In 2007, New England’s financial services industry contributed more than 11 percent of the region’s economic output, providing well over 500,000 full or part-time jobs. Despite the turbulence of the recent national recession, the financial services industry continues to exceed 10 percent of the gross state product in Connecticut, Massachusetts and Rhode Island, with the other three New England states averaging around five percent.
Among our members, the New England Council counts many of the nation’s top financial services firms, along with a range of smaller entrepreneurial financial organizations. Members include life, health and property casualty insurers, commercial and community banks, credit unions, investment houses of every variety and other financial institutions.
In recent years, the Financial Services Committee has worked closely with the New England congressional delegation, especially those in high-ranking positions on the key committees of jurisdiction in the U.S. House and Senate, to promote policies that will enhance the viability of financial services as a critical regional economic driver. Some examples of recent advocacy activity are detailed below. For more information about the New England Council Financial Services Committee, please contact Griffin Doherty.
DOL Fiduciary Rule
In July 2015, the Council submitted a comment letter to U.S. Labor Secretary Tom Perez regarding concerns Council members have expressed over the Department of Labor’s proposed rule to establish a uniform fiduciary standard of duty. Specifically, after citing concerns related to the workability of the rule as drafted and potential impacts it could have on access to advice for low- and middle-income Americans and small businesses, the letter urges the Secretary to “thoroughly examine all comments on these issues and work with all stakeholders – particularly those in the financial services industry charged with providing advice to Americans – to make any necessary and productive changes that will assuage these concerns and ensure that the rule is workable for all parties involved. The Council also helped facilitate an August 2015 letter from Governors Charlie Baker (R-MA) and Maggie Hassan (D-NH) to Secretary Perez and members of the New England Congressional delegation regarding the fiduciary proposal. The letter discusses specific areas of concern for the two governors, and urges that “the Administration work with representatives of the small business community and members of the financial services industry to produce a workable rule that protects savers yet does not hamstring or prevent the industry from using long established service models to help individuals plan and save for retirement.” The Council also sent a letter to the New England Congressional delegation in March 2016 supporting legislation co-authored by Reps. Richard Neal (D-MA) and John Larson (D-CT) that would have accomplished the nearly universally shared goal of establishing a best interest standard without hampering the ability of hardworking Americans to access timely guidance and advice regarding their financial future.
In November 2015, the Council sent a letter to both Senate and House conferees on the long-term highway funding reauthorization bill urging them to reject a provision in the Senate-passed version of the bill that would pay for a portion of the legislation’s spending by cutting from six percent to 1.5 percent the dividend payments Federal Reserve member banks receive each year on Federal Reserve stocks. The letter reminds lawmakers that “member banks are required to purchase stock in regional Federal Reserve banks as a condition of their membership, and this stock is unlike other traditional bank assets, as banks are not allowed to sell, transfer, or use it as collateral.” Additionally, the Council’s letter noted that efforts are presently underway to study the ramifications of such a change to Fed dividend payments, including a study by the Government Accountability Office (GAO) that was requested by House Financial Services Committee Chairman Jeb Hensarling (R-TX). Given potential unintended consequences that could arise as a result of this unstudied policy change, the Council asked conferees to support a House-passed provision that replaces the dividend payment change with an alternative offset that utilizes the Federal Reserve’s “surplus” account to help pay for the Highway Trust Fund’s extension.
