Committee on Financial Services

Jeb Hensarling

FSC Majority | Week in Review

2015/05/01

Subcommittee Examines Impact of International Standards on U.S. Insurance Competitiveness

The Housing and Insurance Subcommittee held a hearing on Wednesday to review the impact that international regulatory standards could have on the competitiveness of insurers in America.

Subcommittee Chairman Blaine Luetkemeyer (R-MO) said in his opening statement, "The United States finds itself with the opportunity to lead, and not be led. We must seize the opportunity. It's vital that the gentlemen appearing today work in concert and in the interest of the United States to ensure that no ground is ceded to foreign regulators and that the necessary time is taken to produce common-sense rules."

Rep. Lynn Westmoreland (R-GA) spoke about the unintended consequences caused by ineffective and misguided regulations on small businesses and the economy.

"What Dodd-Frank did specifically with insurance companies in putting them under the SIFI rule and other things is you cast a net so broad that you caught all the little fishes that you were not intending to catch. So as a result, we've got what we've got. And there's going to be all types of unintended consequences as there is with anything as complex as Dodd-Frank and all the many rules that it put on different businesses. Then we wonder why we only had a growth of .02 percent in our economy. It's a direct result of the overregulation that we have today," said Rep. Westmoreland.

For nearly 150 years, U.S. insurance companies have been regulated primarily by the states. The Dodd-Frank Act passed in 2010 enlarged the federal government’s role in the insurance industry.

Today, international regulatory efforts threaten the U.S. model of insurance supervision that keeps our insurance market financially strong and competitive. There is a shared goal to better coordinate international insurance supervision, however, but not if it means deferring to international authorities that seem intent on moving toward a consolidated, bank-like model.

Subcommittee Focuses on Legislation to Help the Economy Grow


The Capital Markets and Government Sponsored Enterprises Subcommittee, chaired by Rep. Scott Garrett (R-NJ), held a hearing on Wednesday to focus on solutions that will help build a healthier economy by reducing regulatory burdens on Main Street businesses.

The Committee reviewed a dozen legislative proposals that will help small businesses -- the primary innovators and job creators of our economy -- gain access to capital so they can hire more workers, rather than having to spend their time and money toward complying with overly burdensome regulations.

“Although these bills are modest, they are not insignificant to our fellow citizens back home or to the entrepreneur or the small company that our fellow citizens depend on for a job,” said Chairman Garrett. “So, in all this, it is important to remember that capital formation and investor protection is not an either/or proposition. When investors have additional investment options to earn a return, and invest their money, that additional choice is significant protection.”

The bills would build upon the success of the bipartisan Jumpstart Our Business Startups (JOBS) Act of 2012. While those provisions of the JOBS Act that have been implemented are helping small businesses access capital at lower costs and have made it easier for companies to go public, more needs to be done.

A list of bills the Subcommittee discussed at the hearing can be found here.

Export-Import Bank’s Mandates Receive Scrutiny at Joint Subcommittee Hearing

The Financial Services Monetary Policy and Trade Subcommittee and the Oversight and Government Reform Health Care, Benefits and Administrative Rules Subcommittee held the second in a series of joint hearings on Thursday to review the Export-Import Bank. This week’s hearing gave members a chance to question Ex-Im Chairman Fred Hochberg about the Bank’s mandates.

“The Export-Import Bank’s stated goal is to support American jobs through exports. However in my opinion, judging by the Bank’s prior financing deals, it appears to be doing quite the opposite, oftentimes," said Subcommittee Chairman Bill Huizenga (R-MI). "American taxpayers have been unwittingly propping up foreign state-owned companies in Saudi Arabia, Russia, China, Venezuela, Pakistan, India, Colombia, Mexico, Ethiopia, South Africa and others who have done nothing but, frankly, work against the best interests of American citizens.”

Ex-Im’s mandates are politically-driven with no economic rationale, subcommittee members said at the hearing. This not only increases the likelihood of default and puts taxpayers at greater risk, it also invites waste, fraud and abuse.

Just last week, a former Ex-Im employee admitted he accepted bribes in return for recommending the approval of unqualified loan applications. At an earlier joint subcommittee hearing, members learned from Ex-Im’s acting inspector general that there are at least 31 active fraud investigations involving Ex-Im and the possibility of further indictments.

Committee Conducts Oversight of the Financial Industry Regulatory Authority

At Friday’s hearing of the Capital Markets and Government Sponsored Enterprises Subcommittee, members examined the activities and policies of the Financial Industry Regulatory Authority (FINRA), an independent, not-for-profit organization authorized by Congress to act as a self-regulatory organization (SRO) over the U.S. securities industry.

The Subcommittee examined concerns that FINRA is transforming itself from a traditional SRO into a quasi-governmental regulator with expansive authorities similar to those of the Securities and Exchange Commission and the need for FINRA to improve operations so it can better serve broker-dealers and their customers.

"Its recent actions are closer to that of the ever-expanding federal bureaucracies that we have become accustomed to in Washington that seek to burrow further into the lives of each and every citizen," said Subcommittee Chairman Garrett.

Additionally, the Subcommittee compared FINRA’s regulation of broker-dealers against rules recently proposed by the Department of Labor that expand the definition of “fiduciary” to include broker-dealers providing investment advice on 401(k) and IRA retirement accounts. Although the Obama Administration has called for broker-dealers to be subject to a fiduciary standard of care, FINRA already subjects broker-dealers to comprehensive oversight and actively protects investors.

Subcommittee Vice Chairman Robert Hurt (R-VA) said, "Investors in Virginia’s Fifth District, my district, and across the country rely on FINRA to regulate broker-dealers in a responsible way. I believe that FINRA has a responsibility to operate in a fair, consistent, and transparent manner given the authority it exercises. FINRA must be mindful of the potential economic impacts its rules may have, particularly at a time when economic growth remains vitally important."

MEMBER SPOTLIGHT

Rep. Mia Love | Mia Love: My first 100 days in Congress

I am serving on the Financial Services committee, which is actively working to examine banking laws and unnecessary regulations. We are currently looking at a multitude of ways to dismantle Dodd-Frank and remove the unfair burden it imposes on financial institutions, particularly the many Industrial Banks based in Utah.

Weekend Must Reads

Wall Street Journal | The Peculiar Uses of a Taxpayer Bank

The Export-Import Bank is anything but a “critical element” of America’s national security. Congress should refuse to reauthorize the bank when its charter expires. Washington shouldn’t be spending taxpayer money on corporate welfare—especially when it goes to companies and countries that are either corrupt or are actively working to undermine America.

Investor's Business Daily | Dodd-Frank Takes Banking Back To Horse-And-Buggy Days

Dodd-Frank's compliance burden is heavier on small banks than larger ones, which are better financed and staffed to handle the costs and complexities. Given this difficult environment, why would anyone open a small bank — which is to say, why would anyone open a bank at all, since no one starts out opening a large bank?

American Banker | Warren's Wall Street Reforms Would Just Make Banks Riskier
 

Sen. Elizabeth Warren has received a lot of attention for her new plan to complete the work of the Dodd-Frank Act. This plan would sow the financial services ground with salt as Rome did to Carthage, ensuring that nothing will grow in the future.

CNBC | Hey, Fed —What was that?!

The Federal Reserve has muddied – significantly – the outlook for monetary policy.


Wall Street Journal | The Messes Obama Will Leave Behind

​Mr. Obama will also leave behind a difficult economic climate in which to start a business. According to a recent Brookings Institution study, every year of his presidency more American businesses have died—closed, merged or gone bankrupt—than have been created.


    In the News

Central Maine | Poliquin introduces child support bill, his first in Congress

The Hill | The CFPB, not what it was hoped to be

Newsmax | Rep. Garrett Offers Proposals to Enhance Capital Formation

Augusta Free Press | Robert Hurt: The CFPB needs increased transparency, accountability

Wall Street Journal | The Slow-Growth Fed

Bloomberg | Duffy Insurance Bill Latest in Growing Scrutiny of International Insurance Talks

National Journal | The Recession Isn't Over For Many Families

Investor’s Business Daily | CFPB Launches 10 Joint Lending Bias Probes With Justice Dept.

Star-Tribune | Hurt introduces bill to reduce regulatory burden on small companies

Investor's Business Daily | Obama's Economy Stumbles Again With A 0.2% Quarter

Detroit News | Huizenga: Many reasons to be wary of the Ex-Im Bank

Wall Street Journal | House Lawmaker Presses SEC Chief on Bond-Market Liquidity

RepublicanAmerican | Low-down-payment mortgages are back

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ICYMI: The Bank to Nowhere

2015/05/01

 

 

By KIMBERLEY A. STRASSEL
May 1, 2015
LINK TO STORY
 
In October 2005, earmarks were a Washington fact of life. Then former Oklahoma Sen.Tom Coburn took to the floor to decry pork spending for Alaska’s “Bridge to Nowhere.” The phrase became a national rallying cry against government waste. It required another five years, but in late 2010, Republicans forswore earmarks.
 
Conservative reformers are rolling out that strategy again, this time to deep-six one of Washington’s oldest dispensers of corporate welfare: the Export-Import Bank. The campaign is already in full swing, with a coalition of free-market Republicans and grass-roots groups dropping a daily barrage about the bank’s corruption, mismanagement and cronyism. Their hope is that by June 30 they will have redefined Ex-Im as the Bank to Nowhere.
 
That date marks the expiration of Ex-Im’s charter, and it’s why this campaign (in comparison with earmarks) is turbocharged. About half the Republican caucus remains committed to the Ex-Im favor factory and wants Speaker John Boehner to push through a reauthorization. The reformers have but two months to instead embarrass their colleagues into doing what Congress does best: nothing.
 
Inside the House, Financial Services Chairman Jeb Hensarling and Ohio’s Jim Jordan are leading the charge, with recent assists from Oversight Chairman Jason Chaffetz and Michigan’s Bill Huizenga. The quartet jumped on the Justice Department’s April 13 charges against Johnny Gutierrez, a former Ex-Im loan officer accused of accepting bribes on 19 separate occasions to do bank favors.
 
In a hearing two days later, the group outlined evidence that fraud and mismanagement is widespread. The bank’s acting inspector general, Michael McCarthy, testified that further indictments were possible in no fewer than 31 open fraud investigations.
 
