US TREASURY SAYS THAT TERRORISM BACKSTOP NEEDS PARING

The US terrorism risk insurance act (TRIA), which created the federal insurance backstop against foreign terrorist attacks, should not be extended beyond its end-2005 expiration unless it is sharply scaled back, according to a report by the US treasury department. TRIA runs the risk of hurting taxpayers and hindering development of the private insurance market for terrorism risks, the report said. “Consistent with its original purpose as a temporary programme scheduled to end December 31, 2005, and the need to encourage further development of the private market, the [Bush] administration opposes the extension of TRIA in its current form”, said treasury secretary John Snow. Congress passed TRIA for a span of three years to promote recovery of the US property insurance and real estate markets in the wake of the September 11 terrorist attacks. Congress had been awaiting the treasury’s report before deciding on TRIA’s extension. Following the airing of the report, Senate banking committee chairman Richard Shelby said that an extension of the TRIA programme “should be narrow, targeted and minimise interference with our markets”. The committee plans to convene a hearing on the treasury report next month. House financial services committee chairman Michael Oxley said that “a simple extension of the programme is not in the best interest of American consumers or the economy”, adding that Congress would decide TRIA’s fate before year-end.