New York Senators Charles E. Schumer, D, and Sen. Hillary Rodham Clinton, D, have blasted the Treasury Department’s report, submitted to the Senate Banking Committee, which urged Congress not to renew the Terrorism Risk Insurance Act or TRIA as it currently is written.
Schumer charged that the “Administration’s ideological slant has gotten in the way of a clear look at the facts on the ground.”
“Treasury evaluated TRIA in the context of it being a temporary program, but what is happening on the ground is proof that there is a permanent need to extend this critical risk insurance program,” Schumer said.
He said the report does not back up its conclusion that the private insurance industry can do the job without a federal program.
“The Treasury report can point to no evidence that the private market can fill in the potential gaps – and most experts, including Alan Greenspan and the credit rating agencies, say that there are certain types of costs that the government must bear, like violence from abroad or terrorism. Moreover, if TRIA is not renewed, the real estate market would slow to a crawl and every time a new project isn’t refinanced or a new proposal to build something large and grand doesn’t get the proper insurance coverage, it would slow down a little more,” Schumer concluded.
Clinton said she is “deeply disappointed” with the Treasury report, calling its recommendation for removing federal terrorism reinsurance “careless at best” and a potential blow to New York businesses.
“In the weeks and months following the attacks of September 11th, virtually every sector of our economy faced extreme uncertainty in the wake of the most devastating terrorist attacks in our nation’s history. It has been estimated that nearly $15 billion in real estate transactions and over 300,000 jobs, including many in New York, were put on hold due to the lack of terrorism insurance available,” Clinton stated.
She said that by ending the program, the Administration “would be pulling the rug out from under hundreds of institutions that depend on this critical safety net.”
Clinton maintained that it is “particularly troubling” that the Treasury Department has made this recommendation despite its own conclusion that TRIA has been effective in achieving its goals and supporting the many sectors of the economy that the insurance industry underwrites.
She said there is “a wide consensus that the disruption in coverage and its effect on economic growth would be severe,” citing a GAO report that concluded last year that an adequate market for terrorism insurance would not exist if TRIA expired.
“As a result, reinsurer and consequently, insurer, participation in the terrorism insurance market likely will decline significantly after TRIA expires. I hope that a permanent solution to the problem of terrorism insurance can be achieved with cooperation from both the public and private sector. I will continue to work with my colleagues, my constituents and the Administration to achieve that goal. Nevertheless, I firmly believe that the abrupt end to the TRIA program would be harmful to New York’s and the nation’s economy and that is why I will continue to work for its extension,” Clinton said.
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