Posted by Staff on January 09, 2015
House's TRIA Reauthorization and Dodd-Frank Clarification Bill Headed to President's Desk
The House once again overwhelmingly passed a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA) with taxpayer protection reforms this week. The bill, sponsored by Rep. Randy Neugebauer (R-TX), included the reestablishment of NARAB and also a critically important clarification of Dodd-Frank to prevent further harm to jobs on Main Street.
Chairman Jeb Hensarling (R-TX) said the bill “clarifies that Main Street businesses, farmers and ranchers – who had nothing to do with the 2008 financial crisis – will no longer be subject to an onerous misinterpretation of the language of Dodd-Frank. Both former Chairman Barney Frank and former Chairman Chris Dodd, as well as Ranking Member Waters, have said this misinterpretation is a mistake."
Failure to clarify this “end user” provision of Dodd-Frank threatened to inflict serious harm on the economy, endangering up to 130,000 jobs and reducing capital spending by as much as $6.7 billion, according to the Coalition for Derivatives End Users. These are dollars that could otherwise be invested to sustain and grow jobs.
A day after the House passed the bill by a vote of 416-5, the Senate approved the bill 93-4 after resoundingly defeating an amendment by Senator Elizabeth Warren (D-MA) to strip out the Dodd-Frank clarification that’s needed to protect Main Street small businesses, farmers and ranchers from Dodd-Frank’s onerous end user regulations. The Warren amendment failed by a vote of 31-66. The House bill now heads to the President.
Rep. Randy Neugebauer | House passes two of Neugebauer's bills on second day of session
It’s been a busy opening week of the 114th Congress for Lubbock's U.S. Rep. Randy Neugebauer, who had two bills pass through the House on Wednesday.
Weekend Must Reads
Politico Magazine | The (Real) Bank of America
Nobody set out to create the bank of America or make it this big. It’s an outgrowth of the classic Washington instinct—arguably an American instinct—to max out the credit card now and worry about the risks later. Its $3.2 trillion in debt doesn’t even include another $15 trillion worth of pension insurance, deposit insurance, Fannie Mae and Freddie Mac mortgage insurance, and other government exposures that aren’t officially considered credit programs. I interviewed about 50 sources inside and outside government about the bank of America, and few of them think it is well-designed, well-managed or well-understood, even if much of what it does is well-intentioned.
Forbes | CFPB Fails To Protect Consumers
To some, the CFPB sounds like a great idea in theory—an entire federal agency dedicated to protecting consumers in the financial sector, if somehow the federal government had both the sophistication and skill set to always know how to best protect the American public. So it’s no surprise that in execution, the agency is squeezing out the financial options available to low-income Americans and basing its regulatory agenda on faulty data.
Washington Times | Broken promise? Obama’s America better for Wall Street than Main Street, stats show
But economists say the rosy statistics mask some real concerns about the underlying strength of the economy, noting that large numbers of Americans have left the job market, and companies are sitting on trillions of dollars of spendable money until they get more clarity from Washington. And beneath all that, a large segment of America's Main Street is becoming increasingly reliant on government help to make ends meet.
American Action Forum | 4 Reasons Taxpayers Should Be Wary of Executive Action on Housing
In a speech today in Phoenix, President Obama is expected to announce a reduction in Federal Housing Administration (FHA) annual premiums of 50 basis points, the latest in a concerted effort to expand credit availability. With recent pressure from affordable housing advocates, the announcement comes as no surprise. Yet this case of political pandering has serious policy implications. While a premium reduction certainly has its supporters, it does not come without a cost.
On the Horizon
January 13, 2015 10:00 a.m.
Associated Press | U.S. Senate Passes Terrorism Insurance Bill
Politico Pro | Extension of terrorism insurance program clears CongressBloomberg | U.S. House Votes to Revive Backstop for Insurers’ Terror Losses
Washington Examiner | House sends terrorism insurance bill to the Senate
Wall Street Journal | ‘Scoring’ Legislation for Growth
Investor's Business Daily | Obama's Regulatory Siege Holds Back The Economy
Washington Times | Flimsy facts in the economic road show
Posted by on December 17, 2014
This morning, Washington Democrats are feverishly trying to spin Harry Reid’s decision to prevent the Senate from taking a vote on the bipartisan House-passed bill to reauthorize the Terrorism Risk Insurance Act.
