Expect Debate On Proposed Consumer Financial Protection Agency To Take Place Soon

House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) announced Thursday that a markup for legislation regarding a recently proposed Consumer Financial Protection Agency will occur in two weeks.

Frank said during Thursday's hearing that the goal of the proposed agency is to streamline consumer protection rules and serve as a building block for financial reform.

"Consumer protection suffers very deeply and this bill would remedy that," said Frank

The Massachusetts Democrat explained that if passed, the legislation would take power and funding from the Federal Reserve.

"We do not think that banks should be charged extra for this...the Federal Reserve will be ceding a lot of power that is not used very much and funding will come with it," said Frank.

Ron Paul Seeks Fed Oversight, Fed Fights Back

by Julianne LaJeunesse- University of New Mexico

Should the Federal Reserve Committee be regulated by the Government Accountability Office? U.S. Representative Ron Paul (R-Texas) says yes, and Scott G. Alvarez of the Federal Reserve says no.

Paul is the sponsor of H.R. 1207, which calls for audits on the Federal Reserve, a quasi-public entity that in theory can control the nation's money supply, set interest rates, and implement monetary policy.

At a Friday hearing, Paul said the Fed needs GAO oversight because they aren't doing their job correctly.

"The Federal Reserve was designed, and their mandate was to make sure that we have full employment, price stability, and stable interest rates," Paul said. "In my lifetime, interest rates have been 21 percent and less than one percent- so they fail there. They [the Fed] want a stable dollar and stable prices... well, we have continuous inflation."

Paul said it's Congress' responsibility to make sure the Fed does what it was created for and not buy into the idea that the Fed needs more power and more secrecy.

Fed Board of Governors General Counselor Scott G. Alvarez argued before Paul, Chairman Barney Frank (D-Mass.), and other members of the House Financial Services Committee, saying that Fed autonomy is instrumental in safeguarding U.S. interest rates, but also that an independent Fed is a nonpolitical Fed.

Alvarez said from an economic stance, GAO regulation would hinder Fed access to and implementation of some programs.

"If it looks like the Federal Reserve is changing directions because a statement [of] the policy review by another agency is influencing the Federal Reserve's decision... then the integrity of the process will be undermined, confidence that the Federal Reserve will move in the direction that is best for the economy will be undermined, and we won't be able to carry out our job as well," Alvarez said. "And that's what we're concerned about."

Alvarez said the Fed has taken many steps to increase transparency since the 2008 bank bailouts, but when Rep. Emanuel Cleaver II (D- Mo.) asked him about the misinterpretation between Congress and the Treasury Department and the Federal Reserve, as far as Troubled Assets Relief Program allocations, Alvarez said the latter departments decided to use the funds to restore confidence to banking institution, a decision Cleaver said was not immediately apparent when TARP was passed.

Frank Urges House Committee To Support Anti-Discrimination Bill

John DuBois, University of New Mexico - Talk Radio News Service

The House Committee on Education and Labor held a hearing on Wednesday to discuss the Employment Non-Discrimination Act (ENDA) which was introduced by U.S. Rep. Barney Frank (D-Mass.) in June of this year.

The bill, known as H.R. 3017, would prohibit employment discrimination on the basis of sexual orientation or gender identity.

During the hearing, Frank implored his colleagues in the House to support the legislation.

"Let me just say to my colleagues. There's nothing to be afraid of. These are our fellow human beings. They're not asking you for anything other in this bill, for the right to earn a living. Can't you give them that. If you don't like them and don't want to be friends I think your missing on something, but that's your choice," Frank said.

According to Frank, the bill will provide more job opportunities based on a candidate's skill, work ethic and experience, rather than his or her sexual orientation.

Geithner Urges Congress To Act On Financial Regulatory Reform

By Leah Valencia, University of New Mexico - Talk Radio News Service

Treasury Secretary Timothy Geithner urged Congress to act quickly in executing a comprehensive overhaul of the financial regulatory system, telling members of the House Financial Services Committee on Wednesday that, "Time is the enemy of reform."

Geithner said lawmakers must act to correct the regulatory problems that have left the financial system in disarray.

"As some normalcy returns to our financial system and our economy, we cannot let it be cause for complacency," he said in a hearing on Capitol Hill. "We simply cannot walk away from the worst financial crisis since the Great Depression and not do everything in our power to reform the system."

Geithner explained that the regulatory reform plan proposed in June by the Obama administration aims to achieve three main goals, including providing consumer protection, creating a new financial system less prone to crisis and safeguarding taxpayers from bearing costs of future crises.

A key aspect of the proposal seeks to merge the Office of the Comptroller of the Currency and the Office of Thrift Supervision into a new consumer financial protection agency. Lawmakers from both parties raised concerns about such an agency.

House Financial Services Chairman Barney Frank (D-Mass.) wrote proposed changes to the consumer agency in a memo Tuesday. The changes excluded a range of non-financial businesses, such as retailers and auto dealers, from oversight by the agency. Frank also said he plans to fund the agency in a way that would not burden financial institutions, and will no longer require them to offer "plain vanilla" financial products, such as 30-year fixed mortgages.

Geithner said in his testimony that all institutions providing financial credit should be subject to the same regulation and credit standards as banks, but he did not indicate whether these standards would extend to non-financial businesses

"If you are in the business of providing financial credit and you are competing with banks and thrifts to do that, there should be a common set of standards," he said. "In general, we're very supportive of the changes proposed by the chairman."

Frank said he will be holding a series of hearings on the regulatory proposal in coming weeks and plans to have legistlation in the House and Senate by the end of the year.

"This is going to be a very time-consuming committee in October and November," Frank said.

The new legislation would mark the most drastic governance changes for financial institutions implemented in seven decades.

Hoyer: We’re Not Talking About Dropping The Public Option

House Majority Leader Steny Hoyer (D-Md.) stated Tuesday that House Democrats have no intention of striking the public option from the final draft of the health care reform legislation.

“We’re not talking about dropping the public option,” Hoyer said during a pen and pad session with reporters. “One way you bring down costs substantially is to have a public option that provides competition.”

Hoyer’s statement comes after a noticeable divide has opened up between the Majority Leader and House Speaker Nancy Pelosi (D-Calif.) over how committed Congress should be to a public option, with the latter taking a much more aggressive stance in favor of the provision.

The Majority Leader announced that he will be speaking with congressional Republicans in an attempt to find common ground on health care reform, noting that a few Republicans have stated they are behind 80 percent of the proposed health care bills.

“I want to find out what that 80 percent is. If we have 80 percent, then we ought to work very strongly on the remaining 20 percent. It will be my intention to invite them to do so.”

Hoyer also touched upon Medicare’s sustainable growth rate, a formula that determines the level at which medicare physicians are paid. While there was initially going to be a 21 percent decrease in payments made to physicians, the Senate Finance Committee provided a one-year fix that would instead offer a .5 percent increase in payment. While the Majority Leader backs the committee’s fix, he also expressed his desire to see a more permanent solution.

Hoyer said that he would back Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, in passing regulatory reform. The Majority leader added that existing regulatory measures should be bolstered in addition to creating new oversight methods.

The Majority Leader also responded to calls from congressional Republicans to have General Stanley McChrystal, who commands U.S. forces in Afghanistan, testify before Congress. The Majority Leader said his testimony would be “useful.”