July 23, 2018 - (updated on July 26, 2018) – It’s been quite a whirlwind in last two weeks as Congress considered its options for an extension of the National Flood Insurance Program (which terminates on July 31^st).  Loan market participants are keenly interested in the result because the current NFIP requires mandatory insurance for corporate borrowers and charges lenders with enforcing the mandate.  Loan market participants have been seeking to carve out the mandatory commercial insurance requirement as part of any extension of NFIP because it is burdensome and does not provide a meaningful amount of insurance in the context of middle market and broadly syndicated loans. ( For example, a loan to a company that owns an oil pipeline could be subject to the mandatory flood insurance requirements for valueless shacks that are part of the collateral package and are located in flood zones in multiple states all along the pipeline.  The costs of compliance far exceed the value of the insurance).  The relatively good news early last week was that there seemed to be momentum for a bipartisan agreement on a broad, long term extension that would include a number of important reforms.  Unfortunately for the loan market, the bad news was that the compromise would have left in place the mandatory commercial insurance requirement.  Then, late in the week, it became clear that the proposed compromise had fallen apart.  Politico reported that Jeb Hensarling (R. TX), chairman of the House Financial Services Committee gave up on a comprehensive fix for now and announced that the House would pass yet another clean, short term extension (until November 30^th) which it did with an overwhelming majority this Wednesday. Then, on Thursday the Senate agreed to vote next week on the same extension despite threats from Senator Mike Lee of Utah to derail it and force consideration of a real reform bill.  Ironically, the failure of Congress to reach a broad consensus theoretically gives loan market participants another shot at a carve out for mandatory commercial insurance but the chances of success, given its exclusion from the proposed compromise, appear to remain dim.  We will continue to follow and report on this important issue.