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114th Congress    }                                  {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                  {        114-831

======================================================================



 
              TRANSPARENT INSURANCE STANDARDS ACT OF 2016

                                _______
                                

 November 22, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 5143]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 5143) to provide greater transparency and 
congressional oversight of international insurance standards 
setting processes, and for other purposes, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Transparent Insurance Standards Act of 
2016''.

SEC. 2. CONGRESSIONAL FINDINGS.

  The Congress finds the following:
          (1) The State-based system for insurance regulation in the 
        United States has served American consumers well for more than 
        150 years and has fostered an open and competitive marketplace 
        with a diversity of insurance products to the benefit of 
        policyholders and consumers.
          (2) Protecting policyholders by regulating to ensure an 
        insurer's ability to pay claims has been the hallmark of the 
        successful United States system and should be the paramount 
        objective of domestic prudential regulation and emerging 
        international standards.
          (3) United States officials participating in discussions or 
        negotiations regarding international insurance standards shall 
        support standards designed for the protection of policyholders.
          (4) The Secretary of the Treasury shall seek advice and 
        recommendations from a diverse group of outside experts in 
        performing the duties and authorities of the Secretary to 
        coordinate Federal efforts and develop Federal policy on 
        prudential aspects of international insurance matters.
          (5) The draft of the Higher Loss Absorbency capital standard 
        adopted in 2015 by the International Association of Insurance 
        Supervisors, notwithstanding the concerns of U.S. parties to 
        the International Association of Insurance Supervisors, 
        unequally affects insurance products offered in the United 
        States, an issue that must be addressed.
          (6) Any international standard agreed to at the International 
        Association of Insurance Supervisors is not self-executing in 
        the United States for any insurer until implemented through the 
        required Federal or State legislative or regulatory process.

SEC. 3. OBJECTIVES FOR INTERNATIONAL INSURANCE STANDARDS.

  The objectives of the United States regarding international insurance 
standards are as follows:
          (1) To ensure standards that maintain strong protection of 
        policy holders, as reflected in the United States solvency 
        regime.
          (2) To ensure, pursuant to enactment of the Insurance Capital 
        Standards Clarification Act of 2014 (Public Law 113-279), 
        standards that are appropriate for insurers and are not bank-
        centric in nature.
          (3) To promote a principles-based approach to insurance 
        supervision, in which capital adequacy is assessed using risk-
        based capital requirements for insurance combined with 
        qualitative risk assessment and management tools.
          (4) To consider the most efficient and least disruptive 
        approaches to enhancing regulatory assessment of the capital 
        adequacy of insurance groups, including tools that are already 
        in place.
          (5) To ensure that any international insurance standard 
        recognizes prudential measures used within the United States as 
        satisfying standards finalized by international standard-
        setting organizations.
          (6) To support increasing transparency at any global 
        insurance or international standard-setting organization in 
        which the United States participates, including advocating for 
        greater stakeholder public observer access to working groups 
        and committee meetings of the International Association of 
        Insurance Supervisors.
          (7) To ensure that there is a sufficient period for public 
        consultation and comment regarding any proposed international 
        insurance standard before it takes effect.
          (8) To ensure that the Secretary of the Treasury and the 
        Board of Governors of the Federal Reserve System achieve 
        consensus positions with State insurance commissioners when the 
        Secretary and the Board are United States participants in 
        discussions on insurance issues before the International 
        Association of Insurance Supervisors, Financial Stability 
        Board, or any other international forum of financial regulators 
        or supervisors that considers such issues.
          (9) To consider the impact of any such standard on the 
        availability and cost of products to consumers.
          (10) To avoid measures that could limit the availability and 
        accessibility of risk protection and retirement security 
        products that are essential to meeting the needs of aging 
        populations.
          (11) To ensure that the merits of existing State-based 
        capital standards are recognized and incorporated in any 
        domestic or global insurance capital standard.
          (12) To advocate for insurance regulatory standards that are 
        based on the nature, scale, and complexity of the risks posed 
        by the regulated insurance group and entity or activity.

SEC. 4. REQUIREMENTS FOR CONSENT TO ADOPT INTERNATIONAL INSURANCE 
                    STANDARDS.

