Posted by Staff on May 01, 2015
Subcommittee Examines Impact of International Standards on U.S. Insurance Competitiveness
The Housing and Insurance Subcommittee held a hearing on Wednesday to review the impact that international regulatory standards could have on the competitiveness of insurers in America.
Subcommittee Chairman Blaine Luetkemeyer (R-MO) said in his opening statement, "The United States finds itself with the opportunity to lead, and not be led. We must seize the opportunity. It's vital that the gentlemen appearing today work in concert and in the interest of the United States to ensure that no ground is ceded to foreign regulators and that the necessary time is taken to produce common-sense rules."
Rep. Lynn Westmoreland (R-GA) spoke about the unintended consequences caused by ineffective and misguided regulations on small businesses and the economy.
"What Dodd-Frank did specifically with insurance companies in putting them under the SIFI rule and other things is you cast a net so broad that you caught all the little fishes that you were not intending to catch. So as a result, we've got what we've got. And there's going to be all types of unintended consequences as there is with anything as complex as Dodd-Frank and all the many rules that it put on different businesses. Then we wonder why we only had a growth of .02 percent in our economy. It's a direct result of the overregulation that we have today," said Rep. Westmoreland.
For nearly 150 years, U.S. insurance companies have been regulated primarily by the states. The Dodd-Frank Act passed in 2010 enlarged the federal government’s role in the insurance industry.
Today, international regulatory efforts threaten the U.S. model of insurance supervision that keeps our insurance market financially strong and competitive. There is a shared goal to better coordinate international insurance supervision, however, but not if it means deferring to international authorities that seem intent on moving toward a consolidated, bank-like model.
Subcommittee Focuses on Legislation to Help the Economy Grow
The Capital Markets and Government Sponsored Enterprises Subcommittee, chaired by Rep. Scott Garrett (R-NJ), held a hearing on Wednesday to focus on solutions that will help build a healthier economy by reducing regulatory burdens on Main Street businesses.
The Committee reviewed a dozen legislative proposals that will help small businesses -- the primary innovators and job creators of our economy -- gain access to capital so they can hire more workers, rather than having to spend their time and money toward complying with overly burdensome regulations.
“Although these bills are modest, they are not insignificant to our fellow citizens back home or to the entrepreneur or the small company that our fellow citizens depend on for a job,” said Chairman Garrett. “So, in all this, it is important to remember that capital formation and investor protection is not an either/or proposition. When investors have additional investment options to earn a return, and invest their money, that additional choice is significant protection.”
The bills would build upon the success of the bipartisan Jumpstart Our Business Startups (JOBS) Act of 2012. While those provisions of the JOBS Act that have been implemented are helping small businesses access capital at lower costs and have made it easier for companies to go public, more needs to be done.
A list of bills the Subcommittee discussed at the hearing can be found here.
Export-Import Bank’s Mandates Receive Scrutiny at Joint Subcommittee Hearing
The Financial Services Monetary Policy and Trade Subcommittee and the Oversight and Government Reform Health Care, Benefits and Administrative Rules Subcommittee held the second in a series of joint hearings on Thursday to review the Export-Import Bank. This week’s hearing gave members a chance to question Ex-Im Chairman Fred Hochberg about the Bank’s mandates.
“The Export-Import Bank’s stated goal is to support American jobs through exports. However in my opinion, judging by the Bank’s prior financing deals, it appears to be doing quite the opposite, oftentimes," said Subcommittee Chairman Bill Huizenga (R-MI). "American taxpayers have been unwittingly propping up foreign state-owned companies in Saudi Arabia, Russia, China, Venezuela, Pakistan, India, Colombia, Mexico, Ethiopia, South Africa and others who have done nothing but, frankly, work against the best interests of American citizens.”
Ex-Im’s mandates are politically-driven with no economic rationale, subcommittee members said at the hearing. This not only increases the likelihood of default and puts taxpayers at greater risk, it also invites waste, fraud and abuse.
Just last week, a former Ex-Im employee admitted he accepted bribes in return for recommending the approval of unqualified loan applications. At an earlier joint subcommittee hearing, members learned from Ex-Im’s acting inspector general that there are at least 31 active fraud investigations involving Ex-Im and the possibility of further indictments.
Committee Conducts Oversight of the Financial Industry Regulatory Authority
At Friday’s hearing of the Capital Markets and Government Sponsored Enterprises Subcommittee, members examined the activities and policies of the Financial Industry Regulatory Authority (FINRA), an independent, not-for-profit organization authorized by Congress to act as a self-regulatory organization (SRO) over the U.S. securities industry.
The Subcommittee examined concerns that FINRA is transforming itself from a traditional SRO into a quasi-governmental regulator with expansive authorities similar to those of the Securities and Exchange Commission and the need for FINRA to improve operations so it can better serve broker-dealers and their customers.
"Its recent actions are closer to that of the ever-expanding federal bureaucracies that we have become accustomed to in Washington that seek to burrow further into the lives of each and every citizen," said Subcommittee Chairman Garrett.
Additionally, the Subcommittee compared FINRA’s regulation of broker-dealers against rules recently proposed by the Department of Labor that expand the definition of “fiduciary” to include broker-dealers providing investment advice on 401(k) and IRA retirement accounts. Although the Obama Administration has called for broker-dealers to be subject to a fiduciary standard of care, FINRA already subjects broker-dealers to comprehensive oversight and actively protects investors.
Subcommittee Vice Chairman Robert Hurt (R-VA) said, "Investors in Virginia’s Fifth District, my district, and across the country rely on FINRA to regulate broker-dealers in a responsible way. I believe that FINRA has a responsibility to operate in a fair, consistent, and transparent manner given the authority it exercises. FINRA must be mindful of the potential economic impacts its rules may have, particularly at a time when economic growth remains vitally important."
Rep. Mia Love | Mia Love: My first 100 days in Congress
I am serving on the Financial Services committee, which is actively working to examine banking laws and unnecessary regulations. We are currently looking at a multitude of ways to dismantle Dodd-Frank and remove the unfair burden it imposes on financial institutions, particularly the many Industrial Banks based in Utah.
