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.

Pelosi Says House Will Vote On Health Care Before August

By Learned Foote- Talk Radio News Service

Speaker of the House Nancy Pelosi (D-Calif.) emphasized that “we will be on schedule...to vote for [health care] legislation before we leave for the August recess” in a press conference on Monday.

“It is our plan to introduce our legislation tomorrow,” she continued. “It won’t be the finished product, it is...to be marked up in committee to go to the next step.”

Pelosi discussed the moderate Blue Dog Democrats who have expressed some concern about certain aspects of the health care legislation. She said that such give-and-take is commonplace during the legislative process.

“We’ve made a great deal of progress, I think we’re on schedule, and the conversations have been very productive. As you get toward the end, when you’re ready to introduce and then you go to the markup and the amendment process, is when you get some of the differentiation beyond the consensus that we have built to date. But from those conversations, I feel very confident that we will have strong health care reform,” Pelosi said.

Majority Leader Rep. Steny Hoyer (D-Md.) acknowledged that there have been “extensive and spirited discussions,” but emphasized that “to a person, the Blue Dogs believe we need to pass and they want to support health care reform... There is nobody with whom I’ve talked to in the caucus who doesn’t believe that health care reform is essential to do and do this year.”

Pelosi also emphasized the benefits of quick action on health care reform and several private citizens called for speedy action during the press conference. Pelosi said that reform will lower costs, improve the quality of health care and provide more choices to consumers and businesses.

“You’ll hear some of our opponents of reforming health care saying that this is putting government between you and your doctor,” she said. “That’s what they say, that is just the opposite. What we are doing is removing the health insurance company from between patients and their doctors. And in doing so, we’ll provide stability and peace of mind,” said Pelosi.

House Committee Questions Fed Member On Fed’s Expansion

By Learned Foote- Talk Radio News Service

On Thursday, the House Financial Services Committee questioned Federal Reserve Board Vice Chairman Donald Kohn regarding a proposal recently advanced by the Obama administration that would expand the powers of the Fed.

The Fed currently oversees monetary policy, and in 1977 Congress established that the agency's objectives are to maximize employment and stabilize prices.

The expanded powers would grant the Fed the authority to oversee systemic risks to the financial system as a whole. Said Kohn, “the job of the systemic risk regulator would be to take account of those interrelationships, the markets and how they’re developing, and the institutions and how they fit into the markets, and look at the overall risk to the system, as well as the risk of the individual institution.”

He added that the Federal Reserve could fulfill this role.

Some Congressmen argued that the expanded powers could compromise the Fed’s responsibilities regarding monetary policy.

Rep. Spencer Bachus (R-Ala.) said that the House Republicans’ view of the Federal Reserve dramatically differed from that of the administration. “Republicans believe that the Fed’s core mission, and I stress this, is to conduct monetary policy, and that that will be seriously undermined if its supervisory responsibilities are dramatically expanded.” He suggested that the Fed could become a “permanent bail-out agency,” and its political independence could be compromised.

“We need to end the bailouts that the Fed I think has been instrumental in carrying out over the last eighteen months, and I mean the ad hoc bailouts of individual institutions.”

Kohn said “we do not believe that enhancements to our existing supervisory and regulatory authority proposed by the administration would undermine our ability to pursue our monetary policy objectives effectively and independently.”

Rep. Ron Paul (R-Texas), who has introduced a bill in the House to audit the Fed more thoroughly, expressed skepticism as to whether the Fed’s powers should be expanded. He said that the Fed needs to be more transparent, although Kohn argued that “our independence in the conduct of monetary policy is accompanied by substantial accountability and transparency.”

Congressman Al Green (D-Texas) asked the Vice Chairman how he would respond to those who argue that it is “risky to give the Fed this much power.” Kohn replied that the additional powers are “incremental...not a huge increase in our authority.” He emphasized that “for the authority we already have, we are held accountable.”

