Rhode Island Senate Bill S2270

Rhode Island 2024 Regular Session

• Introduced: 2/12/24
• Refer: 2/12/24
• Report Pass: 5/28/24
• Engrossed: 6/4/24
• Enrolled: 6/6/24
• Passed: 6/17/24

Caption

Provides that no person, for over ten days, shall be restricted from enforcing a right under any pledge, security, credit, guarantee agreement, arrangement or other agreement credit enhancement to which a federal home loan bank is a party.

Impact

The implications of this bill on state law are significant as it introduces a more structured approach for managing the assets and liabilities of insurers undergoing rehabilitation or liquidation. By reinforcing the enforceability of rights under security agreements tied to federal home loan banks, S2270 is designed to stabilize interactions between these financial institutions and insolvent insurers, thereby intending to safeguard the interests of policyholders and creditors. This change could potentially lead to more efficient recoveries and better protection for stakeholders involved in such proceedings.

Summary

Bill S2270 addresses critical aspects of the Insurers' Rehabilitation and Liquidation Act in the state of Rhode Island. In particular, the bill stipulates that no individual shall be disproportionately restricted from exercising any rights under agreements connected to federal home loan banks for a duration exceeding ten days. This provision aims to protect the rights of stakeholders during financial distress situations for insurers, enhancing the regulatory framework surrounding insurance company rehabilitation and liquidation processes.

Contention

Notably, the bill raises pertinent discussions surrounding potential conflicts between state regulations and the operations of federal home loan banks, particularly regarding asset management during insolvency. Members of the legislative body have expressed varying viewpoints on whether the bill adequately balances the need for swift administrative action in insolvency situations against the risks posed to creditors and policyholders. Critics argue that the ten-day limit on restrictions might not provide sufficient time for comprehensive evaluations of each case, potentially leading to hasty decisions detrimental to other stakeholders.

Final_notes

Ultimately, S2270 represents an effort to refine the legal landscape governing insurance insolvencies within Rhode Island. With its focus on enhancing the powers of federal home loan banks in relation to insurers, it aims to foster a more predictable and reliable framework for stakeholders, although ongoing discussions in the legislature indicate that there may be adjustments or clarifications necessary as the bill progresses through the legislative process.