Patrick McHenryChairman

Bloomberg: Tea Party Rant II Awaits Next Homeowner Bailout

On Feb. 19, 2009, CNBC editor Rick Santelli let loose on the floor of the Chicago Mercantile Exchange in response to President Barack Obama’s proposal to subsidize underwater mortgages.

Santelli’s famous rant gave birth to the Tea Party. Obama’s proposal gave way to numerous initiatives, known by the catchy acronyms HAMP and HARP (but not HARM), all of which fell short of the administration’s initial goals.

UK Telegraph: China may not overtake America this century after all

Doubts are growing about whether China can pass the US to become the world's biggest economy this century amid warnings that the country’s 30-year miracle is nearing exhaustion.

Real Clear Markets: The SEC's Cross Border Regulatory Creep

Last week, the Securities and Exchange Commission proposed its cross-border security-based swaps rule under Dodd-Frank with great fanfare and a unanimous commission vote. Many outside the SEC have deemed the proposal a success, presumably because it is not as bad as the approach taken by the Commodity Futures Trading Commission that has angered regulators the world over. Exceeding the CFTC's low bar is a pretty poor metric for assessing regulatory success.

New York Post: No happy ending for the Fed’s stock party

Friends don’t let friends invest drunk.

I think that’s an apt warning, considering what’s been going on in the stock markets, which reached all-time highs this week even though the economy is — at best — limping along and may even be deteriorating.

CATO: Regulation, Market Structure, and Role of the Credit Rating Agencies

During the financial crisis of 2008, the financial markets would have been better served if  the credit rating agency industry had been more competitive.

George Will: Courts and Congress give Obama adult supervision

Rep. Jeb Hensarling (R-Tex.), chairman of the Financial Services Committee, has told Richard Cordray not to bother. This is part of the recent evidence that government is getting some adult supervision.

Barack Obama used a recess appointment to make Cordray director of the Consumer Financial Protection Bureau. But a federal circuit court has declared unconstitutional three other recess appointments made the same day because the Senate was not in recess. So Hensarling has told Cordray not to testify before his committee: “Absent contrary guidance from the United States Supreme Court, you do not meet the statutory requirements of a validly serving director of the CFPB, and cannot be recognized as such.”

Competitive Enterprise Institute: Did Hensarling Force Obama’s Hand on “Recess” Appointments?

Chairman Hensarling’s action to block Richard Cordray from testifying on the CFPB’s semi-annual report may have forced the Obama administration’s hand in submitting a brief later in the week urging the Supreme Court to resolve the issue.  What Chairman Hensarling was doing, in the words of columnist George Will, is give an out-of-control government some needed “adult supervision.”  Judging by the White House’s reaction, Hensarling is succeeding.

Heritage: Red Tape Rising: Regulation in Obama’s First Term

Financial regulation dominated rulemaking in 2012, a direct result of the Dodd–Frank Act.  Financial services regulators were responsible for 13 of the 25 new major rules issued.  Far too often, the quality of cost analyses by regulatory agencies is substandard—particularly with respect to Dodd–Frank rulemaking. For example, some regulations issued by the SEC under the Act have been invalidated by the courts because of faulty cost-benefit analyses. 

Reuters: Cheap money bankrolls Wall Street’s bet on housing

Las Vegas would seem a highly unlikely locale for a new housing bubble since the area’s jobless rate hovers near 10% and a healthy housing market depends on people having jobs.  But the area is one of many mini-bubbles spawned by the Federal Reserve’s campaign to buttress growth with "quantitative easing," a wave of asset purchases that's pumping cheap money into the still-weak US economy.

Daily Caller: Dodd-Frank a total failure, bipartisan panel agrees

A mix of conservative and liberal speakers at an American Enterprise Institute discussion all agreed the 2010 law has utterly failed in its purpose of reducing the systemic risk posed by “Too Big to Fail” financial institutions.

New York Post: Sink QE! (the money-printing plan, that is)

The Federal Reserve made it official yesterday, saying it’s full steam ahead for the money-printing operation that is creating all sorts of financial dislocations without helping the economy grow very much.

