Geithner Endorses Frank's Proposal On Future Bailouts

By Ravi Bhatia - Talk Radio News Service

During testimony given before the House Financial Services Committee Thursday, Treasury Secretary Timothy Geithner echoed the White House's support for Committee Chairman Rep. Barney Frank’s (D-Mass.) proposal that would grant the Federal government the authority to take control of failing financial firms.

Frank's legislation would create a fund paid for by businesses with over $10 billion in assets in order to bear the costs of big firms that fail. Such costs were incurred by American taxpayers in the 2008 bailouts of banking company Citigroup and General Motors. It would also create a Financial Oversight Council, led by Geithner, to set policy and stricter regulations on the firms, and mediate arguments between federal agencies.

“It’s not about redemption for the firms that make mistakes,” Geithner said. “It’s about unwinding them in a way that doesn’t cause catastrophic damage to the economy.”

The Committee will vote on the legislation as early as next week. The committee's Ranking Republican, Spencer Bachus (R-Ala.), opposed the legislation and the speed at which it is being pushed.

“The draft legislation that was supposed to be the subject of this hearing was not received until Tuesday afternoon,” he said. “I doubt that any of today's witnesses, with the possible exception of Secretary Geithner, have had the opportunity to fully comprehend the legislation entirely.”

“Their proposal places taxpayers first in line to bear the losses when the government invokes its resolution authority," added Bachus.

In a statement released before her testimony on Thursday, Federal Deposit Insurance Corporation Chairman Sheila Bair said that the proposed Oversight Council lacks the authority to “effectively address systemic risks.” She recommended that the President appoint an independent chairman, subject to Senate confirmation, to fill the role Geithner would otherwise.

“A Council with regulatory agency participation will provide for an appropriate system of checks and balances to ensure that decisions reflect the various interests of public and private stakeholders,” Blair said.

Geithner said that he believes Frank’s bill will update the federal government’s financial regulatory system to match what he called, “21st century” challenges.

“The Council will have the obligation and the authority to identify any firm whose size in leverage and complexity creates a risk to the system as a whole and needs to be subject to heightened, stronger standards on leverage,” he said. “The rules in place today are inadequate and they are outdated. We’ve all seen what happens when in a crisis, the government is left with inadequate tools to respond.... That is a searing lesson of last Fall.”

Democrats In House, Senate Claim Competition Essential To Driving Down Health Costs

By Ravi Bhatia, Talk Radio News Service

Sen. Ron Wyden (D-Or.) and Reps. Anthony Weiner (D-NY) and Jim Cooper (D-Tn.) said Tuesday that infusing the health insurance market with competition would be the best way to bring down health care costs for most Americans.

“We’ve got to open up the exchanges to a broader array of people, both employers and employees,” Wyden said at a panel discussion hosted by The New Republic magazine. “That’s how we’re going to respond to people making $66,000 a year who are going to look at the [Senate] Finance Committee Bill and say that it’s not going work for [their families].”

The discussion occurred the day after Senate Majority Leader Harry Reid (D-Nev.) said that the current draft of the health care bill will include a public option with an opt-out provision for individual states. In theory, giving Americans the option to choose a government-run health care plan would drive down the costs of private insurers by creating competition. The Health Care Exchange would allow those who already have insurance to upgrade to better plans then the ones they already have using the program, further encouraging insurance companies to lower prices and raise their coverage quality standards.

“As these bills are being drafted, only ten percent of the people in America will ever be allowed to shop for any option, whether it's public or private,” Cooper said. “In other words 90 percent will be stuck with what they’ve got. So why don’t we allow people to upgrade to get a better deal?”

Cooper added, “As far as the public option is concerned, I’m for one, we can have a good one, we can have one that’s affordable for the individual family and for the system as a whole, but all this effort is for naught if we can’t get 60 votes in the Senate.”

On Tuesday, Sen. Olympia Snowe (R-Maine), who is often considered the one Republican who might vote in favor of health care reform legislation, responded to Reid’s announcement, saying that she would not support a bill that includes a public option. Sen. Joe Lieberman (I-Conn.) also announced Tuesday that he would block Reid’s plan as long as it includes a publicly funded insurance plan.

