Captive cell insurance in Vermont

Captive’s cell in Vermont
How about a snapshot-sized look at the state’s obscure captive insurance industry? Briefly, a captive insurance business is an insurance risk business controlled by a parent company. Worldwide Vermont places first with $135.4 billion assets under management and has the third largest number of licensed captive insurance entities. The traditional corporate tax havens of Bermuda and the Cayman Island are first and second. In Vermont it’s big, operates largely below the day to day radar, and changes are afoot.

Frequent regulatory tweaking of often little-noticed rules is the standard procedure in this business segment. Revisions are so common that the director of the financial services in the Vermont Department of Economic Development recently said “I think our enhancements to our captive law are an annual tradition,”

Contrasting starkly with what might be expected from regulators, especially after recent insurance and banking horrors, are accommodating remarks explaining how easily these changes happen. 2 Speaking of recent changes undertaken David Provost, Vermont's deputy commissioner of captive insurance said “Basically this was something that the industry requested. They[the industry] wanted to see the option to have incorporated protected cells.”

And they must want tax credits too! New laws will make permanent a first year premium tax credit of $7,500.00 per entity which had been temporarily in place for 18 months
Captive insurance corporations are financial risk management insurance companies which insure investments of parent companies. Captive cells and individual cells are separate enterprises but through various forms of entanglement remain connected with their captive or sponsor partners. Changes to the regulations governing captive insurance cells are in the works; tucked into bill H.468. Current restrictions on cell businesses will be eliminated and replaced by enhanced discretionary power to be wielded by the commissioner .

This change will eliminate the current restrictions on cell business. Business written by a sponsored captive will no longer be required to have it be fronted, reinsured or secured by a trust. This requirement will now be at the discretion of the commissioner.

While Vermont modifies certain regulations, captive insurers may soon take advantage of an interesting quirk in the Federal Home Loan Bank Act of 1932.

Federal Home Loan Bank Act allows companies to use their captive insurers as portals to cheap bank credit. A budding concept is for captive owners, nonbank companies included, to use their captive insurers as portals to cheap bank credit under a federal banking law enacted decades before the first captive appeared.
While captive experts do not foresee the arrangement transforming captives into profit centers, some say it could enhance a facility's liquidity and claims-paying ability or assist its parent company in accessing tough-to-find credit or lowering borrowing costs

Vermont’s deputy commissioner Provost is reported to be cool on this concept and suggests the federal housing agency was misinformed about the nature of captives. Provost and a regulator from Delaware’s captive insurance commission think federal home loan bank would quickly reject a captive or any applicant that fails the asset test. ---
Provost mentions the need for “a lot more information” before he would support it but appears to door accomdatingly ajar for Vermont’s 900 captives.3 He said parent companies could find better ways to line up credit but that he would consider allowing it if he was shown that the parent faced problems obtaining credit.

" Themis" Racketeers ?

Sodexo food service giant has filed suit under the Racketeer Influenced and Corrupt Organizations Act (RICO) against the Service Employees International Union(SEIU) The SEIU is accused by Sodexo, in US district court Virginia of a “strong-arm” scheme in it’s effort to unionize 80,000 non-union employees. The SEIU says the suit is a bogus attempt to draw attention away from Sodexo’s anti-union activity. It is not about which union represents Sodexo workers, but about whether Sodexo workers can bargain collectively at all,”
Sodexo’s RICO complaint claims “This case is not about traditional union organizing. It is about a group of powerful labor organizations that have abandoned the traditional legal framework for organizing employees into unions, in favor of old-fashioned, strong-arm tactics to get what they want,”

Speaking of strong-arm rackets the old established law firm handling the suit for Sodexo is Hunton & Williams (since 1901!)has been up to some other interesting projects lately. They have found themselves under intense scrutiny since their questionable plans for corporate clients were outed by “Anonymous” the online entity. The plan made public was an attempt to profit from channeling funds for corporate clients (Bank of America, US Chamber of Commerce were named) to investigative security companies. The ultimate aim was discrediting anti corporate critics and thus to disarm potential problem makers.

