Tags: Lew | IMF | secretary | financial

Treasury's Lew Spars Again With House Fincl Services Committee

By    |   Wednesday, 18 Mar 2015 07:45 AM

Treasury Secretary Jack Lew appeared before the House Financial Services Committee, chaired by Rep. Jeb Hensarling, R-Texas, at a hearing March 17 titled "The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System."
 
What this amounts to is an annual appointment with the committee to argue over the governance of the so-called International Financial Institutions, the participation of U.S. financial regulators in international regulatory bodies and any other issue that members believe they can score points against each other or show support for elements of the financial services industry that are important to their districts.
 
In opening statements, Hensarling deplored the unsustainable national debt, called for more scrutiny of the International Monetary Fund (IMF) and complained that the Financial Services Oversight Council (FSOC) has designated large nonbank companies for stricter regulation, while ranking Democrat Maxine Waters of California, in remarks that sounded like they might have been written at Treasury, complained that the U.S. has still not ratified governance reforms for the IMF, even as BRIC countries act to increase their influence by establishing multilateral institutions of their own.
 
In his summary of the report, Lew contended that the economy is improving due in large part to government intervention but that at the same time, the deficit is declining. He insisted that the proposed IMF reforms would increase the influence of the U.S. without cost to taxpayers.
 
From a strictly political theater standpoint, the highlight of the hearing was when Rep. Scott Garret, R., N.J., having connected the dots to Lew's service for about two years as Deputy Secretary of State for Management and Resources, under Secretary Hillary Clinton, asked Lew whether he was aware that Hillary had been sending emails from a private account. As Garrett continually reframed the question, he got Lew to say that he didn't pay attention, didn't recall, and the exchange was a clever way of raising the issue in a high-profile forum. Subsequent members who repeated the exercise were not as deft, nor was Rep. Michael Capuano's, D-Mass., attempt at damage control when the he ridiculed the notion that Lew was, in effect, Clinton's minder and perhaps should tuck her in and brush her teeth.
 
Another noteworthy moment occurred when Rep. Bill Huizenga, R-Mich., referred to a memorandum of May 2010 from Brazil's IMF representative, leaked to The Wall Street Journal, complaining that private Greek bondholders had benefited from an IMF bailout of European banks. This writer would suggest that it would also have benefited "too big to fail" American banks.
 
By far the most prevalent theme at this hearing, as it has been in the past, was the role of Treasury as a participant in the designation of large nonbank financial companies as systemically important financial institutions (SIFIs) and the formulation of capital standards for insurance companies that are designated as SIFIs. As he has done in the past, Lew explained that the U.S. participates in this process, but the domestic implementation of international regulations is done by the U.S. regulators. The regulated companies are evidently still quite upset about this.
 
(Archived video, Secretary Lew's testimony and the staff memorandum can be found here.)

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Robert-Feinberg
Treasury Secretary Jack Lew appeared before the House Financial Services Committee, chaired by Rep. Jeb Hensarling, R-Texas, at a hearing March 17 titled "The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System."
Lew, IMF, secretary, financial
529
2015-45-18
Wednesday, 18 Mar 2015 07:45 AM
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