Chairman Jeb Hensarling


Posted by Staff on May 23, 2014
Committee Examines the Dangers of FSOC’s Designation Process

On Tuesday, the full committee held a hearing to examine the Financial Stability Oversight Council’s (FSOC) designation process for deeming banks and non-bank firms as “systemically important” and the impact of such designations.

"FSOC was established—or so its supporters tell us—to make it easier for regulators to communicate and share information with each other. But the regulators didn’t need an act of Congress to do that, and information-sharing is not what FSOC is really about. Instead, FSOC is about one thing: increasing Washington’s control over the U.S. economy thus curtailing both economic freedom and economic prosperity. And FSOC does this through its power to designate “Systemically Important Financial Institutions”—or, in bureaucrat-speak, “SIFIs,” said Chairman Jeb Hensarling (R-TX).

"Having failed to prevent the last financial crisis, notwithstanding having every regulatory power necessary to do so, regulators were rewarded with even more power by the Dodd-Frank Act. The Dodd-Frank Act represents a breathtaking outsourcing of legislative power to the executive branch. Federal agencies now have virtually unfettered discretion to expand their regulatory control through a designation process that is opaque, secretive, vague, open-ended, and highly subjective," he said.

Chairman Hensarling and Members of the committee called on FSOC "to cease and desist further SIFI designations until Congress can review the entire matter." Witnesses argued that FSOC's designations would harm the U.S. financial system and hurt the economy. 

Subcommittee Discusses Legislative Proposals to Reform Domestic Insurance Policy

On Tuesday, the Housing and Insurance Subcommittee held a hearing to examine five legislative proposals addressing domestic insurance issues. 

"We turn our attention to some insurance reform legislation that focuses on protecting policyholders, offering more consumer choice for insurance products and providing regulatory relief to reduce costs to domestic policyholders," said Subcommittee Chairman Randy Neugebauer (R-TX).

Subcommittee Hears Testimony from Subpoenaed CFPB Witnesses

On Wednesday, the Oversight and Investigations Subcommittee received testimony from CFPB officials who were recently subpoenaed as part of the subcommittee’s ongoing investigation into allegations of discrimination and retaliation at the CFPB.

“The fact is that discrimination on the basis of race, sex or other prohibited factors is destructive, morally repugnant, and against the law. All government agencies, including the CFPB, must continue to combat discrimination in employment and punish those responsible for discrimination,” said Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC).

Wednesday's hearing comes nearly a month after subcommittee members voted 20-0 to issue subpoenas to Stacey Bach, Assistant Director of the CFPB’s Office of Equal Employment Opportunity; Liza Strong, Director of Employee Relations at the CFPB; and Ben Konop, Executive Vice President of the CFPB’s employee union, Chapter 335 of the National Treasury Employees Union.

Konop testified that the employees union repeatedly raised concerns with the CFPB about its employee performance review system.

“[W]e alleged that women and minority employees were being underpaid when compared to similarly situated white male colleagues. To date, the Bureau has denied each of these grievances at all stages, often using inconsistent reasoning, despite what I feel is convincing evidence of low pay for numerous women and minority workers,” Konop told the subcommittee.

During the hearing, the subcommittee discussed a report commissioned by the CFPB and conducted by Deloitte Consulting. The findings of Deloitte’s report corroborate whistleblower and CFPB employee Angela Martin’s testimony that there have been problems related to the CFPB’s hiring, staff promotions, performance reviews and employee pay since the Bureau’s inception.

Subcommittee Discusses Legislative Proposals to Improve Transparency and Accountability at the CFPB

On Wednesday, the Financial Institutions and Consumer Credit Subcommittee held a hearing to examine legislative proposals to improve transparency and accountability at the CFPB.

Subcommittee Chairman Shelley Moore Capito (R-WV) said the bills discussed at today’s hearing represent “a continuation of this committee’s efforts to make the Consumer Financial Protection Bureau a more transparent and accountable agency. I would like to thank the sponsors of the legislation before us for their hard work in crafting common sense reforms to the Bureau.”

