Some news that may be of interest in the past week include the following stories:
Congressional Hearings and Committees
Two markup sessions with respect to proposed credit card-related legislation were held this week. First, the House Financial Services Committee had a markup of H.R. 627 aka “The Credit Cardholders’ Bill of Rights Act of 2009″ on April 22, 2009. Second, the Committee held a hearing entitled “HR 1728: Mortgage Reform and Anti-Predatory Lending Act” on April 23, 2009.
On April 21, the Joint Economic Committee held a hearing in relation to the recent spate of bank failures in the last few months. Entitled “Too Big to Fail or Too Big to Save? Examining the Systemic Threats of Large Financial Institutions,” economists including Joseph Stiglitz, Thomas Hoenig and Simon Johnson focused on new policy responses to failures at large financial institutions. The hearing examined what criteria policymakers and regulators should use to determine when institutions pose systemic risk — at what point financial firms become “too big to fail” and how regulators should deal with them when they are insolvent. You can view Rep. Maloney’s opening statement and statements from presenting witnesses, as well as watch a recorded feed of the hearing here.
Mr. Stiglitz is a widely published author, economist, Columbia professor and a prominent critic of the Obama administration’s handling of the banking system. Mr. Johnson is the Ronald Kurtz Professor of Entrepreneurship at the Massachusetts Institute of Technology’s School of Management as well as the co-founder of Baseline Scenario, a blog dedicated to explaining some of the key issues in the global economy and developing concrete policy proposals. Mr. Hoenig is the chief executive of the 10th District Federal Reserve Bank in Kansas City. He is also a voting member of the Federal Open Market Committee.
In related news, Treasury Secretary Timothy Geithner testified before the Congressional Oversight Panel on April 21, 2009. The Panel is empowered to hold hearings, review official data, and write reports on actions taken by the Department of Treasury and financial institutions and their effect on the economy of the United States. Through regular reports, the Panel must oversee Treasury’s actions, assess the impact of spending to stabilize the economy, evaluate market transparency, ensure effective foreclosure mitigation reports and guarantee that Treasury’s actions are in the best interest of the American people. Lastly, Congress has instructed COP to produce a special report on regulatory reform that will analyze “the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system and protecting consumers.”
View Secretary Geithner’s testimony here. Panelists are Rep. Jeb Hensarling (R-Tex.), Richard Neiman, Damon Silvers, former U.S. Senator John Sununu and Elizabeth Warren. Mr. Neiman is the Superintendent of Banks for the State of New York. Mr. Silvers is the associate general counsel of the AFL-CIO. Ms. Warren is the Leo Gottlieb Professor of Law at Harvard Law School and is a noted expert on bankruptcy and credit card issues.
Upcoming Supreme Court Cases
On April 17, 2009, the Court released the schedule of attorneys arguing in the session beginning on April 20. You can view the hearing list here. Of note is Cuomo v. Clearing House Association, L.L.C. et al. (No. 08-453), to be argued on April 28, 2009.
Cuomo is shaping up to be one of the more important bank regulation Supreme Court cases this term. On January 16, 2009, the Court granted certiorari in relation to this petition from the state of New York. Cuomo involves a Second Circuit Court ruling that bars state officials from investigating claims that banks holding national charters are engaging in racial or ethnic bias in the home mortgage market. The case technically turns on a part of the National Bank Act of 1864 that controls “visitorial powers” toward national banks. All of the other 49 states joined New York in urging the Court to hear that state’s petition, saying the U.S. Comptroller of the Currency has intruded deeply on state sovereignty by writing a regulation that scuttles traditional police powers of the states.
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