Sen. Cornyn Criticizes Democrats' “Power Grab” In Health Care Debate

By Learned Foote- Talk Radio News Service

Sen. John Cornyn (R-Texas) harshly criticized the health care reform proposals put forward by the administration and Democratic congressmen.

“[There is a] continued power grab out of Washington, starting with the financial institutions, leading to car companies, and now to health care,” said Cornyn during a conference call with reporters Wednesday. He warned that the American government might take up policies practiced in England, the United Kingdom, and Canada, where “government ultimately makes a calculation on the value of individual lives" in rationing health care.

Cornyn, who serves on the Senate Finance Committee’s subcommittee on Health Care, said that reform should lower the costs of health care and make coverage accessible to more people, but argued that the proposals will not sufficiently address these needs. Instead, the Senator argued, they will “create a huge command-and-control infrastructure.”

Cornyn said that the government will undercut private insurance providers, and cited statistics from The Lewin Group, a health-care policy research firm. The groups’ report estimates that 119 million individuals, two-thirds of those currently privately-insured, will end up on a public plan.

Cornyn also criticized a proposal floated by some Democrats to tax health benefits, a practice he said Obama “derided” during the Presidential campaign.

Cornyn praised Senator Max Baucus (D-Mont.), the chairman of the Senate Finance Committee, for attempting to work in a bipartisan fashion, but said that Baucus is “being dictated to” by Senate Majority Leader Harry Reid (D-Nev.), who favors a public option.

“My hope is that common sense will prevail and that we will listen to the stake-holders, including the millions of Americans whose health care will be forever changed should some of these proposals pass without an opportunity for bipartisan input,” said Cornyn.

Prominent Litigators Reflect On Supreme Court Term, Look To Future

By Learned Foote - Talk Radio News Service

Lawyers who argued some of the year’s most controversial Supreme Court cases reflected on the past term during a panel at the Georgetown Law Center on Monday.

The combined experience of the panelists included work on such cases as the Voting Rights Act, Ricci v. DeStefano, District Attorney’s Office v. Osborne, Wyeth v. Levine, and Pleasant Grove City v. Summum. The issues at stake included free speech, the right to DNA testing after conviction, federal pre-emption, and rase-based hiring practices for firefighters.

Pamela Harris of O‘Melveny & Myers spoke as one of the attorneys who argued on behalf of members of the Summum Church, who wanted to erect a monument containing the Seven Aphorisms in a public park, near a monument to the Ten Commandments. The Supreme Court ruled against the Summum Church 9-0. “We knew we were losing this case going in,” she said. “The question for us was how did we want to lose the case.”

Harris said that the Court thought about the case not as a free speech issue, but rather in terms of the establishment clause, which prevents the government from favoring one religion over another. She said that the ruling means any monument in a public park could now be construed as government speech, and that future suits could use Pleasant Grove City v. Summum in cases that draw upon the establishment clause.

Gregory Coleman, Partner at Yetter, Warden, & Coleman, successfully argued both the Voting Rights Act and Ricci v. DeStefano in the span of one week. Both cases involved issues of race, and some civil rights groups have criticized the majority rulings in both cases.

Coleman said he was not disappointed that the Court made a narrow ruling on statutory grounds, rather than striking down Section V of the Voting Rights Act as Coleman had argued. “It’s kind of a warning shot to Congress,” Coleman said, and suggested that the Court might examine the constitutionality of the Voting Rights Act again if Congress does not act.

Neal Katyal, the Deputy Solicitor General, noted that the decision not to strike down Title V surprised some. He said that the Roberts Court contains many different models of judging, and Roberts often allows judges of separate persuasions to be pleased with a decision. At the same time, he noted that Justice Thomas is “not afraid to be the lone dissenter” in some cases.

Moderator Tony Mauro, Supreme Court Correspondent for Legal Times, asked whether the panelists believed the court was incrementalist and preferred small judicial steps. Harris disagreed, saying it seemed as though “the Chief Justice is going just as far to the right and he’s going there just as fast as Justice Kennedy is prepared to go along with him.”