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Senate Proceeding on May 20th, 2010 :: 0:26:10 to 0:41:55
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Tom Harkin

0:26:08 to 0:26:28( Edit History Discussion )

Tom Harkin: the yeas and nays are the presiding officer: the senator from iow mr. harkin: parliamentary inquiry. what is before the senate at the present the presiding officer: merkley mr. harkin: mr. president? the presiding officer: the senator from iowa. mr. harkin: madam president, i have been for some time trying

Tom Harkin

0:26:10 to 0:41:55( Edit History Discussion )
Speech By: Tom Harkin

Tom Harkin

0:26:29 to 0:26:49( Edit History Discussion )

Tom Harkin: to bring up an amendment that's been filed that deals with kind of a, some mig?w say an arcane, obscure, little-known part of the insurance industry. it's called indexed annuities.

Tom Harkin

0:26:50 to 0:27:14( Edit History Discussion )

Tom Harkin: indexed a little bit of background. indexed annuities have been sold for some time. what they are, they are an annuity that people would buy, and the -- there is an upside limit. in other words, if -- if the s&p

Tom Harkin

0:27:15 to 0:27:37( Edit History Discussion )

Tom Harkin: index goes up by, let's say, 500%, the does not get all that 500%. the insurance company gets a big portion of that. but in exchange for that, there is no downside in other words, the holder of that annuity then if the s&p anything. so it's been a very valuable instrument for a lot of people

Tom Harkin

0:27:38 to 0:27:58( Edit History Discussion )

Tom Harkin: to have these -- these indexed annuities. i would point out that during the recent 2008-2009, no one lost any capital. no one lost any of their annuities based on the stock market going they lost nothing because they

Tom Harkin

0:27:59 to 0:28:20( Edit History Discussion )

Tom Harkin: had that downside protection. not true of oer instruments, obviously. if you had a security, if you had a security, obviously you lost a lot of downturn of the stock market.

Tom Harkin

0:28:21 to 0:28:42( Edit History Discussion )

Tom Harkin: but holders of indexed annuities did not lose their principal whatsoever. that's the value of these annuities, annuities. now, two years ago, almost three years ago now, in the waning days of the last administration, the securities and exchange commission decided that they

Tom Harkin

0:28:43 to 0:29:04( Edit History Discussion )

Tom Harkin: wanted to have jurisdiction over these. there had been some abuses by sellers of indexed annuities to individuals, mostly individuals, who really didn't didn't -- this was not the best thing for them and so they were sold an

Tom Harkin

0:29:05 to 0:29:28( Edit History Discussion )

Tom Harkin: was not in their best interests. and so the s.e.c. under chairman cox decided that they were going to take jurisdiction of this, they were going to have jurisdiction of this. and it was a divided vote on the s.e.c. as to whether or not they would. but the vote was in favor so the s.e.c. pulled this under their umbrella. they were taken to court, the

Tom Harkin

0:29:29 to 0:29:51( Edit History Discussion )

Tom Harkin: s.e.c. was taken to court by certain companies. it went through the district court, and then it to the circuit court of appeals in the district of columbia. the circuit court of appeals decided this on july 21, 2009, not even one year ago. and here's what the circuit court said.

Tom Harkin

0:29:52 to 0:30:13( Edit History Discussion )

Tom Harkin: the circuit court said -- "we hold that the commission's consideration" -- that's the securities and exchange commission, the s.e.c. -- "we hold that the commission's consideration of the effect of rule 151 that would govern the indexed annuities that the s.e.c. now wanted to take control over,

Tom Harkin

0:30:14 to 0:30:37( Edit History Discussion )

Tom Harkin: which they never had before." we hold that the commission's consideration of the effect of rule 151-a on the efficiency, competition and capital formation was arbitrary and capricious." arbitrary and held by the circuit court, the

Tom Harkin

0:30:38 to 0:30:59( Edit History Discussion )

Tom Harkin: circuit court said, we remand this. we remand this. having determined that their analysis is lacking, we conclude this matter should be remanded to the s.e.c. with its too be analysis. so it's back at the s.e.c. the s.e.c. could at some point jiggle things around and decide,

Tom Harkin

0:31:00 to 0:31:20( Edit History Discussion )

Tom Harkin: yes, now they have a better analysis and now they have jurisdiction. they'll be taken to court again. they'll be taken to court again and this thing will go on and on. in the mean time the status of these insurance instruments, called limbo.

