[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--

[[Page H8125]]

       ``(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.

                          ____________________