S.Amdt. 3922

SA 3922. Mr. MERKLEY (for himself, Mr. Brown of Ohio, Mrs. Boxer, Mr.
Feingold, Ms. Snowe, and Mr. Sanders) submitted an amendment intended
to be proposed to amendment SA 3739 proposed by Mr. Reid (for Mr. Dodd,
(for himself and Mrs. Lincoln)) to the bill S. 3217, to promote
stability of the United States by improving accountability and
transparency in the financial system, to end ``too big to fall'', to
protect the American taxpayer by ending bailouts, to protect consumers
from abusive financial services practices, and for other purposes;
which was ordered to lie on the table; as follows:

On page 392, strike line 6 and all that follows through the
matter following line 2 on page 409, and insert the
following:
``(D) to coordinate Federal efforts and develop Federal
policy on prudential aspects of international insurance
matters, including representing the United States, as
appropriate, in the International Association of Insurance
Supervisors (or a successor entity) and assisting the
Secretary in negotiating Covered Agreements;
``(E) to determine, in accordance with subsection (f),
whether State insurance measures are preempted by Covered
Agreements;
``(F) to consult with the States (including State insurance
regulators) regarding insurance matters of national
importance and prudential insurance matters of international
importance; and
``(G) to perform such other related duties and authorities
as may be assigned to the Office by the Secretary.
``(2) Advisory functions.--The Office shall advise the
Secretary on major domestic and prudential international
insurance policy issues.
``(d) Scope.--The authority of the Office shall extend to
all lines of insurance except health insurance, as such
insurance is determined by the Secretary based on section
2791 of the Public Health Service Act (42 U.S.C. 300gg-91),
and crop insurance, as established by the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.).
``(e) Gathering of Information.--
``(1) In general.--In carrying out the functions required
under subsection (c), the Office may--
``(A) receive and collect data and information on and from
the insurance industry and insurers;
``(B) enter into information-sharing agreements;
``(C) analyze and disseminate data and information; and
``(D) issue reports regarding all lines of insurance except
health insurance.
``(2) Collection of information from insurers and
affiliates.--
``(A) In general.--Except as provided in paragraph (3), the
Office may require an insurer, or any affiliate of an
insurer, to submit such data or information as the Office may
reasonably require in carrying out the functions described
under subsection (c).
``(B) Rule of construction.--Notwithstanding any other
provision of this section, for purposes of subparagraph (A),
the term `insurer' means any person that is authorized to
write insurance or reinsure risks and issue contracts or
policies in 1 or more States.
``(3) Exception for small insurers.--Paragraph (2) shall
not apply with respect to any insurer or affiliate thereof
that meets a minimum size threshold that the Office may
establish, whether by order or rule.
``(4) Advance coordination.--Before collecting any data or
information under paragraph (2) from an insurer, or any
affiliate of an insurer, the Office shall coordinate with
each relevant State insurance regulator (or other relevant
Federal or State regulatory agency, if any, in the case of an
affiliate of an insurer) to determine if the information to
be collected is available from, or may be obtained in a
timely manner by, such State insurance regulator,
individually or collectively, another regulatory agency, or
publicly available sources. Notwithstanding any other
provision of law, each such relevant State insurance
regulator or other Federal or State regulatory agency is
authorized to provide to the Office such data or information.
``(5) Confidentiality.--
``(A) Retention of privilege.--The submission of any
nonpublicly available data and information to the Office
under this subsection shall not constitute a waiver of, or
otherwise affect, any privilege arising under Federal or
State law (including the rules of any Federal or State court)
to which the data or information is otherwise subject.
``(B) Continued application of prior confidentiality
agreements.--Any requirement under Federal or State law to
the extent otherwise applicable, or any requirement pursuant
to a written agreement in effect between the original source
of any nonpublicly available data or information and the
source of such data or information to the Office, regarding
the privacy or confidentiality of any data or information in
the possession of the source to the Office, shall continue to
apply to such data or information after the data or
information has been provided pursuant to this subsection to
the Office.
``(C) Information sharing agreement.--Any data or
information obtained by the Office may be made available to
State insurance regulators, individually or collectively,
through an information sharing agreement that--
``(i) shall comply with applicable Federal law; and
``(ii) shall not constitute a waiver of, or otherwise
affect, any privilege under Federal or State law (including
the rules of any Federal or State Court) to which the data or
information is otherwise subject.
``(D) Agency disclosure requirements.--Section 552 of title
5, United States Code, shall apply to any data or information
submitted to the Office by an insurer or an affiliate of an
insurer.
``(6) Subpoenas and enforcement.--The Director shall have
the power to require by subpoena the production of the data
or information requested under paragraph (2), but only upon a
written finding by the Director that such data or information
is required to carry out the functions described under
subsection (c) and that the Office has coordinated with such
regulator or agency as required under paragraph (4).
Subpoenas shall bear the signature of the Director and shall
be served by any person or class of persons designated by the
Director for that purpose. In the case of contumacy or
failure to obey a subpoena, the subpoena shall be enforceable
by order of any appropriate district court of the United
States. Any failure to obey the order of the court may be
punished by the court as a contempt of court.
``(f) Preemption of State Insurance Measures.--
``(1) Standard.--A State insurance measure shall be
preempted if, and only to the extent that the Director
determines, in accordance with this subsection, that the
measure--
``(A) directly treats less favorably a non-United States
insurer domiciled in a foreign jurisdiction that is subject
to a Covered Agreement than a United States insurer
domiciled, licensed, or otherwise admitted in that State; and