Weekend Must Reads
Wall Street Journal | The Peculiar Uses of a Taxpayer Bank
The Export-Import Bank is anything but a “critical element” of America’s national security. Congress should refuse to reauthorize the bank when its charter expires. Washington shouldn’t be spending taxpayer money on corporate welfare—especially when it goes to companies and countries that are either corrupt or are actively working to undermine America.
Investor's Business Daily | Dodd-Frank Takes Banking Back To Horse-And-Buggy Days
Dodd-Frank's compliance burden is heavier on small banks than larger ones, which are better financed and staffed to handle the costs and complexities. Given this difficult environment, why would anyone open a small bank — which is to say, why would anyone open a bank at all, since no one starts out opening a large bank?
American Banker | Warren's Wall Street Reforms Would Just Make Banks Riskier
Sen. Elizabeth Warren has received a lot of attention for her new plan to complete the work of the Dodd-Frank Act. This plan would sow the financial services ground with salt as Rome did to Carthage, ensuring that nothing will grow in the future.
CNBC | Hey, Fed —What was that?!
The Federal Reserve has muddied – significantly – the outlook for monetary policy.
Wall Street Journal | The Messes Obama Will Leave Behind
Mr. Obama will also leave behind a difficult economic climate in which to start a business. According to a recent Brookings Institution study, every year of his presidency more American businesses have died—closed, merged or gone bankrupt—than have been created.
In the News
Central Maine | Poliquin introduces child support bill, his first in Congress
Augusta Free Press | Robert Hurt: The CFPB needs increased transparency, accountability
Wall Street Journal | The Slow-Growth Fed
National Journal | The Recession Isn't Over For Many Families
Detroit News | Huizenga: Many reasons to be wary of the Ex-Im BankWall Street Journal | House Lawmaker Presses SEC Chief on Bond-Market Liquidity
RepublicanAmerican | Low-down-payment mortgages are back
Posted by on April 24, 2015
Task Force Holds First Hearing on Terrorism Financing
The Task Force to Investigate Terrorism Financing held its first hearing on Wednesday to examine the global terrorist threat and the methods by which terror groups finance their operations.
In its coverage of the hearing, The Hill quoted Task Force Chairman Michael Fitzpatrick (R-PA) as saying that members will make sure "the federal government is using every tool at its disposal to deprive groups like the Islamic State, Boko Haram and other terrorist organizations of the funds they rely on to advance their warped ideology."
Members and hearing witnesses expressed concern that lifting sanctions against Iran as part of President Obama’s nuclear deal “could ease the flow of funding to terrorist groups around the world,” the Boston Herald reported.
The U.S. is ceding $11.9 billion in cash transfers to Iran as the Obama administration looks to finalize a nuclear deal with Tehran.
For more on the Task Force, be sure to watch this week’s Sunday Video Message with Task Force Co-Chairman Rep. Robert Pittenger (R-NC).Subcommittee Hears From Regulators on Regulatory Burdens
The Financial Institutions and Consumer Credit Subcommittee continued examining the detrimental effect the regulatory burden on community financial institutions has on consumers at its hearing on Thursday.
As Bloomberg reported in its coverage of the hearing, “Smaller banks have been complaining for years of the compliance costs of post-crisis regulations, particularly those implementing the Dodd-Frank Act.”
Members shared their concerns about the shrinking number of local banks and credit unions due to burdensome and duplicative regulations.
Overregulation has limited choices for consumers, increased costs and made it harder for Americans, especially those with low and middle incomes, to achieve financial independence, said Rep. Frank Guinta (R-NJ).
Rep. Scott Tipton (R-CO) said in his rural district community financial institutions are "about to give up" due to the unmanageable amount of regulations.MEMBER SPOTLIGHT
Rep. Mike Fitzpatrick | Experts: Terrorists financing with fish, statues and sugar
In March, the U.S. House Financial Services Committee created a task force specifically to study the flow of money for terrorists. Chaired by Bucks County Congressman Mike Fitzpatrick, the task force has six months to issue a set of recommendations on bankrupting groups such as the Islamic State group, or ISIS. “It’s estimated that the terror attacks of Sept. 11, 2001, cost al-Qaida $500,000 to plan and execute,” said Fitzpatrick, R-8, of Middletown. “In 2015, the United States once again faces the specter of terrorism. The Islamic State has a reported net worth over $2 billion.”
Weekend Must Reads
Wall Street Journal | What’s Wrong With the Golden Goose?
How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.
Wall Street Journal | Mel Watt’s Taxpayer Guarantee
The decision is a reminder of how little has changed in mortgage finance and at Fannie and Freddie despite their central role in the financial meltdown.
Economics One | A Monetary Policy for the Future
But much of the progress in medicine over the years has been due to doctors using checklists. Experience shows that checklists are invaluable for preventing mistakes, getting good diagnoses and appropriate treatments. Of course doctors need to exercise judgement in implementing checklists, but if they start winging it or skipping steps the patients usually suffer. Checklist-free medicine is as bad as rules-free monetary policy.
On the Horizon
April 29, 2015 10:00 a.m.
April 30, 2015 1:00 p.m.
Al-Monitor | Congressional terror finance task force targets Iran
CNN Money | U.S. economy isn't growing fast enough
Wall Street Journal | Lawmaker Wants Fed to Name Possible Sources of Internal Secrets
The Hill | Half of Americans have money worries
Washington Examiner | The incredible shrinking deficit is no more
Wall Street Journal | Regional Banks Sweat Through Low-Rate ‘Torture’
Posted by Staff on April 17, 2015
House Passes Bipartisan Regulatory Relief Bills for Consumers
As the House marked "Financial Independence Week,” lawmakers passed eight bipartisan regulatory relief bills to promote a healthier economy, preserve consumer choice, and help more Americans achieve the dream of financial independence.
“The American dream for so many low and moderate income Americans is that one day they can achieve financial independence,” said Chairman Jeb Hensarling (R-TX). “But, regrettably, over the last six years, middle income paychecks have remained flat or have actually been slightly lower; we know that middle income bank accounts are a lot lower. Part of the problem, frankly, has been the Dodd-Frank Act. After its passage the big banks have gotten bigger, the small banks have gotten fewer, the taxpayer has become poorer.”
