The House Financial Services Committee held a hearing on “Financial Market Regulatory Restructuring,” focusing on the risks large banking firms pose on the entire financial system. The Committee discussed what Congress could do to quell those risks and increase systemic strength, as the recent collapse of Bear Stearns stimulated fear of instability in the financial system. Chairman Barney Frank (D-Mass.), said there needs to be a regulatory authority of the financial system. He said he is optimistic of an international agreement to increase regulation. (more…)

Sen. Wayne Allard (R-Colo.) says that the recent turmoil in the credit markets and the demise of Bear Stearns has caused many to scrutinize the role of credit derivatives and the banks exposure to the “potentially risky” financial statements. Allard also says that the OTC credit derivatives market is still relatively new and trades on a market that lacks substantial infrastructure and transparency. (1:24)

 

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Today the House Financial Services committee held a full hearing on “Using the FHA (Federal Housing Administration) for Housing Stabilization and Homeownership Retention” to discuss possible solutions to the current mortgage and foreclosure crisis.
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At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” SEC Chairman Christopher Cox says the decision to provide funding through JPMorgan was made because of Bear’s participation in a range of critical markets meant that a chaotic unwinding of its positions could have created additional pressure throughout the real economy. (:26)

 

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At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” SEC Chairman Christopher Cox says despite the run on the bank to which Bear Stearns was subjected, at no time during the week between March 10-17 were its customers at risk of losing their cash or their securities. (:18)

 

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At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” Federal Reserve Chairman Ben Bernanke says the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain and the adverse impact of a default would not have been confined to the financial system. (:23)

 

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At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” Under Secretary for Domestic Finance Robert K. Steel (appearing to represent Secretary Paulson and the U.S. Treasury Department) says a strong financial system is vitally important for all Americans. When our markets work, people throuhgout economy benefit, such as Americans seeking to buy a car or home, or borrow on the strength of a good idea. When our financial system is under stress, he says, all Americans bear the consequences. (:29)

 

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At the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators,” Senator Jim Bunning (R-KY) says his first question is how big do you have to be to be too big to fail, and he does not like the idea of the Fed getting involved in the bailout of that company [Bear Stearns]. I want to hear from the witnesses, he says, why they thought it was necessary to stop the invisible hand of the market from delivering discipline. That, he says, is Socialism. (:38)

 

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Why did you bail out Bear Stearns? It was the resounding question heard over and over in the Senate Banking, Housing, and Urban Affairs Committee hearing on “Turmoil in U.S. Credit Markets: Examining the Recent Actions of Federal Financial Regulators.” Federal Reserve Chairman Ben Bernanke, SEC Chairman Christopher Cox, United States Treasury Under Secretary Robert Steel, and President of the Federal Reserve Bank of New York Timothy F. Geithner, all attempted to answer that question to Congress. (more…)