TERRORISM RISK INSURANCE REVISION AND EXTENSION ACT OF 2007 -- (House of Representatives - September 19, 2007)
BREAK IN TRANSCRIPT
Mr. HENSARLING. Mr. Chairman, I thank the gentleman for yielding. I certainly thank him for his leadership in this area.
If I could paraphrase President Ronald Reagan, the closest thing to eternal life on Earth is a Federal program. And certainly the legislation that comes before us today helps prove this.
When TRIA was brought to the floor, and I, admittedly, was not here but I have read the Record, supposedly it was to be a temporary program at a time of great economic hardship to our Nation.
I just heard the gentlewoman from New York speak very eloquently on the subject. But I recall from the Record her own words: ``We are simply working to keep our economy on track with a short-term program that addresses the new terrorist threat.''
Now we are being asked for a 15-year extension on what has already been a 5-year program.
The gentleman from Pennsylvania, who is now our chairman of the Capital Markets Subcommittee: ``We wisely designed the TRIA Act as a temporary backstop to get our Nation through a period of economic uncertainty until the private sector could develop models.''
Now, maybe those on the other side of the aisle have a different definition of ``temporary.'' I was here to vote for the TRIA extension, and I voted for it. I thought that the market needed some time to develop. But let's face it. If we vote for this, we are voting for a permanent, a de facto permanent, huge government insurance program on top of those that we already have, none of which, none of which, are financially sound.
And we have to remember when we are hearing debate on the floor about how critical it is in the fight against terror that we have terrorism reinsurance. I believe terrorism reinsurance is important, but I think even more important in fighting terror is prevention, ensuring it doesn't happen in the first place. And yet we have Member after Member after Member on the other side of the aisle that would make it more difficult for our government to monitor the conversations of suspected terrorists. We have Member after Member on the other side of the aisle voting to assure that a portion of our intelligence budget, to paraphrase the former Director of the CIA, goes to spying on bugs and bunnies instead of terrorists. Prevention is what is key in the fight against this terror.
Now, of course, reinsurance is important, and, again, as I said, I voted for another extension. But to hear those on the other side of the aisle, they would say, well, there is no way that the market can develop this. I'm not sure I agree with that, and I know that the President's working group on financial markets doesn't agree with that. They say that the availability and affordability of terrorism risk insurance has improved since the terrorist attacks. Despite increases in risk retentions under TRIA, insurers have allocated additional capacity to terrorism risk, prices have declined, and take-up rates have increased.
And let me quote here from this working group: ``The presence of subsidized Federal reinsurance through TRIA appears to negatively affect the emergence of private reinsurance capacity because it dilutes demand for private sector reinsurance.''
Now, the chairman, whom I certainly respect, and he is entitled to his own opinions, he doesn't believe the market could ever develop. Well, I would respectfully say to our chairman: How are we ever going to know? How are we ever going to know when you are giving away something for free that the market otherwise would charge for and all of the signs are there that the market can develop?
Some tell us this is a new risk that we don't know how to model for. Well, there was a time when the insurance industry didn't know how to model for airline catasrophes. They didn't know how to model for data processing collapses. And this is not the first time in our Nation's history that we have faced great threats. How did we model the Cold War when thousands of nuclear arms were pointed at us and somehow construction still took place in America?
Construction has taken place in New York based upon a 3-year extension, not a de facto permanent extension, but based on a 3-year extension with higher deductibles and with less government subsidy.
So I don't believe that building is going to come to a complete stop. But if there is a market failure, we could have worked on a bipartisan basis for something restricted that was temporary, dealing with nuclear, chemical, and biological, with large deductibles and large industry retentions.
Instead, we are going to create a massive new insurance program that threatens the taxpayer, another great threat to this Nation. We should oppose this bill.
BREAK IN TRANSCRIPT