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FSC Majority | Week in Review

Washington, June 5, 2015 - Subcommittee Conducts Oversight on Hurricane Sandy Claims

The need to reform the National Flood Insurance Program and allegations that Hurricane Sandy victims were cheated out of flood insurance claims due to bogus home inspection reports were the focus of a hearing on Tuesday held by the Housing and Insurance Subcommittee.

The subcommittee, chaired by Rep. Blaine Luetkemeyer (R-MO), heard testimony from the FEMA official in charge of the nation’s flood insurance program. He testified that more than 2,000 court cases have been filed by Sandy victims, many of which allege insurance companies and inspectors conspired to deny or underpay flood insurance claims.

“FEMA acted, but only after public prodding, and today is in the midst of a significant legal battle,” said Chairman Luetkemeyer. “Still, no one has been able to tell Congress or the public why these engineering firms operated in the fraudulent manner in which they are believed to have done. One question we must examine is whether or not perverse incentives exist within the National Flood Insurance Program.”

Rep. Scott Garrett (R-NJ) said during the hearing that he personally helped his constituents dig out of the rubble of Hurricane Sandy. “But after enduring the storm and the cleanup, the people of New Jersey had to face yet another challenge – doctored flood insurance claims that threatened their ability to rebuild. This is simply unacceptable. Frankly, it is maddening and I hope that we can all work together to ensure that victims are not cheated from what they are rightfully due,” he said.

Witnesses Testify That Ex-Im Harms American Jobs

Witnesses appearing before the committee at a hearing on the Export-Import Bank on Wednesday testified that Ex-Im harms some American jobs, tilts the playing field against some U.S. companies and has problems with corruption.

“We still believe that the Bank’s policy of subsidizing our foreign competitors tilts that playing field, harming U.S. companies and their workers,” said Richard Hirst, Executive Vice President and Chief Legal Officer for Delta Air Lines.

A $694 million direct loan from Ex-Im for an iron ore project in Australia is one reason why more than 1,200 American workers at domestic iron ore operations “are currently on layoff or have been notified of a coming layoff,” said Clifford Smith, Executive Vice President of Cliffs Natural Resources. The company is America’s largest producer of iron ore pellets for steelmaking and has five major mines in Minnesota and Michigan.

Ex-Im’s Deputy Inspector General Michael McCarthy testified that since the Office of Inspector General’s latest semiannual report was filed in March, one former Bank employee pleaded guilty to accepting $78,000 in bribes and another individual was sentenced to 41 months in prison for defrauding the Bank. At an earlier hearing this year, McCarthy said future indictments surrounding Ex-Im’s activities are possible.

This week, McCarthy also testified that Ex-Im has not fully complied with the Improper Payments Elimination and Recovery Act of 2010.

"We found Ex-Im Bank’s risk assessment for FY 2014 reporting provided limited insight into the actual risk of significant improper payments. As a result, the Bank’s improper payment reporting is incomplete and the true risk of significant improper payments is unknown," he testified.

Speaking to Ex-Im Chairman and President Fred Hochberg at the hearing, Rep. Bruice Poliquin (R-ME) wondered “how I can go back to the people I represent with this trail of mismanagement – ongoing mismanagement – and vote to reauthorize your bank?”


Rep. French Hill | Banker Returns to D.C. to Take on CFPB, Regulatory Red Tape

His career has "always had at its core finance, it's always had at its core the private sector, and then I've always just been pretty passionate about public policy," the freshman congressman told American Banker in a recent interview. Hill, a member of the House Financial Services Committee, said he's now focused on removing duplicative and unnecessary regulation for the financial industry, calling the Consumer Financial Protection Bureau "a redundant regulatory initiative."

Weekend Must Reads

Wall Street Journal | An Open Letter to Republicans on the Ex-Im Bank

If Republicans can’t stand up to corporate interests in this skirmish, how will we ever stand up to the myriad special interests warring against adoption of a simplified, pro-growth tax code? How will we earn the moral authority to reform the social welfare state unless we first reform the corporate welfare state? Let the Democrats own corporate welfare by themselves.

Investor's Business Daily | As Obama's Economy Falls, White House Excuses Boom

It's true that in recent years, growth in Q1 has tended to be subpar. But the problem isn't a lack of proper seasonal adjustment; it's that growth under Obama has been so tepid that even the slightest bump can knock it off stride. Just look at the numbers.

CNBC | Why the Fed is wrong. Again

The Federal Reserve has fueled financial bubbles and exacerbated economic problems before, and it is doing it now. In the past 15 years, we have seen what can happen when the Fed underestimates the risks of rising asset prices and maintains "accommodative" monetary conditions for too long. Investors should proceed with caution.

    On the Horizon 

June 11, 2015 10:00 a.m.
Full Committee Hearing

"The Future of Housing in America: Oversight of the Department of Housing and Urban Development"

June 11, 2015 2:00 p.m.
Financial Institutions and Consumer Credit Subcommittee Hearing

"Examining Legislative Proposals to Preserve Consumer Choice and Financial Independence"

  In the News

Asbury Park Press | FEMA: Government, insurers let down Sandy victims | FEMA official: Government let Hurricane Sandy victims down

NY Newsday | Outgoing Flood Insurance Chief Says Program ‘Lacks Adequate Governance

Bloomberg | Republicans Order Records in New Attack on FSOC Transparency

Daily Caller | EXCLUSIVE: Obama Consumer Official Leaves Amid Charges He Helped Create ‘Toxic Workplace'

Newnan Times-Herald | Westmoreland Takes Tour of InComm Facility

Daily Signal | House Moves to Stop Operation Choke Point


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