In a second joint Financial Services-Oversight hearing Thursday, the focus turned to the bank’s cronyism—particularly its failed green cronyism. Ex-Im guaranteed a $10.3 million loan to finance the overseas sale of products made by the infamous Solyndra. It gave $9.2 million to finance the export of solar panels from Abound Solar, which also went bankrupt. It seems no coincidence that both Solyndra and Abound were politically connected firms that also got huge loan guarantees from the Energy Department.
 
Australia’s billionaire mining heiress Gina Rinehart snagged a $694 million Ex-Im loan for an iron ore project in Western Australia. Ex-Im has provided near record-breaking loans to subsidize a firm co-owned by Saudi Aramco—the world’s largest oil company. It provided millions to one-time Washington energy darling Enron. There is a reason for these deals, and for why more than 60% of Ex-Im’s money in 2013 benefited just 10 rich companies—it’s called politics.
 
Outside Congress, the grass roots are rallying constituents. Some 50 conservative groups, organized by Americans for Prosperity, sent a letter to Congress last week demanding the bank die. Their leaders have been calling up pro-Ex-Im Republicans, re-educating them on bank myths, including the whoppers that it helps small businesses and doesn’t cost taxpayers a dime. And they’ve been pointing out the extraordinary political benefit of Republicans’ finally getting on the right side of capitalism, in contrast to such supposed populist crusaders as Elizabeth Warren, who supports the bank.
 
Heritage Action’s growing list of influential members who oppose reauthorization is proof reformers are making progress. It now includes eight House committee chairman (the likes of Paul Ryan, Tom Price and Fred Upton), as well as Majority Leader Kevin McCarthy and Whip Steve Scalise. The Club for Growth is running ads in GOP districts noting that reauthorization is now opposed by pretty much the entire GOP presidential field: Jeb Bush, Scott Walker, Marco Rubio, Ted Cruz, Rand Paul.
 
Yet the Chamber of Commerce and other Ex-Im supporters are lobbying hard, particularly Mr. Boehner—and with some apparent success. In a press conference Thursday the speaker said he’d support any plan Mr. Hensarling crafted to “reform” or “wind down” the bank; he worried that there are “thousands of jobs on the line.”
 
But letting the charter expire by necessity involves an orderly wind down, since it would take years for the bank to close out loans. (Which also means jobs don’t go poof.) The real question is whether Mr. Boehner will take the extraordinary step of undercutting his own committee chairman to put a reauthorization on the floor.
 
Reformers also need to spread this campaign to the Senate. It’s no good if the House kills Ex-Im, only for crony GOP senators to attach reauthorization to a “must-pass” bill (highway funds?). Utah Sen. Mike Lee had Mr. Hensarling address 35 senators Wednesday at the Senate Republican Steering Committee. That’s a start.
 
Not so long ago, Republican porksters had all manner of (bogus) arguments for why they could not, should not and would not ever relinquish earmarks. Yet they did, and the world not only didn’t end, it’s a better place. They might remember that, and just say goodbye to the Bank to Nowhere.
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Subcommittees Examine the Export-Import Bank’s Mandates

2015/04/30

The Financial Services Subcommittee on Monetary Policy and Trade and the Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules held the second in a series of hearings on Thursday on the Export-Import Bank.  At Thursday’s hearing, the subcommittees examined the Export-Import Bank’s mandates.

“The Export-Import Bank’s stated goal is to support American jobs through exports.  However in my opinion, judging by the Bank’s prior financing deals, it appears to be doing quite the opposite, oftentimes," said Monetary Policy and Trade Subcommittee Chairman Bill Huizenga (R-MI). "American taxpayers have been unwittingly propping up foreign state-owned companies in Saudi Arabia, Russia, China, Venezuela, Pakistan, India, Colombia, Mexico, Ethiopia, South Africa and others who have done nothing but, frankly, work against the best interests of American citizens.”

 
CLICK HERE TO WATCH

Key Takeaways From the Hearing:
  • Ex-Im’s mandates create incentives for the Bank’s staff to churn out approvals – independent of an applicant’s merits – just to conform to a mandate.  This invites the type of waste, fraud and abuse that has become emblematic of Ex-Im.

  • At our last joint hearing on Ex-Im, the subcommittees learned from Ex-Im’s acting Inspector General that there are at least 31 open fraud investigations involving Ex-Im and the possibility of indictments in the future.

  • Just last week, former Ex-Im employee Johnny Gutierrez admitted that on 19 separate occasions, he accepted bribes in return for recommending the approval of unqualified loan applications and improperly expediting others.  

  • Ex-Im employees say that ethical conduct is not among Ex-Im’s strengths.  Responding to a 2013 government survey, only 42 percent of Ex-Im employees agreed with the statement:  “My organization’s leaders maintain high standards of honesty and integrity.”  Only half agreed they can disclose a suspected violation of any law, rule or regulation without fear of reprisal.

  • Politically-driven mandates that have no economic rationale distort the Bank’s fiscal decisions and increase the likelihood of default, which puts taxpayers at greater risk.  The Congressional Budget Office (CBO) reported that if the Ex-Im Bank used more accurate accounting methods, the Bank would cost taxpayers $2 billion over 10 years.

“Since you have taken the helm of Ex-Im, 65 matters have been referred to prosecution, 31 arrest warrants, 85 indictments, 48 criminal judgments, decades of combined prison time, a quarter of billion in fines, restitution and forfeiture,” said Chairman Jeb Hensarling (R-TX).

