Three Takeaways from Senate Banking Panel’s TRIA Vote

"Bank-centric capital rules should not be applied to insurance companies," said Senate Banking Committee Chairman Tim Johnson, urging a separate vote on a bill to amend the Dodd-Frank Act. Photo: Bloomberg News

"I agree that bank-centric capital rules should not be applied to insurance companies. While I also share the view that the Fed has authority to fix this by regulation, I support a narrow legislative fix if the Fed will not use the flexibility they have," Johnson said during the markup. "I urge my colleagues to support their request to move their bill by unanimous consent. If that fails, while I and the ranking member do not control the floor, I will work with Sens. Johanns, Brown and Crapo to find a way to add this provision on the floor."

Analysts warned that attaching the provision to the TRIA bill on the Senate floor could slow down the legislative process and potentially open up a fight for broader changes to Dodd-Frank.

"By adding a 'Collins Amendment' component to TRIA, you would open the bill up to all the ugliness of the amendment process because Dodd-Frank is being altered. Members from both sides are going to want to insert changes to the [Consumer Financial Protection Bureau] or bank size, or other parts of Dodd-Frank," said Barford. "Even if the Senate could agree to limit the scope of any amendments, the inclusion of Collins means that House Republicans could make a conference a nightmare before the election. There also is no time impetus for Collins, compared to TRIA, since the Federal Reserve has acted exceedingly cautiously in promulgating new regulations for insurance companies."

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