Witnesses at today’s hearing described the CFPB as a uniquely unaccountable, secretive, and powerful agency whose actions make it harder for American businesses to create jobs and that is in need of greater transparency, accountability and oversight.

Committee Passes Job Growth and Regulatory Relief Bills

The House Financial Services Committee on Thursday passed 11 bills to enhance capital formation for small and emerging growth companies and provide regulatory relief for community financial institutions.

“When we, as a committee, have the opportunity to help put Americans back to work, to help create jobs, we have the responsibility to do so and hopefully to do so on a bipartisan basis. This is why our committee has already guided 22 regulatory relief bills to House passage. The vast majority of those bills, once again, have received strong -- not just token -- but strong bipartisan support,” said Chairman Jeb Hensarling (R-TX).

“Now it is most regrettable that the Senate, where all good ideas go to languish and fail, has indeed failed to take up a single one of those bipartisan bills. I would strongly encourage my Democratic colleagues, who may spend more quality time with the Senate Majority Leader and the President than do I, to encourage them to take up these bills, to contact their friends and colleagues in the Senate and in the White House and urge them to pay attention to what our committee has put forth on a bipartisan basis. This would indeed be very, very constructive. But again, despite the Senate’s failure to act, we must act,” Hensarling added.


Rep. Randy Neugebauer | VIDEO: PATH Act on CNBC

Rep. Neugebauer discussed housing finance reform and the PATH Act with CNBC's Rick Santelli.

Weekend Must Reads

Investor's Business Daily | At Last, Congress Checks Obama's Rogue Consumer Bureau

CFPB has the power to police virtually every financial transaction in the economy. Yet it holds its meetings in secret, has no inspector general and is funded outside the normal congressional budget process. On Wednesday, the House Financial Services Committee [took up] 11 bills that would make the bureau more accountable and transparent to Americans.

Wall Street Journal | The Fed's Blueprint for Financial Control

Federal Reserve regulation of U.S. capital markets would be a huge mistake. It would retard economic growth, lower investor returns and dull the vibrancy of the country's financial system.
    In the News

Pensions & Investments | FSOC hears from money managers, House critics on systemically important designations

American Banker | CFPB Moved Slowly to Fix Evaluation Disparities: Lawmakers

Politico Pro | GOP: CFPB too slow to address diversity, hiring problems

Housing Wire | New evidence shows CFPB knew about discrimination well before AB article

Washington Examiner | CFPB misses diversity mark, outside consultant says

The Hill | House GOP: Consumer bureau discrimination probe will continue

Reuters | U.S. consumer bureau slow to fix age, minority bias -union leader

Plain Dealer | More must be done to fix discrimination at Richard Cordray’s federal agency, union representative tells Congress

Posted by Staff on May 16, 2014

“It is easy reverse engineer and identify the people in our database.”

“At present we are allowed to have any federal employee gain access” to the database.

House Financial Services Committee Chairman Jeb Hensarling and Senate Banking Committee Ranking Member Mike Crapo this week sent a letter to the CFPB and FHFA raising serious privacy concerns about the massive federal mortgage database the two agencies are creating.  

A recent notice in the Federal Register outlined how expansive the agencies’ database will be. Specifically, the notice proposes to vastly expand the scope of their data collection to include highly personal information that is unrelated to the purchase of a home.  For example, data fields would include one’s religion, Social Security number, education and military records, languages spoken, ages of children at home, and major life events.

At a January 28, 2014 hearing with CFPB Director Richard Cordray, the House Financial Services Committee highlighted comments from Bob Avery, the Project Director for the mortgage database.  In a video shown at the hearing, Avery says the mortgage database is vulnerable to hackers.

“It is easy to reverse engineer and identify the people in our database,” Avery is seen saying on the video.  “We have the date the mortgage was taken out, the size of the mortgage and we have the Census tract [of the mortgage holder]. Ninety-five percent of these are unique.”

Avery also said on the video that “any federal employee” at present can gain access to the mortgage database.

