When Fed Chair Janet Yellen testifies before the Joint Economic Committee on Wednesday, she may not get asked about the Collins Amendment to the Dodd-Frank bill, which calls for minimum capital requirements for financial institutions.
"I could write her answer for her at this point," offered one lobbyist for the insurance industry.
The lobbyist's certainty about the Fed chief's position is a sign of just how stalemated the issue has become, with regulators in one corner and members of Congress and the insurance industry in the other.
Into this fray, lawmakers on both sides of the Capitol and in both parties, including Sen. Susan Collins herself, are pushing legislation aimed at clarifying what they say is a mere misunderstanding. It's an example of the rare case where members of both parties agree and there is little opposition in Congress, and yet the bill's prospects are still uncertain.
At issue is the Fed's interpretation of how capital requirements are applied to insurers. The problem, at least as insurers and many members in Congress — including Collins — see it, is that the Fed is incorrectly interpreting Collins's amendment.
From the Fed's point of view, while Yellen has acknowledged the difference between the banking and insurance businesses, the central bank does not have the legal authority to regulate insurers differently than banks under the Dodd-Frank provision.
"The Collins Amendment does restrict what is possible for the Federal Reserve in designing an appropriate set of rules," Yellen said earlier this year at a Senate Banking Committee hearing. "So it does pose some constraints on what we can do, and we will do our very best to craft an appropriate set of rules subject to that constraint."
In response, Collins, Democratic Sen. Sherrod Brown of Ohio, and Republican Sen. Mike Johanns of Nebraska have introduced a bill that would exempt insurers from regulation under the provision if their business is regulated as insurance at the state level.
"I'm as much in favor of regulations for financial services as anyone. This doesn't do that," said Brown, speaking of the Fed's interpretation of the law. In a sign of just how eager he is to see Congress move on this issue, Brown chaired a subcommittee hearing on the issue in March and even dropped his own bill so he could back Collins's latest measure.
Sen. Tim Johnson of South Dakota, who chairs the Banking Committee, called the Collins-Brown-Johanns bill a "top priority," but wouldn't commit to when the panel would report it out. He shares the view that banking standards should not apply to insurance companies, but is still reviewing the legislation, a committee aide said.
So, with all the apparent support in the Senate, what is the holdup?
For one, the Banking Committee's legislative runway is jammed at the moment. The committee is in the throes of reporting out a bill that would dismantle Fannie Mae and Freddie Mac. The bill has bipartisan support and could pass committee, aides acknowledge, but Johnson is working behind the scenes to build more support among Democrats, a senior Democratic aide said. The thinking is that the bill needs more backing to clear the floor.
Then, there's reauthorization of the Terrorism Risk Insurance Act, which expires at the end of the year. That law set up a compensation system for public and private losses due to terrorism. It's also a priority for Johnson, and could be a lightning rod as well, aides said.
That leaves insurance lobbyists, and the bill's authors, charting a path for passage. Collins wants to see the bill move as a stand-alone measure.
"My hope is that it will move quickly through the committee. We've worked extensively to reach consensus," Collins said. "I would hate for a bill "¦ after many months to have achieved consensus, to get bogged down in unrelated issues."
Brown did not offer specifics on how and if the legislation would get done, but said the clock is ticking. Indeed, insurance lobbyists say the Fed would hold off on its rule until January 2015. "It's gotta get done before the end of the year," Brown said.
Lobbyists suggest that adding the legislation as an amendment to some must-pass legislation could be an option. But one problem with that approach is the deterioration of the amendments process in the Senate, where Majority Leader Harry Reid rarely allows Republicans to offer amendments.
Another issue, lobbyists say, is that Dodd-Frank as a topic might be politically radioactive, making lawmakers skittish about addressing the law again. But Collins dismisses that fear.
"This isn't reopening a major issue in Dodd-Frank," she said. "It is simply bringing clarity to a provision that I authored that the Fed has misinterpreted. I think given how closely we've worked with everyone, it really is more of a technical correction."