 
CLICK HERE TO WATCH
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Subcommittee Focuses on Solutions to Help Small Businesses Grow

2015/04/29

 

The Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, chaired by Rep. Scott Garrett (R-NJ), held a hearing on Wednesday to review proposals designed to reduce regulatory burdens so small companies can gain access to job-creating capital.

“Since 2011, this Subcommittee has held almost one dozen hearings to explore ways to facilitate capital formation, make the U.S. capital markets more attractive to companies, and increase investment opportunities for all investors.  Most notably, this Subcommittee led the charge to implement one of the most meaningful updates to our securities laws in recent memory – the JOBS Act,” said Chairman Garrett.  “But more still needs to be done.  Therefore, it is incumbent upon Congress to provide sensible improvements to our securities laws to help small companies and startups access the capital they need to innovate and create jobs.”  

Key Takeaways From the Hearing:


  • Small businesses are the primary innovators and job creators of our economy, but the cost of regulation falls heaviest on them.  Companies with fewer than 20 employees spend 45% more per employee complying with federal regulations than bigger businesses.
  • In passing the Jumpstart Our Business Startups (JOBS) Act in 2012, Congress took an important step toward easing the regulatory burden on small businesses seeking access to capital markets.  The parts of the JOBS Act that have gone into effect are already helping small businesses and emerging growth companies gain access to capital markets at a lower cost.
  • But Congress needs to take further steps because many small companies still cannot access the capital they need to grow their businesses and create jobs.  According to a Pepperdine University survey, “50% of respondents believe the current business financing environment is restricting growth opportunities while 42% of respondents believe it is restricting their ability to hire new employees.”
  • The Subcommittee discussed 12 legislative proposals to enhance capital formation for small and emerging growth companies, reduce regulatory burdens, and improve the SEC’s administration of the capital markets.  (Click HERE to learn more about these 12 bills.)

Topline Quotes from Witnesses:

“The JOBS Act has been so successful in the biotech industry because it represents a perfect balance of capital formation incentives and appropriately tailored regulations. This important law allows enhanced access to investors, increasing the capital potential of a public offering, and then reduces the regulatory burden on emerging growth companies, decreasing the amount of capital diverted from R&D… The search for capital in our industry is always ongoing – it does not end at the IPO. As such, I strongly support efforts by Congress and the SEC to enhance the capital formation ecosystem and incentivize funding for the next generation of breakthrough medicines.”
– Shane Kovacs, PTC Therapeutics, Inc.

“The initial cost to register with the SEC is often in excess of $100,000. Annual costs to comply with SEC investment adviser rules are often $50,000 or more per year. SBIA supports exempting small business investors from the Investment Advisers Act. The $150 million threshold that triggers SEC registration is too low and, at a minimum, should be raised. It is illustrative that one of the authors of Dodd-Frank, former Congressman Barney Frank, recently stated that Congress should consider amending the $150 million threshold with which private equity firms must register with the SEC; while further highlighting that ‘in the crisis situation, we erred on the side of maybe being too inclusive." – Gayle G. Hughes, Merion Investment Partners, on behalf of the Small Business Investor Alliance (SBIA)

“If these bills are not passed and if the JOBS Act is not fully implemented, economic growth and job creation will continue to underperform and stagnate for years to come.” – Thomas Quaadman, Center for Capital Markets at the U.S. Chamber of Commerce

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Subcommittee Discusses Impact International Regulatory Standards Could Have on U.S.Insurance Competitiveness

2015/04/29

 

The Financial Services Subcommittee on Housing and Insurance, chaired by Rep. Blaine Luetkemeyer (R-MO), held a hearing on Wednesday to examine the impact international regulatory standards could have on the competitiveness of U.S. insurers.

“Our nation enjoys the most robust, policyholder-centric insurance system in the world.  The industry performed well during the financial crisis, and policy holders enjoyed the safety and soundness that comes with our nation’s unique regulatory structure,” said Chairman Luetkemeyer.  “It is vital that we uphold the system that has served Americans well for so many generations.  Any discussion or compromise that jeopardizes the U.S. insurance industry or, more importantly, the policyholder, should be rejected.”


Key Takeaways From the Hearing:
  • For nearly 150 years, U.S. insurance companies of every kind – including property-casualty, life, reinsurance, health, and auto – have been regulated primarily by the states.  The Dodd-Frank Act passed in 2010 enlarged the federal government’s role in the insurance industry.
  • International regulatory efforts threaten the U.S. model of insurance supervision that keeps our insurance market financially strong and competitive.  There is a shared goal to better coordinate international insurance supervision, however, but not if it means deferring to international authorities that seem intent on moving toward a consolidated, bank-like model.
  • U.S insurance supervisors do not have a unified strategy to defend and promote the strengths of our regulatory system internationally and ensure that U.S. insurers can effectively compete overseas.
  • Recent steps by International Association of Insurance Supervisors (IAIS) to deny U.S. insurance companies a voice in the IAIS decision-making process have prompted concerns that U.S. insurers will be prevented from expanding their products into foreign markets.

