Bernanke, Paulson and Bair expected to argue the merits of competing plans at today’s House Finance committee hearingNovember 18th, 2008 by selise
Bernanke (Fed), Paulson (Treasury) and Bair (FDIC) will be testifying together before Frank’s House Financial Services Committee this morning. This could get interesting. Shelia Bair has, for some time, been pushing for national mortgage relief in order to prevent foreclosures but Paulson and apparently the rest of the Bush administration have not been receptive. Finally last week, on Nov. 11, Treasury announced support of a modification of the failed HOPE NOW program. The next day Shelia Bair criticized the plan, as did congressional Democrats and then on Friday, Nov. 14, Bair introduced a competing FDIC plan. Definitely potential for some fireworks today.
Note: there are several interesting hearings scheduled for this week, and since the elections are over (hurray!) I made a weekly hearing list for those who want to plan a few days ahead.
Some background on today’s hearing from USA Today:
"Many of today’s unusually high number of foreclosures are not preventable," he [Paulson -s]said in prepared remarks to a mortgage-lending forum meeting in Arlington, Va. "There is little public policymakers can, or should, do to compensate for untenable financial decisions."
From Dean Baker at oxdown:
…Bair has shown a willingness to both confront the big Wall Street banks and to stand up for homeowners. When the FDIC took over IndyMac, one of the mass market subprime lenders, Bair ordered a moratorium on foreclosures on the mortgages held by the bank. She announced that the FDIC would arrange write-downs that allowed homeowners to stay in their home wherever possible. Bair has since been vocal in her criticisms of other banks for being unwilling to take the same steps.
From the LA Times:
Bair last week took two unusual steps that suggest where she’s focusing her gaze. On Wednesday, she publicly criticized a highly touted foreclosure prevention plan from the Treasury Department and other agencies as falling short of what’s needed.
Then on Friday, Bair released details of her much more ambitious plan — a $24.4-billion program aimed at preventing 1.5 million foreclosures — even though Treasury Secretary Henry M. Paulson had told reporters earlier in the week that he would not pay for it.
The FDIC on Friday released the details of agency chairman Sheila Bair’s new plan to prevent foreclosures. Under the terms of the program, the Feds would reduce mortgage payments for distressed borrowers and share losses if modified mortgages redefault. The agency is hoping that such loan guarantees will entice lenders and servicers to modify loans in greater numbers than they have in the past. The FDIC believes–at a cost of roughly $24 billion to taxpayers–the plan can prevent 1.5 million foreclosures.
Here’s the catch: both Treasury Secretary Henry Paulson and Neel Kashkari–the agency official overseeing the TARP–have recently expressed opposition to the proposal. So why would a Republican member of the administration continue to push a policy initiative that the Bush team has rejected?
Today at 9:30 am, Frank’s House Financial Services Committee will hold a hearing on "Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability"
- Henry M. Paulson, Jr., Secretary, U.S. Department of the Treasury
- Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System
- Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation
- Steve Bartlett, President and Chief Executive Officer, Financial Services Roundtable
- Edward L. Yingling, President and Chief Executive Officer, American Bankers Association
- Cynthia Blankenship, Vice Chairman and Chief Operating Officer, Bank of the West on behalf of The Independent Community Bankers of America
- D. Cameron Findlay, Executive Vice President and General Counsel, Aon Corporation on behalf of The Council of Insurance Agents & Brokers
- Alan S. Blinder, Gordon S. Rentschler Memorial Professor of Economics and Co-Director of the Center for Economic Policy Studies, Princeton University
- Martin S. Feldstein, George F. Baker Professor of Economics, Harvard University and President Emeritus, National Bureau of Economic Research, Inc.
Another interesting hearing today is the first of two hearings on a bailout for the auto industry. At 3 pm Dodd’s Senate Banking, Housing, and Urban Affairs Committee will hold a hearing on "Examining the State of the Domestic Automobile Industry"
- Debbie Stabenow, (D-MI) United States Senator
- Ron Gettelfinger, President, UWA
- Alan Mulally, President and CEO, Ford Motor Company
- Robert Nardelli, Chairman and Chief Executive Officer, Chrysler LLC
- G. Richard Wagoner, Jr., Chairman and Chief Executive Officer, General Motors
- Peter Morici, Professor, Robert H. Smith School of Business, University of Maryland
x-posted at oxdown