New Subcommittee Chairs Target CFPB, GSE Reform

By Kaper, Stacy | American Banker, December 10, 2010 | Go to article overview

New Subcommittee Chairs Target CFPB, GSE Reform


Kaper, Stacy, American Banker


Byline: Stacy Kaper

WASHINGTON - The new slate of House Republicans picked to preside over financial services staked out an ambitious set of policy goals Thursday, saying they intend to downsize or dismantle the government mandates supported by their Democratic predecessors.

Out of the gate, the new subcommittee chiefs for the Financial Services Committee said that reining in the government-sponsored enterprises and revamping portions of the Dodd-Frank Act - including creation of the Consumer Financial Protection Bureau - were top priorities.

The CFPB is "a moving target right now in terms of where it's going, and we will look at it closely and hopefully reshape it," said Rep. Shelley Moore Capito, R-W.Va., the new chairwoman of the financial institutions subcommittee.

Though subcommittee chairmen sometimes are mere figureheads, Rep. Spencer Bachus, the committee's chairman for next year, reiterated Thursday that he expects his picks to take lead roles in setting the committee's agenda.

Some of the new panel chiefs are the most outspoken critics of areas they will oversee. The most obvious example is Rep. Ron Paul, R-Texas, the new head of the domestic monetary policy subcommittee, who has made a career out of arguing against the Federal Reserve Board.

Likewise, Rep. Scott Garrett, R-N.J., a vocal critic of Fannie Mae and Freddie Mac, will now lead the subcommittee focused on the government-sponsored enterprises.

"While there will be a number of very important issues on the subcommittee's plate during the 112th Congress, winding down Fannie Mae and Freddie Mac will be priority No. 1," Garrett said in a press release.

"With the American taxpayers already on the hook for $150 billion and counting to bail them out, we need to be taking concrete steps to reduce the ongoing financial risk they pose to the country and eradicating the bailout culture of Capitol Hill."

To be sure, some lawmakers voiced more caution. Rep. Gary Miller, R-Calif., the new chairman of the international monetary policy subcommittee, warned against overly drastic moves to shake up the GSEs. In an interview, he said he wanted to play an active role on Fannie and Freddie oversight.

"There's no doubt we need to reform the system," but "just to go out and say, 'We are going to turn the market upside down,' and act as if they don't exist and that they shouldn't exist in the future would have an incredibly negative impact on the overall housing market," he said.

"We're dealing with a stressed market as it is. We need to be very cautious about what we do. We do need to make sure they are acting in a safe and sound fashion, but they are providing such a huge portion of the marketplace right now as far as liquidity goes, we need to be cautious about what we do, and we need to be careful of the message we send."

He argued that the GSEs command too much of the mortgage market to justify doing anything too extreme.

"When you look at it between" the Federal Housing Administration "and the GSEs, they are 98% of the marketplace," Miller said. "Without them you couldn't give a house away. We need to be very cautious about that. And banks work very well with the GSEs. We need to strengthen that relationship but make sure we do it in a safe and sound fashion. …

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