  (a) Publication of Standards; Adoption of Capital and Prudential 
Standards.--The United States may not agree to, accept, establish, 
enter into, or consent to the adoption of a final international 
insurance standard with an international standard-setting organization 
or a foreign government, authority, or regulatory entity unless the 
requirements under both of the following paragraphs are complied with:
          (1) Publication.--The requirements under this paragraph are 
        complied with if the conditions under one of the following 
        subparagraphs have been met:
                  (A) By federal reserve and treasury.--The Chairman of 
                the Board of Governors of the Federal Reserve System 
                and the Secretary of the Treasury have caused the 
                proposed text of the proposed final international 
                insurance standard to be published in the Federal 
                Register and made available for public comment for a 
                period of not fewer than 30 days (which period may run 
                concurrently with the 90-day period referred to in 
                subsection (b)(3)).
                  (B) By state insurance commissioners.--The State 
                insurance commissioners have caused the proposed text 
                of the proposed international insurance standard to be 
                published in a similar form and manner that provides 
                for notice and public comment.
          (2) Capital standard.--In the case only of a final 
        international insurance standard setting forth any capital 
        standard or standards for insurers--
                  (A) such international capital standard is consistent 
                with capital requirements set forth in the State-based 
                system of insurance regulation;
                  (B) the Board has issued capital requirements for 
                insurance companies supervised by the Board and subject 
                to such requirements, which shall be issued through 
                rulemaking in accordance with the procedures 
                established under section 553 of title 5, United States 
                Code, regarding substantive rules, under which the 
                periods for notice and public comment shall each have a 
                duration of not fewer than 60 days; and
                  (C) to the extent that such international capital 
                standard is intended to be applied to a company or 
                companies supervised by the Board of Governors of the 
                Federal Reserve System, is consistent with the capital 
                requirements of the Board for such companies.
  (b) Submission and Layover Provisions.--The Secretary and the Board 
may not agree to, accept, establish, enter into, or consent to the 
adoption of an international insurance standard established through an 
international standard-setting organization or a foreign government, 
authority, or regulatory entity unless--
          (1) the Secretary and the Board have--
                  (A) conducted an analysis under subsection (c) of the 
                proposed international insurance standard; and
                  (B) submitted to the covered congressional 
                committees, on a day on which both Houses of Congress 
                are in session, a copy of the proposed final text of 
                the proposed international insurance standard and the 
                report required under subsection (c)(2) regarding such 
                analysis;
          (2) the Secretary and the Chairman of the Board have 
        determined, pursuant to such analysis, that the proposed 
        standard will not result in any change in State law;
          (3) with respect to a capital standard under subsection 
        (a)(2), the Secretary and the Chairman of the Board certify 
        that the proposed international capital standard is designed 
        solely to help ensure that sufficient funds are available to 
        pay claims to an insurer's policyholders in the event of the 
        liquidation of that entity; and
          (4) a period of 90 calendar days beginning on the date on 
        which the copy of the proposed final text of the standard is 
        submitted to the covered congressional committees under 
        paragraph (1)(B) has expired, during which period the Congress 
        may take action to approve or reject such final standard.
  (c) Joint Analysis by Chair of the Federal Reserve and Secretary of 
the Treasury.--
          (1) In general.--An analysis under this subsection of a 
        proposed final international insurance standard shall be an 
        analysis conducted by the Secretary and the Chairman of the 
        Board of Governors of the Federal Reserve System, in 
        consultation with the State insurance commissioners, of the 
        impact of such standard on consumers and markets in the United 
        States and whether any changes in State law will result from 
        such final standard.
          (2) Report.--Upon completion of an analysis under this 
        subsection of a final international insurance standard, the 
        Secretary and the Board shall submit a report on the results of 
        the analysis to the covered congressional committees and the 
        Comptroller General of the United States. The report shall 
        include a statement setting forth the determination made 
        pursuant to paragraph (1) regarding any changes in State law 
        resulting from such final standard.
          (3) Notice and comment.--
                  (A) Notice.--The Secretary and the Chairman of the 
                Board of Governors of the Federal Reserve System shall 
                provide notice before the date on which drafting the 
                report is commenced and after the date on which the 
                draft of the report is completed.
                  (B) Opportunity for comment.--There shall be an 
                opportunity for public comment for a period beginning 
                on the date on which the report is submitted under 
                paragraph (2) and ending on the date that is not fewer 
                than 60 days after the date on which the report is 
                submitted. Nothing in this subparagraph shall affect 
                the authority of the Board to issue the rule referred 
                to in subsection (a)(2).
          (4) Review by comptroller general.--Upon submission of a 
        report pursuant to paragraph (2) to the Comptroller General, 
        the Comptroller General shall review the report and shall 
        submit a report to the Congress setting forth the conclusions 
        of the Comptroller General's review.
  (d) Limited Effect.--This section may not be construed to establish 
or expand any authority to implement an international insurance 
standard in the United States or for the United States or any 
representative of the Federal Government to adopt or enter into any 
international insurance standard.
  (e) Treatment of State Law.--In accordance with the Act of March 9, 
1945 (Chapter 20; 59 Stat. 33; 15 U.S.C. 1011 et seq.), commonly 
referred to as the ``McCarran-Ferguson Act'', this section may not be 
construed to preempt State law.

SEC. 5. REPORTS.

