[Congressional Record Volume 164, Number 152 (Wednesday, September 12, 2018)]
[House]
[Pages H8124-H8127]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1530
STATE INSURANCE REGULATION PRESERVATION ACT
Mr. ROTHFUS. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 5059) to amend the Home Owners' Loan Act with respect to the
registration and supervision of insurance savings and loan holding
companies, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 5059
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``State Insurance Regulation
Preservation Act''.
SEC. 2. SUPERVISION OF INSURANCE SAVINGS AND LOAN HOLDING
COMPANIES.
(a) Definitions.--Section 10(a)(1) of the Home Owners' Loan
Act (12 U.S.C. 1467a(a)(1)) is amended by inserting at the
end the following:
``(K) Domicile.--The term `domicile' means the State in
which an insurance underwriting company or the holding
company for such company is incorporated, chartered, or
organized.
``(L) Business of insurance.--The term `business of
insurance' means any activity that is regulated in accordance
with the relevant State insurance laws and regulations,
including the writing of insurance and the reinsuring of
risks.
``(M) Insurance savings and loan holding company.--The term
`insurance savings and loan holding company' means--
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``(i) a savings and loan holding company with 75 percent or
more of its total consolidated assets in an insurance
underwriting company (or insurance underwriting companies),
other than assets associated with insurance for credit risk,
during the 4 most recent consecutive quarters, as calculated
in accordance with Generally Accepted Accounting Principles
or the Statutory Accounting Principles in accordance with
State law;
``(ii) a company that--
``(I) was a savings and loan holding company as of July 21,
2010, and through date of enactment of this clause; and
``(II) was not subject to the Basel III capital regulation
promulgated by the Board of Governors of the Federal Reserve
System and the Comptroller of the Currency on October 11,
2013 (78 Fed. Reg. 62018), because the savings and loan
holding company held 25 percent or more of its total
consolidated assets in subsidiaries that are insurance
underwriting companies (other than assets associated with
insurance for credit risk); or
``(iii) a top-tier savings and loan holding company that--
``(I) was registered as a savings and loan holding company
before July 21, 2010; and
``(II) is a New York not-for-profit corporation formed for
the purpose of holding the stock of a New York insurance
company.
``(N) Insurance underwriting company.--The term `insurance
underwriting company' means an insurer that is subject to
regulation by a State insurance authority of the insurer's
domicile.
``(O) State insurance authority.--The term `State insurance
authority' means the State insurance authority of the State
in which an insurance underwriting company or holding company
for such company is domiciled.
``(P) Top-tier savings and loan holding company.--The term
`top-tier savings and loan holding company' means the
ultimate parent company in a savings and loan holding company
structure.''.
(b) Registration.--Section 10(b)(1) of the Home Owners'
Loan Act (12 U.S.C. 1467a(b)(1)) is amended by inserting at
the end the following new sentence:
``A savings and loan holding company that is an insurance
savings and loan holding company shall register as an
insurance savings and loan holding company.''.
(c) Reports.--Section 10(b)(2) of the Home Owners' Loan Act
(12 U.S.C. 1467a(b)(2)) is amended by adding at the end the
following new subparagraph:
``(D) Insurance savings and loan holding companies.--The
Board, to the fullest extent possible, shall request reports
and other information filed by insurance savings and loan
holding companies and any insurance underwriting company that
is a subsidiary of such company with other Federal
authorities and the State insurance authority for such
company before requesting such reports or information from
the insurance savings and loan holding company or any
insurance underwriting company that is a subsidiary of such
company.
``(E) Rule of construction.--Nothing in this section may be
construed as prohibiting the Board from requesting reports
and other information that is not otherwise collected and
shared with other Federal or State authorities.''.
(d) Books and Records.--Section 10(b)(3) of the Home
Owners' Loan Act (12 U.S.C. 1467a(b)(3)) is amended--
(1) by striking ``Each'' and inserting the following:
``(A) In general.--Each''; and
(2) by inserting at the end the following new subparagraph:
``(B) Insurance savings and loan holding companies.--The
Board, to the fullest extent possible, shall align any
prescribed recordkeeping requirements for an insurance
savings and loan holding company with the recordkeeping
requirements imposed by the State insurance authority of such
company and any insurance underwriting company that is a
subsidiary of such company.''.
(e) Examinations.--Section 10(b)(4)(C) of the Home Owners'
Loan Act (12 U.S.C.1467a(b)(4)(C)) is amended--
(1) in clause (i), by striking the word ``and'' at the end;
(2) in clause (ii), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new clause:
``(iii) Insurance savings and loan holding companies.--
``(I) Coordination.--The Board, to the fullest extent
possible, shall coordinate examinations of an insurance
savings and loan holding company in conjunction with the
State insurance authority of such company and any insurance
underwriting company that is a subsidiary of such company and
other State and Federal authorities in order to minimize the
potential for duplication and conflict between the
examinations conducted by the Board and the examinations
conducted by other State and Federal authorities.