Topline Quotes from Witness:

“In our view, taking a more homogenous regulatory approach that treats insurers more like banks may actually encourage new risk-taking in the insurance industry. Also, if the new standards are excessive or too inflexible, then they could increase costs on U.S. insurers and consumers and undermine the U.S. state-based insurance regulatory system, which is based on protecting policyholders and has a strong track record of effective solvency supervision and stable, competitive insurance markets.”
– Kevin McCarty, Commissioner, Florida Office of Insurance Regulation

“We remain equally concerned with the lack of transparency at the Financial Stability Board. While we appreciate the role of the Federal Reserve, Treasury, and the Securities and Exchange Commission as members of the FSB, state insurance regulators supervise 100% of the private insurance market in the United States and to date have had only limited access into FSB discussions directly relevant to our sector….we find the lack of support for our inclusion at the FSB by our federal colleagues troubling and not reflective of the best interests of U.S. insurers and policyholders.” – Kevin McCarty, Commissioner, Florida Office of Insurance Regulation

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Committee Schedule for the Week of April 27

2015/04/27

Financial Services Committee Chairman Jeb Hensarling (R-TX) announced the following hearing schedule for the week of April 27:

Wednesday, April 29th at 10:00 A.M.- The Housing and Insurance Subcommittee will hold a hearing to examine the impact of international regulatory standards on the competitiveness of U.S. insurers. Specifically, the hearing will focus on international regulatory standards considered by the G-20, the Financial Stability Board and other international supervisory authorities.

Witnesses invited to appear:

Mr. Michael McRaith, Director, Federal Insurance Office, U.S. Department of the Treasury

Mr. Mark van der Weide, Deputy Director, Division of Banking Supervision and Regulation, Federal Reserve Board of Governors

Mr. Kevin McCarty, Commissioner, Florida Office of Insurance Regulation, on behalf of the National Association of Insurance Commissioners

The hearing will take place in room HVC-210 of the Capitol Visitor Center.

Wednesday, April 29th at 2:00 P.M.- The Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing to review legislative proposals to enhance capital formation and reduce regulatory burdens. The list of legislative proposals can be found here.

Witnesses invited to appear:

Mr. Thomas C. Deas, Vice President and Treasurer, FMC Corporation, on behalf of the Coalition for Derivatives End-Users

Professor Theresa A. Gabaldon, Lyle T. Alverson Professor of Law, George Washington University

Ms. Gayle Hughes, Partner, Merion Investment Partners, on behalf of the Small Business Investor Alliance

Mr. Shane Kovacs, Executive Vice President, Chief Financial Officer and Head of Corporate Development, PTC Therapeutics, Inc., on behalf of the Biotechnology Industry Organization

Mr. Thomas Quaadman, Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce

The hearing will take place in room HVC-210 of the Capitol Visitor Center.

Thursday, April 30th at 1:00 P.M.-  The Financial Services Committee’s Monetary Policy and Trade Subcommittee and the Oversight and Government Reform Committee’s Health Care, Benefits and Administrative Rules Subcommittee will hold a joint hearing to examine the mandates of the Export-Import Bank of the United States.

This is the second joint hearing of the subcommittees to examine the Export-Import Bank. During the April 15, 2015 hearing, the Export-Import Bank’s Inspector General admitted additional future indictments surrounding illegal employee activity might be forthcoming.

Witnesses invited to appear:

Fred Hochberg, Chairman and President, Export-Import Bank of the United States

The hearing will take place in room 2154 of the Rayburn House Office Building

Friday, May 1st at 9:15 A.M.- The Capital Markets and Government Sponsored Enterprises Subcommittee will hold an oversight hearing on the Financial Industry Regulatory Authority (FINRA).

Witnesses invited to appear:

Richard Ketchum, Chairman and CEO, FINRA

The hearing will take place in room HVC-210 of the Capitol Visitors Center.

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MEDIA ADVISORY: HOUSE FINANCIAL SERVICES AND OVERSIGHT SUBCOMMITTEES TO EXAMINE THE EXPORT-IMPORT BANK’S MANDATES

2015/04/27

House Financial Services Subcommittee on Monetary Policy and Trade, and Oversight and Government Reform Subcommittee on Health Care, Benefits, and Administrative Rules, will conduct its second joint hearing looking into the future viability of Export–Import Bank, which is up for reauthorization in June.

During the first joint subcommittee hearing on April 15, 2015, the Committees learned two key things: 1. the Obama Administration has failed to meaningfully comply with the requirements passed by Congress and signed into law as part of the reauthorization of Ex-Im in 2012 and 2. the Ex-Im Inspector General mentioned that future indictments at the bank are possible. For a full recap of this hearing click here. 

HEARING DETAILS:

WHAT: Examining the Export-Import Bank’s Mandates

Financial Services Subcommittee on Monetary Policy and Trade, Chairman Bill Huizenga (R-MI)

Oversight Subcommittee on Health Care, Benefits, and Administrative Rules, Chairman Jim Jordan (R-OH)

WHERE: Oversight and Government Reform Hearing Room

2154 Rayburn House Office Building

DATE: Thursday, April 30, 2015

TIME: 1:00 p.m. EST

INVITED WITNESS LIST:

Honorable Fred P. Hochberg

Chairman and President

Export-Import Bank of the United States

The meeting is open to the public and a live video stream will be broadcast here.