  (a) Reports and Testimony by Secretary of the Treasury and Chair of 
the Federal Reserve.--The Secretary and the Chairman of the Board of 
Governors of the Federal Reserve System shall submit to the covered 
congressional committees an annual report and provide testimony, not 
less often than every 6 months, to the covered congressional committees 
on the efforts of the Secretary and the Chairman with the State 
insurance commissioners with respect to international insurance 
standard-setting organizations and international insurance standards, 
including--
          (1) a description of the insurance standard-setting issues 
        under discussion at international standard-setting bodies, 
        including the Financial Stability Board and the International 
        Association of Insurance Supervisors;
          (2) a description of the effects that international insurance 
        standards could have on consumers and insurance markets in the 
        United States;
          (3) a description of any position taken by the Secretary and 
        the Board in international insurance discussions or on any 
        international insurance standard;
          (4) a description of the efforts by the Secretary and the 
        Board to increase transparency and accountability at the 
        Financial Stability Board with respect to insurance proposals 
        and the International Association of Insurance Supervisors, 
        including efforts to provide additional public access to 
        working groups and committees of the International Association 
        of Insurance Supervisors; and
          (5) a description of how the Secretary and the Board are 
        meeting the objectives set forth in section 3, or, if such 
        objectives are not being met, an explanation of the reasons for 
        not meeting such objectives.
  (b) Reports and Testimony by State Insurance Commissioners.--The 
State insurance commissioners may provide testimony or reports to the 
Congress on the issues described in subsection (a).
  (c) Report on Transparency.--Not later than 180 days after the date 
of enactment of this Act, the Chairman of the Board of Governors of the 
Federal Reserve System and the Secretary shall submit to the Congress a 
report and provide testimony to the Congress on the efforts of the 
Chairman and the Secretary pursuant to subsection (a)(4) of this 
section to increase transparency at meetings of the International 
Association of Insurance Supervisors.
  (d) GAO Report on Transparency of Outside Organizations.--
          (1) In general.--Not later than one year after the date of 
        enactment of this Act, the Comptroller General of the United 
        States shall submit to the covered congressional committees a 
        report, and provide testimony to such committees, identifying 
        and analyzing the transparency and accountability of any 
        organization acting as a designee of, or at the direction of, 
        the head of a State insurance department on issues related to 
        international insurance standards, which is not employed 
        directly by the State.
          (2) Content.--The report and testimony required under this 
        section shall include a description and analysis of--
                  (A) the role, involvement, or relationship, of any 
                organization identified pursuant to paragraph (1), of, 
                with, or to the State insurance departments' activities 
                as authorized by, directed by, or otherwise referred to 
                in this Act, including a description and analysis 
                regarding such organization's participation in policy 
                and decision-making deliberations and activities 
                related to international insurance standards;
                  (B) any financial support provided by such 
                organization to any State insurance department 
                personnel in furtherance of their activities related to 
                international insurance standards, the nature and 
                amount of such support, and any understandings between 
                the organization and the State regarding travel 
                protocols and State laws governing State officials' 
                receipt of, benefitting from, or being subsidized by, 
                outside funds;
                  (C) the budget, including revenues and expenses, of 
                any organization identified pursuant to paragraph (1) 
                relating to participation in international insurance 
                discussions on issues before, involving, or relating to 
                the International Association of Insurance Supervisors, 
                the Financial Stability Board, or any other 
                international forum of financial regulators or 
                supervisors that considers such issues, and how the 
                organization collects money to fund such activities;
                  (D) whether each such budget of such an organization 
                is developed under a process comparable in its 
                transparency and accountability to the process under 
                which budgets are developed and appropriated for State 
                departments of insurance and Federal executive branch 
                regulatory agencies, including--
                          (i) an identification of any bodies 
                        independent of the organization that set 
                        standards for and/or oversee that 
                        organization's budgeting process; and
                          (ii) a description of the extent to which and 
                        how the organization, in funding its 
                        operations, uses or benefits from its members' 
                        ability to compel entities subject to its 
                        members' regulatory authority to use the 
                        services of the organization or any of its 
                        affiliates; and
                  (E) the extent to which the work product of any 
                organization identified pursuant to paragraph (1)has 
                the effect of establishing any self-executing national 
                standards, and in what way, and whether such standards 
                are developed under processes comparable in their 
                transparency and accountability to the process under 
                which national standards are developed by the Congress 
                or Federal executive branch agencies.

SEC. 6. DEFINITIONS.

  In this Act:
          (1) Board.--The term ``Board'' means the Board of Governors 
        of the Federal Reserve System, or the designee of the Board.
          (2) Covered congressional committees.--The term ``covered 
        congressional committees'' means the Committee on Financial 
        Services of the House of Representatives and the Committee on 
        Banking, Housing and Urban Affairs of the Senate.
          (3) International insurance standard.--The term 
        ``international insurance standard'' means any international 
        insurance supervisory standard developed by an international 
        standards setting organization, or regulatory or supervisory 
        forum, in which the United States participates, including the 
        Common Framework for the Supervision of Internationally Active 
        Insurance Groups, the Financial Stability Board, and the 
        International Association of Insurance Supervisors.
          (4) Secretary.--The term ``Secretary'' means the Secretary of 
        the Treasury, or the Secretary's designee.
          (5) State insurance commissioners.--The term ``State 
        insurance commissioners'' means the heads of the State 
        insurance departments or their designees acting at their 
        direction.

SEC. 7. TREATMENT OF COVERED AGREEMENTS.

  Section 314 of title 31, United States Code is amended--
          (1) in subsection (c)--
                  (A) by redesignating paragraphs (1) and (2) as 
                paragraphs (2) and (3), respectively; and
                  (B) by inserting before paragraph (2), as so 
                redesignated, the following new paragraph:
          ``(1) the Secretary of the Treasury and the United States 
        Trade Representative have caused to be published in the Federal 
        Register, and made available for public comment for a period of 
        not fewer than 30 days (which period may run concurrently with 
        the 90-day period for the covered agreement referred to in 
        paragraph (3)), the proposed text of the covered agreement;''; 
        and
          (2) by adding at the end the following new subsections:
  ``(d) Consultation With State Insurance Commissioners.--In any 
negotiations regarding a contemplated covered agreement, the Secretary 
and the United States Trade Representative shall consult with and 
directly include State insurance commissioners.
  ``(e) Prohibition on Regulatory Authority.--In accordance with 
subsections (k) and (l) of section 313, a covered agreement shall not 
be used to establish or provide the Federal Insurance Office or the 
Treasury with any general supervisory or regulatory authority over the 
business of insurance or with the authority to participate in a 
supervisory college or similar process.
  ``(f) Treatment Under Other Law.--A covered agreement shall not be 
considered an international insurance standard for purposes of the 
Transparent Insurance Standards Act of 2016 and shall not be subject to 
such Act.''.

SEC. 8. DUTIES OF INDEPENDENT MEMBER OF FINANCIAL STABILITY OVERSIGHT 
                    COUNCIL.

