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Under the Dome by Joel Wood Playing the Percentages

In Washington, everybody wants to go to heaven, and nobody wants to die. My job is to get something passed in my lifetime—even if it’s not all that I want.

By  Joel Wood

I had an opportunity in April to share a drink with a freshman Democrat on the House Financial Services Committee, a guy who’d knocked off a longtime Republican incumbent.(The beer was legal!He was buying!) A former state legislator, he finds the D.C. experience gratifying but painstakingly slow.

In the statehouse, he said, “you could have a bill introduced in the morning, and it could be on the floor the next day and enacted the next week.Here, it’s all a slow-motion posture.”

The reference point for our conversation was Treasury Secretary Hank Paulson’s Blueprint for Financial Regulatory Reform. Among the many proposed reforms is an Optional Federal Charter for insurers and producers—marking the first time that any administration has embraced such progressive reforms.

My new Democratic drinking buddy hadn’t yet decided whether he supports the OFC, but he knows there’s no rush to decide.Most observers tend to think that, absent a crisis, the OFC effort will take years.Meanwhile, all the major stakeholders breathlessly commented pro and con on the treatise, with plenty of invective from those who feel they have the most to lose from a rational, national insurance regulatory regime—small insurers and agents, and the state regulators themselves. The National Association of Insurance Commissioners was particularly vitriolic, its president sarcastically comparing the OFC proposal to the federal response to Hurricane Katrina.

The insurance industry does pretty well when it’s cohesive—passing TRIA, for example, or beating Hillary’s (first) health care overhaul.But when there are schisms, gridlock usually follows.

Parts of the industry want a federal backstop for natural catastrophes while most of the industry does not. Gridlock.

Some wanted to cut a deal for an asbestos litigation resolution fund. Others did not. Gridlock.

Some want aggressive, preemptive small-group market health insurance reforms. Others don’t. Gridlock.

When Congress has taken sides on legislation involving major intra-industry animosity, the votes have come after literally decades of debate (think of the Gramm-Leach-Bliley Act that allowed banks to sell insurance).

At The Council, we’re all for the Paulson Blueprint, and we issued our own press release about how the administration’s move helps secure the inevitable.Do I believe that?Sure. We’ve supported the OFC in every iteration since House Energy & Commerce Committee Chairman John Dingell, D-Mich., authored the concept in 1992.But can I, with a straight face, predict its enactment within the foreseeable future?Nope.

WhatI canenvision in the next year or two, though, is a shuffling of priorities based on political facts of life.Those facts include the overwhelming likelihood that Rep. Barney Frank, D-Mass., will remain chairman of the House Financial Services Committee, and the ranking Republican member will still be Rep. Spencer Bachus, R-Ala.Sen. Chris Dodd, D-Conn., will still be chair of the Senate Banking Committee (unless President Barack Obama names him to his cabinet or he moves over to chair the Foreign Affairs Committee should Sen. Joe Biden, D-Del., leave), and the ranking minority member will be Sen. Richard Shelby, R-Ala.

In both of these principal committees of jurisdiction, the chairmen are progressive firebrands and the ranking members are conservative, southern Republicans.But consensus reigns, particularly in the regulatory reform arena. None of the four have said they support a comprehensive OFC for the entire insurance industry.Dodd, probably the most sympathetic to it, has said the politics tilt toward a life-only charter (the argument being that property-casualty products have more inherently local, and fewer national, characteristics).

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