Wall Street Journal:  Republicans Call Federal Mortgage Database an ‘Unwarranted Intrusion’
By: Alan Zibel
May 15, 2014

WASHINGTON — Congressional Republicans are taking aim at a national database of mortgage information being developed by two federal regulators, arguing it doesn’t provide enough privacy protections for consumers.

The GOP lawmakers are seizing on a notice placed in the Federal Register last month, in which the Federal Housing Finance Agency detailed plans to collect a wide range of information on U.S. mortgage borrowers.

The agency, which regulates mortgage giants Fannie Mae and Freddie Mac, is creating the database along with the Consumer Financial Protection Bureau as part of an effort to develop a better understanding of trends in the housing market.

According to the notice, regulators may collect information including borrowers’ names, address, zip code, telephone numbers, date of birth, race, gender, language, religion and social security numbers, plus detailed information on their finances.

Republicans are crying foul. The collection of such information “represents an unwarranted intrusion into the private lives of ordinary Americans, and can be easily perceived as an abuse of the trust placed in your agencies by the American people,” wrote Rep. Jeb Hensarling (R., Texas), the chairman of the House Financial Services Committee and Sen. Mike Crapo (R., Idaho), the top Republican on the Senate Banking Committee in a letter sent Thursday to the leaders of both agencies

The lawmakers asked FHFA Director Mel Watt and CFPB Director Richard Cordray to justify why the agencies should college “intimate personal information about borrowers and their famiiles.” They also asked the officials to explain why information on religion should be added to the database.

The move is the latest in a series of criticisms against the CPFB by Republicans, who have questioned whether the agency provides enough data security and privacy for consumers. At the request of Mr. Crapo, the Government Accountability Office has been studying the amount of data collected by the CFPB.

The FHFA and CFPB are required under a 2008 law to collect information on home sales prices and other mortgage data, so as to make a timely database of mortgage market information available to the public.

In announcing the database project in November 2012, the agencies said they would take precautions to ensure consumers’ privacy. But Republicans question whether they agencies are truly taking enough steps to do so.

A spokeswoman for FHFA said the agency would respond to the letter. A CFPB spokesman did not immediately comment.

Posted by Staff on May 12, 2014


Last week, the Financial Services Committee met to take up a number of strategies designed to spur job growth. Watch Rep. Mick Mulvaney (Twitter|Facebook) discuss those ideas and more in this week's FSC Video Message.

Posted by Staff on May 09, 2014
On Wednesday, the full committee marked up several bills designed to grow the economy, create jobs, and relieve the regulatory burden for community financial institutions. 

"We received some bad news recently that more than 800,000 Americans, almost a million, left the workforce last month alone. Many simply could not find a job to make ends meet, no matter how hard they tried. Millions of others remain out of work. The latest economic figures show that during the first quarter of this year the economy slowed to a stall, with a barely discernable 0.1 percent annual growth rate," said Chairman Jeb Hensarling (R-TX).

"So when we, as a committee, have the opportunity to help arrest this trend, to help put Americans back to work, to help create jobs, we have the responsibility to do so and hopefully to do so on on a bipartisan basis. This why our committee has already guided 22 regulatory relief bills to House passage. The vast majority of those bills, once again, have received strong -- not just token -- but strong bipartisan support,” he said.

H.R. 3211, the Mortgage Choice Act of 2013 sponsored by Rep. Bill Huizenga (R-MI), was agreed to by a voice vote. The markup will continue and final passage of the bills will take place after the upcoming District Work Period.

Committee Holds Oversight Hearing with Treasury Secretary, Raises Transparency Concerns

On Thursday, the full committee held a hearing with Treasury Secretary Jacob Lew to receive the annual testimony on the state of the international financial system. 

Several members, including Reps. Garrett, Royce and McHenry, discussed the Financial Stability Oversight Council’s disturbing lack of transparency and accountability.

Chairman Hensarling said FSOC “should cease and desist” from designating more financial firms as “too big to fail” until there is an opportunity for greater congressional oversight of the council’s decision-making process.