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WSJ: The Peculiar Uses of a Taxpayer Bank

2015/04/27

 
The Peculiar Uses of a Taxpayer Bank
A look at the Export-Import Bank’s beneficiaries suggests that sometimes it works against U.S. interests abroad.

By Mark Pfeifle

Only in Washington can a prominent example of corporate welfare be described as a “critical element” of America’s national security. That’s exactly what former Secretary of State Madeleine Albright, former Secretary of Defense William Cohen and 10 other former federal officials claimed in a recent letter to Congress, in which they pleaded with lawmakers to renew the Export-Import Bank’s charter before it expires in June. National Security Adviser Susan Rice, speaking at last week’s Ex-Im annual conference, similarly declared that the bank “is a very important part of our diplomacy.”

Most Americans would be hard-pressed to name the Ex-Im Bank, much less identify it as crucial to U.S. national security. The bank is a New Deal-era federal agency that provides taxpayer-backed financial assistance to foreign businesses that purchase American products.

In recent years, the bank has come under fire from politicians as diverse as Barack Obama and Paul Ryan, who have rightly noted that Ex-Im’s support mainly benefits a few multinational companies. Those same companies are now working to convince Congress to keep the taxpayer cash flowing.

How does this fit into America’s national security framework? According to the letter, the bank’s economic activity drives “political stability abroad.” Put aside, if you can, the fact that Ex-Im supports less than 2% of U.S. exports, rendering it a negligible portion of America’s international economic activity. A look at Ex-Im’s beneficiary list suggests that the bank sometimes works against American interests abroad.

For decades, Ex-Im has sent American taxpayer money to companies and countries that either have no place doing business with America or actively undermine U.S. national security interests.

The most egregious example: Ex-Im has given hundreds of millions of dollars in taxpayer-backed guarantees to the state-owned Russian bank Vnesheconombank (VEB). Ex-Im only recently suspended new deals after the bank was targeted by American sanctions in the past year.

VEB has a long and sordid history. Known until 2007 as the Bank for Foreign Economic Affairs of the U.S.S.R., VEB maintains an operating agreement with Russian arms exporter Rosoboronexport “to promote exports of Russian military products and boost their competitive edge in the world market.” Rosoboronexport also handles more than 80% of Russia’s weapon exports. In this capacity, it has become a chief weapons supplier to Bashar Assad’s regime in Syria and has supplied advanced missile systems to Iran, according to reporting last year in this newspaper. VEB has said that its practices fully comply with European Union and United Nations sanctions.

Americans probably assume that Washington wouldn’t use taxpayer money to help a company that supports these regimes. Yet the bank’s records indicate that VEB received a $497 million loan guarantee in 2012 and a further $703 million in 2014. American taxpayers still haven’t received thank-you cards from President Assad and the mullahs.

Ex-Im has nearly $1.5 billion of taxpayer exposure in Russia by the bank’s own report. And its indiscriminate use of taxpayer money extends far beyond Vladimir Putin’s autocracy. Between 1997 and 2014, companies in countries such as China, Venezuela, Pakistan and others received billions of dollars in Ex-Im’s taxpayer-backed assistance.

Many of the bank’s foreign beneficiaries are also state-owned. American taxpayers are unwittingly propping up the bank accounts of foreign states, from China to Russia to a host of other countries. Thus it should also come as no surprise that the bank has a long history of assisting international firms that raise serious red flags.

Consider Pemex, Mexico’s state-owned oil company, which conceded in 2013 that it deals with “serious” levels of corruption and that it has been plagued by “interference from organized crime”—including roughly $1 billion in stolen oil over a two-year span. That hasn’t stopped it from becoming the Ex-Im Bank’s single largest debtor, owing American taxpayers some $5.6 billion at the end of the fiscal year 2014.

Corruption and graft are recurring problems for the bank. According to April 15 congressional testimony by Ex-Im’s inspector general, 47 people have been convicted of defrauding the bank in the past five years. The IG also indicated that 31 corruption and fraud investigations are ongoing. That doesn’t include the four Ex-Im employees who, according to reporting in The Wall Street Journal, were being investigated last year for allegedly accepting kickbacks and steering contracts to specific companies. One Ex-Im official last week pleaded guilty to accepting bribes.

This points to a simple conclusion. Despite the fanciful claims by Secretary Albright, Secretary Cohen and the officials who signed the recent letter, the Export-Import Bank is anything but a “critical element” of America’s national security. Congress should refuse to reauthorize the bank when its charter expires. Washington shouldn’t be spending taxpayer money on corporate welfare—especially when it goes to companies and countries that are either corrupt or are actively working to undermine America.

Mr. Pfeifle is president of Off the Record Strategies. He served as deputy national security adviser for strategic communications and global outreach at the White House, 2007-09.

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Hearing entitled “Oversight of the Financial Industry Regulatory Authority”

2015/04/24


FSC Majority | Week in Review

2015/04/24

Task Force Holds First Hearing on Terrorism Financing

The Task Force to Investigate Terrorism Financing held its first hearing on Wednesday to examine the global terrorist threat and the methods by which terror groups finance their operations. 

In its coverage of the hearing, The Hill quoted Task Force Chairman Michael Fitzpatrick (R-PA) as saying that members will make sure "the federal government is using every tool at its disposal to deprive groups like the Islamic State, Boko Haram and other terrorist organizations of the funds they rely on to advance their warped ideology."

