Senator says Fed is misreading Dodd-Frank

Sen. Susan CollinsSusan Margaret CollinsDemocrats search for 51st net neutrality vote Overnight Tech: States sue FCC over net neutrality repeal | Senate Dems reach 50 votes on measure to override repeal | Dems press Apple on phone slowdowns, kids' health | New Android malware found Overnight Regulation: Dems claim 50 votes in Senate to block net neutrality repeal | Consumer bureau takes first step to revising payday lending rule | Trump wants to loosen rules on bank loans | Pentagon, FDA to speed up military drug approvals MORE (R-Maine) on Tuesday accused the Federal Reserve of misinterpreting a piece of financial reform legislation she wrote four years ago.

Speaking to a Senate Banking subcommittee, Collins said the Fed has repeatedly shown disregard for an amendment she wrote as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.

Collins rallied Congress to adopt capital requirements for banks at the time, but said she never intended for the Fed to apply the same rules to insurers, because they have completely different business models that require their own, unique regulations.

“While the Federal Reserve has acknowledged the important distinctions between insurance and banking, it has repeatedly suggested that it lacks authority to take those distinctions into account when implementing the consolidated capital standards,” Collins testified at a hearing of the Senate financial institutions and consumer protection subcommittee.

“As I have already said,” Collins continued, “I do not agree that the Fed lacks this authority and find its disregard of my clear intent as the author [of the amendment] to be frustrating, to say the least.”

Collins said it is “improper” for insurers that are regulated by their respective states to instead face bank-centric federal regulations.

The senator wrote to the Fed in November 2012 to say as much, but the agency responded by saying it lacked the authority to regulate banks and insurers separately under her amendment. Collins has received wide bipartisan support from her colleagues, who say they agree the Fed took her intentions out of context.

Sen. Sherrod BrownSherrod Campbell BrownSenate campaign fundraising reports roll in Commerce sends Trump long-awaited steel report GOP Rep. Jim Renacci announces Ohio Senate bid MORE (D-Ohio), who led the hearing, said he is working with Collins on legislation that would clarify the Fed's role in regulating insurers.

“If the Fed continues to disagree, I am committed to working with Sen. Collins and Sen. [Mike] Johanns to find a legislative solution,” Brown said at the hearing.

Johanns (D-Neb.), Jon TesterJonathan (Jon) TesterEMILY’s List president: Franken did 'right thing for Minnesota' Reforming veterans health care for all generations of veterans Trump and Republicans deliver gift that keeps on giving for Americans MORE (D-Mont.) and Pat Toomey (R-Pa.) also expressed support for Collins' concerns.

“There is broad bipartisan agreement that providing traditional life and property and casualty insurance is different from banking,” Brown said.

“Capital rules must accurately measure and address the risks of the businesses to which they are being applied,” he added.