Tags: Senate | Fed | mortgage | bizarre

Senate Banking Committee Holds Bizarre Meeting

By    |   Monday, 05 May 2014 07:52 AM

The Senate Banking Committee held a meeting April 29 that was so strange that it might be unprecedented.

The meeting was held in order to vote on two pieces of business. The first was to vote on a backlog of nominees to a half dozen government posts, including three nominees to the Federal Reserve Board — Stanley Fischer, a renowned professor who has taught some of the leading lights of monetary policy, including Ben Bernanke, Lawrence Summers and Mario Draghi; Jerome Powell, a sitting Fed governor who is being reappointed; and Lael Brainard, a leading expert on trade policy and advocate of Free Trade. Fischer is being nominated to serve as vice chairman.

This was not the bizarre part of the meeting, but it was marked, and perhaps marred, by a presentation by Sen. David Vitter, R-La., who again showed, as he did at the confirmation hearing for the Fed chair nominee, a chart showing that increasingly, membership on the Board of Governors has been concentrated in academic economists. Vitter argued that at least one governor should have experience in community banking or in regulating community banks. The risk is that such a governor might perform as Elizabeth Duke did during her recent tenure on the Board, as virtually an in-house representative of the community banking lobby, one of the most powerful on Capitol Hill.

Vitter's presentation may have done a service, though, if it leads Congress, in the centennial year of the founding of the Fed, to take a fresh look at its structure and governance.

The committee then turned to S. 1217, the ironically named "Housing Finance Reform and Taxpayer Protection Act." What was bizarre was that after months, one could say years, of hearings, the leaders of the committee, Chairman Tim Johnson, D-S.D., and Michael Crapo, R-Idaho, announced that a markup of the bill would take place that day. Normally, once a markup is scheduled, and especially after an extended recess such as the just-concluded spring break, it means "the fix is in," that the bill was marked up by staff during the recess, and all that is left to do is to hold a ceremonial meeting where the senators get a chance to put on a show for their clients and constituents.

Not this time. Instead of proceeding to vote on the bill, Johnson and Crapo announced that while they have sufficient votes to do that, they want to establish even more support, so they are putting off the vote until some date TBA. It's like the old Peanuts cartoons where Lucy always pulls the football back before Charlie Brown can kick it.

One commentator has rightly called this bill "Obamacare for the mortgage industry," and this writer has called it "Corkercare," after Sen. Bob Corker, R-Tenn., the eager sponsor of an earlier version.

If the sponsors of this bill really want to protect the taxpayers, they can just give up trying to reestablish the same toxic mortgage products that helped to fuel the 2008 episode of the ongoing financial crisis, except that this time it would have an explicit government guarantee.

The positive side of this mess is that while the U.S. government is broke, the nation is blessed to have a group of social-Democratic oligarchs led by Warren Buffett who have more disposable income than the government, many of whom have been in this market. A good place to start would be to meet with them and say, "You say it's essential to the nation's economic future to restore the secondary market for home mortgages. Figure it out."

(Archived video can be found here.)

© 2019 Newsmax Finance. All rights reserved.

1Like our page
The Senate Banking Committee held a meeting April 29 that was so strange that it might be unprecedented.
Senate, Fed, mortgage, bizarre
Monday, 05 May 2014 07:52 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved