Sending people to Mars won't help cut the deficit

by Suzia van Swol and Candyce Torres, University of New Mexico-Talk Radio News Service
After the President's Address to Congress, Congressman Barney Frank (D-Mass.) says that he thinks it is possible to cut the deficit in half if, "you stop this cold war defense weapons spending, and you curtail very expensive sending people to Mars, you cut back on excessive agriculture spending as he said, and you let taxes on the wealthiest people go back to where they were under Bill Clinton when the economy prospered, that you can do this." (0:29)

Federal Reserve to be more transparent about lending policies

By Kayleigh Harvey - Talk Radio News Service

Federal Reserve Board Chairman, Ben Bernanke testified before the House Financial Services Committee concerning "An Examination of the Extraordinary Efforts by the Federal Reserve Bank to provide Liquidity in the current Financial Crisis."

Chairman Barney Frank, (D-Mass) said in his opening statement: "I read before coming here, the new Treasury of the Secretary's announcement of his plans to use the TARP funds. It is very clear that the Obama administration, as did the Bush administration is using the money in the TARP program in conjunction with the lending authority of the Federal Reserve."

"There are also some important questions in the ways in which we govern ourselves. The Chairman of the Federal Reserve and indeed the Federal Reserve system, I believe were responding to the very real needs in society and people need not agree with every specific decision that the Federal Reserve made, to appreciate the sense of very important public purpose that has motivated them," Chairman Frank said.

The Trouble Assets Relief Program (TARP), was a program set up, in October 2008, by the United States government to allow them to purchase assets and equity from financial institutions to help strengthen them during the economic recession.

The Ranking Member of the Committee, Representative Spencer Bachus, (R-Ala) said: "I believe in a democracy it should be a requirement in any agreement or transaction involving the government that...in the event that our governing officials come to the decision that the commitment of public funds is necessary, if a commitment of taxpayer funds or guarantees cannot be disclosed because of the circumstances involved it cannot and should not be made."

Chairman Bernanke answered questions for over two hours to the Committee concerning the Federal Reserve’s problems in this economic crisis.

"I firmly believe that central banks be as transparent as possible both for reasons of democratic accountability and because many of our policies are likely to be more effective if they are well understood by the markets and the public...The Federal Reserve is committed to keeping the Congress and the public informed about its lending programs and its balance sheet."

"To improve public access to information concerning Federal policies and programs, Federal Reserve staff are developing a new website that will bring together a new systematic and comprehensive way to find a full range of information the Federal Reserve already makes available, supplemented by new explanations, discussions and analysis. Our goal is to have this website operational in a few weeks."

Chairman Bernanke also referred to a new committee that will revue the Federal Reserve’s current publications and disclosure policies that will relate to the Federal Reserve's balance sheet and lending policies.

Hope for homeowners needs to be modified

By Kayleigh Harvey - Talk Radio News Service

The House Financial Services Committee met today for the first time under the one hundred and eleventh Congress to discuss "Promoting Bank Liquidity and Lending Through Deposit Insurance, Hope for Homeowners, and other Enhancements". 

Testifying before the committee members were John Bovenzi from the Federal Deposit Insurance Corporation and Meg Burns from the Federal Housing Administration. 

Committee Chairman Barney Frank (D-MA), opened the meeting saying, "Hope for homeowners came out of this committee and we passed it last year, we didn't do it well. I acknowledge that, and it has to be corrected."

The discussion focused on proposals to modify the current 'Hope for Homeowners' Program.

John Bovenzi in his testimony to the committee said that, "Liquidity is a key component in returning the economy to a condition where it can support normal economic activity and future economic growth"

"Deposits, especially FDIC ensured deposits are a key source of bank liquidity. The FDIC has implemented the temporary liquidity guarantee program to help stabilize the funding structure of financial institutions and expand their funding base to support the extension of new credit", he stated. The FDIC is trying to increase their line of credit to potential home buyers from $30 billion to $100 billion. 

Congresswoman Judy Biggert (R-IL) said: "From home builders we're hearing that they have homes and condos to sell, people arrive, but because of the severe restrictions that have been put on the loan, make it so that the buyers walk-away".

Meg Burns said: "All of us at HUD welcome and applaud your decision to make modifications to the 'Hope for Homeowners' program. As you are well aware the initial program data clearly indicate that changes are not only appropriate but necessary. Furthermore, changes are needed as quickly as possible. To date FHA has ensured no loans under the program, lenders have taken 451 applications and 25 loans have closed".

February 3, 2009