Tuesday, April 7, 2009

Considered forthwith: House Financial Services Committee

Crossposted at Congress Matters

Welcome to the second installment of "Considered Forthwith." This approximately weekly series looks at the various committees in the House and the Senate. Committees are the workshops of our democracy. This is where bills are considered, revised, and occasionally advance for consideration by the House and Senate. Most committees also have the authority to exercise oversight of related executive branch agencies.

Some Considered Forthwith diaries will consider a single committees and others will consider committees of both houses if both the House and Senate have committees with identical or nearly identical jurisdiction. If you want to read previous dairies in the series, search using the "forthwith" tag. As always, I welcome criticisms and corrections in the comments. Eventually, this diary will be crossposted on Daily Kos.

This week, Considered Forthwith considers the House Financial Services Committee, chaired by Barney Frank of Massachusetts. The ranking member is Spencer Bachus of Alabama. It seems the Republicans have their own version of the site here, but it's not very informative.

This is a large committee.

Democratic members of the Committee are:
Barney Frank, MA (chair), Paul E. Kanjorski, PA, Maxine Waters, CA, Carolyn B. Maloney, NY, Luis V. Gutierrez, IL, Nydia M. Velázquez, NY, Melvin L. Watt, NC, Gary L. Ackerman, NY, Brad Sherman, CA, Gregory W. Meeks, NY, Dennis Moore, KS, Michael E. Capuano, MA, Rubén Hinojosa, TX, William Lacy Clay, MO, Carolyn McCarthy, NY, Joe Baca, CA, Stephen F. Lynch, MA, Brad Miller, NC, David Scott, GA, Al Green, TX, Emanuel Cleaver, MO, Melissa L. Bean, IL, Gwen Moore, WI, Paul W. Hodes, NH, Keith Ellison, MN, Ron Klein, FL, Charles Wilson, OH, Ed Perlmutter, CO, Joe Donnelly, IN, Bill Foster, IL, Andre Carson, IN, Jackie Speier, CA, Travis Childers, MS, Walt Minnick, ID, John Adler, NJ, Mary Jo Kilroy, OH, Steve Driehaus, OH, Suzanne Kosmas, FL, Alan Grayson, FL, Jim Himes, CT, Gary Peters, MI, Dan Maffei, NY

The Republican members are:
Spencer Bachus, AL (ranking member), Michael N. Castle, DE, Peter King, NY, Edward R. Royce, CA, Frank D. Lucas, OK, Ron Paul, TX, Donald A. Manzullo, IL, Walter B. Jones , NC, Judy Biggert, IL, Gary G. Miller, CA, Shelley Moore Capito, WV, Jeb Hensarling, TX, Scott Garrett, NJ, J. Gresham Barrett, SC, Jim Gerlach, PA, Randy Neugebauer, TX, Tom Price, GA, Patrick T. McHenry, NC, John Campbell, CA, Adam Putnam, FL, Michele Bachmann, MN, Kenny Marchant, TX, Thaddeus McCotter, MI, Kevin McCarthy, CA, Bill Posey, FL, Lynn Jenkins, KS, Christopher Lee, NY, Erik Paulsen, MN, Leonard Lance, NJ

Author's aside: Yes, that Ron Paul; and No, not that Christopher Lee

Ever since the real estate/mortgage/credit market/insurance/general banking meltdown, this committee has been a key player within the Legislative Branch. It has also turned Rep. Frank into a favorite guest on the 24 hour news networks. (Just try going more than two days without seeing him on MSNBC during the day.)

Additionally, because of the nature of committees, nothing having to do with TARP funds or other financial bailouts passes without Frank's influence. Here's a link to recent TARP reports.

The committee's jurisdiction, as posted on the website, is as follow:

The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.

To parse that a little bit, that covers regulation of the domestic banking and securities industries. Chairman Frank has been instrumental in writing many of the recent reforms including American Housing Rescue & Foreclosure Prevention Act (which President Bush signed last summer) and the Credit Cardholders’ Bill of Rights (which died in the Senate last year, but has again just passed the Subcommittee on Financial Institutions and Consumer Credit of the House Financial Services Committee).

The committee also oversees the real estate market and insurance market to (in theory) ensure that those industries do not take advantage of consumers. Of course, this is the committee that has the responsibility to decide whether to regulate or deregulate these industries.

The committee also oversees public housing. Too often, we have a negative view of public housing. We picture inner city "projects." On the other hand, I have toured public housing that is in excellent shape. Admittedly, those apartment buildings were in rural areas and headed by a very competent and responsive staff. The point is that the housing projects are only as good as the local managers. Among other programs, The Department of Housing and Urban Development also runs the Section 8 program. This program offers poor people vouchers to help cover the rent. Public housing is supposed to be a last resort for people. My experience has been that many public housing recipients are senior citizens on fixed incomes and families who have hit hard times.

Finally, the committee deals with legislation and oversight affecting the World Bank and the IMF.

Author's aside: These areas are far outside of my areas of expertise, so I will have to leave the explanation at this. I do want to make one quick note. A series of Supreme Court cases have allowed corporations to be defined as "persons" under the 14th Amendment. As such, Congress has a responsibility to regulate corporations. For example, there are laws on the books to prevent me from defrauding another person. It is only fair that there be laws on the books to prevent a lender from defrauding me. The next time some free marketeer tries to argue for deregulation, remind them that corporations "are people too," with both the rights and legal constraints of individuals.

