A View From The Press Box

I was impressed by Rep. Frank’s bravado when I watched him stride confidently on stage and draw his line in the sand during a late October speech in Boston at the annual meeting of the Property Casualty Insurers Association of America.

“My concern is that the Senate will pass a [TRIA extension] bill that is better than nothing right at the end of the year, and then say the House must take it or leave it, even if we believe it is inadequate,” Rep. Frank said at the time. “I will not be subjected to this kind of tactic.”

To defuse the tension, he said he would introduce a “bridge bill” to extend the status quo on TRIA through April 30, 2008, “to allow for further debate and give us plenty of time to do what is best for this country.”

Now that push is about to come to shove, however, I can't see the Senate going along with a temporary extension. That would push the divisive TRIA debate deeper into the heart of next year's presidential race, with dozens of members of Congress preparing to fight for their political lives.

The last thing Congress wants to do is leave the nation financially exposed to a terrorist attack, especially with so many U.S. senators running for president--including the TRIA bill's Senate champion, Connecticut Democrat Chris Dodd, who has some major insurers among his constituents back in Hartford.

Could you imagine the political fallout if we're hit by another terrorist attack early in the new year and thousands have no insurance coverage? That's what would happen if TRIA is allowed to expire, prompting all but legally-obligated workers' compensation insurers to head for the exits on this catastrophic risk.

Rep. Frank, a heavyweight given his chairmanship of the powerful House Financial Services Committee, wants a 15-year extension and a mandate for insurers to cover nuclear, chemical, biological and radiological attacks. The Senate passed a more modest version, voting for a seven-year extension and adding coverage for domestic terrorism (like the Oklahoma City bombing) but--much to the insurance industry's relief--leaving out NCBR exposures.

In my view, this is not enough of a substantial difference to warrant a showdown between the House and Senate.

And while I can appreciate Rep. Frank's personal distaste for allowing the Senate to dictate the terms of extension, the fact is the entire argument is moot because of a looming veto threat from President George W. Bush.

The White House is compromising by even going along with extension of any kind. Their opposition to government intervention in the terrorism insurance market is no secret. But recognizing that fear of terrorism remains the most potent election issue (along with immigration) for Republicans, President Bush isn't about to pull the rug out from under his own party by leaving the nation exposed to catastrophic terrorism losses on his watch.

However, that doesn't mean he'll sign any extension bill Congress dumps on his desk. The White House has made it quite clear that while President Bush could reluctantly live with the Senate's more modest version, he would veto the longer-term, more comprehensive House bill. I don't think he's bluffing.

Game over.

The Senate bill is a decent compromise in its own right. Seven years is more than a reasonable term of extension. The Senate version also buys time on two other contentious issues by ordering studies by the Government Accountability Office on the risk of NBCR attacks and capacity restraints in high-profile-target areas, such as lower Manhattan.

Rep. Frank may have been roaring like a lion at PCI, but he sounded more like a lamb after the Senate passed its limited version. Sen. Dodd also expressed confidence that a bill would pass by Dec. 31 that President Bush could live with.

For all our sakes, let's hope his confidence is not misplaced.

What do you folks think???