“There is increasingly bipartisan concern about the immense discretionary power that FSOC has and how frankly little transparency it has,” Chairman Hensarling said to Secretary Lew. “I would simply call upon you as head of FSOC to cease and desist with these designations until all of our questions can be answered fully and Congress can exercise its oversight authority over this incredible process,” he said. (Watch the video here.)

Members also expressed disappointment that Secretary Lew could fit only two hours into his schedule to appear at Thursday’s statutorily required hearing.

Because of this unusual time constraint, “there's 20 members of this committee that won't get a chance to talk to you today. That represents roughly 14 million people," Rep Mick Mulvaney (R-SC) said.


Rep. Scott Garrett | Federal Debt Not Only Liability Taxpayers On Hook For 

It is no secret that Washington's finances are in a dire state. What might come as a shock, however, is that the American people are on the hook for a lot more than just our national debt. Today, nine of 10 new mortgages are insured by you, the taxpayers...The PATH Act is a comprehensive plan for building a mortgage market that avoids the problems of the past. This legislation would wind down Fannie and Freddie and build a new, more open mortgage market based on private capital, not taxpayer guarantees.

Weekend Must Reads

Wall Street Journal | The Feds Target Money Managers

The conceit of the Obama era is that regulators know best in all things, and so the more of finance that can be put under their sway the better. We'll all learn just how wrong that is if regulators bring high leverage and taxpayer backing from the world of banking into the rest of the financial economy.

American Banker 'Skin in the Game' Rule Unnecessary for CLOs

The House recognized the importance of CLOs to the economy and recently passed bipartisan legislation exempting certain legacy CLOs from Dodd-Frank's Volcker rule. Regulators would be wise to craft a workable solution for the risk retention requirements regarding the CLO market. After which they can perhaps turn their attention to dealing with the actual causes of the financial crisis.

American Action Forum | The Cumulative Impact of Regulatory Cost Burdens on Employment

AAF research finds that for every billion dollars in regulatory compliance, affected industry employment declines by 3.6%.
    On the Horizon 

The House is not in session next week.

  In the News

American Banker | Lawmakers Press Treasury's Lew on Mortgage Servicing, FSOC

Credit Union Times | House Passes Three Key Reg Relief Bills

The Hill | House Votes to Amend Dodd-Frank Rule

Ludington Daily News | Bipartisan Huizenga legislation to help low and middle income borrowers sails through committee

American Banker | FSOC Pledges to Disclose More Amid Criticism by Lawmakers

Wall Street Journal | As One-Time Gains Fade, Fannie and Freddie Face a Less-Profitable Future

Posted by Staff on May 02, 2014

Committee Holds SEC Accountable

On Tuesday, the full committee held an oversight hearing with SEC Chair Mary Jo White to discuss the Commission's agenda, operations, and 2015 budget. 

"The SEC’s budget has grown substantially in recent years. In fact, the SEC’s budget has increased by 80 percent in the last 10 years and by nearly 300 percent since the year 2000. I again note that when my Democratic colleagues were in the majority even after the passage of the Dodd-Frank Act, they never called for the dramatic budget increases they call for now," said Chairman Jeb Hensarling (R-TX). 

"Not many other agencies throughout the entirety of the Federal Government have seen such hefty budget increases during this same period of time. I don’t know many constituents in Texas’s Fifth Congressional District -- that I have the honor of representing -- whose family budget has seen an 80 percent increase in the last 10 years. In addition, as we see the national debt clock regrettably continually turn at the pace we have observed, this is something that must loom large over all of our budgetary decisions," he said. 

During the hearing, Members also questioned Chair White regarding market structure and high frequency trading.  In response to a question from Rep. Scott Garrett (R-NJ), Chairman of the Subcommittee on Capital Markets and Government Sponsored Enterprises, Chair White said, "the markets are not rigged."

On 20-0 Vote, Subpoenas Approved in Investigation of CFPB

Republicans and Democrats on the Oversight and Investigations Subcommittee voted 20-0 to subpoena two CFPB officials and a union representative as part of its ongoing investigation into allegations of discrimination and retaliation at the Bureau.

