FBI oversight ineffective; new investigation guidelines unclear

Multiple Congressmen expressed frustration at the inefficacy of FBI oversight as currently carried out by the House Judiciary Committee in a hearing today. FBI Director Robert Mueller was the sole witness. Chairman John Conyers (D-Mich.) opened the session complaining in an exasperated tone that the committee had not yet received a response to a September 5 letter asking about "the FBI’s anthrax investigation, disturbing revelations about the Bureau’s improper collection of information on reporters, the FBI’s approach to this country’s mortgage fraud crisis, and the expanded investigative and intelligence gathering powers resulting from the proposed Attorney General Guidelines concerning the FBI’s domestic operations."

Conyers and other congressmen elaborated in questions about why they wanted the Attorney General Guidelines (set to be made public in a few weeks), which Mueller said were still under review but which would unify the FBI's standards for starting investigations over different types of investigations. For example, the standards for when to open a criminal investigation are different from those used for national security investigations, and it is hoped that the new guidelines would make standards easier to follow. Congressman Artur Davis (D-Ala.), a former assistant U.S. Attorney, questioned Mueller about whether the new standards for opening an investigation would be lower than the standards police use for when they are allowed to stop and question a person (set out in the Terry v. Ohio Supreme Court decision of 1968). Mueller resisted the comparison, but Davis pointed out that the investigative activities carried out by the FBI are similar to those used by police. Mueller finally admitted that the standard has a lower threshold, so investigations could be opened without having reasonable suspicion based on "specific and articulable facts" that a person has committed, is committing, or is about to commit a crime.

Congressman Bill Delahunt (D-Mass.) expressed frustration at the committee's policy of allowing each congressman only 5 minutes for asking questions; "this format doesn't work," he said, pointing out that it was impossible to get deep into any issue in that time. He suggested the FBI could have experts in particular areas come testify, and on a more frequent basis than Director Mueller does. Mueller responded by saying that the committee will always be frustrated regardless of administration, as answers to questions must be vetted before being sent back. He also offered to come up to the hill at any time for briefings or discussions.

Congresswoman Maxine Waters (D-Calif.) asked Director Mueller about allegations that voters will be challenged at polling places if their homes have been foreclosed on. Mueller said he had not heard about that particular plan. He said the Department of Justice Civil Rights Division would investigate any such issue, though Mueller was unable to name the head of that division without the help of an aide. Mueller promised to follow up on making sure the Civil Rights Division knew about the problem, and Chairman Conyers assured Waters that Civil Rights Division head Grace Chung Becker would be testifying before the committee soon.

Foreclosure crisis is leaving neighborhoods in ruins

The Domestic Policy Subcommittee of the House Oversight and Government Reform Committee held a hearing on “Neighborhoods: The Blameless Victims of the Subprime Mortgage Crisis” to discuss the more widespread repercussions of foreclosures and vacant properties within concentrated areas, as opposed to effects on individual families and the economy.

Chairman Dennis Kucinich (D-Ohio) said that “when foreclosure leads to vacant and abandoned properties, surrounding neighborhoods and local municipalities suffer significant consequences.” Kucinich said these include falling neighborhood-wide property values, equity loss, decreased rental availability, lowered business rates for merchants, increased crime from arson and vandalism, increased building and demolition costs, increased legal expenses and reliance on governmental service programs, and loss of tax revenue. Kucinich called the neighborhoods “totally blameless” victims of the crisis who “had nothing to do with the transactions that resulted in the subprime mortgage meltdown.” He mentioned new pending legislation, the Neighborhood Stabilization Act of 2008, which would authorize $15 billion in grants and loans for local governments to spend on property acquisition, building rehabilitation and demolition. Kucinich said the bill faces a veto threat by President Bush, which he said he “just cannot understand.”

Rep. Diane Watson (D-Calif.) said that California foreclosures have surged by 327% from 2007 to 2008, which amounted to 517 foreclosures every day for three months. Witness Nancy Floreen of the Maryland Council said that Montgomery County experienced a 1,250% rise in foreclosures during the same year, from 68 in the first quarter of 2007 to 916 in the first quarter of 2008. Floreen expressed support for the Neighborhood Stabilization Act, saying that the market alone cannot fix the crisis. She also said the crisis has disproportionately impacted minority communities and that the market has “preyed upon” people who cannot afford subprime lending.

Witness Daniel Kildee, Genesse County Treasurer from Flint, Michigan, said in his written statement that vacant land is a “Tyhpoid Mary to a neighborhood struggling to sustain itself.” When asked by Kucinich about the lessons to learn from his county about non-interventionist government, Kildee said the government should not be allowed to treat high-value property differently from property whose value is “upside-down.”

IMF economists address the housing crisis

At a discussion on the Housing Crisis and Lessons for Monetary Policy at the Brookings Institute today, International Monetary Fund Economic Counselor and Director Simon Johnson predicted a “mild contraction” in the U.S. economy this year followed by a “relatively slow recovery” next year. Johnson discussed the link between housing and mortgage finance and said that the link between monetary policy and housing is stronger because of recent governmental intervention in the current crisis.

IMF Senior Economist Roberto Cardarelli said that over the last four quarters, residential investment has contributed 56% to the decline in U.S. GDP, “and by that standard, we are very much in a recession environment in the United States.” Cardarelli said another cause for concern is the impact of housing prices on the decline in consumption, which further stunts economic growth. He also emphasized that inflation rates need to change in order to stabilize inflation and minimize loss.

Foreclosure concerns draw the ire of House members unhappy with lack of progress

The House Committee on Financial Services Subcommittee on Housing and Community Opportunity held a hearing concerning foreclosure prevention and sound mortgage servicing.

The committee interrogated a panel of governmental housing program leaders including Laura Maggiano, Deputy Director of the Office of Single Family Asset Management at the Department of Housing and Urban Development (HUD). Maggiano defended HUD’s assistance to families unable to finance their homes amid strong criticism from each congressional representative at the hearing, particularly Chairwoman Maxine Waters (D-CA).

Rep. Emmanuel Cleaver (D-MO) told the panel that with our country experiencing “approximately 20,000 foreclosures a week” that we have“more than a casual problem”.

Maggiano’s defense emphasized that her department was trying hard to both help keep borrowers informed about the housing contracts they were agreeing to pay, and ensuring loaners that could receive the money they distribute.

Also, Judy Caden, answering questions on behalf of the US Department of Veterans Affairs (VA), argued in her defense that not all foreclosures were the result of bad loans being distributed.

Conference Call compares House and Senate housing relief tax packages

The Center on Budget and Policy Priorities held a conference call today to compare the House and Senate housing relief tax packages. Call participants voiced their concerns about the lack of success both chambers of Congress have had to date in helping families decimated by the crisis concerning housing foreclosures and subprime mortgage rates.

Call participants discussed how the packages Congress has implemented to address the growing rate of housing foreclosures facing Americans “don’t meet the needs” of families seeking government aid. The discussion also focused on the importance of providing struggling families with tax credit, something the Senate bill does not address. Policy analyst Aviva Aron-Dine discussed how there are too many provisions that the relief package bills include (particularly the Senate version) that do not have anything to do with the housing crisis. Call participants explained that tax cuts the bills include for the wealthy are of no assistance to the poor who do not benefit from them.

Aron-Dine described the Senate bill as “extremely disappointing” and noted that while the House version is better, it still does not go far enough toward helping families in dire need of governmental aid. Aron-Dine explained that 60% of the Senate bill has nothing to do with helping solve the foreclosure problem. Call hosts also interestingly noted that forclosures destroy community life as well as family life, and that people renting homes have been affected by the crisis as well.