Financial Services Subcommittee Holds Hearing on Posey Legislation to Protect Auto, Home and Life Insurance Policyholders
The House Financial Services Subcommittee on Housing and Insurance held a hearing today which focused discussion on bipartisan legislation (H.R. 605, H.R. 4557) introduced by Congressman Bill Posey (R-Rockledge) to protect insurance policyholders by eliminating provisions buried deep in the Dodd-Frank financial reform law that essentially permits the federal government to force your insurance company to “bail out” a failing Wall Street Bank.
“The provisions slipped into the Dodd-Frank bill authorizes Federal regulators to essentially impose what amounts to a hidden ‘tax’ on your homeowners, auto or life insurance to contribute to a fund to bail out a large bank in New York that makes a bad bet,” said Congressman Posey. “That’s just wrong because it could undermine the solvency of these insurance policies, so I introduced bipartisan legislation to repeal the authority for this hidden tax and protect individuals from having to pay it.”
Among its numerous controversial provisions and regulations, the Dodd-Frank Act gave the Federal Deposit Insurance Corporation (FDIC), a depository regulator, expansive new “Orderly Liquidation Authority” to bail out large Wall Street institutions that Washington regulators deem too-big-to-fail. As written in Dodd-Frank, however, the FDIC could assess insurance companies and their customers for the new bailout fund, even though they are ineligible for a similar bailout and insurance policy holders already are protected by state-level backstops. State solvency funding for property and casualty, as well as life insurance already exists, so this Dodd-Frank provision amounts to double taxation.
Posey’s legislation explicitly excludes these life, auto and homeowners insurance policies from the FDIC’s Orderly Liquidation Authority, ensuring that federal regulators cannot assess insurance policyholders as a source of cash for bailing out a failed Wall Street firm. Both bills have bipartisan support and preserve the longstanding practice of regulating insurance at the state level.
View Congressman Posey’s questioning HERE.