Six of the eight bills were passed on the suspension calendar:H.R. 299, the Capital Access for Small Community Financial Institutions Act, sponsored by Rep. Steve Stivers (R-OH):
H.R. 601, the Eliminate Privacy Notice Confusion Act, sponsored by Rep. Blaine Luetkemeyer (R-MO):
H.R. 1259, the Helping Expand Lending Practices in Rural Communities Act, sponsored by Rep. Andy Barr (R-KY);
H.R. 1265, the Bureau Advisory Commission Transparency Act, sponsored by Rep. Sean Duffy (R-WI);
H.R. 1367, sponsored by Rep. Amata Radewagen (R-American Samoa); and
H.R. 1480, the SAFE Act Confidentiality and Privilege Enhancement Act, sponsored by Rep. Robert Dold (R-IL).The other two bipartisan bills both deal with making sure lower and middle income Americans have affordable housing choices.
H.R. 685, the Mortgage Choice Act, sponsored by Rep. Bill Huizenga (R-MI), was approved 286-140. The bill provides clarity to the calculation of points and fees in mortgage transactions, allowing more loans to be classified as Qualified Mortgages and increasing affordable options for borrowers.
"Hardworking families should not be denied access to a qualified mortgage because of technicalities that are largely out of their control," said Rep. Huizenga, Chairman of the Monetary Policy and Trade Subcommittee.
The other bill, H.R. 650, the Preserving Access to Manufactured Housing Act, will ensure consumers – especially low and moderate-income consumers – can continue to have access to affordable manufactured housing. This bipartisan legislation continues existing consumer protections, including protections that prohibit steering consumers to predatory loans.
The bill’s sponsor, Rep. Stephen Fincher (R-TN), the bipartisan bill will protects "financing options for the millions of Americans who rely on manufactured housing. New regulations that fail to recognize the uniqueness of the manufactured housing industry are taking options off the table for low-income families.”
H.R. 650 passed the House 263-162.More Indictments of Export-Import Bank Employees Possible, Members Learn at Joint Hearing
Members attending a joint hearing of the Financial Services Monetary Policy and Trade Subcommittee and Oversight and Government Reform Health Care, Benefits and Administrative Rules Subcommittee heard the Export-Import Bank’s acting Inspector General reveal that future indictments surrounding the Bank’s activities are possible.
Earlier in the week, the Justice Department charged a former Ex-Im loan officer with bribery, alleging 19 occasions when the former employee accepted cash and other things of value in return for “being influence in the performance of his official act,” the Wall Street Journal, The Hill and other media outlets reported.
Committee leaders called the news “alarming.”
“While this is disturbing enough, the fact that we learned of this only at the end of nearly three hours of testimony, is further evidence of the Bank’s continued and brazen efforts to avoid transparency and accountability. With the Bank’s charter expiring this summer, this adds to the already long list of significant concerns we have over its future viability,” said Chairmen Hensarling, Jason Chaffetz, Huizenga and Jim Jordan.
Earlier in the hearing, Subcommittee Chairman Huizenga noted that "since its creation, Ex-Im's taxpayer subsidy has grown exponentially to a whopping $140 billion cap. As the national debt continues to climb over $18 trillion, many fear that these taxpayer-backed loan guarantees put taxpayers dollars at significant risk and raise concern that the Ex-Im is looming towards yet another bailout that the American people simply cannot afford. It has been claimed that while the Export-Import Bank is a self-sustaining agency that receives a net appropriation of $0 from Congress, because these bank loans are backed by the full faith and credit of the U.S. government, I believe and many others believe that American taxpayers are at risk if these banks' projects fail. It's important to note that the bank has already received a congressional bailout previously,” Chairman Huizenga said, noting that “from 1992 to 1996, Ex-Im received $9.92 billion in direct appropriations from Congress and the American taxpayers."
Witnesses Speak Up for Regulatory Relief
The Financial Institutions and Consumer Credit Subcommittee held a hearing on Wednesday to hear from community-based lenders and service providers about how the regulatory burden of the Dodd-Frank Act is harming their customers by restricting access to affordable credit.
“This Committee has already heard testimony and explored the significant regulatory onslaught and resulting market consolidation facing depository institutions - our nation’s community banks and credit unions. Today, I am pleased to welcome our witnesses who represent many small businesses and community-based financial institutions to hear their perspective on ever-increasing regulatory burdens,” said Subcommittee Chairman Randy Neugebauer (R-TX). “We must push forward in our bipartisan efforts to provide regulatory relief for our Main Street financial institutions and protect the financial independence of the individuals and families they serve.”
Dennis Shaul, who served as a senior advisor to former Chairman Barney Frank (D-MA) and is now CEO of the Community Financial Services Association of America, told the subcommittee, “federal legislation that was intended to reform Wall Street has instead been interpreted by the Bureau in ways never intended by Congress ─ to the detriment of consumers.”
"A law that was meant to improve accountability and transparency in the financial system and protect consumers is now being implemented in ways that are anything but transparent. Instead, the CFPB is using suspect and biased data and unpublished research products to support presumptive claims against disfavored nonbank financial products,” added Mr. Shaul.
"The average guy in the oil field that I represent, they come and tell me, 'What business is it of yours, the government, if I want to borrow a $100 today and pay back a $120 at the end of the week,'" said Rep. Steve Pearce (R-NM). “So what you're going to do is you're going to force these people out of business by putting these caps on here and, at the end of the day, the guy borrowing the money says, ‘What business is it of the government if I want to borrow a $100 to get me through the next payday, but you would choke that opportunity off.’"
Committee Seeks Increased Private Sector Participation in Affordable Housing
The Housing and Insurance Subcommittee held a hearing on Thursday to find ways to increase the role of the private sector in affordable housing.
Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, “We need to look at innovative ways to do more with less, including increased private sector participation in public and affordable housing. And while private capital may not work in every instance, it’s essential that we examine the track record of demonstration programs like Moving-to-Work and the Rental Demonstration Assistance program and public-private partnerships so we can serve more people in need with the limited resources at our disposal. In today’s hearing we will hear from witnesses who have first-hand experience in forging partnerships that benefit communities in need. These are some of the many people and organizations striving to make a difference; we need to provide them with greater flexibility to meet the growing demand they face."