Hunton & Williams stood to be the channel for $2 million in monthly subcontractor payments […]build a lucrative practice around investigating critics such as U.S. Chamber Watch and WikiLeaks, and it worked with three private security companies in a partnership they called “Team Themis,” the e-mails say. Lawyers saw “potential for huge gains” as a result of liberal anger, one security employee wrote in an e-mail.

After being exposed Hunton & Williams claims to have ended it’s involvement in the project.

HBGary Federal, Palantir Technologies and Berico Technologies the firms approached by Hunton & Williams as part of “Team Themis” are now under Congressional scrutiny A dozen congressman including Vermont Congressman Peter Welch signed a letter suggesting investigation.The letter says in part

HBGary Federal emails also revealed that the security contractors along with Hunton & Williams had also “planned a campaign to sabotage and discredit critics of the U.S. Chamber of Commerce,” as well as the trade union federation Change to Win, the Center for American Progress and other organizations

A Proselytizing Priebus

Wisconsin Gov. Walker, despite falling poll numbers and threatened recalls sounds for all the world like a man that believes he won. He is even declaring his anti-collective bargaining legislation “progressive, innovative” and “reform that leads the country” Ohio, Michigan and Indiana are all promoting variations on this anti-labor theme.

Is this a new template for other state Republican legislators?
New RNC Chairman Wisconsinite Reince Priebus backer of the Walker way said “I’m proud of what Scott Walker did in Wisconsin,” […] “I think that he is leading not only the state of Wisconsin, but he is leading this country." Priebus is scheduled to speak with Vermont Republicans touting Walker’s tactics. The Vermont State Employees Association (VSEA) and the Vermont AFL-CIO have called on the Vermont Republican Party to rescind his invitation due to “his anti-worker, anti-middle-class message”

Smoothly paving the way for Priebus’proselytizing is top Vermont Republican former Gov. Jim Douglas who weighed in favorably on Gov. Walker. Significantly as if to say to Vermonters ‘resistance is futile’ he made a point of attacking Wisconsin Dems actions. Douglas said of the democratic legislators' action against budget cuts and for labor "That's irresponsible […] I was pleased to hear leaders of the Vermont Senate from both parties declare that they would never resort to such a childish move."

Its unlikely any of the 14 Wisconsin Democratic state senators rallying in Madison this weekend ever dreamed their legislative process would break down to the point where leaving the session in protest would be a desirable option. It did prove an option they needed and used to their advantage. It is far fetched a similar situation could happen here. Few if any Vermont legislators would dream the legislative process could suffer such a breakdown and it is an unlikely event. But they already disarmed and Jim Douglas and Reince Priebus are sure glad.

Would Vermont legislators ever consider flight?
“No,” Senate President Pro Tempore John Campbell, D-Windsor, said Monday. “I hate to see any legislator walk off the job like that,” he said. “The legislative process is about discourse and about coming up with solutions.”

"It was friggin' awesome and it scared the shit out of everyone"

"Today just 400 Americans have more wealth than half of all Americans combined."


Here are some bits from Michael Moore’s speech at a Madison Wisconsin rally this weekend in support of collective bargain rights and issues of economic fairness.

Let me say that again. 400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer "bailout" of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can't bring yourself to call that a financial coup d'état, then you are simply not being honest about what you know in your heart to be true.

“America is not broke” said Michael Moore.

But how did we get to this point ?

They have created a poison pill that they know you will never want to take. It is their version of mutually assured destruction. And when they threatened to release this weapon of mass economic annihilation in September of 2008, we blinked.

As the economy and the stock market went into a tailspin, and the banks were caught conducting a worldwide Ponzi scheme, Wall Street issued this threat: Either hand over trillions of dollars from the American taxpayers or we will crash this economy straight into the ground. Fork it over or it's Goodbye savings accounts. Goodbye pensions. Goodbye United States Treasury. Goodbye jobs and homes and future.