Tom Harkin

0:31:21 to 0:31:42( Edit History Discussion )

Tom Harkin: now, again, madam president, if someone says, well, we had some problems with this in the past, i understand that. but the insurance commissioners, who have jurisdiction over insurance fix the problems. in fact,

Tom Harkin

0:31:43 to 0:32:04( Edit History Discussion )

Tom Harkin: the national association of insurance commissioners in a letter to senator dodd, the chairman of the committee dated april 30th, basically points out what they had done to fix up this problem. so the insurance commissioner said, yes, there's a problem. let's get together. let's change the rules and

Tom Harkin

0:32:05 to 0:32:26( Edit History Discussion )

Tom Harkin: regulations under which these are -- are sold. and they did. well, some might say, well, why shouldn't we give this to the s.e.c.? is the s.e.c. the final and best word and the best protector of consumers, i ask you? is the s.e.c. the best protector

Tom Harkin

0:32:27 to 0:32:48( Edit History Discussion )

Tom Harkin: of consumers in this country when it comes to financial instruments? ask bernie madoff's customers. now, did we say because of bernie madoff and all the money he cheated and stole from people and he was under jurisdiction of the s.e.c., well, we have to take that jurisdiction away from the

Tom Harkin

0:32:49 to 0:33:10( Edit History Discussion )

Tom Harkin: s.e.c. and give it to somebody else? no. we said s.e.c. change your policies, change your regulations so a bernie madoff cannot h and so that's what we're indexed annuities have always been insurance products. governed by the insurance commissioners in this each state and the national association of

Tom Harkin

0:33:11 to 0:33:32( Edit History Discussion )

Tom Harkin: insurance commissioners. so if there was a problem, it went to they addressed the problem, they fixed it. and so we have a new regime in which indexed annuiti sold so a problems -- the problems that occurred in a few states in the past won't happen again.

Tom Harkin

0:33:33 to 0:33:56( Edit History Discussion )

Tom Harkin: so i'm not one to say, well to protect the consumer against everything, you have to give it to the s.e.c. well, the s.e.c. did job -- allowsy job in protecting consumers against securities -- i mean stocks. securities. not one person who had an indexed anewty lost

Tom Harkin

0:33:57 to 0:34:17( Edit History Discussion )

Tom Harkin: annuity lost one single dime in 2008 and 2009. you can't say that about bernie madoff's and so, madam president, i've been trying to get my amendment to basically s.e.c. does not have jurisdiction right now over these insurance instruments. that's what they are, they're insurance that's why we've left insurance

Tom Harkin

0:34:18 to 0:34:38( Edit History Discussion )

Tom Harkin: out to the states. if the s a hold of this kind of -- of -- of an instrument, what's to keep them from saying, well, whole life -- now we're going to take over whole life insurance policies too. because we've had problems with whole life insurance policies too, you know, folks? that's why insurance

Tom Harkin

0:34:39 to 0:35:00( Edit History Discussion )

Tom Harkin: commissioners keep track o this. they crack down. they change the change their rules and regulations to cover these kinds of happenings. so unless we're saying we're going to federalize all insurance in america, if we're there, well, okay. i'd like to see that vote happen here.

Tom Harkin

0:35:01 to 0:35:21( Edit History Discussion )

Tom Harkin: this is -- this is one more overreaching by a federal department to gain jurisdiction over a state regulation over which they've never jurisdiction. the f.e.c. never had jurisdiction and the sirveght court said there are analysis where we reach the basis to

Tom Harkin

0:35:22 to 0:35:43( Edit History Discussion )

Tom Harkin: grab this was arbitrary and capricious and so i have an amendment, 3920, at the desk. it has broad eqipships on both sides of the aisle -- broad eqips on both sides of the aisle, republicans, democrats, independents to say, no, this should commissioners, because this is,

Tom Harkin

0:35:44 to 0:36:04( Edit History Discussion )

Tom Harkin: in essence, an insurance product. so the new rules that have been patrol mulpromulgated by the commissioners cover the problems that happened in the past. the rules require certain amounts of liquidity, take into the account of the age of the consumer.

Tom Harkin

0:36:05 to 0:36:27( Edit History Discussion )

Tom Harkin: that was the problem in the past. th were selling these to people who were way too old who wouldn't live to get through the annuities. lee they look at the tax -- they look at the tax status.?? these are new regulations instituted by the insurance commissioners answer a problem that came up because of

Tom Harkin

0:36:28 to 0:36:49( Edit History Discussion )

Tom Harkin: a -- let's face it, some agents out there that were -- that taking advantage of elderly people. so there's always going to be some bad actors. i don't care i it's under s.e.c. or insurance commissioners,here's also going to be someone trying to game the system. this has always been under the insurance commissioner's insurance commission.