From their seats on their flights home for the holidays, Democrats are trying their hardest to blame TRIA’s demise on the inclusion of a technical clarification of the Dodd-Frank law that, as a standalone measure, passed the House almost unanimously. That might be true if facts did not get in the way. Rep. Maxine Waters—the highest ranking Democratic Member on the Financial Services Committee—called this Dodd-Frank language “a truly technical fix” that “would clarify the intent of Dodd-Frank.”
The truth is that the Senate’s failure to bring the TRIA reauthorization to the floor has nothing to do with the Dodd-Frank clarification. If that were the case, the bill would not have attracted the support of 417 members of the House, including every Democrat who voted. And as Politico notes, “Senate Democrats were begrudgingly willing to clear the TRIA package for the president’s signature.”
The Senate’s failure on TRIA had nothing to do with Dodd-Frank; it has nothing to do with Sen. Coburn’s objection. It has everything to do with Harry Reid.
He simply refused to bring the bill up in the Senate. He decided that the bill would either pass by unanimous consent or, apparently, not pass at all.
All Harry Reid needed was a cloture vote and 30 hours (the amount of time permitted for debate after a motion to proceed is agreed to). He could have easily found 30 hours during the lame duck; timing wasn’t the problem—it was courage. He chose to prioritize, and fill an entire weekend with, cloture and final votes on other matters instead of TRIA, including judicial and executive branch nominations that were far more controversial than the House’s almost unanimously approved TRIA bill. Thanks to Leader Reid, on January 1st, the United States will not have a terrorism insurance program, but at least now we will have a newly confirmed Commissioner of Reclamation.
The bottom line:
The House passed a bipartisan TRIA reauthorization bill 417-7. The Senate’s response? Quit working, leave town, and kill TRIA.
Posted by Staff on November 21, 2014
Hensarling Announces Subcommittee Chairs and Welcomes Republican Members to the Financial Services Committee
"I look forward to working alongside my colleagues to pass laws that help grow the economy from Main Street up, not Washington down,” said Chairman Hensarling. “Our committee will continue to focus on promoting sensible solutions that help create jobs and hold both Washington and Wall Street accountable to the American people."
The subcommittee chairmen for the 114th Congress:
Rep. Scott Garrett (R-NJ) will serve as Chairman of the Capital Markets and Government-Sponsored Enterprises Subcommittee.
Rep. Randy Neugebauer (R-TX) will serve as Chairman of the Financial Institutions and Consumer Credit Subcommittee.
Rep. Blaine Luetkemeyer (R-MO) will serve as Chairman of the Housing and Insurance Subcommittee.
Rep. Bill Huizenga (R-MI) will serve as Chairman of the Monetary Policy and Trade Subcommittee.
Rep. Sean Duffy (R-WI) will serve as Chairman of the Oversight and Investigations Subcommittee.
This list includes new Republican members as well as Republicans who previously served on the committee and will be returning:
Rep.-Elect Bob Dold (R-IL)
Rep.-Elect Frank Guinta (R-NH)
Rep.-Elect French Hill (R-AR)
Rep.-Elect Mia Love (R-UT)
Rep.-Elect Bruce Poliquin (R-ME)
Rep. David Schweikert (R-AZ)
Rep. Scott Tipton (R-CO)
Rep. Roger Williams (R-TX)
Subcommittee Examines the Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers
On Tuesday the Housing and Insurance Subcommittee held a hearing to continue its examination of how international regulatory standards being proposed by the International Association of Insurance Supervisors (IAIS) could impact U.S. consumers and insurers.
Subcommittee Chairman Randy Neugebauer (R-TX) said, "I am concerned that IAIS's role has evolved from being an international coordinator to one of a international promulgator. The IAIS's most recent proposal to harmonize the insurance regulations called 'ComFrame' -- would create a kind of one- size-fits-all regime for global insurers, including some burdensome group-wide capital assessments and prescriptive prudential standards. Members of this committee have expressed concerns with the prescriptive nature of the ComFrame proposal. Many are equally concerned that it seems to be a mechanism for the E.U. to export its consolidated bank-like approach to regulating insurance here in the United States. While this system might work well for our allies across the Atlantic, it is inconsistent with our system of insurance regulation and I don't believe is in the best interest of our consumers and insurers."
