Posted by on November 03, 2013
Posted by on October 31, 2013
The Protecting American Taxpayers and Homeowners Act – the PATH Act – expressly preserves the 30-year fixed rate mortgage. In fact, it's the only housing reform bill that specifically does so. But those who defend the status quo are trying to trick you into believing otherwise.
If it becomes law, the PATH Act would mark the first time that the FHA is specifically required to offer a 30-year fixed rate insurance product. Moreover, many have said the very existence of the 30-year fixed rate mortgage is due to the creation of the FHA. If that's the case, the PATH Act goes to great lengths to strengthen the 30-year fixed rate mortgage by taking FHA out of HUD and making it its own autonomous, stand-alone agency. This new FHA would have the tools and flexibility it needs to fulfill its mission in a financially sound manner.
Still spooked? Consider this: The 30-year fixed rate mortgages existed before the financial crisis and they are being made today without a government guarantee.
As the Washington Post recently stated in an editorial: “Opponents of the PATH Act argue that the lack of permanent government backing will deprive the market of liquidity and consequently end the 30-year fixed rate mortgage…One answer to that is that some 30-year fixed rate loans already exist without government help…”
Homebuyers should have the opportunity to acquire a 30-year fixed rate mortgage. They do today. And the PATH Act will not change that.
Posted by on October 29, 2013
Today, the House Financial Services Committee held a hearing on the Federal Housing Administration’s (FHA) first-ever taxpayer-funded bailout — approximately $1.7 billion.
Despite long-standing concerns about its solvency, the FHA has not taken the necessary steps to mitigate its losses. FHA currently has several means at its disposal to minimize losses to its insurance fund, yet the FHA has not fully utilized these tools. As a result, American taxpayers are now on the hook for a $1.7 billion bailout.
In light of FHA’s fiscal mismanagement and first-ever taxpayer-funded bailout, Committee Chairman Jeb Hensarling (R-TX) asked FHA Commissioner Carol Galante whether anyone at the agency she heads has been held accountable.
As seen in the video below, unfortunately, Commissioner Galante could not tell Chairman Hensarling who has been held accountable. In fact, she had no answer at all.
Posted by on October 28, 2013
The House is in session Monday through Wednesday this week and will consider two Financial Services bills. Additionally, the committee will hold two hearings. Be sure to check back here on the Bottom Line Blog -- and sign up for our email updates -- for more information throughout the week.
Here's what's happening:
On Tuesday at 10 a.m. the Full Committee will hear from Federal Housing Administration (FHA) Commissioner Carol Galante on the FHA's first-ever, $1.7 billion taxpayer-funded bailout. In the afternoon, at 3 p.m. the Financial Institutions and Consumer Credit Subcommittee will discuss legislative proposals addressing much needed reforms at the Consumer Financial Protection Bureau (CFPB).
Also on Tuesday afternoon, H.R. 2374, the Retail Investor Protection Act will be considered on the House floor. Rep. Ann Wagner, the author of H.R. 2374, discussed her legislation in yesterday's Sunday Video Message.
Rounding out the week on Wednesday the House is expected to consider H.R. 992, the Swaps Regulatory Improvement Act. Rep. Randy Hultgren explained H.R. 992 in a Sunday Video Message last month.
Posted by on October 28, 2013
Chairman Hensarling appeared on Fox Business Network earlier today to discuss tomorrow's Full Committee hearing on the $1.7 billion taxpayer-funded bailout the Federal Housing Administration (FHA) received at the end of September.
Hensarling on FHA's current condition:
"Well as you probably know, FHA is about to receive their first bailout ever: $1.7 billion basically for a government agency that for years told us they would never need a bailout."
"Regrettably, Congress has been misled for years as to the true fiscal health of the FHA. And so we're going to have the director of the FHA, Carol Galante, before our committee tomorrow [to] try to get to the bottom of this and find out why aren't they using the tools available to them to make FHA more fiscally sound. Because a broke FHA does no one any good."
"For years FHA has been making predictions about their fiscal sustainability and they have been consistently wrong and hugely wrong."
"The bottom line is at a time when our nation has taken on more debt in the previous four years than in the first 200, I can visualize the national debt clock, which I keep going in our committee hearing room, it's just turning faster and faster, and now part of the problem is the FHA."
Hensarling on FHA reform:
"We have to have a sustainable housing policy in America. One that is sustainable for homeowners, so we don't put people in homes they can't afford to keep. One that is sustainable for taxpayers, so they never again have to engage in bailouts of Fannie and Freddie and FHA. And then finally [one that is] sustainable for our economy. We've got to get off this boom, bust, bailout cycle."
