Leader's Edge logo Under the Dome by Joel Wood Tell the Editor
Under the Dome by Joel Wood Being Frank

Massachusetts liberal Barney Frank is prolific in moving legislation and a supporter of many of our key issues.

By  Joel Wood

House Financial Services Committee Chairman Barney Frank is 2007’s most intriguing man influencing public policy on insurance issues. An indefatigable liberal intellectual, he’s been the most prolific legislator on insurance issues in the nearly 20 years I’ve been lobbying for the industry.

Frank can be withering to opponents in debate, but gets along fairly well with the committee’s ranking Republican, Spencer Bachus of Alabama. Politically, the men could not be more different, but both are hilarious. Frank has the ADHD style of Robin Williams, whereas Bachus (winner of “Washington’s Funniest Celebrity” a couple of years ago) is deadpan Bob Newhart with a drawl.

In the ’80s, insurgent conservatives convened all-night “special orders” on the House floor to rant about right-wing social causes, including one on school prayer. At 3 a.m., as Frank presided over the near-empty chamber, grandmotherly Rep. Virginia Smith of Nebraska declared that America is a “Christian nation.” Asked later about her remarks, Frank said he agreed: “They put this Jewish guy in the chair at three in the morning, so it must be a Christian nation.” 

Given his high profile on gay rights and his role as a partisan utility player for Democrats, some may have wondered how much focus Frank would apply to the complicated, technical and often mundane issues facing the financial services industry. His predecessor, Republican Chairman Mike Oxley, had turned the old Banking Committee into a bipartisan powerhouse. Concerns that Frank would upend that tradition with Democrats in power have been unfounded.

Under his leadership, the Financial Services Committee has passed more legislation than any other committee in my memory. To the dismay of some mortgage lenders, Frank forged a compromise with Bachus on subprime lending and other commercial banking regulatory reforms.

Before the 2006 elections, Frank told me he considered the Nonadmitted and Reinsurance Reform Act—The Council’s top legislative priority—to be the kind of bill that had already been vetted by the committee under Oxley’s leadership and that he’d move it out of the House rapidly. He kept to his word, passing it unanimously on the House floor in June. (It remains pending in the Senate Banking Committee.)

TRIA has been more partisan. Frank instinctively understands that terrorism cannot be underwritten and believes deeply that the federal government has an obligation to protect the economic interests of Americans against the risk of international terror. Many Republicans believe TRIA “crowds out” private sector innovation. With a partisan divide (though many Republicans ultimately voted with him), Frank got out a TRIA bill that extends the program for 15 years, lowers industry deductibles and retentions, and adds group life and a governmental backstop against nuclear, biological, chemical and radiation risks. At press time, Frank remained in a stare-down with the Senate Banking Committee, whose seven-year extension is far more modest.

Early in the year, Frank tasked Ron Klein and Tim Mahoney, Florida freshmen Democrats, to come up with a coastal insurance bill that could pass the House. Most of us rolled our eyes, as natural catastrophe issues have been a circular firing squad in the industry for decades.  Klein and Mahoney’s bill, controversial within the industry, would allow state Nat Cat pools—wind or earthquake—to voluntarily join together. Many feel the bill provides an implicit federal backstop, would skew the private reinsurance marketplace and represents adverse selection at its worst. But all those political issues aside, Frank managed to have the bill passed in his committee and on the House floor.

Similarly, Frank pushed through a flood insurance reform bill with many good provisions. But with some trepidation, he acceded to House Speaker Nancy Pelosi and Rep. Gene Taylor of Mississippi in adding wind coverage. Several months ago, I would have predicted that a wind add-on would never succeed on the House floor, with Democratic members split along coastal/non-coastal lines and near-lockstep Republican opposition. But Frank passed it.

On the Optional Federal Charter, Frank’s instincts are progressive. (He likes the idea of a life-insurance charter and is open-minded about adding large commercial p-c, but he violently opposes a personal-lines charter.) He is sensitive to the politics, though, claiming the opposition of small independent insurance agents will continue to have a chilling effect on the debate.

Frank has proven that he is perhaps the most competent and certainly the most prolific House chairman under new Democratic control. But he is not omnipotent. On TRIA, on wind coverage, on Klein-Mahoney, and even on surplus lines, he cannot impose his will on the Senate.

The ranking Republican on the Senate Banking Committee is Richard Shelby of Alabama, who has a very conservative and skeptical view of federal intervention on insurance. Though Chairman Chris Dodd shares many of Frank’s progressive regulatory views, Dodd and Shelby work well together and almost always act in consensus.  Meanwhile, Frank certainly sets the stage for progressively moving along the insurance agenda, and the only question is whether he will be as successful in his dealings with the Senate as he is in passing legislation in the House.


Wood is the Council’s senior vp of Government Affairs.
Send Email to Author


Email PagePrint PageArticle reprintsArticle tools sponsored by

Full Leader's Edge Archive. Previously published articles, listed by subject below.

arrow Industry Leaders    arrow Wholesalers    arrow Legal Issues   arrow Regulatory Issues  
arrow International Risk arrow Management    arrow Industry News    arrow Regulatory News
arrow Market News   arrow Cartoons