Rep. Blaine Luetkemeyer | A lot can be accomplished in 50 years
So, what will the future of housing look like? If the objective is to build a system that protects taxpayers and homeowners and allows for a smarter housing safety net, the answer is reform. To ensure efficiency, we need organizational reform at HUD and leadership at the FHA and the Federal Housing Finance Agency that understands the importance of risk management. To protect taxpayers, the FHA must return to its mission and allow for more private market participation. To create a stable housing economy, we need to continue to press for responsible housing finance reform that encourages a culture of sustainability among homeowners. To help those most in need, we must push for innovation at HUD, the U.S. Department of Agriculture and other federal agencies that need to reduce the regulatory burdens that those who work tirelessly to serve their communities face.
Weekend Must Reads
Wall Street Journal | How to Revive The Private Mortgage Market
The economic logic is clear. Everybody wants more private capital operating in the secondary-mortgage market. But Fannie’s and Freddie’s huge government advantages make it impossible for any private entities to compete. Congress instructed that mortgage-guarantee fees be raised to the level where private financial institutions—using these institutions’ actual capital requirements and cost of capital—can fairly compete. The goal is a more robust, more private, and economically more efficient mortgage market. Taxpayers’ exposure to losses by Fannie and Freddie will also be reduced.
Forbes | How 'Progressive' Policy Weakens African-American Banks
Democrats (along with bureaucrats at the Consumer Financial Protection Bureau) have tried to go after car dealers and other lenders for “disparate impact” against minorities. Perhaps they should have turned that lens on themselves prior to passing Dodd-Frank. However well-intentioned Democratic lawmakers were in creating Dodd-Frank, its impact is another example of the negative consequences of over-regulation. That’s quite the opposite of “progressive.”
American Banker | No Denying Dodd-Frank’s Role in Bank M&A
The Hill | It’s Time to End the Choke Hold on Consumers and Businesses
April 22, 2015 10:00 a.m.
Housing Wire | Huge Mortgage Choice Act critic was supporter in August
Detroit News | House approves bill to change mortgage rules
Associated Press | House approves legislation to ease rules on home loans
The Hill | House passes Wall Street reform revisions
Arkansas Online | House OKs easing of lending rules
Housing Wire | Houses passes Mortgage Choice Act of 2015 by 286-140
Bloomberg | Lawmakers Step Up Fed Leak Scrutiny With Interview Requests
Credit Union Times | Credit Union Bills Head for House VoteArkansas News | Dodd-Frank Hurting Manufactured Home Loans
Wall Street Journal | Justice Department Charges Former Export-Import Bank Official With Bribery
Posted by Staff on March 27, 2015
Committee Passes 11 Bipartisan Regulatory Relief Bills and Establishes Task Force to Investigate Terrorism Financing
The Committee marked up and passed 11 bipartisan regulatory relief bills this week. The bills are designed to help strengthen the economy, preserve consumer choice and allow more Americans an opportunity to achieve financial independence.
Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-TX) said, “Today, the Financial Services Committee has begun to move the pendulum closer to the direction of reasonable regulation by taking the first step to address much-needed regulatory relief for our Main Street financial institutions and the consumers they serve.”
“As the United States pushes back against the tide of terror and extremism that is the enemy of freedom and peace everywhere, it must do so with every tool available – including within the financial system,” said Rep. Fitzpatrick.
Rep. Pittenger said, “America remains the primary target of radical Islamist jihadists, who seek to destroy our way of life and the freedoms we cherish. We must do all we can to mitigate that threat.”Subcommittee Examines FDIC's Role in Operation Choke Point
The Oversight and Investigations Subcommittee held a hearing to further examine the Federal Deposit Insurance Corporation's (FDIC) role in Operation Choke Point. Operation Choke Point is a program spearheaded by the Department of Justice (DOJ) that has unfairly forced several legal businesses to shut down by closing their bank accounts with certain financial institutions. These businesses have been deemed "high risk" by DOJ and financial regulators due to an alleged higher incidence of consumer fraud, regardless of whether the business has done anything illegal.
The sole witness, FDIC Chairman Martin Gruenberg, admitted that it was a mistake for government officials, including those at the FDIC, to cut off access to financial institutions for businesses deemed as “high risk” regardless of their individual merit.
"Using the term 'reputational risk,' they [FDIC examiners] are warning banks that if they do business with gun dealers, short-term lenders, payday lenders, ammunition manufacturers, smokes apps, and other legal businesses, they will meet the wrath of the FDIC. And if you disagree, Mr. Chairman, we have emails and memos from the FDIC to prove it," said Oversight and Investigations Subcommittee Chairman Sean Duffy (R-WI). "Their purpose is to choke off the business they don't like from the banking system. I've asked Chairman Gruenberg to testify today because I want to know where he got the target list from several years ago and like the IRS, I fear that activists at the DOJ and the FDIC are abusing their power and authority and they're going out to legal businesses and in fact, they're weaponizing government to meet their ideological belief."
Rep. Mick Mulvaney (R-SC) shared the story of a constituent who owns a pawnshop. The bank where she had a 25-year business relationship with told her it could not lend to her because of the nature of her business.
Despite the FDIC's efforts to retract the initial "high risk" list and guidance that prevented innocent business owners from accessing lines of credit, the FDIC has failed to hold accountable government officials who pressured banks to stop servicing businesses.
Committee Reviews SEC's Budget Request and Operations
The Committee held a hearing to review the Securities and Exchange Commission's (SEC) agenda, operations, and Fiscal Year 2016 budget request.
While many Democrats claim the SEC is “underfunded,” Chairman Hensarling pointed out in his opening statement that the SEC budget “has grown tremendously over the years.”
“In fact,” he said, “the SEC’s current budget of $1.5 billion represents an increase of almost 35% since the passage of the Dodd-Frank Act not yet five years ago. In fact, over a 20-year period since 1995, the SEC’s budget has increased by nearly 400%. That is three times greater than our national defense budget has grown at a time when we have to fight the international war on terror.”
The hearing also gave Committee members an opportunity to question the SEC’s rulemaking activities at a time when the SEC and the Department of Labor are crafting more regulations for financial advisers.
Rep. Bruce Poliquin (R-ME) expressed concerns that the proposed regulations will make it more difficult for low and moderate income Americans to save for retirement.