Wall Street Journal’s Mary Kissel: Disdain for the Courts

The House Financial Services Committee disinvited Consumer Financial Protection Bureau chief Richard Cordray from testifying Tuesday, noting President Obama's non-recess, recess appointment of Mr. Cordray and a January D.C. Circuit Court of Appeals decision, Noel Canning v. NLRB, that invalidated other appointments made under the same pretense. In a letter to Mr. Cordray, Texas Republican Jeb Hensarling said his committee stands "ready to accept the testimony of the Director of the CFPB" when "an individual validly holds this position."

National Review Online: Jeb Hensarling on Richard Cordray

President Obama’s attempt to circumvent the Senate by unilaterally appointing Ohio politician Richard Cordray to the Consumer Financial Protection Bureau may have been premised on his expectation that he would get away with it. If so, he seems to have miscalculated, because the other two branches of government are providing him with a Sesame Street demonstration of the concept of “checks and balances.”

Volokh.com: House Financial Services Committee Refuses to Invite Richard Cordray to Testify

Amazingly, CFPB spokesmen continue to insist that Noel Canning does not apply to Cordray’s improper recess appointment although they have provided no explanation as to why it does not.

New York Times: Possible Fed Successor Has Admirers and Foes

In July 1996, the Federal Reserve broke the metronomic routine of its closed-door policy-making meetings to hold an unusual debate. The Fed’s powerful chairman, Alan Greenspan, saw a chance for the first time in decades to drive annual inflation all the way down to zero, achieving the price stability he had long regarded as the central bank’s primary mission.

Washington Post: As Wall Street relies more on technology, social media can tilt the markets

The evolution of market news — from messages on homing pigeons to newspaper articles to round-the-clock wire reports — has taken yet another disruptive step with the arrival of Twitter on trading desks throughout the world.

Bloomberg: Central Banks Load Up on Equities

Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.

AEI: How Robin Kelly can ease Illinois' pain

The FHA exists to help first-time and low-income homebuyers achieve responsible homeownership. Sadly, the federal agency has strayed far from its historic mission and instead is setting families up to fail and saddling thousands of neighborhoods across America with high rates of home foreclosures.

A little over a year ago, Congress passed the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act was designed to make it easier for entrepreneurs to raise capital and turn their ideas into job-creating businesses that might one day go public. At a time of slow growth and high unemployment, the JOBS Act was a big win for the St. Louis region and the American economy.

Not only was the JOBS Act good policy — it also was an important bipartisan breakthrough at a time of heightened partisanship. During the Rose Garden signing ceremony, President Obama hailed the bill as a “potential game-changer” and noted that the JOBS Act “represents exactly the kind of bipartisan action we should be taking in Washington to help our economy.”

I couldn’t agree more with the president. But unfortunately, the gears of bureaucracy in Washington have kept the JOBS Act from being implemented. As entrepreneurs and investors in the St. Louis region sit and wait, the Securities and Exchange Commission (SEC) has failed to finalize key aspects of the JOBS Act.

Congress directed the SEC to write simple rules that would allow entrepreneurs to start raising capital, while also ensuring strong investor protections remain in place. But one year later, the SEC has missed important deadlines to finalize two of these rules, and there is little indication they are ready to implement other portions of the bill.

For example, one provision would make it easier for businesses to advertise investments in their company to potential investors. The SEC was required to issue a final rule for this provision by July 2012. However, nine months later the SEC has only gone so far as to issue a rule proposal, which is Washington’s way of saying “We’ll get back to you later.”

Another provision would create opportunities for startups to “crowdfund,” or pool small investments from a number of people who want to invest in companies they believe in. The SEC was required to finalize crowdfunding rules by December 2012, but again they have dragged their feet as startups and investors stand idle. It’s not as if these rulemakings are foreign to the SEC. In fact, writing rules that facilitate capital formation while maintaining investor protections is largely why the SEC exists. If the SEC is able to finalize rules dealing with “conflict minerals” in the Democratic Republic of the Congo (as they did in August 2012), there’s no reason why the JOBS Act should remain unfinished.

The St. Louis region stands to benefit from the JOBS Act in terms of jobs, growth and new innovations — but only if the Washington bureaucracy gets out of the way and lets American entrepreneurs do what they do best. The House Financial Services Committee, on which I serve, has made implementation of the JOBS Act a top priority for this Congress. The time for delays and excuses is over — the SEC must recognize that their inaction has real economic consequences.