``(II) Scope and frequency.--Following public notice and
comment, the Board shall establish a schedule for the
frequency and the scope of examinations of insurance savings
and loan holding companies that is consistent with the
supervisory framework required by paragraph (7).''.
(f) Supervision.--Section 10(b) of the Home Owners' Loan
Act (12 U.S.C. 1467a(b)) is amended by inserting at the end
the following new paragraph:
``(7) Insurance savings and loan holding companies.--
``(A) Tailored supervision.--The Board, by rule, shall
establish a supervisory framework for insurance savings and
loan holding companies that--
``(i) is tailored to the unique risks, operations, and
activities of insurance savings and loan holding companies;
and
``(ii) to the fullest extent possible, and consistent with
the safe and sound operation of insurance savings and loan
holding companies, does not unnecessarily duplicate the
supervision of insurance underwriting companies by the State
insurance authorities for such companies or insurance
underwriting companies that are subsidiaries of such
companies.
``(B) Review of supervisory guidance.--Following public
notice and comment, the Board shall review and revise
supervisory policy letters and guidance applicable to
insurance savings and loan holding companies to ensure that
such letters and guidance are not inconsistent with the
supervisory framework required by this paragraph.''.
SEC. 3. ASSESSMENTS AND FEES FOR INSURANCE SAVINGS AND LOAN
HOLDING COMPANIES.
Section 11(s) of the Federal Reserve Act (12 U.S.C.
248(s)), which relates to assessments and fees, is amended by
inserting at the end the following new paragraph:
``(4) Excluded assets.--For purposes of paragraph (2)(B),
the total consolidated assets of an insurance savings and
loan holding company, as defined in section 10(a)(1)(L) of
the Home Owners' Loan Act (12 U.S.C. 1467a(a)(1)(L)), shall
not include assets attributable to the business of insurance
conducted by such company or any affiliate of such company,
other than assets associated with insurance for credit
risk.''.
SEC. 4. IMPLEMENTATION.
(a) Implementation of Supervisory Framework.--The Board
shall establish the supervisory framework required by section
10(b)(7) of the Home Owners' Loan Act (12 U.S.C.
1467a(b)(7)), as added by this Act, within 24 months of the
date of enactment of this Act.
(b) Review of Supervisory Guidance.--The Board shall
complete the review of supervisory policy letters and policy
guidance required by section 10(b)(7) of the Home Owners'
Loan Act (12 U.S.C. 1467a(b)(7)), as added by this Act,
within 30 months of the date of enactment of this Act.
(c) Report to Congress.--The Board, no later than 36 months
after the date of enactment of this Act, shall submit a
report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives on the implementation of this
Act.
(d) Board Defined.--As used in this section, the term
``Board'' means the Board of Governors of the Federal Reserve
System.
SEC. 5. RELATIONSHIP TO OTHER LAWS.
This Act and the amendments made by this Act shall not
limit any authority over insurance savings and loan holding
companies (as defined under section 10(a)(1) of the Home
Owners' Loan Act) that is provided by a Federal law other
than the Home Owners' Loan Act.
SEC. 6. RULEMAKING AUTHORITY.
The Board may issue regulations and orders as may be
necessary to--
(1) administer and carry out this Act and the amendments
made by this Act; and
(2) prevent evasions of this Act and the amendments made by
this Act.
SEC. 7. RULE OF CONSTRUCTION.
Nothing in this Act or the amendments made by this Act may
be construed to affect the authority of the Board of
Governors of the Federal Reserve System over any subsidiary
of an insurance savings and loan holding company that is not
an insurance underwriting company (as such terms are defined,
respectively, under section 10(a)(1) of the Home Owners' Loan
Act).
The SPEAKER pro tempore (Mr. Simpson). Pursuant to the rule, the
gentleman from Pennsylvania (Mr. Rothfus) and the gentlewoman from Ohio
(Mrs. Beatty) each will control 20 minutes.
The Chair recognizes the gentleman from Pennsylvania.
General Leave
Mr. ROTHFUS. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and include extraneous material on the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Pennsylvania?
There was no objection.
Mr. ROTHFUS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 5059, the State Insurance
Regulation Preservation Act. I want to thank Chairman Hensarling and
Ranking Member Waters for their support for this bill. I also want to
commend my colleague, Representative Joyce Beatty from Ohio, for her
leadership on this issue. It has been a pleasure working with
Representative Beatty, the ranking member's staff, and the Federal
Reserve to ensure that this
[[Page H8126]]
legislation is balanced, effective, and bipartisan.
