Provision in Bill Bars Pentagon From Revising Investment Rules

New York Times

Provision in Bill Bars Pentagon From Revising Investment Rules


The Pentagon will be barred from taking any action to tighten its rules on the sale of insurance and other financial products on military bases until sometime next spring as a result of a small rider to the defense appropriations bill that was passed by Congress last night.

The Pentagon came under Congressional pressure this week to address policies and enforcement practices that have allowed young military recruits to be exposed to misleading tactics used to sell insurance and investment products that are ill suited to their needs. The practices were examined in articles this week in The New York Times, prompting calls for Congressional hearings into ways to protect service members from improper sales pressure.

But an obscure provision of the defense appropriations bill forbids the Pentagon from revising its insurance sales rules until 90 days after the completion of a Government Accountability Office study that senior House members requested in March. That study, which is expected be completed by the end of the year, was begun after insurance industry executives complained that officers on some military bases were interfering with the sales of insurance policies to their troops.

Senator Hillary Rodham Clinton, Democrat of New York, has called for hearings on the problems associated with the sale of insurance on military bases, and tried on Wednesday night to have that restriction removed from the military spending bill, according to her office. But it was too late in the legislative process to amend the bill, her aides said. As a result, the three-month restriction will become law when President Bush signs the bill, as he has promised to do.

Even more stringent restrictions on Pentagon action were inserted into the House version of the military authorization bill, which was passed in May. One small part of that bill, called Section 586, would tie the Pentagon’s hands for a year after the delivery of the Government Accountability Office study, or until about January 2006.

The authorization bill is still subject to negotiation between the House and the Senate, and Senator Clinton will try to eliminate Section 586 before the authorization bill comes to a final vote, a senior member of her staff said yesterday.

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