  Subsection (a) of section 112 of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (12 U.S.C. 5322(a)) is amended by adding at 
the end the following new paragraph:
          ``(3) Duties of independent member.--To assist the Council 
        with its responsibilities to monitor international insurance 
        developments, advise Congress, and make recommendations, the 
        Independent Member of the Council shall have the authority to--
                  ``(A) regularly consult with international insurance 
                supervisors and international financial stability 
                counterparts;
                  ``(B) consult with, advise, and assist the Secretary 
                of the Treasury with respect to representing the 
                Federal Government of the United States, as 
                appropriate, in the International Association of 
                Insurance Supervisors (including to become a non-voting 
                member thereof), particularly on matters of systemic 
                risk, and to consult with the Board of Governors of the 
                Federal Reserve System and the States concerning such 
                matters;
                  ``(C) attend the Financial Stability Board of The 
                Group of Twenty and join with other members from the 
                United States, including on matters related to 
                insurance and financial stability, and provide for the 
                attendance and participation at such Board, on matters 
                related to insurance and financial stability, of State 
                insurance commissioners; and
                  ``(D) attend, with the United States delegation, the 
                Organization for Economic Cooperation and Development 
                and observe and participate at the Insurance and 
                Private Pensions Committee of such Organization on 
                matters related to insurance and financial 
                stability.''.

SEC. 9. STATE INSURANCE REGULATOR INVOLVEMENT IN INTERNATIONAL STANDARD 
                    SETTING.

  Parties representing the United States at the Financial Stability 
Board of the Group of Twenty on matters, and in meetings, related to 
insurance and financial stability shall consult with, and seek to 
include in such meetings, the State insurance commissioners.

SEC. 10. RULE OF CONSTRUCTION.

  Nothing in this Act or the amendments made by this Act may be 
construed to support or endorse the domestic capital standard for 
insurers referred to in section 4(a)(2) or any such domestic capital 
standards established by the Board.

                          Purpose and Summary

    H.R. 5143, the ``Transparent Insurance Standards Act of 
2016,'' enhances Congress's oversight of international 
deliberations relating to insurance standards. More 
specifically, the legislation establishes a series of 
requirements to be met before the Treasury Department or the 
Federal Reserve (Fed) may agree to, accept, establish, enter 
into or consent to the adoption of a final international 
insurance standard.
    First, the Treasury and the Fed must publish in the Federal 
Register, any proposed final standard and allow for public 
comment. In so doing, the agencies must provide a joint 
analysis on the impact of the standard on consumers and U.S. 
insurance markets. Before agreeing to any international 
standard relating to capital, the Fed is required to first 
promulgate its domestic capital standard rule. H.R. 5143 
imposes similar requirements for negotiations concerning 
covered agreements. The legislation sets negotiating objectives 
for U.S. parties and also mandates that the Secretary of the 
Treasury and the Chairman of the Board of Governors of the Fed 
report and testify to Congress twice annually. Finally, H.R. 
5143 helps to ensure that the Financial Stability Oversight 
Council's (FSOC) Independent Member with Insurance Expertise is 
permitted to assist the FSOC in international discussions and 
attend meetings of international bodies where insurance 
standards are discussed.

                  Background and Need for Legislation

    For nearly 150 years, U.S. insurance companies of every 
kind--including property-casualty, life, reinsurance, health, 
and auto--have been regulated primarily by the states. Congress 
and the states have occasionally reviewed the effectiveness of 
the state-based regulation of insurance and coordinated efforts 
to achieve greater regulatory uniformity. In 1945, Congress 
passed the McCarran-Ferguson Act (15 U.S.C. Sec. Sec. 1011 et 
seq.), which confirmed the states' regulatory authority over 
insurance except where a federal law expressly provides 
otherwise.
    The Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Pub. L. No. 111-203) enlarged the federal government's 
role in the insurance industry by creating a federal office 
specifically tasked with insurance matters. The Dodd-Frank Act 
established a Federal Insurance Office (FIO) at Treasury and 
charged the director of the FIO with representing the interests 
of U.S. insurers during the negotiation of international 
agreements and advising the Office of the U.S. Trade 
Representative (USTR) during trade negotiations.
    The Dodd-Frank Act brought insurers, insurance holding 
companies, and insurance subsidiaries within the purview of the 
newly created FSOC, a 15-member inter-agency group charged with 
identifying risks to the financial stability of the United 
States. The Dodd-Frank Act requires that three of the FSOC's 
members represent the perspective of the insurance industry. 
The Dodd-Frank Act also grants the Fed regulatory authority 
over non-bank institutions designated by the FSOC as 
systemically important and transferred to the Fed supervisory 
responsibility for savings and loan holding companies, a group 
that includes numerous U.S.-domiciled insurers. It is this 
authority that provides for the imposition of a capital 
standard on domestic insurance companies, currently being 
discussed at the Fed. Even though the Dodd-Frank Act expanded 
the federal government's oversight of the insurance industry, 
it also preserved the states' general authority to regulate 
insurance and to resolve failed insurance firms.
    H.R. 5143 addresses concerns that international 
negotiations should be consistent with the intent of Congress 
on international issues to follow a more insurance centric 
approach for insurance issues, including collaborating with the 
state insurance regulators and seeking greater equivalent 
recognition of the U.S. insurance regulatory system 
internationally. Hence, H.R. 5143 would create a more 
formalized role for Congressional monitoring of international 
standards and agreements. The legislation would establish a 
series of requirements to be met before FIO, the Fed, or any 
other party to these international conversations could consent 
to the adoption of a final insurance standard. Moreover, 
similar standards would be set for negotiations on covered 
agreements, including the covered agreement currently being 
negotiated with the European Union.
    H.R. 5143 also outlines a more robust role for the FSOC 
Independent Member with Insurance Expertise, strengthening U.S. 
negotiators and its ability to advocate for the policies that 
suit U.S. insurance markets and consumers.
    H.R. 5143 will provide for greater transparency, allow for 
a stronger U.S. negotiation team, and indicate to foreign 
bodies that the United States will lead and not be led.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Housing & Insurance held a hearing examining matters relating 
to H.R. 5143 on February 25, 2016.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 15 and 16, 2016 to consider the bill. An amendment in the 
nature of a substitute offered by Mr. Luetkemeyer was agreed to 
by voice vote. An amendment to the amendment in the nature of a 
substitute, offered by Mr. Royce, was agreed to by voice vote. 
An amendment to the amendment in the nature of a substitute, 
offered by Mr. Heck, was withdrawn. The Committee ordered H.R. 
5143 to be reported favorably to the House as amended by a 
recorded vote of 34 yeas to 25 nays (recorded vote no. FC-115), 
a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 34 yeas to 25 nays (Record 
vote no. FC-115), a quorum being present.
{GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 5143 
will provide for Congressional oversight of international 
negotiations concerning insurance matters by creating a more 
formalized role for such oversight.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 31, 2016.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5143, the 
Transparent Insurance Standards Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5143--Transparent Insurance Standards Act of 2016

