The Senate voted to renew the Terrorism Risk Insurance Act (TRIA) on Thursday afternoon, after shooting down an effort to scupper a deregulatory measure attached to the legislation.
The bill passed the chamber by a vote of 93-4. Sens. Maria Cantwell (D-Wash.), Marco Rubio (R-Fla.), Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) were the quartet to disapprove of the measure.
Warren and Sen. Chuck Schumer (D-N.Y.) introduced an amendment that sought to strip a provision from the bill that prevents regulators from imposing collateral requirements on non-financial hedging. She described TRIA as “a critical program that helps drive economic development and create jobs,” but denounced the deregulatory clauses that were, late last year, folded into the bill by House Republicans.
“It will only encourage Republicans to pull our financial regulations apart piece by piece,” she said. Her amendment, however, failed to win over some Democrats—it was killed in a 31 to 66 vote.
Toward the end of the year, as Congress scrambled to pass TRIA, Public Citizen financial policy advocate Bart Naylor told The Sentinel that the repeal of collateral, or margin requirements “paves the way for the emergence of a future problem.” He said that “alert regulators would appeal to Congress” to refrain from fettering their power.
While many banks impose their own margin requirements, forbidding regulators from doing it could create a systemic problem fueled by deals between corporate America and Wall Street. During the subprime crisis, many financial firms–most notably, the bailed-out insurance outfit AIG–took enormous risks, without collateral requirements, and ended up without sufficient reserves when the market tanked.
Sen. Schumer, who was opposed to the margin requirement repeal but supported the bill anyway, said Thursday, before the final vote, that TRIA “should be reauthorized without political jockeying and attempts at point scoring.” He also lamented what he described as Republicans “monkeying around” with the legislation.
