House Republicans Introduce Bill To Block Bailouts

By Meagan Wiseley - University of New Mexico, Talk Radio News Service

Republican members of the House Financial Services Committee Tuesday outlined the Republican Regulatory Reform Bill, a piece of legislation that calls for no more government bailouts and an end to government intervention when it comes to failing financial institutions.

“We do need to end bailouts and the government practices of picking winners and losers and restore market discipline. We need reform [and] we need smart clear and strong regulations to get our financial system back on track," said Rep. Judy Biggert (R-Ill.) during a press conference.

Republican members of the Financial Services committee have introduced legislation this week to create an independent trust in order to divest the governments ownership in companies like AIG, General Motors, Citigroup and Chrysler.

Bankers Welcome Regulation, But Skeptical Of Plans For Regulatory Agency

By Learned Foote- Talk Radio News Service

On Wednesday, a panel of banking experts expressed reservations over certain aspects of the regulatory reform proposals that the Obama administration has put forth.

In a hearing before the House Financial Services Committee, representatives from the financial services industry criticized plans to create a Consumer Financial Protection Agency.

In recent weeks, Committee Chairman Rep. Barney Frank (D-N.J.) cited a “flood of complaints” regarding practices in the financial industry. Rather than create laws to deal with each complaint, Frank has argued that conflict could be mitigated by a Consumer Financial Protection Agency.

Steve Bartlett, President and CEO of the Financial Services Roundtable, acknowledged that the “status quo is unacceptable,” and argued that regulation reform “should be comprehensive, should be systemic, and should be quite large in terms of its scope." He criticized the current system of regulation, which he said featured “hundreds of different agencies who regulate the same companies with the same activities in totally different ways based on different statutes, different standards.”

Bartlett nonetheless emphasized that he and his company “strongly oppose” the creation of a new agency, and recommended that Congress instead pass legislation enacting “strong national consumer protection standards.”

Steven Zeisel, Senior Counsel at the Consumer Bankers Association, said that he supported regulatory reform as well, but expressed reservations about the CFPA. He said that the legislation could require retail banks in different states to follow many different laws, which could make lending more complex, and could potentially the limit the availability of credit while raising costs for the consumer. He also said that the legislation will require banks “to offer products designed entirely by the federal government,” which could stifle innovation.

Rep. Scott Garrett (D-N.J.) said, “I don’t think Americans want government bureaucrats deciding if they are smart enough, sophisticated enough to take out a line of credit at the local retailer, or policing whether the credit cards that they choose offer reward points or not. When you come down to it, having choices is part of being an American.”

Rep. Maxine Walters (D-Calif.) harshly criticized the arguments of the panel. She said that they had “no real support for a consumer finance agency to protect consumers from these exotic products that worry us so much.” “You will work your magic with your influence in the Congress of the United States to keep any real strong legislation from ever coming out of here,” she continued. She also disputed the claim that the CFPA would raise consumer costs.

“I am just dumbfounded that we have before us representatives of the overall industry here today who do not appear to understand we have a crisis,” she said.

HUD Secretary Asks House For Greater Commitment To Housing

By Aaron Richardson-Talk Radio News Service

Housing and Urban Development (HUD) Secretary Shaun Donovan testified in front the House Financial Services Committee thursday about the need for legislation to assist low income Americans with their housing issues.

“Today there are less than 3 units for every 4 low income households and only half the number needed for families who live in extreme poverty.” said Donovan.

Rep. David Scott (D-Ga.) spoke candidly during the hearing about the hardships that many veterans face when it comes to inadequate housing.

“ As more and more of our troops come and try to acclimate back to their communities we as government must make sure that they have a home to come home to and provide that assistance.”

During the hearing, Sec. Donovan recommended extending fully funded section 8 contracts for twelve months,increasing federal funding for housing vouchers. Sec. Donovan also described some of the downfalls that HUD has faced in the past, saying, “Too often HUD’s policies and practices get in the way of preservation efforts instead of supporting them, that is going to change.”

Congress Seeks An Answer For Executive Bonuses

By Aaron Richardson-Talk Radio News Service

The House Financial Services Committee inquired today as to why, with the economy in recession, CEO's are still receiving millions of dollars in bonuses. 

"What have you discovered about the $5 billion in bonuses given to Merill Lynch?" Rep. Maxine Waters (D-Calif.) asked the panel of witnesses, which included Brian Breheny, the SEC's Deputy Director of Corporate Finance; Scott Alvarez, Federal Reserve System General Counsel and  Gene Sperling, the Counselor to the Secretary of Treasury.

Sperling ,who answered the majority of the questions, could not answer, and only replied, " I would have to go back, and would be happy to do so, and get what our administrations best understanding of that dispute is."

Rep. Gene Green (D-Texas) brought the Committee’s attention over to what was at stake for the citizens in his district if fiscally irresponsible behavior, including exorbitant salaries for the executives of flailing companies, continues.

"What they are losing is their money for education, money to pay their house notes and money to sustain themselves. I find it quite disenchanting to know that there are those who want them to receive cuts and not want us to look at the compensation these executives are receiving,” said Green.

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