    H.R. 5143 would require the Department of the Treasury and 
the Federal Reserve to provide additional reports and testimony 
to the Congress on international negotiations regarding 
regulatory standards in the insurance industry. Before agreeing 
to or adopting such standards, the bill would require that the 
Treasury and the Federal Reserve publish any proposed final 
standard, allow for public comment, and report to the Congress 
on the impact of those standards on U.S. consumers, markets, 
and state laws. The bill also would require the Federal Reserve 
to promulgate a rule on domestic capital standards before 
agreeing to any international standard related to capital 
standards for insurance firms. Finally, H.R. 5143 would require 
the Government Accountability Office (GAO) to review those 
reports on insurance regulations.
    Based on information provided by the Federal Reserve, CBO 
estimates that enacting H.R. 5143 would increase costs to the 
Federal Reserve System for conducting the required analysis and 
for preparing reports and testimony. Those increased costs 
would reduce revenues paid to the Treasury by the Federal 
Reserve by $7 million over the 2017-2026 period; therefore pay-
as-you-go procedures apply. Those changes are shown in the 
following table. Enacting the bill would not affect direct 
spending.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5143 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JUNE 16, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              By fiscal year, in millions of dollars--
                                           -------------------------------------------------------------------------------------------------------------
                                             2016    2017    2018    2019    2020    2021    2022    2023    2024    2025    2026   2016-2021  2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact............       0       0       1       1       1       1       1       1       1       1       1         3          7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition, based on information from the Treasury and the 
cost of similar activities, CBO estimates that implementing 
H.R. 5143 would cost $1 million in 2017 and less than $500,000 
in subsequent years for the GAO report and the reporting 
requirements related to international standards. Such spending 
would be subject to the availability of appropriated amounts.
    CBO estimates that enacting H.R. 5143 would not increase 
net direct spending or on-budget deficits by more than $5 
billion in any of the four consecutive 10-year periods 
beginning in 2027.
    H.R. 5143 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contacts for this estimate are Matthew 
Pickford (for federal costs) and Nathaniel Frentz (for 
revenues). The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 5143 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 5143 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 5143 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 5143 as the ``Transparent Insurance 
Standards Act of 2016''.

Section 2. Congressional findings

    This section sets forth Congressional findings concerning 
insurance regulatory matters.

Section 3. Objectives for international insurance standards

    This section establishes 12 objectives of the United States 
regarding international insurance standards.

Section 4. Requirements for consent to adopt international insurance 
        standards

    This section prohibits the United States from agreeing to a 
final international insurance standard with an international 
standard-setting organization or foreign government or 
authority absent a public notice-and-comment period. Further, 
the United States may not agree to an international insurance 
standard adopting a capital standard unless (1) such standard 
is consistent with State-based capital requirements and (2) the 
Fed has issued capital requirements for insurance companies it 
supervises and the international standard is consistent with 
such Fed-issued requirements. Additionally, this section 
requires submission to Congress of a copy of the proposed final 
text of the international insurance standard together with a 
report on the standard's impact on State-based insurance 
regulation; certification that such standard will not result in 
any change in State law; and, with respect to an international 
standard proposing a capital standard, certification that the 
proposal is designed solely to help ensure that sufficient 
funds are available to pay claims to an insurer's policyholders 
in the event of the liquidation of that entity. Finally, this 
section provides that the above-described report must be 
subject to public notice and comment as well as review by the 
Comptroller General, and that the United States may not agree 
to an international insurance standard within 90 days of 
submitting the proposed text of the standard to Congress.

Section 5. Reports

    This section requires the Treasury Secretary and the Fed 
Chairman to submit an annual report and testify at least every 
six months concerning efforts with state insurance 
commissioners with respect to international insurance standard-
setting organizations and international insurance standards. 
This section also requires a report and congressional testimony 
on efforts by the Fed Chairman and Treasury Secretary to 
increase transparency at meetings of the International 
Association of Insurance Supervisors. Finally, this section 
requires that the Comptroller General report and testify 
concerning the transparency and accountability of outside 
organizations acting on behalf of the heads of State insurance 
departments on issues related to international insurance 
standards.

Section 6. Definitions

    This section defines the terms ``Board,'' ``Covered 
Congressional Committees,'' ``International Insurance 
Standard,'' ``Secretary,'' and ``State Insurance 
Commissioners.''

