Pelosi: Stimulus creates jobs, jobs, jobs, and jobs and jobs

By Suzia van Swol, University of New Mexico-Talk Radio News Service

Following a Democratic Steering and Policy Committee listening session on the economy, Speaker of the House, Nancy Pelosi (D-Calif.) said that, “we just had a very productive session with some leading economists who for over a year now have been giving us advice and guidance and an assessment of the state of our economy and some judgments about how we should go forward.” She went on to state that, “it is very clear that as we implement our recovery package, we must make sure that it works. And again, confidence is a big part of that investment that we have made. And we also must make sure the public understands this is a very fiscally sound package. The choices that were made in it were to create jobs, jobs, jobs and jobs and jobs as soon as possible and jobs over a period of time to stabilize the economy.” Pelosi emphasized that the baseline for spending has not been raised, but rather the stimulus is targeted in a timeframe to make the difference.

Congressman Barney Frank (D-Mass.) said that this is not some effort to supplant the private market, and he believes that what we are doing is actually very pro market. “We are halting the erosion and laying the foundation for things to get better,” stated Frank.
He expressed that one of the things the market suffers from today is a lack of investor confidence, “I think there is this danger that people will look at the mistakes that were made in the administration of the TARP funds in the past administration inpute them to the current administration,” said Frank.

Congressman George Miller (D-Calif.) said that we cannot discount the amount of time that was lost during the previous administration. “What we now see is a concentrated effort to refine those programs, to make sure that they are accountable, to make sure that in fact there is a response to the actions we are taking,” said Miller. He stated that the first release of the TARP money really discouraged the public because they saw billions of dollars flow to the money center banks and nothing loosening up.

The Speaker and members of Congress will continue to call on economists to provide expertise on the best way to move forward during this long term process of restoring the economy.

Executives try to keep egg off their faces

On Wednesday the heads of several of the largest lending institutions in the United States were called to testify before the House Financial Services Committee. All of the individuals testifying represented lending institutions which received financial assistance from the federal government several months ago under the Troubled Assets Relief Program (TARP). Committee members inquired about the use of the TARP money thus far.

Committee Chairman Barney Frank (D-Mass) said that the aim of the hearing was to adopt rules to make sure this situation did not happen again in the future, while restoring the system of extending credit in the United States. Frank said that although the hearing would focus on what transpired in getting the country into this situation, his committee would be “looking forward” at what progress can be made. Congressman Paul Kanjorski (D-Penn)said that when these lending institutions took taxpayer money, they “moved into a fishbowl”, and that all eyes are justifiably on how they use the money. Recent public outrage at the seeming misuse of taxpayer money in the form of executive compensation (anger which Chairman Frank called “justifiable”) has left many asking what role the federal government should play in overseeing the use of these funds to make sure that the taxpayer money is being used wisely.

Lloyd Blankfein of Goldman Sachs said that the TARP bill was important to maintaining the overall stability of the financial system. Most of the executives testifying said that their institutions are still lending, but after and extended amount of inquiry from committee members, it is uncertain if the TARP money has actually encouraged these institutions to lend more than they have in the recent and distant past, respectively. Jamie Dimon of JP Morgan Chase & Co. said that his company is committed to helping homeowners avoid foreclosure and stay in their homes. Vikram of Citi said that taxpayers have a right to expect a return on their investments, and said that he personally has volunteered to have his salary set at one dollar per year until the company returns to a profitable state. Chairman Frank asked the members of the lending community to withhold any new foreclosures until Treasury Secretary Tim Geichner’s program could be put into place, but at present it is uncertain whether than will happen.

By Michael Ruhl, University of New Mexico - Talk Radio News Service

Barney Frank says that Federal Government sending "Mixed Message"

Congressman Barney Frank (D-Mass.) says that the Federal Government is sending "Mixed Messages" to the lending institutions, because the the government wants increased lending but also safety. He says that the goal is to find a balance between the two of them

Auto bailout must lead to "self sustaining" companies

At a hearing today with executives from Ford, Chrysler, and General Motors, Chairman Frank lamented that the U.S. is in its worst economic situation since the Great Depression including 533,000 lost jobs in November. He called the current lack of jobs in the U.S. "an unmitigated disaster." Rep. Al Green (D-Texas) said that allowing the car companies to fail would put "2 million people out of work."