Posted by on October 27, 2013
Posted by on October 24, 2013
Update 11/18/13: The full committee will consider six bills to reform the CFPB on Wednesday.
Next week the Financial Institutions and Consumer Credit Subcommittee will hold a hearing to discuss legislative proposals to bring more accountability, reform and transparency to the Consumer Financial Protection Bureau (CFPB). As Chairman Hensarling has pointed out, the CFPB is arguably the single most powerful and least accountable federal agency in American history.
Established by the Dodd-Frank Act, the CFPB's radical design is unique among financial and consumer regulators, including those responsible for consumer and investor protection. Not only does it evade the traditional system of checks and balances championed by James Madison in Federalist #51, it also lacks the internal controls Congress built into other regulatory agencies.
As the chart above illustrates, the CFPB escapes congressional budgetary oversight, obtaining its funding directly from the Federal Reserve instead of through the regular appropriations process. This end-run around Congress leaves no check to ensure the CFPB director is spending the people’s money effectively to promote consumer protection, much less efficiently in this time of runaway debt and deficits. In fact, we've already begun to see the result of this lack of oversight in the CFPB's egregious headquarters renovation costs.
Unaccountable to Congress, we see that the CFPB eludes even the power of the president. The bureau's director, once appointed and confirmed, can only be removed by the nation's chief executive for cause. And don't count on the president to enforce spending discipline or regulatory restraint at the CFPB; the bureau is neither subject to the Office of Management and Budget nor the Office of Information and Regulatory Affairs.
The most glaring difference between the CFPB and other regulators in the chart above, however, is the bureau's shocking lack of judicial oversight. Section 1022 of the Dodd-Frank Act provides that where the bureau disagrees with any other agency about the meaning of a provision of a federal consumer financial law, a reviewing court must give deference to the bureau’s view under the Chevron Doctrine.
Unfortunately, the absence of external checks and balances is only half the story at the CFPB.
As the chart below shows, the CFPB is unaccountable even to itself since there is fundamentally no ‘it,’ no ‘they’ – only a he. Be he our credit czar, national nanny or benevolent financial product dictator, the CFPB director's authority is unilateral, unbridled and unparalleled. Without the check of a bipartisan commission, the director can declare virtually any financial product or service as ‘unfair’ or ‘abusive,’ at which point Americans will be denied that product or service even if they need it, understand it and want it.
Finally, the CFPB lacks a dedicated inspector general (IG) to root out waste, fraud and abuse at the bureau. Given the findings by the Housing and Urban Development IG we highlighted last month, taxpayers should be outraged by this complete lack of accountability, oversight and transparency in the way the CFPB spends the people's money.
Defenders of this structure claim it's necessary to guarantee the CFPB's freedom to protect consumers without the influence or interference of politics. Agency independence, however, cannot come at the expense of public accountability.
The bottom line is this: consumer protection is not having powerful government agencies 'nudge' consumers to make 'correct' choices in the belief they are incapable of making rational decisions for themselves. True consumer protection empowers consumers and respects their economic freedoms to make informed choices free from government interference and fiat.
Posted by on October 19, 2013
A whole segment of society is losing access to mainstream banking that allows them to safely save and invest for the future. They are being pushed into nontraditional financial arrangements not by choice, but because of Dodd-Frank.
With Janet Yellen now seemingly on course to be the next Fed chairman, it’s time to find out what she thinks about some very important questions of monetary and regulatory policy.
If the CFPB intends to pursue discrimination caused by policies that have a discriminatory effect, it may want to start by looking at its own policies.
Washington Examiner | GM got bailout, now ships jobs to China
President Obama quietly released GM from a bailout requirement that it increase its U.S. production. Now, GM is spending billions of dollars building up its production capacity in China.
Posted by on September 29, 2013
Posted by on September 28, 2013
Did “deregulation” cause the financial crisis? Our conclusion was that there was no measurable, net deregulation leading up to the financial crisis.
Omaha World-Herald | Mortgage lending at risk if rules not delayed, banker says
Without a delay of onerous Dodd-Frank mortgage regulations, some banks will stop or cut back on mortgage lending.
The White House has handled the process of picking the next chair of the Federal Reserve "terribly," a top official at the U.S. central bank said in an unusual public critique of the delicate, and traditionally discreet, selection process.
Daily Caller | CFPB accused of violating transparency law
A Mississippi man is threatening to sue the Consumer Financial Protection Bureau for denying him entry to the proceedings of one of its advisory committees, a move he claims is a breach of federal transparency law.