[[Page S3477]]

``(B) is inconsistent with a Covered Agreement.
``(2) Determination.--
``(A) Notice of potential inconsistency.--Before making any
determination under paragraph (1), the Director shall--
``(i) notify and consult with the appropriate State
regarding any potential inconsistency or preemption;
``(ii) cause to be published in the Federal Register notice
of the issue regarding the potential inconsistency or
preemption, including a description of each State insurance
measure at issue and any applicable Covered Agreements;
``(iii) provide interested parties a reasonable opportunity
to submit written comments to the Office;
``(iv) consider any comments received; and
``(v) consider the effect of preemption on--

``(I) the protection of policyholders and policy claimants;
``(II) the maintenance of the safety, soundness, integrity,
and financial responsibility of any entity involved in the
business of insurance or insurance operations;
``(III) ensuring the integrity and stability of the United
States financial system; and
``(IV) the creation of a gap or void in financial or market
conduct regulation of any entity involved in the business of
insurance or insurance operations in the United States; and

``(B) Scope of review.--For purposes of this subsection,
the determination of the Director regarding State insurance
measures shall be limited to the subject matter contained
within the Covered Agreement involved.
``(C) Notice of determination of inconsistency.--Upon
making any determination under paragraph (1), the Director
shall--
``(i) notify the appropriate State of the determination and
the extent of the inconsistency;
``(ii) establish a reasonable period of time, which shall
not be less than 90 days, before the determination shall
become effective;
``(iii) notify the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives of the inconsistency; and
``(iv) cause to be published in the Federal Register notice
of the determination and the extent of the inconsistency.
``(3) Notice of effectiveness.--Upon the conclusion of the
period referred to in paragraph (2)(C)(ii), if the basis for
such determination still exists, the determination shall
become effective and the Director shall--
``(A) cause to be published a notice in the Federal
Register that the preemption has become effective, as well as
the effective date; and
``(B) notify the appropriate State.
``(4) Limitation.--No State may enforce a State insurance
measure to the extent that such measure has been preempted
under this subsection.
``(g) Applicability of Administrative Procedures Act.--
Determinations of inconsistency made pursuant to subsection
(f)(2) shall be subject to the applicable provisions of
subchapter II of chapter 5 of title 5, United States Code
(relating to administrative procedure), and chapter 7 of such
title (relating to judicial review), except that in any
action for judicial review of a determination of
inconsistency, the court shall determine the matter de novo.
``(h) Regulations, Policies, and Procedures.--The Secretary
may issue orders, regulations, policies, and procedures to
implement this section.
``(i) Consultation.--The Director shall consult with State
insurance regulators, individually or collectively, to the
extent the Director determines appropriate, in carrying out
the functions of the Office.
``(j) Savings Provisions.--Nothing in this section shall--
``(1) preempt--
``(A) any State insurance measure that governs any
insurer's rates, premiums, underwriting, or sales practices;
``(B) any State coverage requirements for insurance;
``(C) the application of the antitrust laws of any State to
the business of insurance; or
``(D) any State insurance measure governing the capital or
solvency of an insurer, except to the extent that such State
insurance measure directly treats a non-United States insurer
less favorably than a United States insurer and in that case
only to the extent of the less favorable treatment of the
non-United States insurer domiciled in a foreign jurisdiction
that is subject to a Covered Agreement;
``(2) be construed to alter, amend, or limit any provision
of the Consumer Financial Protection Agency Act of 2010; or
``(3) affect the preemption of any State insurance measure
otherwise inconsistent with and preempted by Federal law.
``(k) Retention of Existing State Regulatory Authority.--
Nothing in this section or section 314 shall be construed to
establish or provide the Office or the Department of the
Treasury with general supervisory or regulatory authority
over the business of insurance.
``(l) Annual Report to Congress.--Beginning September 30,
2011, the Director shall submit a report on or before
September 30 of each calendar year to the President and to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives on the insurance industry, any actions
taken by the Office pursuant to subsection (f) (regarding
