The legislation on which the House and Senate settled more closely resembles the Senate's version of the bill, which the White House strongly supports, but encompasses significant aspects of both bills. As per the agreement, the level at which TRIA becomes activated will go up from $5 million to $50 million in 2006 and up to $100 million in 2007. Deductibles and co-payments will increase and there will be an increase in the responsibilities of the insurance industry.
One major aspect, however, in which the House and the Senate bills differ, is the issue of repayment of federal aid. The compromise bill calls for 25% repayment in 2006 and 27.5% in 2006, which is a far cry from the House's call for 100% repayment.
"The Senate and the administration were completely unwilling to include real taxpayer payback," House Committee on Financial Services chairman Michael G. Oxley says. "I was successful in negotiating a modest increase in the industry's retention. However, this is not actual taxpayer payback, but in essence an industry-wide deductible." He says this "ensures that taxpayers will never be fully reimbursed for any corporate subsidies provided in the wake of a large-scale attack. This leaves taxpayers unnecessarily exposed to the potential cost of terrorism. As it is constructed now, this program could result in nothing more than a corporate handout from taxpayers."
The National Association of Professional Insurance Agents, while commending the passage, expressed a certain amount of disappointment. "Passage of this legislation is good news for businesses across the country, for insurance agents, for our economy and for America," PIA executive vice president and CEO Len Brevik says. "We encourage the President to sign the bill without delay." The group shares some of the concerns expressed by Oxley.
The final bill also replaces the House's call for the formation of a public-private commission to develop long-term solutions to replace TRIA with the creation of a White House-appointed committee to take on the task. The President's Working Group on Financial Markets is scheduled to meet with Congress regarding long-term options by Sept. 30, 2006.
With the compromise bill now in place, the final passage of the TRIA renewal bill now rests with the president. "If Congress and the Administration had not put in the hard work to reach a compromise before TRIA expires at the end of this year, a significant market dislocation was likely," says Jeffrey D. DeBoer, Real Estate Roundtable president and CEO.
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