Rep. Barney Frank says, “We need to regulate for normal human beings and that’s what we hope to do. We think it’s important for there to be both regulatory structures that provide focused responsibility for the right kind of regulation and the appointment of individuals to do it.” (0:30)
By Sam Wechsler – Talk Radio News Service
Secretary of the Treasury Timothy Geithner expressed support for the newly proposed Consumer Financial Protection Agency (CFPA) Friday at a hearing before the House Financial Services Committee. If established, the new agency would both regulate and enforce rules geared towards protecting consumers from risky financial products.
Geithner stated that “rules written by those not responsible for enforcing them are likely to be poorly designed, with insufficient feel for the needs of consumers and for the realities of the market. Rule-writing authority without enforcement authority would risk creating an agency that is too weak, dominated by those with enforcement authority.”
Oversight of the CFPA would extend to both banks and non-banking financial institutions such as mortgage brokers.
Geithner said that consumer protection failed in the years leading up to the current financial crisis in part because all federal financial regulators had higher priorities than consumer protection. Creation of the new agency would strip the Federal Reserve of consumer protection authority, and would require the Fed to receive written authority from the Secretary of the Treasury in order to exercise emergency lending authority.
Geithner stressed his desire to see innovation maintained in the financial product industry, and called for a system that produces less risk for damage. “Many of the practices of consumer lending that led to this crisis gave innovation a bad name. What [lenders] claim was innovation was often just predation,” he said.
In addition to the new CFPA, Geithner discussed a Financial Services Oversight Council that would be comprised of the heads of all major financial regulatory agencies, including the Fed and the Securities and Exchange Commission. The council would have the power to gather information from any firm or market to help identify risk, and would be responsible for recommending changes in laws and regulation that would safeguard against future crises.
Geithner hopes that Congress will pass financial reform by the end of the year. “Despite this crisis, the United States remains in many ways the most productive, the most innovative, the most resilient economy in the world. To preserve this, though, we need a more stable, more resilient system, and this requires fundamental reform,” he said.
By Courtney Ann Jackson-Talk Radio News Service
Financial industry leaders were in agreement Friday that the Obama administration’s proposed financial regulatory reform is necessary, noting that the reform will renovate and strengthen the financial marketplace and many of its regulations. During a Committee on Financial Services hearing Friday, many of the panelists applauded the administration’s proposal.
“We fully support the Administration’s five key principles for strengthening consumer protection-transparency, simplicity, fairness, accountability, and access-and we are pleased to see the Chairman carry these principles forward as he works to fill the regulatory gaps to protect consumers,” said Diahann Lassus on behalf of the Financial Planning Coalition.
Other panelists highlighted the administration’s “diagnosis of the deficiencies” of the current financial framework. They said it is outdated and some aspects have led to confusion and inefficiencies for years now.
Regulations received much attention with panelist Robert Nicholas, President and COO of Financial Services Forum, saying the framework as it currently stands, “undermines regulators’ ability to ensure institutional and systemic safety and soundness-helping to create the opportunity for, and exacerbating, the current financial crisis.”
Committee member Rep. Paul Kanjorski (D-Pa.) noted a survey by ShareOwners.org that sites 58 percent of investors are now “less confident in the fairness of the financial markets” than they were one year ago. He noted that a major reason for the lack of confidence is due to the failure of regulators.
“We must enact strong new laws,” said Kanjorski.
By Kayleigh Harvey – Talk Radio News Service
Fred Wertheimer, President and CEO of Democracy 21 discusses the need for “strong rules to stop the use of public officials misusing their office for personal gain.”
By Kayleigh Harvey – Talk Radio News Service
The House Financial Services Committee met today for the first time under the one hundred and eleventh Congress to discuss “Promoting Bank Liquidity and Lending Through Deposit Insurance, Hope for Homeowners, and other Enhancements”.
Testifying before the committee members were John Bovenzi from the Federal Deposit Insurance Corporation and Meg Burns from the Federal Housing Administration.
Committee Chairman Barney Frank (D-MA), opened the meeting saying, “Hope for homeowners came out of this committee and we passed it last year, we didn’t do it well. I acknowledge that, and it has to be corrected.”
The discussion focused on proposals to modify the current ‘Hope for Homeowners’ Program.
John Bovenzi in his testimony to the committee said that, “Liquidity is a key component in returning the economy to a condition where it can support normal economic activity and future economic growth”
“Deposits, especially FDIC ensured deposits are a key source of bank liquidity. The FDIC has implemented the temporary liquidity guarantee program to help stabilize the funding structure of financial institutions and expand their funding base to support the extension of new credit”, he stated. The FDIC is trying to increase their line of credit to potential home buyers from $30 billion to $100 billion.
Congresswoman Judy Biggert (R-IL) said: “From home builders we’re hearing that they have homes and condos to sell, people arrive, but because of the severe restrictions that have been put on the loan, make it so that the buyers walk-away”.
Meg Burns said: “All of us at HUD welcome and applaud your decision to make modifications to the ‘Hope for Homeowners’ program. As you are well aware the initial program data clearly indicate that changes are not only appropriate but necessary. Furthermore, changes are needed as quickly as possible. To date FHA has ensured no loans under the program, lenders have taken 451 applications and 25 loans have closed”.
February 3, 2009
Congressman Michael Capuano (D-MA) expresses his concerns to a representative from the FDIC about the current economic situation at a House Financial Services Committee hearing to discuss the “Hope for Homeowners” program. February 3, 2009.
Democratic National Committee General Counsel Joe Sandler says Sen. John McCain (R-Ariz.) could face a fine of tens of millions of dollars if found to be in violation of federal campaign finance laws. He also says this could be the largest financial violation of these laws in history (:30).
Democratic National Committee General Counsel Joe Sandler says that the appropriate course for determining whether Sen. John McCain (R-Ariz.) violated campaign finance laws by opting out of the matching funds program without filing a request with the Federal Election Commission (FEC) is to pursue an investigation, should there be sufficient evidence be found by the FEC to do so. If McCain is found to be in violation of the law, Sandler says the information should be made public before the election (:53).
Vivian C. Jones, specialist of international trade and finance at the Congressional Research Service, says that public entities or government subsidies help to lower the prices of U.S. goods for consumers. Jones says it is fundamentally about price, especially since U.S. industries claim that imported goods are unfairly priced. Jones says that this makes the U.S. producers unable to compete internationally. (0:35)
Secretary of the Department of Education, Margaret Spellings, addresses Rep. George Miller (D-CA) at House Education and Labor Committee hearing on ensuring the availability of federal student loans. (0:37)