Rep. Spencer Bachus (R-Ala.) said the reality is that "Detroit is making good cars." He called a potential $34 billion loan to the major U.S. automobile companies "limited transitional assistance" and said he would only support giving the car companies the loan they requested if there is an "expectation of success." Rep. Judy Biggert (R-Ill.) claimed these companies must find a way to be "self sustaining."

Rep. Donald Manzullo (R-Ill.) said that the U.S. needs to "increase the demand for these vehicles." He felt that either the government or the car companies need to find a way to encourage Americans "to start buying cars again."

Ron Gettelfinger, President United Auto Workers (UAW), said workers in the automobile industry are "prepared to do our part." He did caution against making auto workers and retirees the "scapegoat" since they only make 10 percent of the total cost of the businesses. He also said that allowing the car companies to declare Chapter 11 bankruptcy is not an option because people will not buy vehicles from a bankrupt company.

President and CEO of the Ford Motor Company Alan Mulally said that Ford had "too many brands" of vehicle, but they are now "matching production" with "customer demand." He claimed Ford needs to become more balanced and efficient. He also stated that he has worked with the UAW to "reduce labor costs." On behalf of Ford, Mulally asked Congress for a $9 billion bridge financing loan.

Robert Nardelli, CEO of Chrysler, asked Congress for $7 billion in bridge financing. He blamed his company's lack of success on current U.S. auto sales, which he said were the worst in 20 years. Nardelli was excited about current improvements in his company's vehicles though, saying that 73 percent of them would have improved fuel economy in 2009.

Chairman and CEO of the General Motors Corporation (GM) Richard Wagoner, who asked Congress for $12 billion in short term loans, said that GM is dedicated to conserving energy volumes and finding new "green jobs" in the future. He also said that his company will change the way they give executive compensation after his company's economic fallout.

Congressional committee stresses the importance of reducing foreclosures

Rep. Barney Frank (D-Mass.), Chairman of the House Financial Services Committee, said he has seen “encouraging signs,” in efforts to reduce foreclosures in the U.S. During a Financial Services Committee hearing today, Frank said it would be very important to the economy to reduce foreclosures and to use the rescue plan to put money into the economy.

Chairman Frank stated that taxpayer dollars wouldn’t be used to help others “pay their mortgages,” believing there was “zero likelihood” that that would happen. Frank also felt that decisions on the housing crisis are “unmakeable” in government currently, adding, “Someone has got to have the authority to make a decision.”

Rep. Spencer Bachus (R-Ala.) said that while the U.S. should work to reduce foreclosures, “We need to be careful to prevent all foreclosures.” Bachus stated, "If a homeowner is under water, if the house is worth substantially less than the mortgage, it is predictable that many are going to walk away from their obligation. In fact, we are seeing a good percentage of foreclosures in which the homeowner is under water and they are walking away." He added, "I don’t see any practical way of preventing that."

While Bachus agreed that the government could not allow an economic collapse, he asked “Where does it stop?” Bachus did praise government’s intervention in the crisis to this point, saying “So far, we’ve made a terrible situation better,” but advocated the need for an "exit strategy."

Rep. Paul Kanjorsky (D-Pa.) made a reference to homeowners, saying that it was important to “keep them afloat.” He added that current foreclosure rates have “decimated some communities.”

According to Rep. Randy Neugebauer (R-Texas), it is important not to “encourage borrower behavior that is not appropriate.” He did think that if dialogue between borrowers and lenders is encouraged, “there will be some effort” to keep people in their homes.

Benjamin Allensworth, Senior Legal Counsel for the Managed Funds Association, said “the wave of foreclosures has placed downward pressure on home prices, which in turn has eroded home equity and consumer confidence in the mortgage market.” He advocated “effective mortgage modifications over foreclosure whenever possible.”

Thomas Deutsch, Deputy Executive Director of the American Securitization Forum, felt that government assistance in the crisis is vital and while mortgage lenders have made efforts to prevent “avoidable foreclosures,” “Macro economic forces bearing down on an already troubled housing market are simply too strong for private sector loan modification alone to counteract the nationwide increase in mortgage defaults and foreclosures.” Deutsch felt the housing crisis could not be resolved without government assistance.