Legislation Prompts USAA to Urge Action

[Gravedigger]

Apparently USAA needs our help. This seems like it could be very gay.

New Legislation

[rcwelch]

Isn't this important enough to be put under it's own "Topic heading" so it would stand out to all that are interested? Just a thought and someone with more knowledge than me would have to do it.

[nsplayr]

Apparently USAA needs our help. This seems like it could be very gay.

New Legislation

Already sent my letter. USAA is one of my most used benefits of being in the military and I don't want that to change.

[Toro]

Isn't this important enough to be put under it's own "Topic heading" so it would stand out to all that are interested? Just a thought and someone with more knowledge than me would have to do it.

Agreed, I've split it to it's own topic. Here's some highlights from the e-mail sent out:

USAA is facing a serious challenge due to financial services legislation, known as S.3217, that is being considered by the U.S. Senate right now. We are reaching out to our members, employees and friends in an effort to share details about how the proposed legislation would impact USAA, and we are asking them to take action.

USAA is unique because we are a member-owned association that focuses on the needs of the military and their families. Please help us defend the association we share together. Contact your U.S. senators and urge them to amend a portion of the bill known as the "Volcker Rule," to eliminate its effect on a company like USAA.

The "Volcker Rule," as drafted in Section 619 of the Restoring American Financial Stability Act of 2010 ("the Senate bill"), gives regulators the discretion to limit and prohibit certain investment activities of financial services companies, like USAA. In particular, this bill directs regulators to prohibit government insured depository institutions from engaging in "proprietary trading," whereby a company trades for its own account. However, the reach of the bill extends beyond the bounds of a depository institution to its affiliates and subsidiaries. For insurers that own banks or thrifts, like USAA, this could mean that all of the investment activity essential to the running of the insurance operations would be significantly limited to investment in only government securities, despite these operations already being heavily regulated by state insurance regulators. The result would be that products that require more robust investments to support them would be limited to government securities, which do not earn enough to keep the cost of such products affordable.

To illustrate this effect, insurers collect premiums from customers in return for a promise to pay a possible future claim. During the time between the collection of premiums and the claims payout, the insurer takes those premium dollars and invests them in order to ensure that funds exist to pay later arising claims. By limiting an insurer's investments to government securities, that insurer may not be able to generate the income necessary to continue offering its products at affordable rates. This could then result in the need to charge higher premiums on policies and pay less favorable rates on annuities.

[Magellan]

Agreed, I've split it to it's own topic. Here's some highlights from the e-mail sent out:

For those who want the gouge just follow this link, enter your info and hit continue. No nasty surprises when you click this link at work either.

USAA Advocacy

Edited April 23, 2010 by Magellan

[slacker]

For those who want the gouge just follow this link, enter your info and hit continue. No nasty surprises when you click this link at work either.

USAA Advocacy

Link didn't work for me.

Edited April 23, 2010 by slacker

[slacker]

It worked for me. Emails sent.

I'll have to try at home.

[Guest Stoop]

Email sent! Thanks for the info.

[tunes]

sent

[rugger7]

Emails sent.

[B52gator]

I feel dirty asking Franken for help, but email was sent.

[scawtiedog]

Done.

[Herkdrvr]

I feel dirty asking Franken for help, but email was sent.

I wish I was that lucky...Boxer + Feinstein. Oh well, worth the 2 secs it took to e-mail.

[TacAirCoug]

I wish I was that lucky...Boxer + Feinstein. Oh well, worth the 2 secs it took to e-mail.

Ditto.

[Gravedigger]

Looks like we did our part...

May 19, 2010

Thank you for contacting me with your thoughts on Wall Street reform and its impact on USAA. I appreciate hearing from you on this issue.

As you know, the Restoring American Financial Stability Act of 2010 (S. 3217) includes a provision known as the "Volcker Rule," which seeks to remove conflicts of interest and safeguard bank customers by prohibiting traditional depository banks from engaging in the sorts of high-risk proprietary trading that caused the financial meltdown in 2008. Some Coloradans have raised concerns about the impact of this rule on USAA and its members.

You will be pleased to learn that I am an original cosponsor of an amendment offered by Senators Jeff Merkley and Carl Levin (S.Amdt. 3739 to S. 3217) which, among its many provisions, speaks to these concerns. This amendment would modify the "Volcker Rule" in S. 3217 so that it would not apply to the insurance arms of banks like USAA. I know that USAA provides a critical service to members of the U.S. military and their families, many of whom have specific financial needs that are best served by USAA's convenience and reliability. I too am wary of any potential negative effects on USAA's important services, and I am proud USAA has announced its support for S.Amdt. 3739.

As the economic crisis has shown, changes need to be made to modernize our financial regulatory system. Increased accountability for banks once deemed "too big to fail" is an important step in the reforms needed to ensure the stability of the U.S. economy. I want to see that the large Wall Street banks that helped create the financial crisis are held accountable and that American taxpayers are protected from ever having to bail out Wall Street again. We must also protect Coloradans' savings, investments and financial standing from unfair, deceptive and predatory practices.

I will continue to listen closely to what you and other Coloradans have to say about matters before Congress, the concerns of our communities, and the issues facing Colorado and the nation. My job is not about merely supporting or opposing legislation; it is also about bridging the divide that has paralyzed our nation's politics. For more information about my positions and to learn how my office can assist you, please visit my website at www.markudall.senate.gov.

Warm regards,

Signature

Mark Udall

U.S. Senator, Colorado

MEU/hpd

[NHbound]

Also got this today...

Dear Friend,

Thank you for contacting my office about pending financial services reform legislation and its impact on USAA. I know that USAA provides a number of vital services to members of our armed forces and their families. I appreciate hearing from you about this important issue.

We now know that proprietary trading at large Wall Street banks was a major contributor to the financial crisis of late 2008. Proprietary trading refers to a financial institution's use of its capital to make investments and generate revenue. This practice exposes financial firms - and money entrusted to them by their clients - to considerable amounts of risk.

Lehman Brothers is an example of a firm ruined by proprietary trading. By 2007, the firm's proprietary trading accounted for 58% of its total revenues. When the value of its holdings declined in 2008, Lehman Brothers lost $32 billion - almost double the $18 billion in common equity the firm had at that time. By September 2008, Lehman Brothers had become the largest bankruptcy in our nation's history.

The Restoring American Financial Stability Act (RAFSA) presently being considered by the Senate includes a provision that is known as the "Volcker Rule." The Volcker Rule would prohibit companies that control insured deposits, like bank accounts, from engaging in proprietary trading. Although the drafters of RAFSA did not intend to interfere with traditional banking and insurance activities like those performed by USAA, many have expressed concern that the bill's general grant of authority could negatively impact USAA's business model.

I am a co-sponsor of an amendment to RAFSA drafted by Senators Jeff Merkley and Carl Levin that would exempt USAA from the Volcker Rule. While USAA does make investments with its capital as a normal part of its insurance business, these investments are tightly regulated at the state level. I recognize that USAA was not engaged in the same type of risky investment activities as many Wall Street firms, and believe the Merkley-Levin amendment appropriately focuses the Volcker Rule's restrictions on proprietary trading that threatens investors.

Thank you for sharing your thoughts with me; I will have them in mind as the Senate continues its work on bank regulatory reform. Please do not hesitate to contact my office with future concerns.

Sincerely,

Jeanne Shaheen

United States Senator