The CFPB and the National Treasury Employees Union (NTEU) did not allow the officials to appear as witnesses at a subcommittee hearing on April 2. At that hearing, CFPB employee and whistleblower Angela Martin and Misty Raucci, an outside investigator hired by the CFPB, described a culture of racial and gender discrimination and retaliation against employees at the CFPB.

CFPB Director Richard Cordray refused to allow Stacey Bach, Assistant Director of the Office of Equal Employment Opportunity, and Liza Strong, Director of Employee Relations, to testify at the April 2 hearing. A third official, Ben Konop, the executive vice president of the CFPB employees’ union, was also not allowed to testify by the union. All three were subpoenaed today.

“Unfortunately, the CFPB and the NTEU refused to provide the requested witnesses to testify at the April 2 hearing. And yet, we maintain it is imperative that we are able to question Ms. Bach, Ms. Strong, and Mr. Konop. Through our investigation, it has become quite clear to this Subcommittee that they are the three individuals with the most knowledge of the disturbing treatment which women and minority employees were subjected to while at the Bureau,” said Oversight and Investigations Subcommittee Chairman Patrick McHenry (R-NC).

Subcommittee Examines How Technology Can Promote Consumer Financial Literacy

On Wednesday, the Financial Institutions and Consumer Credit Subcommittee held a hearing to discuss the impact of technology on promoting consumer financial literacy.  

"In 2012, the Government Accountability Office released a report that provided an overview of the federal government’s activities and programs to promote financial literacy. They found 13 different programs, operated by 13 different agencies, spent approximately $31 million dollars on financial literacy efforts in 2010. The report also found that there was significant overlap among these agencies and recommended consolidation of the federal government’s to promote financial literacy. Furthermore, the GAO found that there was no mechanism to evaluate the effectiveness of these efforts," said Financial Institutions and Consumer Credit Chairman Shelley Moore Capito (R-WV).

The subcommittee heard from private-sector witnesses who have successfully developed mobile applications and other programs to promote financial literacy.   

Subcommittee Continues Efforts to Spur Economic Growth and Job Creation

On Thursday, the Capital Markets and Government Sponsored Enterprises Subcommittee held a hearing to discuss legislative proposals to enhance capital formation and spur job creation.

"Thanks in large part to the JOBS Act, 2013 was the best year for initial public offerings since 2000, with more than 175 IPOs raising over $40 billion in much-needed growth capital. At least 80% of these companies qualified as Emerging Growth Companies under the JOBS Act. While this is a very positive development, more work needs to be done" said Subcommittee Chairman Scott Garrett (R-NJ).

"According to one small business survey, government regulation and red tape remain at the very top of the list of the most important problems facing America’s job creators. Another survey shows that small business demand for private capital continued to outpace access in 2013, while at least 60% of respondents found it difficult to raise new external financing," he said.

The subcommittee focused on three discussion draft bills: the Equity Crowdfunding Improvement Act of 2014, the Startup Capital Modernization Act of 2014, and a bill to direct the Securities and Exchange Commission to revise its proposed amendments to Regulation D, Form D, and Rule 156.


Rep. Andy Barr (R-KY) | House Passes Volcker Rule Fix

Rep. Andy Barr (R., Ky.), said a small bank in his district feared a loss if it has to sell its CLO holdings at below their current value. “The consequence will be a fire sale in the market that will cause significant losses,” he said Tuesday on the House floor.

Weekend Must Reads

National Review | Consumer Finance Protection Bureau: Hotbed of Discrimination?

Furthermore, the CFPB has been accused of actual disparate treatment race discrimination. One CFPB attorney testified before the House Financial Services Committee regarding her experience, stating that since her arrival at the CFPB in June 2011, she hasn’t received a single case or enforcement matter, despite a successful legal career prior to arriving at the Bureau. She further alleges she was retaliated against after she filed an EEO complaint, and described the Bureau as having a “culture of retaliation and intimidation.” The investigator assigned to the complaint testified that she ”became a veritable hotline for employees at CFPB, who called to discuss their own maltreatment at the Bureau.” The investigator also found that the complainant was, in fact, retaliated against after filing her EEO complaint.

