Tags: Lew | House | financial | Hensarling

House Financial Services Clashes With Jack Lew

By    |   Friday, 16 May 2014 07:39 AM

The previous four articles this week have served as background for this climactic event, the May 8 presentation by Treasury Secretary Jack Lew before the House Financial Services Committee (HFSC), chaired by Jeb Hensarling, R-Texas, of the Treasury's Annual Report on the State of the International Financial System.

This is a report the Secretary is required to present annually to both congressional banking committees, and the Republicans sparred with Lew from beginning to end about how responsive the Treasury has been to the many and varied requests of the committee.

It is evident from this hearing that the honeymoon between this committee and Lew is definitely over.

Members complained that Lew has not answered their correspondence in a timely manner or at all in some cases, and they complained that he was stingy with his time at this hearing, which had been postponed when Lew was indisposed due to surgery a couple weeks ago.

Near the end of the hearing Mick Mulvaney, R-S.C., perhaps the designated badger of Hensarling, tried to cajole Lew into staying an extra hour to accommodate more questions that would give more members a chance to support or badger him.

Lew stuck to his schedule, and in fairness, it has been common for Treasury to negotiate a two-hour limit on the ground that the Secretary has an important meeting, perhaps at the White House. Federal Reserve Chairman Janet Yellen charmed and spoiled the committee recently when at her first appearance there she spent about half a day until every last member had a chance to ask their sometimes erudite but frequently inane and repetitious questions.

In his opening statement, Hensarling set a harsh political tone by attacking President Obama for not living up to his promise that this would be the most open administration ever and chiding Lew for the "D" grade the Treasury has received from the Center for Effective Government. He complained that Lew would only stay two hours and demanded that he agree to hear all the members when he next testifies at HFSC in about a month. Lew demurred, subject to negotiations between the parties.

Finally, Hensarling criticized Lew for moving an aid package for Ukraine without action on the long-pending terms of U.S. participation in the International Monetary Fund (IMF) and World Bank. Lew was probably taking what he could get.

The ranking Democrat, Maxine Waters of California, countered with a political speech of her own crediting the administration with job gains and blaming the Republicans for failing to act on the IMF-World Bank ratification.

The reason the preceding articles on Financial Stability Oversight Council (FSOC) are relevant is that one Republican after another took up the issue of the designation by the FSOC of insurance companies and asset managers as systemically important financial institutions (SIFIs), accusing Lew of collaborating with foreign bank regulators on the Financial Stability Board (FSB) to put U.S. firms at a competitive disadvantage in global finance. Specifically, they were trying to elicit from Lew an admission that among the three agencies that represent the United States on the FSB — the Treasury, Federal Reserve and Securities and Exchange Commission — the Treasury voted in favor of this designation.

Every time Republicans asked, Lew responded that the decision was a collegial one. So on the one hand, this debate tends to shroud the SIFI designation process in a fog of mystery. On the other hand, given the treacherous nature of the ongoing, permanent financial crisis, unless one is being paid by the hour to make these arguments, what is the point?

(Archived video and Secretary Lew's statement can be found here.)

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Robert-Feinberg
The previous four articles this week have served as background for this climactic event, the May 8 presentation by Treasury Secretary Jack Lew before the House Financial Services Committee (HFSC) of the Treasury's Annual Report on the State of the International Financial System.
Lew, House, financial, Hensarling
603
2014-39-16
Friday, 16 May 2014 07:39 AM
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