This bill is a good example of how solutions-minded Members from both
sides of the aisle can come together to address a clear problem. H.R.
5059 is a commonsense, right-regulation bill that calls on the Federal
Reserve to tailor the supervision of insurance-focused savings and loan
holding companies.
As many of you know, Dodd-Frank brought savings and loan holding
companies under the Federal Reserve's supervision for the first time.
Despite the fact that Dodd-Frank also reaffirmed a State-based model of
insurance regulation, a principle that we all support, the law had the
effect of also bringing insurance savings and loan holding companies,
or ISLHCs, under the Fed's purview.
These are firms that are overwhelmingly engaged in the business of
insurance but also happen to own thrift subsidiaries. These insurance
companies are simultaneously regulated by the Fed and the States. The
lack of clarity regarding how Fed supervision of these insurers should
complement rather than supplant State regulation has led to regulatory
inefficiency, duplication of effort, and higher compliance costs.
Bank-centric Fed supervision has also been a poor fit for companies
that are primarily in the insurance business and has not been
consistent with the actual risks posed by ISLHCs. All of this cost and
complexity eventually impact consumers through higher prices and
reduced access to services.
I should also point out that the burden of duplicative supervision
has encouraged a significant number of these insurance companies to get
rid of their thrift subsidiaries. Today, fewer than half of the
insurance savings and loan holding companies that existed when Dodd-
Frank was enacted continue to operate under the same model.
H.R. 5059 streamlines regulators' approach to ISLHCs by enacting the
following reforms.
If an ISLHC has filed a report with another Federal or State
regulator, the Fed will be required to request that report from that
regulator first before requesting the information from the company.
This prevents compliance staff from being required to respond to
duplicative information requests.
H.R. 5059 also requires the Fed to align recordkeeping requirements
with those imposed by State insurance authorities to avoid duplication.
The bill also requires that Fed examinations be coordinated, to the
fullest extent possible, with State and Federal authorities. Again,
this will help to reduce unnecessary duplication and conflict.
The bill further requires the Fed to craft a supervisory framework
that appropriately tailors the supervision of ISLHCs. It then requires
a review of existing supervisory guidance to ensure that it is
consistent with the new framework.
All of these reforms will provide greater regulatory clarity and
efficiency, and reduce unnecessary compliance burden. In doing so, we
can ensure that these companies can continue to serve their customers
without sacrificing the safety and soundness of our financial system.
Mr. Speaker, I urge my colleagues to support H.R. 5059, and I reserve
the balance of my time.
Mrs. BEATTY. Mr. Speaker, I yield myself such time as I may consume.
I rise in support of H.R. 5059, the State Insurance Regulation
Preservation Act. H.R. 5059 is a bipartisan piece of legislation that
seeks to ensure that Federal regulation over the insurance industry is
not unnecessarily duplicative or overly burdensome.
Mr. Speaker, I would like to start by thanking my colleague from the
other side of the aisle, Mr. Rothfus, for working on this bill with me,
as well as the chairman of our committee, Congressman Hensarling, and
Ranking Member Waters for understanding the issue we are trying to
solve and lending their support.
This bill came a long way from when it was introduced earlier this
year, and it reflects input from members of the Financial Services
Committee, industry stakeholders, and Federal regulators. This bill
simply seeks to right-size regulation placed on insurance savings and
loan holding companies compared to the risk they pose to financial
stability.
Insurance savings and loan holding companies are insurance companies
that own their own bank. In most instances, these types of banks
represent a small percentage of their insurance parent company's
overall bottom line, but due to the ownership by the company, they are
subject to Federal regulation by the Federal Reserve and the Office of
the Comptroller of the Currency.
When we held a legislative hearing on this bill in March, one of the
witnesses testified that, while their insurance company's bank assets
made up only 0.2 percent of the company's total assets, the regulation
by the Federal Reserve consumed 25 percent of the company's compliance
costs, ultimately forcing the company to close their bank.
This is but one example, Mr. Speaker, of the uneven regulation these
companies are facing. This costly and out-of-sync duplicative
regulation of these insurance savings and loan holding companies is not
working as effectively as it should, and this bill seeks to harmonize
some of these duplications.
There is no reason why a smaller insurance company, like Ohio-based
Westfield Insurance, should face more regulation than some of the
largest insurance companies in the country due to the fact that they
simply own a small bank, or why a company like Nationwide Insurance, a
company based in my district, the Third Congressional District of Ohio,
which has $236 billion in assets and a $7 billion bank, should be
treated by the Federal Reserve like a $243 billion bank holding
company.