Section 7. Treatment of covered agreements

    This section establishes public notice and comment 
requirements for covered agreements; requires that the Treasury 
Secretary and USTR consult with and directly include State 
insurance commissioners in negotiations regarding a 
contemplated covered agreement; prohibits such an agreement 
from being used to establish or provide FIO or Treasury with 
general supervisory or regulatory authority over the business 
of insurance or with the authority to participate in a 
supervisory college or similar process; and provides that a 
covered agreement shall not be considered an international 
insurance standard for purposes of the Transparent Insurance 
Standards Act of 2016.

Section 8. Duties of independent member of Financial Stability 
        Oversight Council

    This section provides the Independent Member with authority 
to, among other things, consult with international insurance 
supervisors and international financial stability counterparts; 
assist in the representation of the United States in the 
International Association of Insurance Supervisors; and attend 
and participate in insurance and financial stability matters 
before the Financial Stability Board of The Group of Twenty and 
the Organization for Economic Cooperation and Development.

Section 9. State insurance regulator involvement in international 
        standard setting

    This section requires that parties representing the United 
States in international for a relating to insurance and 
financial stability consult with and seek to include in such 
meetings the State insurance commissioners.

Section 10. Rule of construction

    This section provides that nothing in this Act or its 
amendments supports or endorses the domestic capital standard 
for insurers referred to in section 4(a)(2) or any such 
domestic capital standards established by the Board.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 31, UNITED STATES CODE




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SUBTITLE I--GENERAL

           *       *       *       *       *       *       *


CHAPTER 3--DEPARTMENT OF THE TREASURY

           *       *       *       *       *       *       *



SUBCHAPTER I--ORGANIZATION

           *       *       *       *       *       *       *



Sec. 314. Covered agreements

  (a) Authority.--The Secretary and the United States Trade 
Representative are authorized, jointly, to negotiate and enter 
into covered agreements on behalf of the United States.
  (b) Requirements for Consultation With Congress.--
          (1) In general.--Before initiating negotiations to 
        enter into a covered agreement under subsection (a), 
        during such negotiations, and before entering into any 
        such agreement, the Secretary and the United States 
        Trade Representative shall jointly consult with the 
        Committee on Financial Services and the Committee on 
        Ways and Means of the House of Representatives and the 
        Committee on Banking, Housing, and Urban Affairs and 
        the Committee on Finance of the Senate.
          (2) Scope.--The consultation described in paragraph 
        (1) shall include consultation with respect to--
                  (A) the nature of the agreement;
                  (B) how and to what extent the agreement will 
                achieve the applicable purposes, policies, 
                priorities, and objectives of section 313 and 
                this section; and
                  (C) the implementation of the agreement, 
                including the general effect of the agreement 
                on existing State laws.
  (c) Submission and Layover Provisions.--A covered agreement 
under subsection (a) may enter into force with respect to the 
United States only if--
          (1) the Secretary of the Treasury and the United 
        States Trade Representative have caused to be published 
        in the Federal Register, and made available for public 
        comment for a period of not fewer than 30 days (which 
        period may run concurrently with the 90-day period for 
        the covered agreement referred to in paragraph (3)), 
        the proposed text of the covered agreement;
          [(1)] (2) the Secretary and the United States Trade 
        Representative jointly submit to the congressional 
        committees specified in subsection (b)(1), on a day on 
        which both Houses of Congress are in session, a copy of 
        the final legal text of the agreement; and
          [(2)] (3) a period of 90 calendar days beginning on 
        the date on which the copy of the final legal text of 
        the agreement is submitted to the congressional 
        committees under paragraph (1) has expired.
  (d) Consultation With State Insurance Commissioners.--In any 
negotiations regarding a contemplated covered agreement, the 
Secretary and the United States Trade Representative shall 
consult with and directly include State insurance 
commissioners.
  (e) Prohibition on Regulatory Authority.--In accordance with 
subsections (k) and (l) of section 313, a covered agreement 
shall not be used to establish or provide the Federal Insurance 
Office or the Treasury with any general supervisory or 
regulatory authority over the business of insurance or with the 
authority to participate in a supervisory college or similar 
process.
  (f) Treatment Under Other Law.--A covered agreement shall not 
be considered an international insurance standard for purposes 
of the Transparent Insurance Standards Act of 2016 and shall 
not be subject to such Act.

           *       *       *       *       *       *       *

                              ----------                              


       DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT




           *       *       *       *       *       *       *
TITLE I--FINANCIAL STABILITY

           *       *       *       *       *       *       *


Subtitle A--Financial Stability Oversight Council

           *       *       *       *       *       *       *


SEC. 112. COUNCIL AUTHORITY.