Rep. Ann Wagner (R-MO), who has proposed legislation that would give Americans more freedom to seek sound financial advice, urged SEC Chair Mary Jo White to consider the "potential for increased costs" for investors as a consequence of the Department of Labor's proposed fiduciary rules.
Rep. Scott Tipton | Tipton seeks to aid small banks
Rep. Scott Tipton, R-Cortez, introduced legislation Tuesday aimed at reducing compliance burdens for highly rated community banks.
Weekend Must Reads
New York Times | End This Corporate Welfare
The Export-Import Bank does not weigh the jobs it supports against those it destroys. By providing loans to foreign companies that compete with domestic ones, Ex-Im is actively eliminating American jobs.
Washington Examiner | Washington Examiner: Wall St. attacked, Main St. wounded
Dodd-Frank's impact on the financial industry is massive and burdensome. Some might respond, "Good. They deserved it!" But who really bears these burdens? It's not Wall Street but Main Street.
In the News
The Hill | House panel advances Dodd-Frank tweaksThe Hill | House Republicans demand FDIC punish 'Operation Choke Point' operators
American Banker | House Banking Panel to Take Up Slate of Dodd-Frank Changes
Washington Examiner | Operation Choke Point claims more victims, ignores due process
The Hill | House panel advances Dodd-Frank tweaks
Credit Union Times | Credit Union Reg Relief Bills Approved
American Banker | House Panel Passes Reg TweaksGreen Bay Gazette | Duffy pushes FDIC on 'Operation Chokepoint'
Credit Union Times | FDIC Chairman Grilled Over Operation Choke Point
Posted by Staff on March 20, 2015
Washington’s Regulatory Burden Harming Consumer Choice and Financial Independence
Witnesses told the Committee on Wednesday that Washington’s growing regulatory burden doesn’t just affect a bank or credit union’s bottom line, it also restricts consumers’ choices and access to affordable credit.
This is especially true for Americans with low and moderate incomes.
"It’s not an exaggeration to say that every single week we hear from another financial institution that is having trouble meeting the needs of their customers,” said Chairman Jeb Hensarling (R-TX). I have one message here from a bank in Arkansas that says due to the Qualified Mortgage rule that they have had to cease funding mobile homes 'which have long been a source of homeownership for low to moderate income consumers in our markets.' Here is one from a credit union in California who says due to federal regulation that one of their members can no longer wire funds to a family member in Ukraine. Here is one from a bank in Massachusetts -- 'we have experienced a spike in loan declines to women,' for their investigation identified that women attempting to buy the family home to settle their divorce and stabilize their family were being declined at a high rate due to the Dodd-Frank Qualified Mortgage rules and the ability to pay rules."
The Committee’s hearing on Tuesday gave Members the opportunity to question Treasury Secretary Jacob Lew on a variety of important issues ranging from the international financial system to the growing regulatory burden to the ongoing transparency controversy surrounding former Secretary of State Hillary Clinton.
Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI) questioned the Obama Administration’s plans for the IMF, asking “why should hardworking, middle-income American taxpayer dollars be used to bail out other countries, especially after suffering from bailout fatigue in our own backyard dealing with Fannie Mae, Freddie Mac, FHA and a number of others?”
Others voiced concerns that the Financial Stability Oversight Council (FSOC) has ignored the harmful consequences the Dodd-Frank Act has had on community financial institutions and their customers. "The administration's insistence on defending the Dodd-Frank brand at all costs is made all the more mystifying by the fact that the primary author of the law, our former colleague Barney Frank, has identified a number of provisions that he believes should be revisited. What's more, then-Fed Chairman Bernanke, in his last hearing with us, listed multiple bipartisan legislative reforms that policy makers could unite around to improve our financial regulatory system,” said Rep. Randy Hultgren (R-IL). "They both recognized that a law that runs to 2,300 pages and imposes at least 400 mandates cannot possibly be perfect, and that changes are, therefore, warranted.”
Committee Members also sought answers from Secretary Lew regarding former Secretary Clinton's use of a personal email address for official business. For much of the first two years of the Obama Administration, Secretary Lew served as Deputy Secretary of State for Management and Resources, making him the department’s chief operating officer.
However, Secretary Lew failed to shed any light on the issue, saying he had “no recollection” if he ever had any conversations with anyone about the State Department’s email policy and the he “didn’t pay a lot of attention to what e-mail” Secretary Clinton was using.Subcommittee Calls for Fairness and Protection of Shareholders in the SEC's Use of Enforcement
On Thursday, the Capital Markets and Government Sponsored Enterprises Subcommittee held an oversight hearing on the Securities and Exchange Commission’s (SEC) Division of Enforcement.
Subcommittee Chairman Scott Garrett (R-NJ) questioned the SEC’s increased use of Administrative Proceedings rather than federal courts. “I strongly support the proper and stringent enforcing of our nation’s securities laws. However, the enforcement of those laws, like any other, should be done in an even-handed manner, removed from politics, with appropriate due process protections for defendants. The current SEC enforcement policies and procedures do not meet this standard and need to be improved. The SEC should be less concerned about the press releases it sends out and the headlines it receives, and more concerned about having a clear and consistent approach to enforcing the law.”
Rep. Randy Hultgren | Congressman's Interest in Munis Comes from Experience
And that's not all Hultgren has done on the muni bond front since joining Congress in 2011. The 49-year-old has been one of the most vocal supporters of municipal bonds in the House and a leading co-sponsor of legislation on bank-qualified bonds. He serves on the House Financial Services Committee, which has jurisdiction over munis and other securities.
Rep. Ann Wagner | Financial crisis: Americans deserve freedom to grow, save
The president and Sen. Warren claim their new rule will have no impact on investors. They claim, falsely, that if you like your broker, you can keep your broker. But we have seen this Washington double speak before when the president famously said about Obamacare, "if you like your plan, you can keep your plan." In reality, this rule will restrict options and choice and will limit your freedom to keep your broker and invest in your future.
Weekend Must Reads
American Banker | Dangers of Housing Policy 'Hidden in Plain Sight' No More
Necessary reform of the U.S. housing finance system will only be possible when we understand how government policy shaped the financial crisis.