Members and hearing witnesses expressed concern that lifting sanctions against Iran as part of President Obama’s nuclear deal “could ease the flow of funding to terrorist groups around the world,” the Boston Herald reported.

The U.S. is ceding $11.9 billion in cash transfers to Iran as the Obama administration looks to finalize a nuclear deal with Tehran.

Juan Zarate with the Center for Strategic and International Studies testified that effectively fighting terrorists requires choking off their money supply.  “Whether it is Al Qaeda, the Islamic State, or Hizballah, the reality is that terrorist groups need money to operate their networks, implement logistics, maintain territory or influence, and to plan strategically against the United States,” he said. "Money is their enabler, but it’s also their Achilles’ heel."

For more on the Task Force, be sure to watch this week’s Sunday Video Message with Task Force Co-Chairman Rep. Robert Pittenger (R-NC). 

Subcommittee Hears From Regulators on Regulatory Burdens

The Financial Institutions and Consumer Credit Subcommittee continued examining the detrimental effect the regulatory burden on community financial institutions has on consumers at its hearing on Thursday. 

As Bloomberg reported in its coverage of the hearing, “Smaller banks have been complaining for years of the compliance costs of post-crisis regulations, particularly those implementing the Dodd-Frank Act.”

Members shared their concerns about the shrinking number of local banks and credit unions due to burdensome and duplicative regulations.

Subcommittee Chairman Randy Neugebauer (R-TX) shared that "In the 19th District of Texas, we need relationship banking. My constituents want to know their banker. The local banker wants to be flexible and find ways to help his neighbor realize their dream and reach financial independence."

Members also discussed how their constituents struggle when one-size-fits-all Washington regulations impact their hometown banks and credit unions.  Rep. Andy Barr (R-KY) said consumers in his area are not able to have their needs met by their local financial institutions because they are no longer in the “business of lending,” he said, but rather the “business of paperwork and compliance.”

Overregulation has limited choices for consumers, increased costs and made it harder for Americans, especially those with low and middle incomes, to achieve financial independence, said Rep. Frank Guinta (R-NJ).

Rep. Scott Tipton (R-CO) said in his rural district community financial institutions are "about to give up" due to the unmanageable amount of regulations.

MEMBER SPOTLIGHT

Rep. Mike Fitzpatrick | Experts: Terrorists financing with fish, statues and sugar

In March, the U.S. House Financial Services Committee created a task force specifically to study the flow of money for terrorists. Chaired by Bucks County Congressman Mike Fitzpatrick, the task force has six months to issue a set of recommendations on bankrupting groups such as the Islamic State group, or ISIS. “It’s estimated that the terror attacks of Sept. 11, 2001, cost al-Qaida $500,000 to plan and execute,” said Fitzpatrick, R-8, of Middletown. “In 2015, the United States once again faces the specter of terrorism. The Islamic State has a reported net worth over $2 billion.”

Weekend Must Reads


Wall Street Journal | What’s Wrong With the Golden Goose?

How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.

Wall Street Journal | Mel Watt’s Taxpayer Guarantee

The decision is a reminder of how little has changed in mortgage finance and at Fannie and Freddie despite their central role in the financial meltdown.

Economics One | A Monetary Policy for the Future

But much of the progress in medicine over the years has been due to doctors using checklists. Experience shows that checklists are invaluable for preventing mistakes, getting good diagnoses and appropriate treatments. Of course doctors need to exercise judgement in implementing checklists, but if they start winging it or skipping steps the patients usually suffer. Checklist-free medicine is as bad as rules-free monetary policy.

    On the Horizon 

April 29, 2015 10:00 a.m.
Housing and Insurance Subcommittee Hearing

"The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers"

April 29, 2015 2:00 p.m.
Capital Markets and Government Sponsored Enterprise Subcommittee Hearing

"Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens"

April 30, 2015 1:00 p.m.
Committee on Financial Service's Monetary Policy and Trade Subcommittee and Committee on Oversight and Government Reform's Subcommittee on Health Care, Benefits and Administrative Rules Joint Hearing

"Examining the Export-Import Bank’s Mandates"

  In the News

Al-Monitor | Congressional terror finance task force targets Iran

The Hill | Ex-Treasury official warns Iran funds going to terror groups

Bloomberg | Technology Brings Challenge in Fight Against Terror Financing, Expert Tells House Panel

Associated Press | Republican House Bill Modestly Curbs Bank Watchdog's Budget

The Hill | Hensarling slams Boeing CEO for refusing to testify

Financial Times | America’s Main Street banks struggle at the core

CNN Money | U.S. economy isn't growing fast enough

Wall Street Journal | Lawmaker Wants Fed to Name Possible Sources of Internal Secrets

The Hill | Half of Americans have money worries

Washington Examiner | The incredible shrinking deficit is no more

Wall Street Journal | Regional Banks Sweat Through Low-Rate ‘Torture’

American Banker | 'Warren Phenomenon' Causing Reg Relief Delay: House Republican

The Hill | GOP: Probe of Fed leak 'inadequate'