This is not fair. The regulation of the business of insurance is
different from the regulation of banks, and the Federal Reserve's
supervisory framework must reflect, I believe, this important
difference.
The Federal Reserve has historically never regulated insurance until
recently, within the past 10 years, Mr. Speaker, when Congress
transferred the regulatory authority over these companies to the Feds.
By contrast, our State insurance regulators have regulated this
country's insurance system for nearly 150 years.
While the Federal Reserve has said that they are looking to tailor
some of their regulations, there is little evidence to support those
assertions, and time is simply running out. Since we transferred this
authority to the Federal Reserve in 2010, nearly two-thirds of existing
insurance savings and loan holding companies have closed their banks.
We need better coordination and cooperation between our State
insurance regulators and Federal regulators to ensure our insurance
regulatory regime is not unnecessarily duplicative or overly
burdensome.
This bill will seek to accomplish both of these things. Talk about a
win-win, Mr. Speaker. I believe this is it.
Mr. Speaker, I reserve the balance of my time.
Mr. ROTHFUS. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman
from Missouri (Mr. Luetkemeyer), the chairman of the House Financial
Institutions and Consumer Credit Subcommittee.
Mr. LUETKEMEYER. Mr. Speaker, I thank the gentleman from Pennsylvania
(Mr. Rothfus), who is vice chair of the House Financial Institutions
and Consumer Credit Subcommittee, and the gentlewoman from Ohio (Mrs.
Beatty) for their work on this legislation.
For years, the Federal Government has slowly expanded its
jurisdiction in a number of areas. From healthcare to education, the
Federal Government's presence has grown larger and larger. This bill
attempts to restore regulatory balance and ensure that the proper
authority--in this instance, the State insurance commissioners--can
continue to do the job they have done well for more than 100 years.
In a pre-Dodd-Frank world, there were more than 30 insurance savings
and loan holding companies that owned insurance depository
institutions. Federal Reserve supervision of these institutions has
driven insurance companies to close their banks. That list includes
Shelter Insurance, headquartered just outside my district in Columbia,
Missouri.
In the wake of Dodd-Frank and the dawn of Federal Reserve
supervision, Shelter executives said it was simply no longer cost-
effective to run a bank.
[[Page H8127]]
This was a profitable, well-run bank that served people in the
communities I represent that was put out of business by the Federal
Government.
Mr. Rothfus and Mrs. Beatty have introduced legislation that would
mandate more tailored supervision of insurance holding companies
subject to Federal Reserve oversight. The legislation will require the
Fed to streamline examination procedures and better coordinate with
State insurance regulators.
To be clear, the legislation does not, Mr. Speaker--and I say again,
does not--end Federal Reserve supervision. It merely directs the Fed to
better coordinate with the States and develop standards that are more
suitable for insurers, something Congress has asked them to do for
years.
The gentleman from Pennsylvania and the gentlewoman from Ohio worked
together and with the Federal Reserve, both before and after the
markup, to address various concerns. They are both to be commended for
their efforts to work across the aisle and with the regulators.
H.R. 5059 is a commonsense solution to Federal overreach and a step
toward reduction of bureaucratic redundancy. The bill has received
tremendous support, so much that it was agreed to by a voice vote in
the Financial Services Committee on July 24.
Mr. Speaker, I again want to thank Mr. Rothfus and Mrs. Beatty for
their ongoing leadership and ask my colleagues to join me in supporting
H.R. 5059.
Mrs. BEATTY. Mr. Speaker, in closing, I would simply like to say,
again, thank you to my colleagues on the other side of the aisle, and I
want to thank all the members who helped us get this bill to this point
and reiterate that this bill does not--does not--remove insurance
savings and loan companies from Federal regulation.
Insurance savings and loan holding companies will still be regulated
by several Federal Government agencies, including the Federal Reserve.
This bill simply seeks to require the Federal Reserve to tailor their
bank-centric regulations to the business of insurance and to coordinate
supervision and examination of these companies with their State
counterparts to avoid unnecessary, duplicative, and overly burdensome
regulation.
Mr. Speaker, I yield back the balance of my time.
Mr. ROTHFUS. Mr. Speaker, I thank Representative Beatty for working
together on this very particular piece of legislation.
Again, this is a right-sized regulation that enjoys strong bipartisan
support and sets forth the appropriate framework for regulating
insurance savings and loan holding companies in this area.
Mr. Speaker, I request that my colleagues vote ``yes'' on this
legislation, H.R. 5059, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Pennsylvania (Mr. Rothfus) that the House suspend the
rules and pass the bill, H.R. 5059, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________