

Terrorism is an intentional act carried out with the explicit intention of maximizing damage, loss of life, and economic disruption. I – for one – do not understand why the manner in which an attack is conducted should lead to a significantly higher program trigger and a more expensive copay.  It is shortsighted, doesn’t make sense, and is bad policy.

The second way this legislation picks winners and losers is through changes to policies that would hurt our smallest insurers. The bill allows insurers to voluntarily opt-out of TRIA’s mandatory requirement in instances of financial hardship. But in actuality, this means large insurers will either be forced to fill in the gaps in coverage, increasing the concentration of risk, or capacity will be reduced and take-up rates will suffer. This bill punishes small, regional, and niche insurers and contradicts one of the fundamental purposes of TRIA –to make terrorism coverage mandatory and available.

Mr. Chairman, these are just some of the many concerns I have with the TRIA Reform Act’s modifications to this successful program. I’m also concerned with the bill’s dramatic changes to the Treasury’s recoupment formula and the certification process. As a result, I will be opposing this legislation.

We will also consider two pieces of legislation that would chip away at one of the centerpieces of Wall Street reform – the Financial Stability Oversight Council (FSOC).  As I have said before, the FSOC was created for the express purpose of looking at every aspect of our financial system for possible weaknesses and risk – something that did not happen in the lead up to the crisis. These bills are designed to undercut that process under the guise of transparency– and disrupt the FSOC’s important work ensuring the stability of the financial system.

Mr. Garrett’s bill, H.R. 4387, imposes restrictions on the Council, politicizes its membership with the inclusion of the regulators’ commissioners and board members, and, in what may be considered unconstitutional, gives each member of Congress the right to participate in closed door meetings related to systemic risk. In short, it would eliminate important protections afforded to sensitive market information that could weaken the economy if disclosed, and ignores the self-fulfilling prophesy deliberations of systemic risk have if made public.

Thank you, and I yield back.”


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