preemption of inconsistent State insurance measures), the
status of international insurance prudential matters and
negotiations, including on standard-setting, and any other
information as deemed relevant by the Director or as
requested by such Committees.
``(m) Study and Report on Regulation of Insurance.--
``(1) In general.--Not later than 18 months after the date
of enactment of this section, the Government Accountability
Office shall conduct a study and submit a report to Congress
on how to modernize and improve the system of insurance
regulation in the United States.
``(2) Considerations.--The study and report required under
paragraph (1) shall be based on and guided by the following
considerations:
``(A) Systemic risk regulation with respect to insurance.
``(B) Capital standards and the relationship between
capital allocation and liabilities, including standards
relating to liquidity and duration risk.
``(C) Consumer protection for insurance products and
practices, including gaps in state regulation.
``(D) The degree of national uniformity of State insurance
regulation, including the feasability and costs and benefits
of alternative Federal or State actions, such as interstate
compacts, that would encourage the States to accomplish the
regulatory goal of uniformity that may be identified as being
achieved through any proposed Federal regulation of
insurance.
``(E) The regulation of insurance companies and affiliates
on a consolidated basis.
``(F) International coordination of insurance regulation.
``(3) Additional factors.--The study and report required
under paragraph (1) shall also examine the following factors:
``(A) The costs and benefits of potential Federal
regulation of insurance across various lines of insurance
(except health insurance).
``(B) The feasibility of regulating only certain lines of
insurance at the Federal level, while leaving other lines of
insurance to be regulated at the State level.
``(C) The ability of any potential Federal regulation or
Federal regulators to eliminate or minimize regulatory
arbitrage.
``(D) The impact that developments in the regulation of
insurance in foreign jurisdictions might have on the
potential Federal regulation of insurance.
``(E) The ability of any potential Federal regulation or
Federal regulator to provide robust consumer protection for
policyholders.
``(F) The potential consequences of subjecting insurance
companies to a Federal resolution authority, including the
effects of any Federal resolution authority--
``(i) on the operation of State insurance guaranty fund
systems, including the loss of guaranty fund coverage if an
insurance company is subject to a Federal resolution
authority;
``(ii) on policyholder protection, including the loss of
the priority status of policyholder claims over other
unsecured general creditor claims;
``(iii) in the case of life insurance companies, the loss
of the special status of separate account assets and separate
account liabilities; and
``(iv) on the international competitiveness of insurance
companies.
``(G) Such other factors as the Government Accountability
Office determines necessary or appropriate, consistent with
the principles set forth in paragraph (2).
``(4) Required recommendations.--The study and report
required under paragraph (1) shall also contain any
legislative, administrative, or regulatory recommendations,
as the Government Accountability Office determines
appropriate, to carry out or effectuate the findings set
forth in such report.
``(5) Consultation.--With respect to the study and report
required under paragraph (1), the Government Accountability
Office shall consult with the National Association of
Insurance Commissioners, consumer organizations,
representatives of the insurance industry and policyholders,
and other organizations and experts, as appropriate.
``(n) Definitions.--In this section and section 314, the
following definitions shall apply:
``(1) Affiliate.--The term `affiliate' means, with respect
to an insurer, any person who controls, is controlled by, or
is under common control with the insurer.
``(2) Insurer.--The term `insurer' means any person engaged
in the business of insurance, including reinsurance.
``(3) Covered agreements.--The term `Covered Agreements'
means a written bilateral or multilateral agreement entered
into between the United States and a foreign government,
authority, or regulatory entity after the date of the
enactment of the Restoring American Financial Stability Act
of 2010 regarding prudential measures applicable to the
business of insurance or reinsurance that--
``(A) provides for recognition of other countries'
prudential measures with respect to the business of insurance
or reinsurance;
``(B) protects insurance consumers in the United States;
``(C) promotes the integrity and stability of the financial
system; and