Real Clear Markets | Regulation In the Form of Big Bank Coercion

American Banker | Banks Overreact to Risk, and Pawnbrokers Pay the Price

Politico Pro | Former Ex-Im Bank Loan Officer Pleads Guilty To Taking Bribes

Washington Examiner | House passes bill to rein in consumer bureau

The Hill | House passes Wall Street reform tweak

Bloomberg | Fed Fails to Meet House Deadline for Names of Possible Leakers

The Hill | Rep. Hensarling’s invite to Ex-Im conference ‘lost in the mail’

Bloomberg | Regulator Seeks Community Bank Definition; Calls on Congress to Create ID Process

Wall Street Journal | Fed Fails to Comply With Lawmakers’ Request For Names in Probe

Read More

Joint Hearing with the Committee on Oversight and Government Reform's Subcommittee on Health Care, Benefits and Administrative Rules entitled, “Examining the Export-Import Bank’s Mandates”

2015/04/23


Hearing entitled “Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens”

2015/04/22


Hearing entitled “The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers”

2015/04/22


Hensarling Opening Statement at Task Force Hearing

2015/04/22

 
CLICK HERE TO WATCH

Financial Services Committee Chairman Jeb Hensarling (R-TX) made the following opening statement at today’s first hearing of the Task Force to Investigate Terrorism Financing:

When it comes to protecting our homeland, when it comes to protecting our citizens, we again are Americans first.

I want to thank the Ranking Member for working to put together this bipartisan Task Force. I want to thank you, Mr. Chairman, for your commitment to the issue. I want to thank you for your leadership in advance. I want to thank the Ranking Member Mr. Lynch as well and the Vice Chair Mr. Pittenger of North Carolina and all Members -- you are charged with an incredible responsibility here.

We know that the terrorist threat is constantly evolving, morphing, metastasizing and so are their finances. So you are each charged to ensure that the work of this Task Force is to thoroughly examine and evaluate any need to upgrade and improve our nation’s ability to starve the terrorists of the financial resources they need to carry out their evil attacks. I can think of no more somber responsibility that you have. I thank you for undertaking it and I look forward to the Task Force getting on with its work and I look forward to hearing the witnesses at this hearing.

Read More

Hearing entitled “Examining Regulatory Burdens – Regulator Perspective”

2015/04/16


Hearing entitled “A Survey of Global Terrorism and Terrorist Financing”

2015/04/15


Hearing entitled “The Future of Housing in America: Increasing Private Sector Participation in Affordable Housing”

2015/04/09


Hearing entitled “Examining Regulatory Burdens on Non-Depository Financial Institutions”

2015/04/08


Joint Hearing with the Committee on Oversight and Government Reform's Subcommittee on Health Care, Benefits and Administrative Rules entitled, “Oversight of Efforts to Reform the Export-Import Bank of the United States”

2015/04/08


Continuation of Markup of H.R. 299, H.R. 601, H.R. 650, H.R. 685, H.R. 1195, H.R. 1259, H.R. 1265, H.R. 1367, H.R. 1408, H.R. 1480, and H.R. 1529

2015/03/25


There is no media available for this committee.

Contact Information

2129 Rayburn HOB
Washington, DC 20515
Phone 202-225-7502
Fax 202-226-0471
financialservices.house.gov


Membership

Andy Barr

KENTUCKY's 6th DISTRICT

Robert Dold

ILLINOIS' 10th DISTRICT

Sean Duffy

WISCONSIN's 7th DISTRICT

Stephen Fincher

TENNESSEE's 8th DISTRICT

Mike Fitzpatrick

PENNSYLVANIA's 8th DISTRICT

Scott Garrett

NEW JERSEY's 5th DISTRICT

Frank Guinta

NEW HAMPSHIRE's 1st DISTRICT

Jeb Hensarling

TEXAS' 5th DISTRICT

French Hill

ARKANSAS' 2nd DISTRICT

Bill Huizenga

MICHIGAN's 2nd DISTRICT

Randy Hultgren

ILLINOIS' 14th DISTRICT

Robert Hurt

VIRGINIA's 5th DISTRICT

Peter King

NEW YORK's 2nd DISTRICT

Mia Love

UTAH's 4th DISTRICT

Frank Lucas

OKLAHOMA's 3rd DISTRICT

Blaine Luetkemeyer

MISSOURI's 3rd DISTRICT

Patrick McHenry

NORTH CAROLINA's 10th DISTRICT

Luke Messer

INDIANA's 6th DISTRICT

Mick Mulvaney

SOUTH CAROLINA's 5th DISTRICT

Randy Neugebauer

TEXAS' 19th DISTRICT

Steve Pearce

NEW MEXICO's 2nd DISTRICT

Robert Pittenger

NORTH CAROLINA's 9th DISTRICT

Bruce Poliquin

MAINE's 2nd DISTRICT

Bill Posey

FLORIDA's 8th DISTRICT

Dennis Ross

FLORIDA's 15th DISTRICT

Keith Rothfus

PENNSYLVANIA's 12th DISTRICT

Ed Royce

CALIFORNIA's 39th DISTRICT

David Schweikert

ARIZONA's 6th DISTRICT

Steve Stivers

OHIO's 15th DISTRICT

Marlin Stutzman

INDIANA's 3rd DISTRICT

Scott Tipton

COLORADO's 3rd DISTRICT

Ann Wagner

MISSOURI's 2nd DISTRICT

Lynn Westmoreland

GEORGIA's 3rd DISTRICT

Roger Williams

TEXAS' 25th DISTRICT