Insurance firms, already among Washington’s biggest donors, are securing powerful allies in Congress as the Federal Reserve draws up nationwide capital rules for the $1 trillion industry after years of delay.
Two members of the House of Representatives who received large industry donations for their election campaigns and one senator last month started the Financial Protection and Life Insurance Caucus, grouping lawmakers pledged to vie for the industry’s interests on Capitol Hill.
While the caucus cannot directly interfere with the Fed’s rule-making progress, it poses another hurdle for regulators, who have already faced critical questions in a series of House and Senate hearings this year.
Insurers have spent more than $150 million annually on lobbying Congress – in addition to campaign donations – since 2010, far more than what commercial banks or securities firms spent. Since 1998, the sector has spent the most of any industry other than the pharmaceutical sector, according to data on the OpenSecrets website (https://www.opensecrets.org).
“The new caucus will be instrumental in solidifying congressional support for our industry, particularly in helping to elevate our industry’s profile,” American Council of Life Insurers Chief Executive Dirk Kempthorne said in a March 10 email to members that was obtained by Reuters.
Richard Neal and Pat Tiberi, both members of the powerful House Ways and Means Committee, which regulates taxes, are co-chairs of the newly established insurance caucus. Both have received large sums of money for their campaigns from the industry in recent years, public data shows.
Tiberi, an Ohio Republican, was the seven-biggest recipient of funds from the industry for the 2014 election, according to public data on OpenSecrets. Neal, a Democrat from Massachusetts, was ninth on the list. The electoral districts of both men are home to large insurance firms.
The only members of Congress who received more money from the industry were higher-profile politicians like Senate Majority Leader Mitch McConnell, Speaker of the House John Boehner, and Jeb Hensarling, the firebrand Republican who chairs the House Financial Services Committee.
MetLife recently filed a lawsuit contesting a decision by regulators to subject the company to tougher rules and direct oversight by the Fed.
The 2010 Dodd-Frank Wall Street reform law mandated the Fed to write nationwide capital standards to avoid another failure such as the near-collapse of AIG, which prompted a $182 billion bailout at the depth of the financial crisis.
The Fed has not said much about the new rules. But the industry worries that it will be treated just like the heavily regulated Wall Street banks that the Fed has overseen for a century, despite differences in business models.
MetLife on Thursday lowered its forecasts for return on equity, citing the unknown impact of the new rules, among other things. Industry analysts have estimated that MetLife’s capital could drop by 50 percent in a worst-case scenario.