It was friggin' awesome and it scared the shit out of everyone. "Here! Take our money! We don't care. We'll even print more for you! Just take it! But, please, leave our lives alone, PLEASE!"

The executives in the board rooms and hedge funds could not contain their laughter, their glee, and within three months they were writing each other huge bonus checks and marveling at how perfectly they had played a nation full of suckers.

Mind the gap

According to the New York Times, White House staff members describe a happier workplace since consolidating responsibilities and smoothing lines of communication under new chief of staff, William Daley. This follows the departure of Rahm Emanuel, the “idea-a-minute dynamo”, whom they say engineered Obama’s brilliant last minute lame duck session rescue of the soon-to-expire Bush tax cuts. Thanks Rahm.

Focusing on long-term strategic goals and being less personality driven is the new order of the day for the Obama White House. With Mr. Daley taking the lead, there is more outreach to Republicans and business groups. Other changes include eliminating the White House health care office and moving the energy czar’s responsibilities to the Domestic Policy Council. The new strategy includes not weighing in as often on day to day news events but only “…at a moment of his choosing when the public is paying attention, it will be more influential.” as White House communication director said.
Here is what this looks like in practice

…the White House mostly has sought to stay out of the fray in Madison, Wis., and other state capitals where Republican governors are battling public employee unions and Democratic lawmakers over collective bargaining rights. When West Wing officials discovered that the Democratic National Committee had mobilized Mr. Obama’s national network to support the protests, they angrily reined in the staff at the party headquarters.

After last Fall’s Election Day shellacking, an "enthusiasm gap" or "turn-out gap"was blamed for Democratic losses in the house. This gap existed most heavily in swing states that Obama needs for the 2012 election. States like Ohio, Wisconsin, and Indiana are now the frontlines in the Republican attack on organized labor.
This gap may be in the process of correcting itself at the grass roots level as some polls show Republican Governor of Wisconsin Walker with a 57% disapproval rating due to his anti-labor stance.

Obama may not want to take risks with this issue that he may see as jeopardizing his relations with big business or stress his ongoing battle of budget cutting with the Congress. His involvement might also energize the Tea Baggers. He and his team may figure, why go noisily out on a limb for labor if it's not "a moment of his choosing"?
Sadly right now Obama is perceived as sitting out what might be a major pivot point in organized labor’s recent fortunes.No one could argue that as President he isn’t a long careful distance from this campaign pledge

“If American workers are being denied their right to organize and collectively bargain,” Obama said. “When I’m in the White House, I’ll put on a comfortable pair of shoes myself. I’ll walk on that picket line with you as president of the United States of America, because workers deserve to know that somebody is standing in their corner.”

Are Vermont Republicans worried about Tom Salmon?

Only a few days before the March 5th date Vermont State Auditor Tom Salmon set to announce his plan to run against Senator Sanders some Vermont Republicans are fishing for other candidates .
The Times Argus David Delecore reports

According to Barre Mayor Tom Lauzon, officials in the Vermont Republican Party have suggested he consider running for governor or the U.S. Senate next year, and he hasn’t closed the door on either possibility.
“The answer is: ‘Yes, I am considering it,’” he said Monday when asked about the possibility he might run as a Republican alternative to Sen. Bernie Sanders, I-Vt.

Lauzon says he is considering the governor’s race too but makes it clear the senate is his choice. “The Senate race attracts me because people say it can’t be won and I think it can,” he said. After mentioning the obligatory soul searching ritual he set a date of June 1st for his decision.

From the sidelines but also in the mix Salmon might want to note the significance of new VPR commentator former Gov. Jim Douglas’ choice of the national deficit for his debut topic. He addresses the national budget, his association with the Domenici-Rivlin Commission from the Bipartisan Policy Center and speaks of the need for leadership on this issue in the senate. Naturally he reminds us of his leadership here in Vermont on this very issue. Always sentimental Douglas shares his thoughts about first seeing his granddaughter in her crib Welcome to the world, I said; your share of the Federal debt is $50,000.