On Wednesday, the Financial Services Committee passed oversight bills to bring greater accountability and transparency to the Financial Stability Oversight Council (FSOC) and its research arm, the Office of Financial Research (OFR).
Chairman Jeb Hensarling (R-TX) remarked, "Dodd-Frank increases the power and control that largely unaccountable Washington bureaucrats have over our economy. The results have left hardworking taxpayers with fewer choices, higher costs and an anemic economy of shrinking paychecks. The reform bills approved by the committee today will help build a healthier economy for all Americans and put in place needed transparency, accountability and checks and balances on powerful bureaucracies."
Members lamented the lethargic economic recovery, calling for more accountability and transparency for government bureaucrats whose decisions have immense impact on our country's economy and financial system.
"We're seeing pockets of prosperity in the country. But here's the reality for the rest of America: lowest labor participation rate in 40 years. For the first time since we've been keeping records, there are more small businesses shutting down than there are new business startups," said Rep. Scott Tipton (R-CO).
House Approves Bipartisan Financial Services Amendments to Transportation Bill
Chairman Jeb Hensarling (R-TX) successfully attached a package of 15 bipartisan financial services bills to the transportation bill approved by the House this week. The 15 bills had previously passed the House with overwhelming bipartisan support.
“People are still hurting in this economy. We need to do everything we can to promote economic growth. It is very difficult to come by bipartisan bills, but I am proud to say that in the House Financial Services Committee we have passed numerous pieces of bipartisan legislation. They are modest because they are bipartisan, but they are important and can make a difference in people’s lives,” said Chairman Hensarling.
The list of 15 bills included in the amendment can be viewed here.
In addition, the House voted for an amendment sponsored by Reps. Randy Neugebauer (R-TX) and Bill Huizenga (R-MI) to draw down the Federal Reserve’s surplus account as an offset for new highway spending. The Neugebauer-Huizenga amendment replaced a controversial funding method approved by the Senate that would reduce the dividend the Fed’s regional reserve banks pay on stock that private-sector banks are required to hold as members of the Federal Reserve system.
“Moving forward with the Federal Reserve dividend reduction without studying it could have devastating consequences for the supervision of the financial sector and the stability of the Federal Reserve System,” Rep. Neugebauer said during debate on the amendment. “The costs that banks—especially community banks—could face as a result of the dividend reduction would be passed on to hardworking consumers. At a time when many Americans continue to struggle from the unintended consequences of Dodd-Frank, it would be dangerous and irresponsible to move forward with the Senate version.”
The amendment also struck from the Senate-passed bill a proposal to increase the fee that mortgage borrowers must pay on loans guaranteed by Fannie Mae and Freddie Mac. “Allowing Congress to continue to raise the g-fees will make comprehensive housing finance reform impossible,” Rep. Neugebauer said.
Committee Calls for Accountability and Transparency from the Federal Reserve
The Financial Services Committee held a hearing on Wednesday with Federal Reserve Chair Janet Yellen as a witness in the place of the Federal Reserve’s Vice Chair for Supervision, a position that President Obama has yet to fill.
Chairman Jeb Hensarling (R-TX) warned in his opening statement, "Combining the Fed’s lack of transparency with its all-encompassing new regulatory authority under Dodd-Frank is a dangerous mix. It is a threat to economic growth, not to mention the principles of due process, checks and balances, and the rule of law. If we are not careful, our central bankers will soon become our central planners."
Members stressed their concern that President Obama has neglected to appoint a Vice Chair for Supervision as required by the Dodd-Frank Act and the consequences of the vacancy in the Federal Reserve's ability to provide balanced supervision and regulation of the financial system.
"Over the past five years, banks of all sizes – and particularly our community banks -- have struggled to deal with the extraordinary costs of increased bank supervision by the Federal Reserve. In light of the importance of implementing a balanced and tailored supervision regime that recognizes that one size does not fit all, it is remarkable that the President continues to fail to follow the law he championed and that the President continues to deprive the Congress of participating in the appointment of this important position,” said Rep. Robert Hurt (R-VA).
Subcommittee Examines Housing Needs in New Orleans, 10 Years After Katrina
On Friday, the Housing and Insurance Subcommittee held a hearing in New Orleans to examine the ongoing response – at the local, state and federal government levels – to the housing needs of residents affected by Hurricane Katrina.
"We have representatives on today’s panel who lead groups that were some of the first responders in the post-Katrina housing crisis. In places where the state or federal government was slow to help, they were there, working to physically and emotionally rebuild their communities. That they continue their work 10 years later is both a testament to their strength and an indication of the need to examine the process for delivering housing assistance in the wake of disasters," said Subcommittee Chairman Blaine Luetkemeyer (R-MO) in his opening statement.
MEMBER SPOTLIGHT
Rep. French Hill | Why Obama must work with the House
I recently learned first-hand how difficult dealing with this Administration can be. When I introduced H.R. 3192, the Homebuyers Assistance Act, with the support of original co-sponsor Rep. Brad Sherman, California Democrat, I never imagined a minor technical fix to a complex issue would receive an official veto threat from the White House. But it did.
Weekend Must Reads
Forbes | Feds Just Can't Allow People To Save And Invest
Last week, the U.S. House passed Rep. Ann Wagner’s (R-Mo.) bill to block the DOL’s fiduciary rule. But without similar action in the U.S. Senate, the federal government will impose the DOL’s overly complex regulations, and average citizens will likely end up with fewer investment options.
Bloomberg Business | Bond Liquidity Seen Worsening by BofA as Regulations Tighten
Dwindling liquidity in bond markets may get worse next year as more regulation hits the financial industry, raising questions as to whether rules are making financial markets safer, Bank of America Merrill Lynch said.
Investor's Business Daily | Most transparent administration in history closes more meetings than ever
But wait! That would mean the current administration can't possibly be the most transparent administration in history. And that, in turn, means that Barack Obama has been wrong every time he made that claim. We need a Federal Advisory Committee to explain how that could be?
On the Horizon
Stay tuned!
In the News
Washington Post | Lawmakers grill Fed chair on oversight of financial system during contentious hearing
Bloomberg | Yellen Says U.S. Banks Still Have Risk-Management Challenges
Financial Times | Fed chief Janet Yellen bullish on US economy
The Hill | Yellen: December rate hike a 'live possibility'
Wall Street Journal | Janet Yellen Turns Over Documents to House Panel Investigating 2012 Leak
Bloomberg | Yellen Shares Leak Probe Documents After Lawmakers’ Demands
Wall Street Journal | Lawmakers Get Extra Chance to Question Yellen at Hearing Wednesday
Washington Post | These confidential documents will haunt Janet Yellen’s testimony on the Hill
American Banker | Fight Over $50B Asset Cutoff Revived in House
Politico Pro | Democrats split on how to help regional banks
Politico Pro | Freddie Mac loss raises warnings of another bailout
American Banker | Freddie Mac's $500M Loss Puts It on Defensive
Wall Street Journal | Freddie Mac Swings to Loss
American Banker | Hensarling Tries to Add Small Bank Legislation Into Highway Bill
Reuters | Fed's Yellen sees possible December rate rise, gradual hiking path