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June 30, 2013
Pennsylvania Congressman Keith Rothfus (Facebook | Twitter) delivers this week's Sunday Video Message. He shares his reaction to Wednesday's full committee hearing on "Too Big to Fail" in the post-Dodd-Frank world.
Spoiler Alert! Dodd-Frank did not, does not and will not end Too Big to Fail.
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June 29, 2013
Wall Street Journal: Regulators have created a mortgage minefield
Incompatible and contradictory federal regulations -- including those in Dodd-Frank -- have created a mortgage minefield. The ultimate casualties will be the nascent housing recovery and the American home buyer. AEI: Overzealous intervention dooms the market Those who want government guarantees for mortgages see them as a path to encourage homeownership and market stability, but instead guarantees pose needless risks to homeowners and taxpayers. Government guarantees suffer from three flaws: the inability and unwillingness to price for risk, asset allocation distortions, and the politicization of lending. Washington Examiner: CFPB advisory board riddled with questionable appointees Multiple members of the Consumer Financial Protection Bureau’s Consumer Advisory Board have histories of financial losses, bankruptcies and insolvencies. The board provides financial and consumer advice to low-income families, including how to live within one’s budget, the need to increase personal savings, and the importance of building assets. Los Angeles Times: Run-up in mortgage rates raises questions about housing recovery The 30-year fixed rate home loan has jumped a full percentage point above recent record lows, raising borrowing costs and posing a threat to consumer confidence. Forbes: Nosebleed Youth Unemployment: Will The U.S. Follow The Sclerotic Lead Of Europe? When the last reports came out showing that youth unemployment had reached 16.2 % in the United States, alarm bells began to be heard. Countries that score better in economic freedom, labor and business regulations, have better odds of enjoying relatively low youth unemployment.
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June 24, 2013
Just one full day of committee activity for this week before the July 4th District Work Period. But be sure to check back here on the Bottom Line Blog -- and subscribe to our email lists -- for updates throughout the week.
Here's what's happening: On Wednesday at 10 a.m. the full committee examines how Dodd-Frank could result in more taxpayer-funded bailouts. Later, at 2 p.m., the Housing & Insurance Subcommittee evaluates how HUD's Moving-to-Work Program benefits public and assisted housing residents.
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June 23, 2013
Oversight & Investigations Subcommittee Chairman Patrick McHenry delivers this week's Sunday Video Message. He discusses what we learned about the CFPB in this week's Financial Institutions and Oversight hearings.
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June 21, 2013
On Tuesday, Members of the Oversight and Investigations Subcommittee examined the budget for the Consumer Protection Financial Bureau (CFPB) with the bureau's Chief Financial Officer.
While the CFPB generally lacks oversight and accountability, one particular issue of concern raised at the hearing was the outrageously expensive planned renovation of the bureau's Washington headquarters. Initially thought to cost $55 million -- a sum greater than the annual construction and acquisition budget for all federal buildings -- the actual budget for the 1,200-employee bureau's headquarters renovation tops out at $95 million -- or $75,000 per employee. Given the lack of Congressional control over appropriations to the CFPB as well as the lack of Administration control over the CFPB’s budget, the large budget and broad regulatory discretion conferred upon the CFPB present substantial risk of waste, fraud and abuse.
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June 19, 2013
Congressman Bill Huizenga joined us to talk about H.R. 1135, the Burdensome Data Collection Relief Act. The bill repeals Section 953(b) of the Dodd-Frank Act that requires all publicly traded companies to calculate and disclose the median annual total compensation of all employees and compare that number to the annual total compensation of the CEO in each SEC filing. While that sounds simple enough on paper, the real-world implications of Section 953 are substantial. As the congressman explains, the provision imposes significant administrative burdens on publicly traded companies while yielding little useful information to investors. Because the language does not define “each SEC filing,” companies could be required to calculate this ratio on a monthly or even weekly basis. Further, because the language does not define “all employees,” the calculation could include employees of the company all over the world like Apple’s manufacturing employees in China or a part-time office cleaning crew in Detroit, thus further skewing an already misleading statistic. In response to a question on Section 953 from Rep. Huizenga on May 16, 2013, SEC Chairman Mary Jo White said, “The complication with that is in the definition of ’total compensation.’ And there is a specific definition of that which applies to when you're disclosing your top executive's compensation. That is, the statutory definition leads to all the other issues you've just teed up in terms of some of those complexities... it's a mandated rulemaking for us.”
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June 19, 2013
Congressman Robert Hurt introduced two of the bills we considered in today's markup: H.R. 1564, the Audit Integrity and Job Protection Act and H.R. 1105, the Small Business Capital Access and Job Preservation Act. Both were reported favorably by the committee with bipartisan support.
The first bill, H.R. 1564, prohibits the Public Company Accounting and Oversight Board from forcing public companies to automatically change or rotate their independent auditing firms. Selecting a company’s auditor is a decision that should be made by a company’s board of directors and ratified by its shareholders – not by a regulator in Washington. Instead of helping to increase transparency, mandated audit rotation could cause confusion for the company and its shareholders and impose an unnecessary cost on private companies. Furthermore, there are only a limited number of firms available to conduct audits, particularly for the largest multi-national corporations. The second of Rep. Hurt's bills, H.R. 1105, would exempt advisers to certain private equity funds from the new, burdensome registration requirements imposed by the Dodd-Frank Act. Private equity and growth capital funds didn't cause the financial crisis. They continue to pose no systemic risk to the U.S. economy nor do they raise investor protection issues that require additional regulatory burdens. H.R. 1105 looks to reduce new, complicated and unnecessary registration requirements that unfairly burden the private equity industry -- an industry responsible for investing hundreds of billions of dollars in U.S.-based businesses each year.
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June 17, 2013
Two subcommittee hearings and a full committee markup make for a slightly lighter week than last. Be sure to check back here on the Bottom Line Blog -- and subscribe to our email lists -- for updates throughout the week. Here’s what’s happening: On Tuesday -- as Rep. Capito previewed in our Sunday Video Message -- the Financial Institutions & Consumer Credit Subcommittee will examine how Dodd-Frank hampers home ownership. That hearing will take place at 10 a.m. Later, at 2 p.m., the Oversight & Investigations Subcommittee will review the budget for the CFPB. Finishing up committee activity for the week on Wednesday, the full committee will mark up the following legislation:
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June 16, 2013
Financial Institutions & Consumer Credit Subcommittee Chairman Shelley Moore Capito delivers this week's Sunday Video Message, the first in our new series. In the video, Rep. Capito previews next week's hearing on the Dodd-Frank Act's negative impact on homeownership.
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June 15, 2013
Fortune: The Fed's other trillion dollar problem The amount of money banks have at the Fed recently reached 13 digits, for the first time ever. Bloomberg: New Home Prices Say What’s Different This Time Although no two business cycles are alike, most share some common characteristics. The interest-rate-sensitive sectors of the economy -- housing and manufacturing -- tend to lead on the way up and the way down, for obvious reasons. Inflation ebbs during the recession and in the early stages of the recovery. Credit creation drives the upswing. CNBC: Are Markets Facing a Crisis of Confidence? The rout in global financial markets that has spared few asset classes extended into Thursday, with Asian stocks plunging across the board, led by a 6 percent fall in Japan's benchmark Nikkei 225 in the morning session. New York Post: Interest rates getting a lot more interesting Ben Bernanke has a big problem: The financial markets aren’t behaving themselves any more. |