by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Last week, the insurance industry pulled off a feat that President Barack Obama can only dream of emulating: The insurers convinced Senate Republicans and Democrats to momentarily lay aside their ferocious animosity and pass a bill unanimously.
The bill exempts life and casualty insurers from a hastily written provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that would have the Federal Reserve saddle them with capital standards designed to make sure commercial banks can withstand severe economic downturns. The affected insurers either own a savings and loan, are owned by a savings and loan, or have been designated a “systemically important financial institution” by the Financial Stability Oversight Council. This category now includes American International Group (ticker: AIG) and Prudential Financial (PRU) and, in the not-too-distant future, also will embrace MetLife (MET), according to Keefe, Bruyette & Woods.
A companion bill in the House, with bipartisan sponsorship, is expected to sail through, as well. There’s little doubt that the president will sign it into law, presumably with some fanfare.
The rare display of bipartisanship demonstrates that gridlock in a divided Congress needn’t be absolute. Deserving interest groups with fathomless pockets can unite the feuding factions. Money has not lost its power of persuasion — though, in this case, it took two full years of ferocious lobbying by the insurance industry to convince Congress to take decisive action.