Rep. Sean Duffy (R-WI) added, "Many of you may not know, but Wisconsin is the fourth-largest home to insurance in the United States. And those insurers, and our state regulators and policyholders, have been contacting me, concerned over some of the proposals coming out of the International Association of Insurance Supervisors. These proposals could force European-style regulation on our state-regulated system that, as we all know, has developed over the past 200 years. The fact is, unlike Europe, our insurance regulators seek to protect the policyholder: the family with a homeowner, or the life insurance policy, not the insurance company providing the policy. The Treasury and Federal Reserve are supposed to represent that philosophy on the IAIS. But I, like many others, don't necessarily think that they are. They're not listening to the insurers, policyholders, state regulators and lawmakers that are voicing their concerns and offering expertise because a conduit for these stakeholders doesn't exist."
Subcommittee Reviews Opportunities for a Private and Competitive Sustainable Flood Insurance Market
On Wednesday the Housing and Insurance Subcommittee held a hearing to review opportunities for a private and competitive sustainable flood insurance market and discussed H.R. 4558 the Flood Insurance Market Parity and Modernization Act of 2014. The bill is sponsored by subcommittee member Rep. Dennis Ross (R-FL).
"I think one of the reasons that this hearing is so important is that if we're going to move toward a private participation in the market place, we have to get the government out of the way and we need to facilitate the ability for the private sector to be a part of this," said Subcommittee Chairman Randy Neugebauer (R-TX). "Choice brings competitive pricing and if you have the government dominating an area, it doesn't really allow for a lot of private participation."
Rep. Ross agreed, saying “homeowners are trapped in a system that forces them to purchase a taxpayer-backed federal insurance product that was already $24 billion in debt at the end of 2013…Allowing more consumer choice in the government-dominated flood insurance market creates competition and results in better policies and pricing that will benefit homeowners.”
Rep. Sean Duffy | Gun dealer shuts down, lawmaker vows more oversight of Operation Choke Point
Choke Point was originally aimed at preventing criminal enterprises from accessing banks and other parts of the financial system. But many have said the program has expanded dramatically, and is being used to prevent many legal businesses from using the financial intermediaries they need to operate, just because they are opposed by Obama administration officials.
Weekend Must Reads
Real Clear Markets | A New Congress Must Perform Major Surgery On Dodd-Frank
Regulators are not looking forward to heightened congressional oversight of their activities, but the new Congress offers them something to offset the pain. Unencumbered by having voted for Dodd-Frank, the incoming Congress can jettison unnecessary statutory mandates so that agencies can get back to their core missions.
Washington Times | Government bailouts in recession do more harm than good
Mr. Grant's history lesson is one that all lawmakers could take to heart. The economy recovers much more quickly, with much less cost to taxpayers, if economic downturns are allowed to run their course. When the government arrives to "help," trouble begins. This is history President Obama and Congress should have read, and heeded, before blowing $3 trillion on stimulus programs and bailouts that probably hurt more than helped.
Wall Street Journal | Now Federal Job-Killers Are Coming After Derivatives
With 10 million fewer Americans working full-time today than six years ago, it is not in the nation’s economic interest for Washington regulators to cause good-paying, full-time jobs to be eliminated. This overreach is just one of many in a regulatory environment that has become a major drag on the U.S. economy. Federal regulations now cost the U.S. more than 12% of gross domestic product, or $2 trillion annually, according to the National Association of Manufacturers. The average manufacturing firm spends almost $20,000 per employee per year on complying with federal regulations. For manufacturers with fewer than 50 employees, the per-employee cost rises to almost $35,000.
In the News
CNBC | Republicans looking to turn up heat on Fed in 2015
Washington Examiner | GAO says CFPB's spending accounting flaws are serious, require prompt fixes
American Banker | GAO Report Finds Flaws in FSOC Designation Process
American Banker | Streamlined Regulation Should Be the Next Frontier of Financial Reform
Posted by Staff on November 14, 2014
Investigation Reveals Export-Import Bank Exaggerating Help for Small Business
LINK TO ARTICLE
(Reuters) - The U.S. Export-Import Bank has mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses, a flaw in its record keeping that could undermine the export lender's survival strategy.
A Reuters analysis showed companies owned by billionaires such as Warren Buffet and Mexico's Carlos Slim, as well by Japanese and European conglomerates, were listed as small businesses and Ex-Im acknowledged errors in its data in response to those findings.
Bank officials and supporters have used the Ex-Im's support for American small business as a first line of defense against a campaign by conservatives to shut it down as an exponent of "crony capitalism."
The bank won a nine-month extension of its mandate in September and faces a bruising battle over the next seven months to secure its future.
Critics reacted quickly.