  (a) Purposes and Duties of the Council.--
          (1) In general.--The purposes of the Council are--
                  (A) to identify risks to the financial 
                stability of the United States that could arise 
                from the material financial distress or 
                failure, or ongoing activities, of large, 
                interconnected bank holding companies or 
                nonbank financial companies, or that could 
                arise outside the financial services 
                marketplace;
                  (B) to promote market discipline, by 
                eliminating expectations on the part of 
                shareholders, creditors, and counterparties of 
                such companies that the Government will shield 
                them from losses in the event of failure; and
                  (C) to respond to emerging threats to the 
                stability of the United States financial 
                system.
          (2) Duties.--The Council shall, in accordance with 
        this title--
                  (A) collect information from member agencies, 
                other Federal and State financial regulatory 
                agencies, the Federal Insurance Office and, if 
                necessary to assess risks to the United States 
                financial system, direct the Office of 
                Financial Research to collect information from 
                bank holding companies and nonbank financial 
                companies;
                  (B) provide direction to, and request data 
                and analyses from, the Office of Financial 
                Research to support the work of the Council;
                  (C) monitor the financial services 
                marketplace in order to identify potential 
                threats to the financial stability of the 
                United States;
                  (D) to monitor domestic and international 
                financial regulatory proposals and 
                developments, including insurance and 
                accounting issues, and to advise Congress and 
                make recommendations in such areas that will 
                enhance the integrity, efficiency, 
                competitiveness, and stability of the U.S. 
                financial markets;
                  (E) facilitate information sharing and 
                coordination among the member agencies and 
                other Federal and State agencies regarding 
                domestic financial services policy development, 
                rulemaking, examinations, reporting 
                requirements, and enforcement actions;
                  (F) recommend to the member agencies general 
                supervisory priorities and principles 
                reflecting the outcome of discussions among the 
                member agencies;
                  (G) identify gaps in regulation that could 
                pose risks to the financial stability of the 
                United States;
                  (H) require supervision by the Board of 
                Governors for nonbank financial companies that 
                may pose risks to the financial stability of 
                the United States in the event of their 
                material financial distress or failure, or 
                because of their activities pursuant to section 
                113;
                  (I) make recommendations to the Board of 
                Governors concerning the establishment of 
                heightened prudential standards for risk-based 
                capital, leverage, liquidity, contingent 
                capital, resolution plans and credit exposure 
                reports, concentration limits, enhanced public 
                disclosures, and overall risk management for 
                nonbank financial companies and large, 
                interconnected bank holding companies 
                supervised by the Board of Governors;
                  (J) identify systemically important financial 
                market utilities and payment, clearing, and 
                settlement activities (as that term is defined 
                in title VIII);
                  (K) make recommendations to primary financial 
                regulatory agencies to apply new or heightened 
                standards and safeguards for financial 
                activities or practices that could create or 
                increase risks of significant liquidity, 
                credit, or other problems spreading among bank 
                holding companies, nonbank financial companies, 
                and United States financial markets;
                  (L) review and, as appropriate, may submit 
                comments to the Commission and any standard-
                setting body with respect to an existing or 
                proposed accounting principle, standard, or 
                procedure;
                  (M) provide a forum for--
                          (i) discussion and analysis of 
                        emerging market developments and 
                        financial regulatory issues; and
                          (ii) resolution of jurisdictional 
                        disputes among the members of the 
                        Council; and
                  (N) annually report to and testify before 
                Congress on--
                          (i) the activities of the Council;
                          (ii) significant financial market and 
                        regulatory developments, including 
                        insurance and accounting regulations 
                        and standards, along with an assessment 
                        of those developments on the stability 
                        of the financial system;
                          (iii) potential emerging threats to 
                        the financial stability of the United 
                        States;
                          (iv) all determinations made under 
                        section 113 or title VIII, and the 
                        basis for such determinations;
                          (v) all recommendations made under 
                        section 119 and the result of such 
                        recommendations; and
                          (vi) recommendations--
                                  (I) to enhance the integrity, 
                                efficiency, competitiveness, 
                                and stability of United States 
                                financial markets;
                                  (II) to promote market 
                                discipline; and
                                  (III) to maintain investor 
                                confidence.
          (3) Duties of independent member.--To assist the 
        Council with its responsibilities to monitor 
        international insurance developments, advise Congress, 
        and make recommendations, the Independent Member of the 
        Council shall have the authority to--
                  (A) regularly consult with international 
                insurance supervisors and international 
                financial stability counterparts;
                  (B) consult with, advise, and assist the 
                Secretary of the Treasury with respect to 
                representing the Federal Government of the 
                United States, as appropriate, in the 
                International Association of Insurance 
                Supervisors (including to become a non-voting 
                member thereof), particularly on matters of 
                systemic risk, and to consult with the Board of 
                Governors of the Federal Reserve System and the 
                States concerning such matters;
                  (C) attend the Financial Stability Board of 
                The Group of Twenty and join with other members 
                from the United States, including on matters 
                related to insurance and financial stability, 
                and provide for the attendance and 
                participation at such Board, on matters related 
                to insurance and financial stability, of State 
                insurance commissioners; and
                  (D) attend, with the United States 
                delegation, the Organization for Economic 
                Cooperation and Development and observe and 
                participate at the Insurance and Private 
                Pensions Committee of such Organization on 
                matters related to insurance and financial 
                stability.
  (b) Statements by Voting Members of the Council.--At the time 
at which each report is submitted under subsection (a), each 
voting member of the Council shall--
          (1) if such member believes that the Council, the 
        Government, and the private sector are taking all 
        reasonable steps to ensure financial stability and to 
        mitigate systemic risk that would negatively affect the 