If you have any interest in the banking industry, the Committee's webpage is a good place get news on upcoming regulation changes.


All of the block quotes come from the committee's webpage.

The Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises is chaired by Paul E. Kanjorski of Pennsylvania.

(T)he subcommittee reviews laws and programs related to the U.S. capital markets, the securities industry, the insurance industry generally (except for health care), and government-sponsored enterprises, such as Fannie Mae and Freddie Mac. It also oversees the Securities and Exchange Commission and self-regulatory organizations, such as the New York Stock Exchange and the NASD, that police the securities markets.

Presumably one of the busiest subcommittees these day, Kanjorksi's committee oversees the SEC and financial organizations like the New York Stock Exchange. They also oversee Freddy and Fannie, which help low income people and first time home buyers purchase homes. They also handle regulation of the securities and insurance industries (but not health care insurance).

The Subcommittee on Financial Institutions and Consumer Credit is chaired by Luis V. Gutierrez of Illinois.

The subcommittee oversees all financial regulators, such as the Federal Deposit Insurance Corporation and the Federal Reserve, all matters pertaining to consumer credit including the Consumer Credit Protection Act and access to financial services, as well as the safety and soundness of the banking system.

The FDIC is the organization that insures your deposits up to $100,000 (temporarily increased to $250,000). If your bank goes under, the federal government will cover a loss of up to $100,000. The Federal Reserve (The Fed) is the nation's central banking system, a quasi-public system. These are the folks who raise and lower interest rates to either slow or stimulate the economy. Technically, this is the rate that banks charge to each other for borrowing money. Other banks follow suit by raising or lowering rates they charge to borrowers. (There's a lot more to it, but again, I am not an expert on finance.)

The Subcommittee Housing and Community Opportunity is chaired by Maxine Waters of California.

(The subcommittee) oversees the Department of Housing and Urban Development, and the Government National Mortgage Association. The subcommittee also handles matters related to public, affordable, and rural housing, as well as community development including Empowerment Zones, and government-sponsored insurance programs, such as the National Flood Insurance Program.

That's pretty self explanatory.

Note: The next two subcommittees are not detailed on the committee website. The following information on jurisdiction is from this and this Wiki sites. It seems the two subcommittees were split with this Congress and it is likely that their respective jurisdictions are so new that the website has not been updated yet.

The Subcommittee on Domestic Monetary Policy and Technology is chaired by Chairman Melvin L. Watt (NC).

The website offers no explanation. However, monetary policy refers to the government's control of the money supply. There are only two ways for the government to control the money supply. One is to change the interest rates. This, of course is the purview of the Fed. It seems like there would be turn battles between this and the Subcommittee on Financial Institutions and Consumer Credit. Any enlightenment would be welcome. The other way to control the money supply is to either print more money (risking inflation) or taking money out of circulation (reducing the amount of money available to citizens). The subcommittee also handles legislation dealing with the U.S. Mint and the Bureau of Engraving and Printing. Presumably, this is the committee that brought us the states quarters program (I have a full set).

The Subcommittee on International Monetary Policy and Trade is chaired by Chairman Gregory W. Meeks (NY).

Again, the website offers no details on the jurisdiction. This subcommittee deals with legislation dealing with the World Bank, IMF and the Export-Import Bank.

The Export-Import Bank is new to me. Here's their mission statement:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept. We also help to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average, 85% of our transactions directly benefit U.S. small businesses.

With more than 70 years of experience, Ex-Im Bank has supported more than $400 billion of U.S. exports, primarily to developing markets worldwide.

The Subcommittee on Oversight and Investigations is chaired by Dennis Moore of Kansas.

In something that will become a theme throughout this series, this is among the most important subcommittees. Most committees have an oversight subcommittee.


(The subcommittee) conducts oversight of the agencies, departments, and programs under the Committee’s jurisdiction. The subcommittee also conducts investigations on any matter within the jurisdiction of the Committee, and evaluates the need for any legislative changes to the laws and programs within this jurisdiction.

Oversight committees are the ones who conduct investigations into allegations of misconduct in executive branch agencies. This is one of the oft overlooked parts of checks and balances. There is an academic debate about whether oversight committees should spend the time and resources to constantly monitor agencies (police patrol) or only respond when a problem is brought to light (fire alarm).

There is no comprehensive list available of all of the agencies over which the subcommittee has jurisdiction. The vague wording allows the subcommittee to initiate an investigation if they can show that the committee has jurisdiction. Obviously, the SEC, FDIC, Fed, Mint, HUD, and Fannie and Freddy are covered. If anyone has more info, it would be most appreciated.

Just one more note on oversight. There is a value in overlapping jurisdiction. If there is obvious corruption in a particular agency and the oversight subcommittee with primary jurisdiction refuses to investigate, another oversight sub could make the argument that they also have jurisdiction and conduct their own investigation.

Finally, here is the value of sitting on a committee. Ron Paul has introduced a bill calling for an audit of the Fed. As a member of the committee that would receive the bill, he is in a strong position to lobby for its passage. Frank and Paul have worked together in the past. From the New York Times:

We first bonded,” recalls Barney Frank, the Massachusetts Democrat, “because we were both conspicuous nonworshipers at the Temple of the Fed and of the High Priest Greenspan.

They have also cooperated on marijuana decriminalization and a bill to allow and regulate online gambling.

Up next week: The House Committee on Science and Technology (mostly because I have a friend who works for the committee).

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