Bill Posey Looks to End 'Hidden Tax' in Dodd-Frank

U.S. Rep. Bill Posey, R-Fla., urged the House Financial Services Subcommittee on Housing and Insurance to reform Dodd-Frank.

According to Poseys team:

Among its numerous controversial provisions and regulations, the Dodd-Frank Act gave the Federal Deposit Insurance Corporation (FDIC), a depository regulator, expansive new Orderly Liquidation Authority to bail out large Wall Street institutions that Washington regulators deem too-big-to-fail. As written in Dodd-Frank, however, the FDIC could assess insurance companies and their customers for the new bailout fund, even though they are ineligible for a similar bailout and insurance policyholders already are protected by state-level backstops. State solvency funding for property and casualty, as well as life insurance already exists, so this Dodd-Frank provision amounts to double taxation.

Poseys legislation explicitly excludes these life, auto and homeowners insurance policies from the FDICs Orderly Liquidation Authority, ensuring that federal regulators cannot assess insurance policyholders as a source of cash for bailing out a failed Wall Street firm. Both bills have bipartisan support and preserve the longstanding practice of regulating insurance at the state level.

Posey looked to end what he calls a hidden tax and explained his bill on Tuesday.

The provisions slipped into the Dodd-Frank bill authorize federal regulators to essentially impose what amounts to a hidden tax on your homeowners, auto or life insurance to contribute to a fund to bail out a large bank in New York that makes a bad bet, said Posey. Thats just wrong because it could undermine the solvency of these insurance policies, so I introduced bipartisan legislation to repeal the authority for this hidden tax and protect individuals from having to pay it.