Tom Harkin

0:36:50 to 0:37:12( Edit History Discussion )

Tom Harkin: i know that some people say, well, we got a letter from the aarp, madam president -- a letter from the they were opposed to my amendment. i have a great deal of respect for the aarp. i do a lot of work with them. more often than not, they do good things.

Tom Harkin

0:37:13 to 0:37:33( Edit History Discussion )

Tom Harkin: but here is an article from the april 10, 2007, "new york times", entitled "income for life, sounds good, but do your homework." and what it points out is that aarp has teamed up with new york life insurance to, guess what? sell annuities. to sell annuities.

Tom Harkin

0:37:34 to 0:37:55( Edit History Discussion )

Tom Harkin: so i detect -- i smell here a little bit of the flavor of a conflict of interest. oh, the aarp, they don't the indexed annuities sold out there. they want them to buy their annuities. i don't care. fine. if they want to be in the business of selling annuities,

Tom Harkin

0:37:56 to 0:38:16( Edit History Discussion )

Tom Harkin: fine. but to send out a later dated may 19, to the banking committee talking about how bad my amendment is, i say in their letter -- did they say in the letter, the chairman of the committee, in all due candor, the aarp has joined with

Tom Harkin

0:38:17 to 0:38:37( Edit History Discussion )

Tom Harkin: ne annuities? no, they didn't say that at all so a little bit of a hint of a conflict of interest there. so, madam president, i would ask that two things appear in the cord at this point. the letter from aarp dated may 19 to the dodd, be printed in the record. immediately following, that the

Tom Harkin

0:38:38 to 0:38:59( Edit History Discussion )

Tom Harkin: article from "the new york times" dated april 10, 2007. the presiding officer: without objection. mr. harkin: madam president, i ask at this point in the record, a letter dated april 11 from the national commissioners association also appear at this point in the record.

Tom Harkin

0:39:00 to 0:39:20( Edit History Discussion )

Tom Harkin: the presiding officer: without objection. mr. harkin: aarp does not come to this in a neutral position. not a neutral position at all. they have their own but they're not indexed annuities. they're not an insurance thing. and i'll tell you, when the downturn comes, people can lose -- people can lose money in

Tom Harkin

0:39:21 to 0:39:42( Edit History Discussion )

Tom Harkin: annuities, but not in an indexed annuity. as i said, you don't get the upside. the insurance companies get that. but you're protected if the market protected. madam president, i'd like to bring up my amendment, but i guess -- i guess i'm precled from doing so.

Tom Harkin

0:39:43 to 0:40:05( Edit History Discussion )

Tom Harkin: i was waiting for the ranking member to come back before i made a motion or -- i was waiting for the ranking member to come back because i had been discussing this with him and i know we're going out at 10:30. start, madam president? are we going out

Tom Harkin

0:40:06 to 0:40:26( Edit History Discussion )

Tom Harkin: the presiding officer: at 10:40. mr. harkin: 10:40. at what time does the senate reconvene? the presiding officer: at 12:00 noon. mr. harkin: and what time -- has there been a certain time on clo the presiding officer: 2:30.

Tom Harkin

0:40:27 to 0:40:47( Edit History Discussion )

Tom Harkin: mr. hark: well, madam president, i'm going to ask unanimou consent to call up amendment -- to set aside -- i ask unanims consent to set aside the p call up my amendment 3920. the presiding officer: is there an objection? a senator: i obj the presiding officer: objection

Tom Harkin

0:40:48 to 0:41:09( Edit History Discussion )

Tom Harkin: is heard. mr. harkin: madam president, i ask unanimous consent then to call up my amendment, 3920, with 20 minutes evenly divided with a vote on the amendment prior to the presiding officer: is there an objtion? a senator: the pres is mr. harkin: so, madam president,

Tom Harkin

0:41:10 to 0:41:31( Edit History Discussion )

Tom Harkin: the senator from hawaii objects to even having a vote on this. i can see the senator objecting, maybe he wants to object to the unanimous conse i just ask consent to have a vote on it. and the senator from hawaii objects to even having an up or down vote on this. i wish the senator could explain why he's afraid to even have an up or down vote. that's what i just asked for.

Tom Harkin

0:41:32 to 0:41:54( Edit History Discussion )

Tom Harkin: isn't that what the senate's for, to try to vote things? well, i want the record to show only one person objected to have a vote on this, and that's my friend from hawaii. and he is my friend. but to say we can't have a vote on this. i didn't hear an objection on the republican side or nob else.

Tom Harkin

0:41:55 to 0:41:55( Edit History Discussion )

Tom Harkin: all i ask vote.

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