By Emily Stephenson, Reuters
The U.S. House of Representatives voted on Wednesday to extend a federal terrorism insurance program that was created after the September 11, 2001 attacks, overcoming criticism from Democrats of a provision that would retool part of 2010 Wall Street reforms.
The program is intended to support insurers by creating a federal backstop that kicks in if they lose a certain amount of money after an attack. It has never been triggered.
Businesses, sports stadium owners and others that insure against attacks have said their costs could rise if the program is not renewed before it expires at the end of the year.
Lawmakers in both parties want to renew the program but are in dispute over whether to include provisions related to the 2010 Dodd-Frank financial reforms.
Democrats objected to the House plan but let it move forward, passing 417-7. It was not clear whether the Democrat-controlled Senate would take up the same version.
“I urge the Senate to move on this bill and vote for these needed reforms,” House Majority Leader Kevin McCarthy, a Republican, said in a statement.
The House bill reauthorizes the program for six years and doubles the losses needed to trigger federal support to $200 million, changes agreed to by Senate negotiators. It also includes the Dodd-Frank provision.
At issue is a portion of the 2010 law that requires swaps participants such as GoldmanSachs Group Inc to post margin against certain kinds of riskier swap deals.
An early version of the law explicitly exempted energy, agriculture and other “end-user” businesses that use swaps to hedge risks. But the final text removed that protective language, raising concerns that it could lead to higher costs.
The provision tacked into the insurance extension bill explicitly frees these “end users” from the rules.
“This isn’t for Wall Street. It’s for Main Street,” said House Financial Services Chairman Jeb Hensarling, a Republican.
Democrats, on the other hand, have argued the Dodd-Frank provision does not belong in the terrorism extension bill. The Senate passed a seven-year extension of the terrorism insurance program in July.
“We should have a clean bill, with nothing else in it,” said Representative Maxine Waters, who is the top Democrat on the Financial Services Committee.
The White House said on Wednesday it opposed including Dodd-Frank modifications in an unrelated bill but stopped short of threatening to veto the insurance extension.