[[Page S3478]]

``(D) meets the regulatory goals of the States with respect
to the comparable subject matter.
``(4) Non-united states insurer.--The term `non-United
States insurer' means an insurer that is organized under the
laws of a jurisdiction other than a State, but does not
include any United States branch of such an insurer.
``(5) Office.--The term `Office' means the Office of
National Insurance established by this section.
``(6) State insurance measure.--The term `State insurance
measure' means any State law, regulation, administrative
ruling, bulletin, guideline, or practice relating to or
affecting prudential measures applicable to insurance or
reinsurance.
``(7) State insurance regulator.--The term `State insurance
regulator' means any State regulatory authority responsible
for the supervision of insurers.
``(8) United states insurer.--The term `United States
insurer' means--
``(A) an insurer that is organized under the laws of a
State; or
``(B) a United States branch of a non-United States
insurer.
``(o) Authorization of Appropriations.--There are
authorized to be appropriated for the Office for each fiscal
year such sums as may be necessary.

``SEC. 314. COVERED AGREEMENTS.

``(a) In General.--The Secretary of the Treasury is
authorized to negotiate and enter into Covered Agreements on
behalf of the United States.
``(b) Savings Provision.--Nothing in this section or
section 313 shall be construed to affect the development and
coordination of United States international trade policy or
the administration of the United States trade agreements
program. It is to be understood that the negotiation of
Covered Agreements under such sections is consistent with the
requirement of this subsection.
``(c) Requirements for Consultation.--
``(1) In general.--Before initiating negotiations to enter
into a Covered Agreement under subsection (a), during such
negotiations, and before entering into any such agreement,
the Secretary shall consult with the United States Trade
Representative, the relevant Congressional committees, and
the insurance commissioners of the States and territories of
the United States.
``(2) Application of apa.--The initiation of negotiations
to enter into a Covered Agreement under subsection (a) and
the decision to enter into any such Covered Agreement shall
be subject to notice and comment rulemaking under the
Administrative Procedures Act.
``(d) Entry Into Force.--A Covered Agreement under
subsection (a) may enter into force with respect to the
United States only if--
``(1) the Secretary has made available for public review by
posting in the Federal Register a copy of the final legal
text of the Covered Agreement; and
``(2) a period of 90 calendar days beginning on the date on
which the copy of the final legal text of the Covered
Agreement is made available for public review under paragraph
(1) has expired.''.
(b) Duties of Secretary.--Section 321(a) of title 31,
United States Code, is amended--
(1) in paragraph (7), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (8)(C), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(9) advise the President on major domestic and
international prudential policy issues in connection with all
lines of insurance except health insurance.''.
(c) Clerical Amendment.--The table of sections for
subchapter I of chapter 3 of title 31, United States Code, is
amended by striking the item relating to section 312 and
inserting the following new items:

``Sec. 312. Terrorism and financial intelligence.
``Sec. 313. Office of National Insurance.
``Sec. 314. Covered Agreements.
``Sec. 315. Continuing in office.''.
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