Federal regulations on insurance companies are likely to be eased this week with the introduction of a Senate bill by the chairman of the Senate Banking Committee.
Alabama Senator Richard Shelby is preparing to push legislation that would exempt certain small US banks and insurance companies from regulations put in place in the 2010 Dodd-Frank Act. Currently, the Wall Street reform bill subjects financial firms and insurance companies deemed “systemically important” to the US economy to federal oversight, including requirements on capital standards.
Easing the burden on insurers has long been considered by Congress, and Senator Shelby is going forward with these new changes despite a falling out with Democrats over his proposed legislation.
Senator Sherrod Brown, the Banking Committee’s top ranking Democrat, is said to be resisting Shelby’s changes, instead preferring a more targeted approach to granting exemptions.
Specifically, he is concerned Shelby’s approach would release larger banks from federal oversight.
“Democrats are ready, willing, and able to provide regulatory relief for community banks and credit unions,” Brown said in a statement.
Shelby’s camp has repeatedly held meetings on the bill and other Dodd-Frank issues, according to a Reuters report. That all changed recently, however.
“We have not met in two weeks because our previous meetings over the past month have been unproductive and we have begun the process of drafting,” an unnamed Republican aide told Reuters.
Without some support from Democrats, however, Shelby stands little chance of securing the bill’s passage. Republicans currently represent 54 votes in the Senate; they need 60 to overcome procedural hang-ups.
The House has already supported such actions. In December, it passed the Insurance Capital Standards Clarification Act, which allowed the Federal Reserve Board greater flexibility in determining how to apply capital standards to prominent insurance carriers.
The legislation amends Dodd-Frank to free the Fed from using accounting principles for banking to measure insurers’ capital adequacy.
Members of the industry said under the current Dodd-Frank provisions, insurance companies would be subject to the same ill-fitting requirements as banks and have been lobbying Congress to make amends.