Washington Times | Sunshine Week should turn up the heat
The company is also raising separation of powers arguments because of the multiple roles FSOC members play, serving as rule-maker, investigator, prosecutor, judge and jury. The company brief states: "FSOC members perform a legislative function by adopting rules that purport to set the standards used to determine whether to designate companies (as SIFIs); an executive and prosecutorial function by proposing companies to be subject to the standards they have promulgated, investigating those companies, and building the case for designation; and an adjudicative function by issuing final decisions adopting their own proposed rationales. Not only is each of these functions performed by the same body, they are also performed by the same individuals, without even a separation into offices or divisions."
Investor's Business Daily | Amid Renewed Bailout Fear, Watt Turns Fannie, Freddie Into Welfare Agencies
Recent moves by Federal Finance Housing Agency chief Mel Watt to ease mortgage terms for delinquent and underwater borrowers could further hurt Fannie's and Freddie's profitability — and even put taxpayers on the hook for more losses.
On the Horizon
March 24, 2015 10:00 a.m.
Wall Street Journal | Treasury Secretary Lew: No Recollection of Clinton Email System
Durango Herald | Tipton questions impact of rules on local banks
Mobile Press-Register | Mobile community banker calls for relief from 'avalanche of new rules' created by Dodd-Frank
American Banker | Treasury's Lew on Volcker, Systemic Threshold and the State of Regulation
Posted by Staff on March 06, 2015
Committee Pushes for Accountability and Transparency at the CFPB
Tuesday’s hearing with Consumer Financial Protection Bureau Director Richard Cordray was another opportunity for Republicans to promote reforms to make the Bureau accountable and transparent to hardworking taxpayers.
Republicans on the Committee are pushing for reforms to make the CFPB accountable and transparent because the Bureau is, by design, not accountable or transparent to Congress or taxpayers. Republican Members understand that real consumer protection puts power where it belongs: in the hands of consumers, not Washington bureaucrats.
“The CFPB undoubtedly remains the single most powerful and least accountable Federal agency in all of Washington,” said Chairman Jeb Hensarling (R-TX) in his opening remarks. “When it comes to the credit cards, auto loans and mortgages of hardworking taxpayers the CFPB has unbridled, discretionary power not only to make those less available and more expensive, but to absolutely take them away."
With its authority unchecked, the Bureau restricts, limits and infringes on the economic freedoms of the very consumers it is supposed to protect.
Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-TX), said, “I remain concerned that many Bureau actions demonstrate a regulatory paternalism that assumes the American consumer doesn’t know how to make choices for themselves. It is a dangerous scenario when government bureaucrats start making financial choices for people.
Committee Republicans also continued to seek answers about why the Bureau is spending more than $215 million in renovation costs for a building it rents.
"Because it's $215 million of taxpayers' money!" declared Rep. Wagner.
Watch this exchange between Rep. Wagner and Director Cordray here.
Rep. Robert Hurt | Robert Hurt: The Federal Reserve must be transparent and accountable
Until we can institute more transparent policies for the Federal Reserve, we must continue to provide rigorous congressional oversight. Last Wednesday, Federal Reserve Chair Janet Yellen testified before the House Financial Services Committee hearing entitled, “Monetary Policy and the State of the Economy.” I appreciate Chair Yellen’s testimony, particularly because I have serious concerns about Federal Reserve policies that make life more difficult for hardworking Americans and disproportionately diminish the ability of Main Street banks to provide vital capital in our rural communities.
Rep. Robert Pittenger | Pittenger renews push on advisory board for small businesses
In a statement Thursday, Pittenger said the board would “give small business owners, credit unions and community banks a seat at the table.” “Small businesses create jobs. Community banks and credit unions support small businesses. Too often, Washington regulators don’t pay attention to how their rules create unnecessary burdens for small business owners, killing job growth,” he said.
Weekend Must Reads
New York Post | White House looking to creep into 401(k)s
It’s all about control. It’s your money, America. The system functions quite well. Adding more pages of red tape will not improve performance, but it just may get your broker to drop your account, just as many credit lines were closed after Dodd-Frank passed.
American Action Forum | Re-inflating the Housing Bubble?
In this light, recent policy decisions are especially troubling. The Federal Housing Finance Agency recently announced that Fannie Mae and Freddie Mac would again purchase and guarantee mortgages with as little as 3 percent down. It also decided to fund the Housing Trust Fund and Capital Magnet Fund. And, as discussed in recent testimony, the FHA announced a wrong-headed cut in the premiums it charges for insuring mortgages against default. These are carbon copies of the kind of pro-cyclical housing policies that prevailed prior to the crash.
Wall Street Journal | A Recovery Waiting to Be Liberated
Hope flickered last year when the economy grew at more than a 4% clip in the second and third quarters. But then came last week’s news that fourth-quarter growth slowed to 2.2%, a gloomy revelation that the rebound was temporary. Economic growth for 2014 clocked in at about 2.3%—the same disappointing pace since the recession officially ended in 2009. What is the problem?
In the News
Holland Sentinel | Huizenga talks about Federal Reserve in weekly Republican address
Wall Street Journal | Hensarling Wants Quicker Responses From ‘Stonewalling’ Agencies
Credit Union Times | Cordray Defends CFPB Payday Lending Action
Housing Wire | House Committee grills Cordray on QM, mortgage regulations
Posted by Staff on February 27, 2015
Committee Pushes for Accountability and Transparency Reforms at the Federal Reserve
Republicans at this week’s hearing with Federal Reserve Chair Janet Yellen raised questions about how much influence the executive branch holds over the central bank and argued in favor of accountability reforms to both protect the Fed’s independence in its conduct of monetary policy and to help give the economy greater certainty.
In its coverage of the hearing, the Associated Press reported that Republicans on the committee “challenged the central bank’s lack of accountability”
Members “seized on Ms. Yellen’s official calendar records and an October speech on inequality, just before the midterm elections, as evidence she was leaning towards the Obama administration and Democrats,” reported the Wall Street Journal in its coverage of the hearing.
While Chair Yellen and Democrats argued reforms would open the Fed to political influence, “Republicans at the hearing countered that Ms. Yellen’s calendars show the executive branch has far more access, and potentially more influence, than Congress,” the Journal reported.
