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Tuesday, July 22, 2014

Legislation would Require FIO to Study Insurance Steering or Redlining

This month, Representative Clay (D-MO) introduced HR 5067, which requires the Federal Insurance Office (FIO) to “carry out a study to determine whether the insurance industry is engaging in the illegal practices of insurance steering or redlining.”

Specifically, the text of the legislation mandates that the FIO Director conduct a study to "investigate insurance products, pricing, promotions, and placement of services being offered to consumers in the United States."  The study report would be due to Congress 180 days after enactment and the FIO would be authorized to make legislative recommendations in the report.  

Learn more about HR 5067.

Dood-Frank Act Turns Four

The Dodd-Frank Act turns four this week and tomorrow morning the House Financial Services Committee will hold a hearing entitled “Assessing the Impact of the Dodd-Frank Act Four Years Later.” This hearing will cover specific provisions of the Dodd-Frank Act (DFA), including the Volcker Rule, the Orderly Liquidation Authority, consumer financial protection provisions, and the Act's cumulative impact on the industry and consumers.

Former Representative Barney Frank, who Chaired the Committee when the DFA was passed, is scheduled to appear as a witness. The other witnesses are: 
  • Mr. Anthony J. Carfang, Partner, Treasury Strategies, Inc.
  • Mr. Thomas C. Deas, Vice President & Treasurer, FMC Corporation, on behalf of the Coalition for Derivatives End-Users
  • Mr. Paul H. Kupiec, Resident Scholar, American Enterprise Institute
  • Mr. Dale K. Wilson, Chairman, President, and Chief Executive Officer, First State Bank
In connection with the DFA's fourth anniversary, ABA President and CEO Frank Keating made several media appearances yesterday. The bill is a mixed bag, he noted on Bloomberg’s “Bottom Line” program.
 
“There are some good things in the law,” he noted -- for example, “it says that no institution is too big to fail” and provides “a mechanism to ensure that’s the case.” It also furnishes a mechanism for regulation of systemically significant nonbanks, he pointed out.
 
However, Keating added, the Consumer Financial Protection Bureau needs more oversight, and mortgage rules based on Dodd-Frank are hindering the housing market. “I hope both Republicans and Democrats go back to the drawing board and amend those things that harm us as an economy and leave in those things that save us from reckless lending and the collapse of a big institution.”
Keating also appeared on Fox Business and Bloomberg Radio.
 
Republicans on the House Financial Services Committee yesterday released a report finding that the regulatory structure created by the Dodd-Frank Act does not sufficiently address the problem of too-big-to-fail financial institutions. The report argued that the orderly liquidation authority created by Title II of Dodd-Frank is untested and continues to leave taxpayers exposed to the costs of winding down a failing firm.
 
Meanwhile, Financial Services Committee Democrats released their own report defending Dodd-Frank’s track record, arguing that the bill reduced the risk of bailouts by providing regulators with tools to address systemic threats.
Read the Committee Memorandum and view the live Hearing once it begins.
 

Monday, July 21, 2014

Complying with the CFPB’s Ability-to-Repay Rule: What Amount of Affiliated Homeowners Insurance Premiums Should be Included in Points and Fees?

By: ABIA Outside Counsel Katie Wechsler, Barnett Sivon & Natter, P.C. and Adam D. Maarec, McIntyre & Lemon, PLLC

The Consumer Financial Protection Bureau’s rule on Ability-to-Repay, which went into effect in January 2014, generally caps “points and fees” for “Qualified Mortgages” at three percent of the loan amount. Charges for title insurance and escrowed homeowners insurance sold by a creditor’s affiliates are included in the points and fees calculation. On the other hand, under the rule the following are not included in points and fees: 1) non-escrowed homeowners insurance sold by an affiliate or non-affiliate, if certain disclosures are provided; 2) title insurance if the charge is reasonable, the creditor receives no direct or indirect compensation in connection with the charge and the charge is not paid to an affiliate of the creditor; or 3) escrowed homeowners insurance if the charge is reasonable, the creditor receives no direct or indirect compensation in connection with the charge, and the charge is not paid to an affiliate of the creditor.