Wall Street Journal The Growth Deficit

The biggest current obstacles are the regulatory burdens still moving through the economy from Dodd-Frank, ObamaCare, and the rest of the damage from the Pelosi Congress. Hard to believe, but Dodd-Frank is only half implemented.
Posted by Staff on April 30, 2014

Republicans and Democrats on the House Financial Services Oversight and Investigations Subcommittee voted 20-0 to subpoena two CFPB officials and a union representative as part of its ongoing investigation into allegations of discrimination and retaliation at the Bureau.

Wall Street Journal: House Panel Votes to Subpoena CFPB Officials

An investigative subcommittee of the House Financial Services Committee voted 20-0 on Tuesday to send subpoenas to three CFPB officials, drawing support from Republicans and Democrats. Under the financial panel's rules, the subcommittee is allowed to authorize subpoenas.

Washington Post: House Panel Approves Subpoenas for CFPB Discrimination Probe

“For the sake of Angela Martin and other CFPB employees who are suffering, our investigation will move forward,” said Rep. Jeb Hensarling (R-Tex.), chairman of the House Financial Services Committee. “All those engaged in reprehensible behavior at the CFPB must be held accountable.”

Cleveland Plain Dealer: Congressional Panel Votes to Subpoena Richard Cordray's Aides in Discrimination Probe

Republicans on the House Financial Services Committee's investigations and oversight subcommittee say it is also their duty to look into the matter so they can assure that Cordray's agency is operating properly. The subpoenas will demand that three employees – one official each from Cordray's equal opportunity and employee relations offices, and a union official who also works as an agency attorney – appear at a to-be-scheduled hearing.

Columbus Dispatch: Cordray Staffers Subpoenaed in Discrimination Probe

A House committee voted yesterday to subpoena a former Ohio congressional candidate as part of its ongoing investigation into discrimination at a consumer-watchdog agency headed by former Ohio Attorney General Richard Cordray.

Toledo Blade: Konop Set to Testify in Bureau Bias Allegations

The committee is looking into allegations from bureau employee Angela Martin, a member of Mr. Konop’s union, that she was discriminated against because of her gender. An internal investigation commissioned by the agency found the consumer financial protection bureau to be a “toxic workplace."

American Banker: House Panel Votes to Subpoena CFPB Employees

A House Financial Services subcommittee unanimously approved subpoenas for three officials at the Consumer Financial Protection Bureau on Tuesday, compelling them to testify about employee allegations of retaliation and discrimination at the agency.

The Hill: House Panel Subpoenas CFPB Officials on Discrimination Claims

“What we saw was a brand new agency establishing a very bad culture,” said Rep. Patrick McHenry (R-N.C.), who heads the subcommittee. “We’ve tried to limit this in scope and try to understand this, and see where we need to take it.”


Posted by Staff on April 07, 2014
On Tuesday at 10:00 a.m. the Full Committee will hold a hearing to examine the economic consequences of recent rulemaking, supervisory, and enforcement actions of the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Reserve Board, the National Credit Union Administration and the Office of the Comptroller of the Currency on consumers, community financial institutions, the U.S. economy, and our domestic job-creating businesses.

On Wednesday at 10:00 a.m. the Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing to discuss legislative proposal to enhance capital formation for small and emerging growth companies.

Be sure to check back here on the Bottom Line Blog -- and sign up for our email updates -- for additional information throughout the week.
Posted by Staff on March 31, 2014
The House is in session Tuesday through Friday this week.

Here’s what’s happening:

On Wednesday at 10:00 a.m. the Oversight and Investigations Subcommittee will hold a hearing to examine allegations of discrimination and retaliation within the CFPB.

Committee staff has received corroborating information from a CFPB employee who alleges she has experienced gender discrimination and retaliation for filing an Equal Employment Opportunity complaint with the CFPB’s Human Capital Office. The CFPB retained an outside investigator to examine the whistleblower’s claims. The investigator
confirmed the whistleblower’s claims of retaliation. Both the whistleblower and the investigator who examined her claims will testify at the hearing. CFPB officials have also been invited to testify.