“Opponents argue any reforms threaten the Fed’s monetary policy independence, but the greatest threat to that independence comes from the executive branch, not the legislative branch,” said Chairman Jeb Hensarling (R-TX). “While the Federal Reserve Chair testifies publicly before this committee twice a year, she meets weekly with the Treasury Secretary in private. And for decades there has been a revolving door between Treasury officials and Fed officials which continues even today…Fed reforms are needed and I for one believe Fed reforms are coming.”
“The Federal Reserve has proven time and time again that its government knows best approach doesn't hold the cure for what ails the economy," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "It's time we restore certainty as well as fiscal responsibility, and we must lift the veil of secrecy to ensure that the Fed is accountable to the people's representatives, the same people that created the Federal Reserve in the first place."
The Housing and Insurance Subcommittee held a hearing Thursday on the Federal Housing Administration (FHA), the second in a series that began earlier this month with the full committee’s hearing with HUD Secretary Julian Castro.
“House Republicans have argued that the FHA was wrong to make a cut to its annual mortgage insurance premium before its reserve fund reached a statutory minimum – and witnesses agreed,” reported the American Banker in its coverage of the hearing. Witnesses told the subcommittee that the FHA’s premium reduction “is undercutting the private sector and expanding the government’s role in the housing market.”Subcommittee Chairman Blaine Luetkemeyer (R-MO) said, "The underlying problems at FHA have existed for years and continue to pose a threat to all Americans. If a private business like the ones represented on our panel today operated in a fashion similar to FHA, it would be placed into receivership. Yet FHA continues unapologetically down a dangerous path that we’ve traveled before."
"It never ceases to amaze me that Washington doesn't seem to be able to learn the lessons of history and recent history. So here we have Fannie Mae and Freddie Mac jumping back in and offering 30-year loans for borrowers that can only afford a 3% down payment. These loans are exempt from the requirements that another federal agency says are required under the qualified mortgage rule, the Consumer Financial Protection Bureau that are supposed to prevent a recurrence of loose lending," remarked Rep. Andy Barr (R-KY). "This is a double-standard. The American people are tired of Washington living by one set of rules and the private sector and the American people living by another set of rules."
Rep. Ann Wagner | Wagner bill clashes with Obama proposal to regulate financial advisers
Wagner said Obama’s reforms could drive up the cost of financial advice for low- and middle-income holders of retirement accounts, thereby depriving them of that service. Wagner also said Obama was pushing the tougher rule without adequately studying its need and potential impact.
Rep. Randy Neugebauer | Overregulation Harmed America’s Financial Sector
In the midst of the financial crisis, the Democrat-controlled Congress did not do the responsible thing. Instead of comprehensively studying the crisis, Democrats in Washington threw a blanket over the financial sector in the form of the Dodd-Frank Act.
Weekend Must Reads
American Enterprise Institute | The Fed and inequality returns
The Fed chair shouldn’t sound like a left-leaning politician opining about hot-button political issues.
American Banker | An Open Letter to Elizabeth Warren on the Future of Community Banks
Facts should be the foundation for forming opinions. To suggest that community banks are doing just fine after Dodd-Frank is contrary to facts.
Bloomberg | CFPB Proves Its Critics Right
When Dodd-Frank was being debated in Congress, critics warned that the CFPB would have little accountability and would therefore be inclined to overreach. On this issue, the agency seems determined to prove that fear right.
Wall Street Journal | Obama vs. Savers
Ignoring existing regulation, Mr. Obama is making his usual argument that consumers are helpless against the predations of businesspeople. The solution naturally involves lawyers making lots of money. And in order to avoid industrywide chaos, the Washington bureaucracy will issue a flood of exemptions. At least Mr. Obama hasn’t promised that if you like your broker you can keep your broker.
On the Horizon
March 3, 2015 2:30 p.m.
CNBC Video | Chairman Hensarling Reacts to Fed Chair’s Testimony
CNBC | Are community banks doomed to fail?
The Hill | Ex-Im critics pounce after bank yanks data
Wall Street Journal | Fannie, Freddie Weak Earnings Raise Possibility of Future Bailouts
The Hill | GOP bill aims to block financial adviser regs
Washington Examiner | Fed's already political, GOP argues in oversight pushThe Hill | Ex-Im worker accused in bilking scheme
Posted by on February 26, 2015
“If independence is an issue, than we really ought to examine the independence of the Fed
House Financial Services Committee Chairman Jeb Hensarling (R-TX) was interviewed on CNBC’s “Closing Bell” Wednesday following the committee’s hearing with Federal Reserve Chair Janet Yellen.
You can watch the entire interview by clicking on the image, and below are excerpts that may be of particular interest.
On his reaction to Chair Yellen’s testimony:
“Well, I was disappointed because what we have seen now is that middle income families are still struggling in the slowest, weakest recovery in the postwar era, and yet it seems that we will continue on extraordinary measures that were employed back in 2008 and here we are in 2015. And yet they are not more transparent, they are not more accountable, and the real issue is, economists I know believe that we are best served when the Federal Reserve will communicate to the public what their monetary policy will be, and yet we didn't hear it in this particular testimony.”
On the Federal Reserve’s independence:
“[M]any of us believe that if independence is an issue, than we really ought to examine the independence of the Fed from the executive branch of government. That’s where the real threat is, not from the legislative branch that merely has asked the Fed -- you make up monetary policy, you can waive it, you can change it, but you ought to have an obligation to communicate it to the rest of us, and when you don't, you hinder economic growth, you hinder a healthy economy, you hinder middle income America that now has smaller paychecks and a smaller bank account.”
On making the Fed more transparent and accountable:
“The House Financial Services Committee moved a bill that, again, would simply ask the Fed to reveal its policy -- it's really about transparency and accountability -- just as long as they reported it to the rest of us and to ensure that the Fed, as you know, just doesn't have to do with monetary policy, it has to do with being a prudential banking regulator. And yet they are exempt from any of the provisions like cost-benefit analysis that other prudential regulators are required to do. We moved that bill in the last Congress. I intend to move a similar bill in this Congress.”
Posted by Staff on February 25, 2015
1). The Ex-Im Bank may harm as many jobs as it claims to support.
