Chairman Jeb Hensarling

Legislation

Posted by on April 26, 2011
The Responsible Consumer Financial Protection Regulations Act establishes a bipartisan commission of five members at the Consumer Financial Protection Bureau (CFPB). H.R. 1121, introduced by Chairman Spencer Bachus facilitates robust consumer financial protection by empanelling a  five-member Commission to carry out all of the duties that would otherwise fall to the Director of the CFPB. This proposed structure of the CFPB is the same structure that has worked well for nearly every other regulatory body in this country, including the FTC, FDIC and SEC.

H.R. 1121 is identical to the bipartisan approach the House took to consumer protection during debate on financial regulatory reform in the last Congress.  However, that approach, which  received strong bipartisan support, was later dropped by the Democratic Conferees to the Dodd-Frank Act.
 
Click here to view the legislation.
Posted by on April 26, 2011

The expansive powers given to the CFPB to write rules will have far-reaching implications. Yet, the Dodd-Frank Act makes the CFPB’s judgments essentially unreviewable. The Dodd-Frank Act did include a review process, but the process is essentially meaningless . The Act allows the Financial Stability Over-sight Council to review rulemaking by the CFPB, but it must meet virtually impossible prerequisites in order to overturn any CFPB rulemaking.

Among the extreme standards the FSOC must meet to overturn a rule are:

  • Two-thirds of FSOC members must approve;
  • The FSOC must find the rule endangers the stability of the entire financial system;
  • The FSOC has only 90 days to review draft rules; and
  • A review petition must be filed within 10 days of publication in the Federal Register of the draft rule.

The Consumer Financial Safety and Soundness Improvement Act (H.R. 1315), introduced by Rep. Sean Duffy on April 1, improves the FSOC review process and makes the review process meaningful. H.R. 1315 improves the FSOC review process by changing the vote to overturn a CFPB rule from a super-majority of two-thirds of the FSOC to a simple majority; ensuring the FSOC must set aside a rule if it is inconsistent with the safe and sound operations of United States financial institutions; and giving the FSOC sufficient time to consider the safety and soundness implications of rules.

Posted by on April 26, 2011

H.R. 1182 ends the taxpayer-funded bailouts of Fannie Mae and Freddie Mac and put these two companies on a path towards privatization.  The failures of the two government-sponsored enterprises (GSEs) have directly cost taxpayers more than $150 billion. H.R. 1182 is sponsored by Rep. Jeb Hensarling.

 

 

Posted by on April 13, 2011

H.R. 839, introduced by Rep. Patrick McHenry (NC), would terminate Treasury’ authority to provide new assistance under the Home Affordable Modification Program (HAMP) while preserving the contracts made prior to the bill’s enactment. H.R. 839 prevents $30 billion in TARP funds from being spent.


Background:
HAMP was announced by the Administration in February 2009 as part of a three-part “Making Home Affordable Program.” $30 billion in TARP funds were set aside for HAMP to provide payments to mortgage servicers for modifying mortgages of struggling borrowers. The Administration claimed HAMP would help up to 4 million homeowners. Instead, only 521,630 loans have been permanently modified under this program and the re-default rate is high. From the $30 billion earmarked for HAMP only $840 million has gone out the door. There is widespread criticism that HAMP is not working and is only making matters worse for many of the homeowners who participate or seek to participate. The Special Inspector General for TARP (SIGTARP), the Congressional Oversight Panel, and the Government Accountability Office have all detailed the shortcomings of HAMP and highlighted how this program has hurt, rather than helped, struggling homeowners. Rewarding servicers with taxpayer dollars to modify mortgages has proven costly, Treasury estimates a $20,000 cost to taxpayers for each successful HAMP modification.

Posted by on April 13, 2011

H.R. 861, introduced by Rep. Gary Miller (CA) on March 1, terminates the Neighborhood Stabilization Program (NSP) and prevents $1 billion from being spent on this program.


Background:
In 2008 the Democrats’ GSE bailout bill (the Housing and Economic Recovery Act) established the NSP with $4 billion in funding.  NSP provides taxpayer dollars to State and local governments to purchase, renovate, rebuild, and resell abandoned and foreclosed property. The Democrats added another $1.93 billion in funding to the NSP through the Obama stimulus plan in 2009 and another $1 billion in the Dodd-Frank Act.  The program has been plagued with problems.  Since its inception, NSP has lacked proper protocols that prevent the misuse of funds. The Inspector General for the Department of Housing and Urban Development (HUD) has identified multiple cases of misused NSP funds, and GAO has detailed HUD’s inadequate tracking of NSP funds.

Posted by on April 13, 2011

H.R. 836, introduced by Rep. Jeb Hensarling on February 28, 2011, ends HUD’s Emergency Homeowners Relief Program and prevents $1 billion from being spent on this program that increases struggling homeowners’ debts. 

Background:

The Dodd-Frank Act established a $1 billion HUD Emergency Homeowner Relief Program, which provides loans or credit advances to unemployed borrowers who cannot pay their mortgages because of unemployment or reduction in income.  Payments under the program may be provided for 12 months, with a possible 12-month extension. The Obama Administration, in its FY 2012 budget proposal, estimates the program to have a 98 percent subsidy rate.  This means for every $1 spent on this Federal program, the taxpayers will lose 98 cents. The program was initially authorized in 1975 and was never funded during its 35 year history.

Posted by on April 13, 2011
The legislation, introduced by Capital Markets Subcommittee Chairman Scott Garrett, helps clarify the risk retention rules required under Section 941 of the Dodd-Frank Act to make clear that Fannie Mae and Freddie Mac will be held to the same standards as any other secondary mortgage market participants.  A GSE loan purchase or asset-backed security issuance would not affect the status of the underlying assets.

On April 6, 2011, the Capital Markets Subcommittee approved the legislation with a vote of 34-0.

Posted by on April 13, 2011
The legislation, introduced by Chairman Bachus, suspends the compensation packages for executives of Fannie Mae and Freddie Mac and places all other employees on the General Schedule pay scale. Since September 2008 when Fannie Mae and Freddie Mac entered Federal conservatorships, the Federal Housing Finance Authority has approved multi-million dollar compensation packages for the GSEs’ top executives. A report released on Thursday by the Inspector General of the FHFA found that the six top executives at Fannie and Freddie were paid $35.4 million since the taxpayers bailed out the GSEs. 

On April 6, 2011, the Capital Markets Subcommittee approved H.R. 1221 on a vote of 27-6.
Posted by on April 13, 2011
The legislation, introduced by Financial Services Committee Vice Chairman Jeb Hensarling, accelerates and formalizes the reduction in the size of the GSEs’ portfolios. As of January 2011, Fannie Mae retained portfolio was $777.059 billion, and Freddie Mac retained portfolio was $694.846 billion. The legislation would cap the GSEs portfolios to no more than $700 billion in the first year, declining to $600 billion for year two, $475 billion for year three, $350 billion for year four, and finally to $250 billion in year five. 

On April 6, 2011, the Capital Markets Subcommittee approved H.R. 1224 on a vote of 24-14.
Posted by on April 13, 2011
The legislation, introduced by Oversight and Investigations Subcommittee Chairman Randy Neugebauer, requires that FHFA gradually increase guarantee fees at Fannie Mae and Freddie Mac over the next two years. Under the legislation, the FHFA will consider the market conditions in raising the GSEs’ guarantee fees to ensure that its actions do not disrupt a housing recovery. 

On April 6, 2011, the Capital Markets Subcommittee approved H.R. 1222 on a vote of 25-9.