Be sure to check back here on the Bottom Line Blog -- and sign up for our email updates -- for additional information throughout the week.
Posted by Staff on March 28, 2014

Committee Holds First in a Series of Hearings on the Impact of the National Debt

On Tuesday, the Financial Services Committee held a hearing on the threat posed by our nation's rising national debt. Tuesday’s hearing was the first in a series of hearings the committee has planned to focus attention on the harmful impact the debt has on economic growth, jobs, national security, and the federal government’s ability to fund discretionary spending and entitlement programs.

"Recently, I saw in the newspaper a headline that read, ‘Debts, deficits - once a focus – fade from agenda.’ Shame on us if we allow that headline to prove accurate. In the last six years we’ve accumulated more national debt than we did in our nation’s first 200 years. We’re experiencing debt to GDP ratios not seen since the aftermath of World War II. That level of debt was episodic and temporary; today’s is structural and unsustainable. As a veteran of the Super Committee, Simpson-Bowles, and now chair of this committee, my laptop is regrettably full of reports describing our debt as ‘unsustainable.’ Yet denial, justification and inaction continue to rule the day," said Chairman Hensarling.

"That is why as Chairman I am launching a series of hearings to be focused on the pending debt crisis. There is much at stake. We can no longer allow the debt deniers among us to mask the threat or change the subject. I believe any reasonable examination of history and economics will show that we are indeed headed for a debt crisis. It is the most foreseeable crisis in our nation’s history. As members of the House of Representatives, we can disagree about the solutions to avert the crisis, but we should unanimously agree that debt matters and debt matters today," Hensarling said.

Expert witnesses urged Washington to refocus its attention on the debt crisis. “For those who think this is just a Wall Street problem, look at it this way: When 10 year Treasury notes go to seven percent, and as a result home mortgages go to 10 percent and car loans to 13 percent, families will have fewer dollars,” said David M. Cote, Chairman and CEO of Honeywell, in his testimony.“That’s now a Main Street problem.”

The witnesses agreed that low-income Americans would be some of the most hurt if Washington fails to act now and change our fiscal path.

Allegations of Discrimination and Retaliation Against CFPB Employees to Be Focus of Hearing Next Week

Allegations that the CFPB has engaged in discrimination and retaliation against its employees will be the subject of a Financial Services Committee Oversight and Investigations Subcommittee hearing next week.

The subcommittee hearing comes amid reports, first published in the American Banker, that CFPB managers “show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses” and that “management has been accused in several cases of favoring Caucasian men and of creating a hostile work environment.”

"The revelations uncovered in the American Banker story are extremely troubling,” said Chairman McHenry. “Coupled with the significant number of discrimination claims filed by CFPB employees, this raises serious questions about the management of the Bureau.”


Rep. Mike Fitzpatrick | Fitzpatrick Highlights Newtown, PA Student Letters in Financial Services Hearing 

“Mr. Chairman, these letters have all been received in my office since January this year – and they’re all about the national debt. The interesting thing about these letters is that every one of them was written by a teenager concerned about the national debt,” said Congressman Fitzpatrick.

Weekend Must Reads

Dallas Morning News | Chairman Hensarling "National Debt Matters in a Big Way"

'Debt matters — and we can’t keep waiting for the next election or next generation to tackle it. To quote a Kenny Chesney song, “Everybody wants to go to heaven … but nobody wants to go now.” If we don’t “go now,” it’s not just our children, but many of us who will soon live in smaller homes, compete for fewer jobs with shrinking paychecks, live in a less secure America, and be limited to small, timid dreams. This is America. We can and we must do better.

Wall Street Journal 
| Obama's IMF Gambit

One of President Obama's favorite legislative gambits is wait and hurry up. Witness his attempt, which failed Tuesday in the Senate, to link urgent aid for Ukraine to International Monetary Fund changes negotiated by G-20 countries four years ago.