Government export finance assistance programs like Ex-Im “largely shift production among sectors within the economy rather than raise the overall level of employment in the economy.” - Government Accountability Office, “Export-Import Bank: Key Factors in Considering Ex-Im Bank Reauthorization”
“[A]t best the Ex-Im Bank creates jobs in export industries by destroying jobs in non-export industries.” – Donald Boudreaux, Ph.D, Professor of Economics at George Mason University
“By some estimates, the [Ex-Im] Bank’s loan guarantees have resulted in up to 7,500 lost U.S. carrier jobs, and up to $684 million of lost income for U.S. airline employees annually.” – Delta Airlines
2). The Ex-Im Bank doesn’t necessarily return money to the taxpayers.
The non-partisan Congressional Budget Office reports that if Ex-Im followed more accurate accounting rules – Fair-Value Accounting – its ledger would show a cost to taxpayers of $200 million/year, or $2 billion over 10 years. -- CBO Fair-Value Estimate
3). Only 1% of 1% of America’s Small Businesses Benefit from Ex-Im.
Congress requires that 20% of Ex-Im’s authorizations go to small businesses, but Ex-Im consistently fails to meet this statutory requirement. In reality, only .01% of America’s small businesses receive any help at all from Ex-Im.
Instead, Ex-Im’s subsidies overwhelmingly benefit very large corporations.
4). The Ex-Im Bank uses American taxpayers’ money to help foreign corporations, including businesses that are owned by the governments of China, Russia, Saudi Arabia, and the United Arab Emirates.
Of the 50 largest loans or guarantees approved by the Ex-Im Bank between FY2007-mid FY2014, 46% went to state-owned foreign companies or to a joint-venture that includes a state-owned company.
5). The Ex-Im Bank is not critical to our economy. It financed only about 1% of total U.S. exports in 2014.
Posted by Staff on February 13, 2015
Committee Examines Risky Practices at FHA
The committee held a hearing on Wednesday to examine the fiscal health of the Federal Housing Administration (FHA) and heard testimony from Housing and Urban Development Secretary Julian Castro.
In its coverage of the hearing, the Wall Street Journal noted that since 2009 the FHA has been in violation of the law which requires the agency to have a capital buffer equal to at least two percent of the loans it guarantees. While Secretary Castro told the committee the premium cuts would push back the FHA’s return to the two percent threshold by only “a few months,” the Journal reported that Moody’s Analytics Chief Economist Mark Zandi and others have said “the fund might not return to the two percent level until 2018, two years later than an estimate made by the FHA’s independent actuary in November.”
After questioning from Rep. Sean Duffy (R-WI), “Castro acknowledged that the 50-basis-point reduction in fees would slow full restoration of the fund," noted the American Banker. "Duffy said it was proof of Republican arguments."“Republicans cite the FHA’s need for a $1.7 billion draw from the Treasury in 2013 to shore up its reserve fund as reason to be concerned about the agency’s failure to move faster toward the two percent level,” The Hill reported in its coverage of the hearing.
Coming to your inbox on Sunday afternoon in this week’s Video Message: Rep. Andy Barr (R-KY) will discuss why hardworking taxpayers should be concerned the FHA is putting them and homebuyers at risk.Committee Holds Markup of Views and Estimates
At Thursday’s full committee markup, Chairman Hensarling said “[The] debt….represents roughly $160,000 of debt for every American household.”
"That particular debt you see on the clock today represents roughly $160,000 of debt for every American household. That comes out of their American dream. That is funds that cannot be used to send kids to college. Those are funds that can no longer be used to pay for health care premiums that have risen. They are funds that cannot be used to capitalize a new small business so that again they can achieve their American dream," said Chairman Hensarling.
"The Budget Views and Estimates that have been put together today will help this committee and help the Budget Committee guide our proceedings to ensure that we can help low and middle-income Americans in their pursuit of happiness and that we can ensure that we do not leave a legacy of debt for our children and our grandchildren and betray the American dream; which is not the fancy new car, it is not the new home with the kitchen and the granite countertops. The American dream is ensuring that our children and grandchildren have greater opportunities, greater freedom and a higher standard of living than we have enjoyed," added Chairman Hensarling.
Rep. Andy Barr | Congressman holds roundtable with bankers
A reintroduced bill could allow for more homeowners in Scott County, as well the creation of new jobs, said U.S. Rep. Andy Barr of Kentucky at a roundtable discussion with Scott County bankers. The Portfolio Lending and Mortgage Act would “expand the access of mortgage credit to the citizens of Scott County and all across the country,” he said.
Weekend Must Reads
American Action Forum | Dodd-Frank Rulemaking Excluded From Regulatory Review
An effort to reduce red tape by financial regulators excludes one of the most burdensome financial laws in recent memory, the Dodd-Frank Act.
Fiscal Times | The Spectacular Too Big Failure of Dodd-Frank
If the point of Dodd-Frank was to eliminate TBTF, it’s clearly failed. Instead, what it has done is prove the point of conservatives, who have consistently argued that regulatory expansion disproportionately impacts smaller players in any market. If the point of Dodd-Frank was to help consumers, that too has been a failure. Consolidation reduces both choice and proximity for most consumers, and the data from Harvard amply demonstrates that in the wake of Dodd-Frank. Rather than provide more competition for service and price, consolidation has left borrowers more and more at the whims of fewer and fewer providers. About the only success we see from Dodd-Frank is the strengthening of lobbyists on Capitol Hill, particularly from Wall Street.
The Hill | Overregulation is endangering our credit unions
The mounting costs and growing complexity of credit unions’ compliance burden are driven by two key components of overregulation: regulators’ overestimation of risk and the need to regulate it, and their underestimation of the time it takes to comply with a rule that, in the end, confers little benefit. Unfortunately, the result has become abundantly apparent as more and more credit unions, not-for-profit, member-owned financial institutions, have ceased doing business. Since 2007, the number of credit unions has declined by 1,600. That’s a whopping 21 percent drop. Under these circumstances, it is no surprise credit unions and NAFCU believe “enough is enough” when it comes to overregulation.
In the News
Wall Street Journal | HUD Secretary Defends Decision to Lower FHA Fees
Financial Times | Regulations hit smaller US banks hardest
El Paso Inc. | Community banks lobby for relief
Investor's Business Daily | Economic Optimism Index Dives Among Middle Class: Poll