House Financial Services Committee Ranking Republican Rep. Spencer Bachus (R-Ala.) calls finance legislation sponsored by committee chair Rep. Barney Frank (D-Mass.) the most “far reaching, significant reform of our financial system since the Great Depression.” He then says however, that debate over the proposal should be “deliberative and not hurried.” (0:33)
By Celia Canon-Talk Radio News Service
At a press conference on Thursday, Republicans presented their own financial regulatory reform plan to counter proposals made by the Democrats on this issue.
Rep. Jeb Hensarling (R-Texas) said that “The Republican plan will transition Fannie (Mae) and Freddie (Mac) to market competition over a reasonable period of time to help end what the taxpayers are tired of.. and that is bail-out mania.”
Congressman Spencer Bachus (R- Ala) emphasized the weakness of the Democrats’ plan.
“Unfortunately, the administration’s plan continues the cycle of bailouts for “too big to fail” financial institutions, furthers the government’s role in picking winners and losers, complicates rather than streamlines the current regulatory structure, and keeps taxpayers on the hook for losses caused by imprudent risk-taking on Wall Street,” said Bachus.
Bachus explained that instead, “The Republican plan would direct all failed non-banks to enhanced bankruptcy proceedings. Bankruptcy is a fair and transparent process where the rules are clear and well-established, and which does not require taxpayer funding to bail out the creditors of failed institutions.”
Rep. Shelley Moore Capito (R-Va.) summarized the Republican plan.
“It’s a better protection for our taxpayers, it’s less government involvement, it’s a more orderly transition,” said Capito.
Congresswoman Judy Biggert (R-Ill.) also partook in the presentation of the regulatory plan.
“There’s going to be enforcement and fiscal responsibility for all those that created (crisis),” said Biggert.
Rep. Shelley Moore Capito (R-Va.) summarized the Republican plan.
“It’s a better protection for our taxpayers, it’s less government involvement, it’s a more orderly transition,” said Capito.
Despite the differing plans, both Republicans and Democrats agree on one point: America needs change in the financial system.
At a hearing today with executives from Ford, Chrysler, and General Motors, Chairman Frank lamented that the U.S. is in its worst economic situation since the Great Depression including 533,000 lost jobs in November. He called the current lack of jobs in the U.S. “an unmitigated disaster.” Rep. Al Green (D-Texas) said that allowing the car companies to fail would put “2 million people out of work.”
Rep. Spencer Bachus (R-Ala.) said the reality is that “Detroit is making good cars.” He called a potential $34 billion loan to the major U.S. automobile companies “limited transitional assistance” and said he would only support giving the car companies the loan they requested if there is an “expectation of success.” Rep. Judy Biggert (R-Ill.) claimed these companies must find a way to be “self sustaining.”
Rep. Donald Manzullo (R-Ill.) said that the U.S. needs to “increase the demand for these vehicles.” He felt that either the government or the car companies need to find a way to encourage Americans “to start buying cars again.”
Ron Gettelfinger, President United Auto Workers (UAW), said workers in the automobile industry are “prepared to do our part.” He did caution against making auto workers and retirees the “scapegoat” since they only make 10 percent of the total cost of the businesses. He also said that allowing the car companies to declare Chapter 11 bankruptcy is not an option because people will not buy vehicles from a bankrupt company.
President and CEO of the Ford Motor Company Alan Mulally said that Ford had “too many brands” of vehicle, but they are now “matching production” with “customer demand.” He claimed Ford needs to become more balanced and efficient. He also stated that he has worked with the UAW to “reduce labor costs.” On behalf of Ford, Mulally asked Congress for a $9 billion bridge financing loan.
Robert Nardelli, CEO of Chrysler, asked Congress for $7 billion in bridge financing. He blamed his company’s lack of success on current U.S. auto sales, which he said were the worst in 20 years. Nardelli was excited about current improvements in his company’s vehicles though, saying that 73 percent of them would have improved fuel economy in 2009.
Chairman and CEO of the General Motors Corporation (GM) Richard Wagoner, who asked Congress for $12 billion in short term loans, said that GM is dedicated to conserving energy volumes and finding new “green jobs” in the future. He also said that his company will change the way they give executive compensation after his company’s economic fallout.
Rep. Spencer Bachus (R-Ala.) says that while high foreclosure rates do not help anyone, the government should not mandate bailing out all borrowers. (1:31)
At the House Financial Services Committee Full committee hearing on the Housing and Urban Development Department’s (HUD) FY2009 Budget, Chairman Barney Frank (D-MA) said the proposed Budget is seriously inadequate, and the cutbacks are “distressing.” At the city level, there is the sub-prime crisis and foreclosures. Frank said the funding of the war in Iraq has caused substantial deductions and cuts in other areas, which results in a under funding of Urban initiatives. He said he expresses “deep unhappiness: in the cutting of money to the cities. He said it is an uncompassionate example of public policy.
Congressman Spencer Bachus (R-AL) said in recent years the house market has fueled the economy, and that nearly 70% of adults own their own homes. A sharp rise in foreclosures have made lenders reevaluate the lending process, Bachus said, and many Americans struggle to make payments. It doesn’t seem fair, Bachus said, to shift the responsibility from home owners to everyday taxpayers, just because the house values are going down.
HUD Secretary Alphonso Jackson said Congress should allow the FHA some flexibility in setting premiums, so they can offer “safe” refinance options. He said he believes that FHA Secure has proven already that it is extremely valuable, and setting FHA home loan limits would provide availability to help more people. Last year, 96% who completed HUD’s program avoided foreclosure.
A large part of the Budget, Jackson said, is for low-income rental housing. They have been making strives to help the chronic homeless, and the proposed Budget seeks to increase the homeless program. Also, nine hundred and eighty vouchers would be able to be used with the Veteran’s Administration to help homeless vets.