American Banker | DOJ’s 'Operation Choke Point': An Attack on Market Economy 

History teaches that when government bureaucracies try to direct economies, stifled creativity, distorted markets and low economic growth are inevitable results. One of the easiest and most insidious ways for bureaucrats to control the U.S. economy is through the banks, directing who gets – and who can't get – loans and other essential banking services. That's happening today, and it ought to alarm and frighten all of us.

Investor's Business Daily | Reaganomics Vs. Obamanomics: Two Wholly Different Outcomes

Contrary to President Obama's prescription of more government spending and regulation, President Reagan diagnosed government as the problem and prescribed a plan of lowering tax rates and reducing regulations to free firms and workers from disincentives to invest and work.
Posted by Staff on March 27, 2014

House Financial Services Committee Chairman Jeb Hensarling is trying to draw attention back to the nation’s mounting debt ahead of midterm elections that are more likely to revolve around Obamacare.

The Texas Republican scheduled a series of hearings on the debt, he says, after reading a newspaper article that noted that the national debt had faded from the agenda.

He held the first hearing Tuesday, inviting experts to testify on the debt and warning in his opening statement that “unsustainable levels of debt are harming our country today as we speak.”

In making the case that the debt is harming the economy, Hensarling warned that the interest on the debt is expected to cost $233 billion in 2014, more than seven times “the requested annual budget for the National Institutes of Health. Let us reflect upon all the childhood cancer studies going unfunded today because of our national debt.”
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More broadly, Hensarling expressed concern that interest payments, the rising cost of retirement programs as the baby boomers age, and increasing health care costs could crowd out other spending priorities. "Is entitlement spending going to be the ‘blob’ that ate discretionary government?” he asked.

Alice Rivlin, a Brookings Institution scholar testifying at the hearing, responded, “I think it already has been. In my view we’ve already cut discretionary spending to unsustainable levels.”

Rivlin, who served as a budget adviser to President Bill Clinton, noted that the Clinton administration prepared a deficit reduction plan in 1993, when rising interest rates forced net interest payments to 14 percent of total government spending.

“We were worried that unless we reduced the deficit and the projected build-up of debt, we would end up having to raise taxes or cut other spending just to pay the increasing debt service,” Rivlin said, adding that “the chances of getting into a similar bind are higher now” because of the higher level of debt.

The federal deficit fell from $1.1 trillion in 2012 to $680 billion in 2013, with the Congressional Budget Office expecting a further decline to $514 billion in fiscal 2014. But the public debt is 72 percent of U.S. economic output, and projected to be 79 percent and rising in 2024. In the long run, the CBO projects the debt, driven by the rising cost of entitlement programs, to continue growing, to 110 percent of GDP in 2038.

Over the next 10 years, the CBO anticipates that mandatory spending — automatic spending on entitlement programs such as Medicare and Social Security — will continue to rise, as will the cost of interest payments on the debt. Discretionary spending, which is all appropriated spending, including for defense programs, will drop from 7.2 to just over 5 percent of GDP.

As for interest payments, they are currently relatively low, at 6 percent of all government spending. That is thanks to a depressed economy and the Federal Reserve’s efforts to lower rates through quantitative easing.

But the Office of Management and Budget sees net interest costs rising again over the course of the decade as the economy improves, rates rise and the Treasury refinances the debt. Interest payments as a share of federal spending is expected to double, to nearly 12 percent, or $550 billion, by 2019 — assuming no adverse market reaction at any point.

Democratic minority whip Steny Hoyer of Maryland raised concerns similar to Hensarling’s on Monday, saying at a speech in Washington that “without action, we will be a nation that can’t invest in its own people” because of rising mandatory and interest spending.

“Every dollar we spend on interest is a dollar we can’t spend on Head Start, nutrition assistance, job training, infrastructure, innovation, support for public schools and early education, and other investments that help more of our people make it in America,” said Hoyer, noting that “those investments are already being crowded out.”

Hoyer also cited a report from the left-of-center think tank Third Way that found that the federal government spent $3 on public investments for every $1 it spent on entitlements, but that ratio was reversed by 2012, and projected to fall to one-to-five by 2022.