        economy, submit a signed statement to Congress stating 
        such belief; or
          (2) if such member does not believe that all 
        reasonable steps described under paragraph (1) are 
        being taken, submit a signed statement to Congress 
        stating what actions such member believes need to be 
        taken in order to ensure that all reasonable steps 
        described under paragraph (1) are taken.
  (c) Testimony by the Chairperson.--The Chairperson shall 
appear before the Committee on Financial Services of the House 
of Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate at an annual hearing, after the 
report is submitted under subsection (a)--
          (1) to discuss the efforts, activities, objectives, 
        and plans of the Council; and
          (2) to discuss and answer questions concerning such 
        report.
  (d) Authority To Obtain Information.--
          (1) In general.--The Council may receive, and may 
        request the submission of, any data or information from 
        the Office of Financial Research, member agencies, and 
        the Federal Insurance Office, as necessary--
                  (A) to monitor the financial services 
                marketplace to identify potential risks to the 
                financial stability of the United States; or
                  (B) to otherwise carry out any of the 
                provisions of this title.
          (2) Submissions by the office and member agencies.--
        Notwithstanding any other provision of law, the Office 
        of Financial Research, any member agency, and the 
        Federal Insurance Office, are authorized to submit 
        information to the Council.
          (3) Financial data collection.--
                  (A) In general.--The Council, acting through 
                the Office of Financial Research, may require 
                the submission of periodic and other reports 
                from any nonbank financial company or bank 
                holding company for the purpose of assessing 
                the extent to which a financial activity or 
                financial market in which the nonbank financial 
                company or bank holding company participates, 
                or the nonbank financial company or bank 
                holding company itself, poses a threat to the 
                financial stability of the United States.
                  (B) Mitigation of report burden.--Before 
                requiring the submission of reports from any 
                nonbank financial company or bank holding 
                company that is regulated by a member agency or 
                any primary financial regulatory agency, the 
                Council, acting through the Office of Financial 
                Research, shall coordinate with such agencies 
                and shall, whenever possible, rely on 
                information available from the Office of 
                Financial Research or such agencies.
                  (C) Mitigation in case of foreign financial 
                companies.--Before requiring the submission of 
                reports from a company that is a foreign 
                nonbank financial company or foreign-based bank 
                holding company, the Council shall, acting 
                through the Office of Financial Research, to 
                the extent appropriate, consult with the 
                appropriate foreign regulator of such company 
                and, whenever possible, rely on information 
                already being collected by such foreign 
                regulator, with English translation.
          (4) Back-up examination by the board of governors.--
        If the Council is unable to determine whether the 
        financial activities of a U.S. nonbank financial 
        company pose a threat to the financial stability of the 
        United States, based on information or reports obtained 
        under paragraphs (1) and (3), discussions with 
        management, and publicly available information, the 
        Council may request the Board of Governors, and the 
        Board of Governors is authorized, to conduct an 
        examination of the U.S. nonbank financial company for 
        the sole purpose of determining whether the nonbank 
        financial company should be supervised by the Board of 
        Governors for purposes of this title.
          (5) Confidentiality.--
                  (A) In general.--The Council, the Office of 
                Financial Research, and the other member 
                agencies shall maintain the confidentiality of 
                any data, information, and reports submitted 
                under this title.
                  (B) Retention of privilege.--The submission 
                of any nonpublicly available data or 
                information under this subsection and subtitle 
                B shall not constitute a waiver of, or 
                otherwise affect, any privilege arising under 
                Federal or State law (including the rules of 
                any Federal or State court) to which the data 
                or information is otherwise subject.
                  (C) Freedom of information act.--Section 552 
                of title 5, United States Code, including the 
                exceptions thereunder, shall apply to any data 
                or information submitted under this subsection 
                and subtitle B.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    H.R. 5143, the ``Transparent Insurance Standards Act of 
2016,'' would prescribe strict negotiating objectives for 
United States representatives in international fora regarding 
international insurance standards, and would establish several 
new processes and reporting requirements to be completed before 
any standard could be agreed to. These requirements would add 
significant delays and limitations to the process for 
developing an international insurance capital standard, 
ultimately weakening the United States' ability to negotiate 
effectively for standards that best accommodate our unique 
regulatory regime.
    Following the 2008 financial crisis, and specifically after 
the near-collapse of American International Group, Inc. (AIG), 
the Wall Street Reform and Consumer Protection Act (Dodd-Frank) 
established a new supervisory and regulatory framework to 
examine financial stability for insurance companies both 
domestically and internationally. Dodd-Frank created the 
Federal Insurance Office (FIO), which is directed in part to 
``coordinate federal efforts and develop federal policy on 
prudential aspects of international insurance matters, 
including representing the United States, as appropriate, in 
the International Association of Insurance Supervisors (IAIS) 
and assisting the Secretary in negotiating covered 
agreements.'' Dodd-Frank also expanded the scope of the Federal 
Reserve's supervisory authority and it now serves as the 
consolidated supervisor of insurance holding companies that own 
federally chartered thrifts or banks, as well as non-bank 
systemically important financial institutions designated by the 
Financial Stability Oversight Council (FSOC).
    FIO, the Federal Reserve, and state insurance commissioners 
are all actively engaged at the IAIS and they regularly 
coordinate with one another, ensuring that each aspect of the 
unique United States regulatory regime is adequately 
represented in any international negotiation. Despite their 
effective coordination and extensive work thus far to improve 
global insurance regulation, H.R. 5143 stops this work in its 
tracks and puts in place cumbersome and counterproductive 
requirements.
    At best, H.R. 5143 is unnecessary because international 
insurance negotiations do not create binding U.S. law. Any such 
international agreement would only take effect domestically if 
regulations are promulgated by a federal or state regulator in 
accordance with U.S. law, including required notice and comment 
periods. At worst, H.R. 5143 is a harmful bill that includes 
requirements that are difficult if not impossible to achieve. 
For example, the bill requires the Treasury and Federal Reserve 
achieve ``consensus positions'' with state insurance regulators 
before any insurance-related negotiations or discussions with 
international regulators. Achieving a consensus position with 
more than 50 state commissioners is virtually impossible to 
achieve, which is one of the reasons that Dodd-Frank tasked FIO 
with representing the United States internationally.
    H.R. 5143 is also opposed by Americans for Financial 
Reform.
    Because this legislation would tie the hands of U.S. 
representatives, and prevent them from effectively negotiating 
on international insurance matters, the Minority opposes H.R. 
5143.

                                   Maxine Waters.
                                   Gwen Moore.
                                   Al Green.
                                   Keith Ellison.
                                   Stephen F. Lynch.
                                   Wm. Lacy Clay.

                                  [all]