As a result, insurance agencies and underwriters affiliated with creditors are receiving unfavorable regulatory treatment solely because of their affiliation. Moreover, compliance concerns with the CFPB’s Ability-to-Repay rule have been noted with respect to homeowners insurance and the amount of insurance premiums paid to an affiliate to include in the points and fees calculation.

Read a review of compliance concerns with the CFPB’s Ability-to-Repay rule with respect to homeowners insurance. 

Indicates ABIA members-only material. Not an ABIA member? Contact Jennifer Hatten to learn about the benefits of membership and ways to join here. Visit our membership page to learn more.

Are you an ABIA member but not yet on our ABIA Network? Contact Deanne Marino for an invitation.

If you are a member of the ABIA and would like to learn more about our CFPB and Qualified Mortgage rule Task Forces, please contact us and visit our website.

Friday, July 18, 2014

This Week at the CFPB

A summary of this week's news about the CFPB from the ABIA and ABA Dodd-Frank Tracker:
The ABIA has a Task Force of members that work on issues related to the CFPB's regulation of insurance products. If you are an ABIA member and would like to learn more about ABIA's work with CFPB to educate them about the bank-insurance industry or join our CFPB Task Force, please contact us and visit our website.

Thursday, July 17, 2014

Senate Passes ABIA-Supported TRIA & NARAB II Legislation

Today the Senate passed ABIA-supported S. 2244, a bipartisan bill to renew the Terrorism Risk Insurance Act, which includes an amendment to create the National Association of Registered Agents and Brokers (NARAB II), by a vote of 93 to 4. ABIA has been a strong industry advocate for both of these programs. Producer licensing reform has been a priority for ABIA since its inception in 2001 and ABIA has supported TRIA since it was first created in 2002.

The bill -- introduced by Sens. Chuck Schumer (D-N.Y.), Dean Heller (R-Nev.), Mark Kirk (R-Ill.), Jack Reed (D-R.I.), Chris Murphy (D-Conn.) and Mike Johanns (R-Neb.) -- would reauthorize TRIA through 2021, increase private insurers’ “co-pay” from 15 to 20 percent and raise the threshold of losses for mandatory federal recoupment of payments to $37.5 billion. Senator Coburn's amendment that would have extended the amount of time the government has to recoup funds from the industry after an attack failed by a vote of 47 to 49.

Sen. Tester (D-MT) offered the ABIA-supported amendment to S. 2244 that establishes the National Association of Registered Agents and Brokers (NARAB), which simplifies the agent licensing process to ensure they can serve clients no matter where they live. The Senate passed this amendment by a voice vote.

The Senate-passed version of NARAB includes a two-year sunset provision that means Congress will have to reauthorize NARAB two years after the first license is issued, which could be about four years from enactment. While not ideal, this provides the industry time to build support for permanent reauthorization.

Leadership in the House has supported debate on the floor of H.R. 4871, the House Financial Security Committee's TRIA bill that has the support of Chairman Hensarling. Moderate republicans and House democrats have voiced objections to this bill and favor the bi-partisan Senate bill. Managing to find majority support for the Hensarling approach to TRIA may take longer than the available time remaining before the House is expected to recess at the end of next week.

However, if the House is able to pass either the House Financial Security Committee's TRIA bill or a compromise bill, it is expected that the committee staff will attempt to harmonize the differences between the Senate and House TRIA versions over the August recess and resubmit the combined TRIA legislation to both Chambers for consideration.

ABA and ABIA issued a statement supporting the Senate's passage of TRIA and NARAB and urging Congress to enact the legislation quickly. Read the statement. For details on the House and Senate TRIA bills, please refer to the ABIA TRIA matrix. Read the ABIA members-only TRIA matrix. 

Indicates ABIA members-only material. Not an ABIA member? Contact Jennifer Hatten to learn about the benefits of membership and ways to join here. Visit our membership page to learn more.

Are you an ABIA member but not yet on our ABIA Network? Contact Deanne Marino for an invitation.

The ABIA has a Terrorism Insurance TRIA Task Force and a NARAB Task Force. If you would like to learn more about ABIA's support of TRIA and NARAB or join one or both of these Task Forces, please contact us and visit our website.