“Rarely does Ex-Im miss a (public relations) opportunity to claim that it primarily helps small business, but Ex-Im is again playing fast and loose with the facts," said Representative Jeb Hensarling, a Texas Republican who chairs the House Financial Services Committee. "The bulk of Ex-Im’s help indisputably goes to large corporations that can finance their own operations without putting it on the taxpayer balance sheet.”
A comparison of some 6,000 businesses characterized by Ex-Im as "small" with information supplied by corporate data collector Dun & Bradstreet, which Ex-Im also uses to vet applicants, and other sources turns up some 200 companies that appear to be mislabeled and many more whose classification is uncertain.
A division of Austria's Swarovski jewelers shows up, as does North Carolina's Global Nuclear Fuels, which is owned by General Electric and Japan's Toshiba and Hitachi.
The extent of the errors, which also mean some genuine small-business transactions are not labeled as such, is not clear. Separate Ex-Im databases do not even agree with each other.
Responding to a list of 10 examples provided by Reuters, Ex-Im acknowledged errors in most of them but said their impact was small and that the mislabeling of small companies as large ones may have a bigger effect on the total tally of small-business support. A spokesman said the bank aimed to be as transparent as possible.
"When it comes to our data, we strive for 100 percent accuracy, and anything less is unacceptable, which is why we are constantly improving our systems,” he said, pointing to Ex-Im's recent hiring of a chief information officer, an overhaul of databases and a review of paper documents.
In an emailed response to Reuters, the bank cited five examples from 2013 in which small companies were labeled as large ones by mistake.
The errors make it difficult to identify exactly how much Ex-Im support goes to big businesses such as Caterpillar and how much to small companies.
The problem is primarily political, as there are no legal implications of businesses being misclassified by Ex-Im. The bank does not set money aside specifically for companies that meet industry-specific revenue and employee limits set by the Small Business Administration. The SBA guidelines exclude companies that may be small but are owned by deep-pocketed conglomerates.
SLIM AND BUFFET
Reuters calculations show that as much as $3 billion in authorizations listed as those for small business may have been misclassified over eight years - roughly 8 percent of Ex-Im's $38 billion in small-business support over that period. Total authorizations came to $189 billion.
For example, among small-business beneficiaries is Texas-based Condumex Inc, the U.S. sales operation for Mexico's Grupo Condumex, a subsidiary of Slim's Grupo Carso.
Or take Brock Grain Systems, a division of CTB International Corp, which has been owned by Buffet's Berkshire Hathaway since 2002.
In its battle to survive, Ex-Im has presented its statistics with exacting precision.
Ex-Im says that in the fiscal year ended Sept. 30, it engaged in 3,347 transactions supporting small businesses, accounting for almost a quarter of financial authorizations and nearly 40 percent of the exports the agency supported.
The lender authorized $20.5 billion during that fiscal year in low interest loans and other support for U.S. exporters and buyers of "Made in America" products.
The mislabeling of transactions, however, makes it difficult to tell exactly how the pie is divided. It extends to a website that allows lawmakers and others to check how Ex-Im supports businesses in each congressional district.
The list of small businesses in Texas, for example, includes engineering and construction company Bechtel, which has 53,000 employees.
Posted by Staff on November 14, 2014
Full Committee Examines Terrorist Financing and the Islamic State
The Financial Services Committee examined ongoing U.S. efforts to stop the Islamic State (ISIL) and other terror groups from obtaining and deploying financial resources at a hearing on Thursday.
“Unlike al Qaeda and other terror groups with which we are familiar and rely mainly on private donations and state sponsorship to fund their activities, ISIL is almost entirely internally financed and apparently is sitting on assets of almost $2 billion," said Chairman Jeb Hensaring (R-TX).
"Fighting the financial war against terror will demand constant innovation and improvement. The tools we have used in the past may not be suitable for the future. I look forward to hearing from all the witnesses on what may be necessary to upgrade, innovate and improve our capabilities to starve the terrorists of the money they so desperately need to carry out their attacks," he added.
"One of the most effective ways the U.S. has disrupted terrorists in the past has been to cut off their financing, limiting their ability to plot and plan attacks. Thwarting the Islamic State's multiple revenue streams and their ability to spend money they already have may require new tactics. So today I'm looking forward to hearing exactly how we are identifying and blocking financial intermediaries that could keep Islamic State in a strong position," said Rep. Marlin Stutzman (R-IN).