The New England Council has long supported the Terrorism Risk Insurance Act (TRIA), and its reauthorization was a top priority for the Council’s Financial Services Committee in 2014. Originally passed in 2002 after the September 11th attacks, TRIA acts as a government-backed stopgap in the case of a major terrorist attack. Its fundamental goal is to ensure that businesses have access to terrorism insurance, so that in the event of an attack, construction projects can proceed, businesses of all sizes can remain open, and commerce does not come to a screeching halt. Without action, the program was set to expire on December 31, 2014. The Council, as part of the Coalition to Insure Against Terrorism (CIAT), wrote several letters to Congress members urging their support for passing a long-term reauthorization of the program. Additionally, Financial Services Committee members participated in a series of meetings with members of the New England House delegation and their staffs as part of a November 2014 Capitol Hill Fly-In. Jim Brett also penned an Op-Ed on the importance of TRIA that ran in several regional business journals in the fall. While the Congress failed to reauthorize TRIA before the end of the 113th Congress, the 114th Congress quickly passed the legislation to reauthorize TRIA for six years through 2020 with broad, bipartisan majorities, providing certainty to the American economy.
The Federal Housing Finance Agency (FHFA) proposed changes to the membership requirements for Federal Home Loan Banks (FHLBanks), including the one in Boston, which have the potential to adversely affect both existing and prospective members. This rulemaking would impact a number of the Council’s Financial Services Committee members. As such, the Council submitted a comment letter to the FHFA urging the agency to reconsider its proposal. The letter lays out Council members’ concerns with the proposal, specifically questioning why it is even needed, given that the FHFA’s own research and data demonstrate the vast majority of FHLBank members – roughly 98 percent – already comply with the proposed requirement to hold at least 10 percent of assets in “residential mortgage loans” on an ongoing basis. It also highlights the concern that the proposed rule would impact FHLB Boston’s ability to grow as well as simply maintain existing levels of advances, thereby leading to reduced funding of its Affordable Housing Program and fewer safe, decent, affordable housing options throughout New England.
On September 15, 2014, the Council sent a letter to Department of Education Secretary Arne Duncan expressing concerns about unintended consequences for financial institutions and students using their services that may result from its ongoing rulemaking pertaining to the disbursement of student aid credit balances under Title IV of the Higher Education Act. Specifically, the current proposal of the rule would effectively impose a range of new requirements and restrictions on all campus banking products, including accounts that are not created specifically for receipt of Title IV funds. The concern is that students may lose access to no- and low-cost services and products should the rule push banks out of the funds disbursement business and impact arrangements between banks and educational institutions. The Council’s letter urges Secretary Duncan to listen to the concerns expressed by colleges and universities, financial institutions, lawmakers, and others in constructing a final rule.
As Congress works to balance the federal budget and eliminate the deficit, some leaders in Washington have proposed eliminating tax incentives for individual retirement savings, such as in 401k’s, IRAs and other private retirement plans. The New England Council’s Financial Services Committee, along with other regional leaders in the financial services industry, are concerned about the potentially devastating long term consequences of such a measure. In June 2011, the Council wrote to members of the New England Congressional delegation to express its concerns and outline the long-term benefits of encouraging Americans to save for retirement by deferring taxation on retirement savings until the funds are withdrawn years later. The Council stressed that the current tax deferral for savings not only promote individual financial self-sufficiency, but also reduce the burden on our already strained government entitlement systems in the long run. The Council also has concerns that if there is less incentive to invest in retirement savings accounts, there would be a significant impact on the financial services industry, which plays a large role in the New England economy.
In the fall of 2011, Congressman Richard Neal (D-MA) and Congressman Jim Gerlach (R-PA), members of the influential House Ways & Means Committee, released a draft concurrent resolution expressing the sense of the Congress that our current tax incentives for retirement savings provide important benefits to Americans to help plan for a financially secure retirement. The Council again wrote to members of the New England delegation, urging them to co-sponsor this resolution to express their support for this important issue, helping attract over 100 co-sponsors for the House resolution.
Later, in December 2012, the Council sent a letter to each member of the New England Senate delegation urging them to support a bi-partisan concurrent resolution sponsored by Senators Richard Blumenthal (D-CT) and Johnny Isakson (R-GA). The resolution affirms that current tax incentives for retirement savings provide important benefits in planning for a financially secure retirement. The resolution mirrors the 2011 Neal-Gerlach resolution.