According to House Majority Leader Steny Hoyer (D-Md.), the House may introduce their health care bill by the end of this week.

Republicans Concerned About Proposed Consumer Finance Protection Agency

By Ravi Bhatia-Talk Radio News Service

House Minority Whip Eric Cantor (R-Va.) and other Republican Congressmen delivered statements today at the U.S. Capitol opposing the proposed Consumer Finance Protection Agency.

The bill that would lead to its establishment, pushed by House Financial Services Committee Chairman Barney Frank (D-Mass.), would create an agency to oversee nearly all facets of consumer lending. The Committee will vote on the bill by the end of the week.

“Increased government regulation isn’t always the answer,” Cantor said. “We need, perhaps, smart regulation, but more [isn’t always] the right solution.”

Supporters of the bill say that the agency will pull together consumer oversight powers scattered among various agencies, making consumer interests a higher priority.

“The new Consumer Financial Protection Agency that I've asked Congress to create will have just one mission:  to look out for the financial interests of ordinary Americans,” said President Barack Obama in a statement released Oct. 9. “It will be charged with setting clear rules of the road for consumers and banks, and it will be able to enforce those rules across the board.”

However, the Republicans at today's briefing are concerned that the agency will concentrate too much power into one organization, or possibly even one person.

“What has been proposed by the Democrats is a new consumer finance rationing and design authority,” said Spencer Bachus (R-Ala.), ranking member of the House Financial Services Committee. “It gives one person - a credit rationing czar - the right to make all types of decisions. Of all the losers, the greatest loser, if this legislation passes, is going to be small business, because small business [is already] having trouble getting financing.”

UPDATE: By a tally of 32-29, the House Financial Services Committee voted to approve the Consumer Financial Protection Agency on Thursday.

Dem. Senators Pressure The Right To Move Faster With Unemployment Benefits Bill

By Ravi Bhatia-Talk Radio News Service

Democratic senators accused their Republican colleagues of becoming “A party of ‘No’” today on Capitol Hill, expressing concern that the right is delaying a bill to extend unemployment benefits for 14 additional weeks to those whose benefits are expiring before 2010.

The bill would add 20 additional weeks of unemployment benefits to citizens in states suffering the highest unemployment rates, such as Rhode Island and Michigan.

“Every state has been hit by this recession, every state is seeing these problems,” Sen. Jack Reed (D-R.I) said. “The Republicans have thrown up opposition in terms of requesting a CBO score when we know [the bill] is fully paid for and fully offset. Now they’re delaying passage by offering amendments that have nothing to do with unemployment. Instead of action, they are just simply saying 'no'.”

Every dollar of unemployment benefits generates $1.60, according to Reed, who later added that the Republicans proposed attaching amendments that relate to ACORN funding and extending the $8,000 real estate tax credit.

Employers pay state and federal unemployment taxes. To pay for the bill, the Democrats proposed extending federal unemployment taxes one more year. Republican senators want the bill to be paid for by other means.

The national unemployment rate has reached 9.8 percent and continues to climb, according to the U.S Deptartment of Labor.

“We don’t need more foreclosures. We need to help folks,” said Sen. Al Franken (D-Minn.), whose state’s unemployment rate is at 7.6 percent. “And this is the time to do it.”

Stabenow Counters Cut To Physicians' Pay

By Ravi Bhatia-Talk Radio News Service

Sen. Debbie Stabenow (D-Mich.) called the delay in changing the Medicare formula a yearly “Kabuki dance” in a press conference Tuesday on the Medicare Physicians Fairness Act, a piece of legislation that will prevent a significant pay-cut for physicians.

“Now we need to take the next step,” she said. “Which is, in the context of health reform, to say we are not going to move forward with the devastating cuts that would happen if we take no action. Instead, we embrace the new focus on prevention and quality and incentives in the health care reform bill that refocus how we look at physician care and physician payments.”

If passed, the act would eliminate the 21.5 percent Medicare payment rate reduction for physician services in 2010 and sunset the application of the sustainable growth rate formula. Stabenow stated that she is hopeful the legislation will pass this week.