TRIA Reauthorization Fails in Senate
- Dec 17, 2014
Christmas has certainly not come early for the commercial real estate industry as the Senate closed up shop for the year without passing a TRIA extension. It is somewhat ironic that the legislation failed in the Senate after it passed a renewal option back in July by a 93-4 vote.
Senate leadership is crediting retiring Senator Tom Coburn (R-OK)—known to his colleagues on the other side of the aisle as ‘Dr. No’—with blocking the reauthorization. Coburn’s beef was that the House-revised bill included a provision related to the Dodd-Frank Act that would create a national board for licensing insurance producers.
The House Financial Services Committee, on the other hand, is placing the blame on U.S. Senate Majority Leader Harry Reid. A scathing post on the committee’s blog said that the failure “had nothing to do with Dodd-Frank; it has nothing to do with Sen. Coburn’s objection. It has everything to do with Harry Reid. He simply refused to bring the bill up in the Senate. He decided that the bill would either pass by unanimous consent, or, apparently, not pass at all.”
The House passed their version of a TRIA extension with higher triggers and insurer co-payments 417-7 on Dec. 10.
The industry was optimistic that a reauthorization would land on President Obama’s desk by the Dec. 31, 2014 expiration. It now appears that—barring a Christmas miracle—the terrorism backstop will not be addressed until 2015. This doesn’t sit well with industry leaders.
“The U.S. Senate’s alarming failure to renew the federal terrorism risk insurance program before adjournment will stall commercial real estate development around the country,” Chris Polychron, president of the National Association of Realtors, said in a prepared statement.
He added that because risk insurance is a requirement of many existing commercial mortgage balances, those whose coverage will lapse on Dec. 31 will be in technical default of their mortgage terms.
New York City Mayor Bill de Blasio had some additional sharp words for Congress.
“The blockage of the bill to reauthorize Terrorism Risk Insurance is a step backward and is a grim reminder of the consequences of the ongoing gridlock in Washington,” Mayor de Blasio said today in a statement. “TRIA has been critically successful in helping ensure that our nation’s companies, private infrastructure and consumers have access to insurance against terror attacks—a threat that continues to loom today.”
In less than three weeks the 114th Congress will convene for the first time. TRIA should be a top priory. As explored in the December issue, industry leaders are cautiously optimistic that Congress will prove more functional with a single party controlling both the House and Senate.