On Monday, after a three-day government shutdown, President Trump signed a temporary continuing resolution funding bill (“CR”) to keep the government running until February 8th. While most people following the shutdown drama focused on questions like whether soldiers would be paid, courts would stay open or regulatory agencies would function, an issue unrelated to government funding, important to the loan market but very much connected to the budget issue was the National Flood Insurance Program (“NFIP”).
As reported in Politico, on Tuesday the House of Representatives passed HR 2874, a series of bills that would extend the National Flood Insurance Program (NFIP), which is set to expire on December 8th, for five years. The good news? Section 202 of the bill would get rid of the current NFIP mandate that requires flood insurance on commercial properties. The not-so-good news? The carve-out for commercial properties is not scheduled to kick in until the beginning of 2019. Why is this important?
After years of regulatory barrage – which often inadvertently hit the leveraged loan market – the situation may have stabilized. In fact, we may even be heading to the point where reasonable FinReg fixes could be in the offing. And, perhaps surprisingly, regulatory refinements may be most likely to come from the regulators themselves. In January, President Trump signed an executive order (“EO”) laying out his core regulatory principles and requiring the Treasury to prepare reports identifying regulations that did not correspond to the core principles (and that were ripe for fixes).
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