At the hearing, Rep. Dennis Ross (R-FL) said ISIL is able to generate funding through a variety of means “from selling oil on the black market, to taxing and extorting local businesses, to kidnapping for ransom...I look forward to working with my colleagues on this Committee to ensure the federal government uses every tool at its disposal to prevent ISIL from acquiring the funds to continue their reign of terror.”
Rep. Sean Duffy | ISIS Funding Network
U.S. Representative Sean Duffy (WI-07) talks to Bloomberg's Trish Regan about the ISIS funding network.
Weekend Must Reads
Washington Times | Wean business insurers off Terrorism Risk Insurance Act
There remains a need for a federal backstop against those catastrophic acts of terrorism that cannot be reasonably modeled or mitigated and whose size truly impacts our economy. However, today there is more capacity within insurance and reinsurance industries to cover far greater portions of this risk. There will be even more tomorrow, provided we put the act back on its transitional reform path.
Wall Street Journal | The Gensler Clean-Up
Under bipartisan pressure from Congress, it’s good to see that Mr. Massad is willing to acknowledge that the celebrated reforms now need to be reformed. But the errors were avoidable. These pages were not alone in warning for years that derivatives rules pursued by Mr. Massad’s predecessor, Gary Gensler, would punish Main Street along with Wall Street.
Wall Street Journal | Does the Fed Read the Election Returns?
All along, let’s face it, this set of priorities has been partly enabled by the Fed. At a speech in Paris on Friday, as fellow central bankers (even the French!) were talking about the need for deregulation and pro-market reforms, Ms. Yellen—the latest great enabler—continued to sing the praises of quantitative easing to solve all problems.
On the Horizon
November 18, 2014 2:00 p.m.
In the News
Wall Street Journal | Fannie Mae’s Profit Trap Comes Into View
Washington Times | New jobs numbers, same poor economy
Investor's Business Daily | Despite Gains In Jobs, Americans Aren't Convinced
Wall Street Journal | How to Distort Income Inequality
Politico Pro | Regional banks looking to Congress for relief
Bloomberg | Fannie-Freddie Regulator’s 3% Down Loans Draw Jeers
Posted by Staff on November 10, 2014
On Thursday at 10:00 a.m. the Full Committee will hold a hearing to examine terrorist financing and the Islamic State.
Posted by Staff on October 30, 2014
HORROR! SHOCK! DEVASTATION! Top-down regulations from Washington make it harder to have a growing economy on Main Street that creates good jobs. Yet each year Washington churns out page after page of new regulations, rules and red tape in the Federal Register. It’s become a MONSTER terrorizing Main Street! See for yourself…IF YOU DARE! #HappyHalloween
"It is time for all to take off partisan blinders and acknowledge the truth that Washington regulators aren’t always right and more red tape is not always the solution to every problem. It is time to hold Washington accountable." - Chairman Jeb Hensarling
Posted by Staff on October 20, 2014
Below are excerpts from the Wall Street Journal’s “Weekend Interview” with House Financial Services Committee Chairman Jeb Hensarling (R-TX). The entire interview can be found here.
Hensarling on the Export-Import Bank
Posted by on October 02, 2014
Although this week’s Jeopardy! contestants couldn’t name the agency, the unaccountable CFPB is certainly making a name for itself in all the wrong ways.
Posted by Staff on September 29, 2014
President Obama recently voiced concerns about the negative impact of “endless regulations” in foreign countries. Millions of unemployed and underemployed Americans must be wondering why he isn’t as concerned about the economic harm caused by the “endless regulations” of his own administration here in the U.S.A.
While the American people are repeatedly told that nothing is getting done in Washington, struggling small business owners and entrepreneurs across our nation can only wish that were true. They know better than anyone that the Washington bureaucracy is busier than ever churning out red tape.
Washington set a new record in 2013 by issuing final rules consuming 26,417 pages in the Federal Register. Another 3,305 regulations are moving through the pipeline at the historic rate of roughly one new regulation every two hours.
Job number one of the Financial Services Committee is job creation and economic growth. That’s why the committee has passed dozens of bipartisan, pro-jobs bills during the 113th Congress. Yet Harry Reid has killed them, refusing to even bring them up for votes. Instead, he adds them to the pile of jobs bills collecting dust in the do-nothing Democrat-controlled Senate.
If President Obama truly cares about the harm caused by “endless regulations,” he should pick up the phone today, call Senator Reid and urge him to take action on these bipartisan jobs bills.