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Friday, September 19, 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.

TRIA Update: Take Action, Urge Passage of S.2244

Although Congress is back in session, TRIA’s reauthorization will have to wait until after the November 4th election.  While not ideal timing, this delay gives the industry additional time to voice support for the Senate's bipartisan bill, S. 2244 and urge all House members to vote for this bill during the upcoming lame duck session. 

However, there are no guarantees. For us to be successful, it will take a sustained effort by all ABIA/ABA members to keep the pressure on Congress to renew TRIA when it returns in November. As a reminder, ABIA and ABA grassroots updated our TRIA Action Alert and talking points to help our members contact their Representatives to urge the House to pass S. 2244.

This bill would extend TRIA for seven years, while increasing the amount the private sector would be required to cover after a terrorist attack. Competing legislation passed by the House Financial Services Committee (HFSC) offers a shorter renewal period with less favorable terms on deductibles, the damage threshold and when the legislation is triggered.

ABIA/ABA’s grassroots alert offers talking points to help our members persuade their Representatives to adopt the Senate’s version instead of the HFSC's. For details on the House and Senate TRIA bills, please read the ABIA members-only TRIA matrix. 

Write your members of Congress now.

Learn more about TRIA and ABIA's work to support renewal.

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. If you would like to learn more about ABIA's support of TRIA or join our Task Forces, please contact us and visit our website.

ABIA, ABA Comment letter on Massachusetts New Flood Insurance Law

In July, Massachusetts passed a new flood insurance bill (H.R.3783/SB.2229), which prohibits creditors from requiring homeowners to purchase flood insurance in an amount exceeding the outstanding balance of their mortgage and the deductible cannot be less than $5,000.

In a joint comment letter to the Massachusetts Division of Banks, ABA/ABIA detailed concerns over the unintended consequences of this law, including:
  • The need for further guidance clarifying how servicers must treat borrowers who already have flood insurance in amounts greater than the outstanding balance of the loan.
  • How to advise consumers who have chosen to buy flood insurance policies that provide benefits on a replacement cost basis.
  • Could there be a conflict of law issues between federal statutes and the new Massachusetts’s law. For example, do nationally chartered banks have to adhere to the Massachusetts’s statute? 
  • How would a lender notify a borrower that they must also change their flood insurance after securing a HELOC? Or, what is the flood standard to be applied in a Lender Placed (LPI) environment?
The letter also addressed issues pertaining to the timing and content of disclosure, "there should be clear, conspicuous language informing consumers of their right to manage flood risk. The disclosure should have to be acknowledged by the borrower. The disclosure should include a clear and distinct comparison of a borrower’s flood coverage benefits after loss; for example, it should be made plain to borrowers that buying coverage for the outstanding balance of their loan only means that in the unfortunate event of total loss of their dwelling, they will not have a balance left on their loan but they may not receive an insurance settlement sufficient to rebuild."

Read the joint ABA/ABIA Letter.  

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.

Thursday, September 18, 2014

House Passes Regulatory Relief for Large Insurance Companies

This week the House of Representatives passed a bill to provide the Federal Reserve more flexibility when regulating large insurance companies.

H.R. 5461, the Insurance Capital Standards Clarification Act of 2014, introduced by Rep. Andy Barr (R-KY), would amend the Dodd-Frank Act to give the Federal Reserve flexibility to set capital standards for insurance companies.

By empowering FSOC [the Financial Stability Oversight Council] to designate Systemically Important Financial Institutions (SIFIs), the Dodd-Frank Act allows the Federal Reserve to impose one-size-fits-all standards on banks and non-banks; in other words, to move more institutions from the non-bailout economy to the bailout economy. The bipartisan Insurance Capital Standards Clarification Act of 2014, including its other provisions that have already received overwhelming support from Democrats and Republicans, is common sense legislation that holds Washington accountable, strengthens our economy and helps create jobs,’ said Financial Services Committee Chairman Jeb Hensarling (R-TX).

Financial Services Committee Press Release.

Wednesday, September 17, 2014

House Passes ABA-Advocated Reg Relief Provisions

The full House yesterday passed by 327 to 97 an ABIA-advocated bill making several technical corrections to the Dodd-Frank Act, representing regulatory relief for financial institutions of all sizes. The bill includes three measures that had independently passed the House.

These include an exemption from Volcker Rule prohibitions for collateralized loan obligations issued prior to Jan. 31, 2014, that clarifies the definition of CLO ownership in a way that would allow more banks to retain CLOs. The bill would also clarify the Qualified Mortgage points-and-fees test so as not to harm wholesale originators and exempt bank end users from margin requirements when using swaps to mitigate risk.

The bill, sponsored by Reps. Andy Barr (R-Ky.) and Gary Miller (R-Calif.), also includes a Senate-passed measure allowing the Federal Reserve to apply insurance-specific capital requires to insurers designated as systemically significant.

The House also passed by 320 to 102 a regulatory relief bill that includes an ABA-backed technical correction to the SEC registration threshold for savings and loan holding companies. On Monday, it passed a bill allowing banks to offer prize-linked savings accounts,

Read ABIA's joint letter on the Barr-Miller bill.