“To aggressively address the financial crisis, we will investigate the Bush administration's mismanagement of financial regulation, how it led to this crisis and what solutions Congress can act upon…I don't think the American people want us to wait until next year. We would hope to have something as soon as we can.”
- Speaker Nancy Pelosi [Dow Jones Newswires, 9/18/08]
American consumers and businesses are getting hit hard by the growing economic crisis. The devastation on Wall Street has a tremendous impact on the hard working middle class of Main Street. Families that have already lost value in their homes are nervously watching their life savings lose value as Wall Street's meltdown continues. It has affected the way people plan for college, their retirement, the security of their jobs, and their standard of living.
Much of the turmoil could have been prevented with responsible regulation and oversight by the executive branch. But the foundation of the Bush Administration's approach to governance is the absence of meaningful regulation - turning a blind eye to waste, fraud, abuse, as well as general mismanagement of everything from Wall Street to the war in Iraq.
The high cost of the Bush-McCain economic policy is clear - and likely to worsen still.
The New Direction Congress is taking aggressive action to address this financial crisis. In the coming days and weeks, we will investigate the Bush Administration's gross mismanagement of the economy with a keen focus on the lack of financial market regulation and identifying solutions the Congress can act upon. It is imperative to get to the root of this crisis and restore confidence in the American economy.
Among the Congressional investigations already scheduled are:
Financial Services Committee
- Thursday, September 18: “Auction Rate Securities Market: A Review of Problems and Potential Resolutions.”
- Wednesday, September 24: Hearing to examine the appropriate response to turmoil in the markets, and whether greater government intervention is needed in light of financial markets not self-correcting.
- Thursday, September 25: Hearing to examine the federal government's role in recent events in the U.S. capital markets, including recent actions by Treasury, the Federal Reserve, and Fannie Mae's and Freddie Mac's regulator. Witnesses will include Treasury Secretary Paulson and Fed Chairman Ben Bernanke.
Oversight and Government Reform Committee
- Monday, October 6: Examination of the regulatory mistakes and financial excesses that led to the bankruptcy filing by Lehman Brothers. Witnesses will include Lehman Brothers CEO Richard Fuld.
- Tuesday, October 7: Examination of the regulatory mistakes and financial excesses that led to the government bailout of AIG. Witnesses will include former AIG CEOs Robert B. Willumstad, Martin J. Sullivan, and Maurice R. Greenberg.
- Hearing next week to investigate the implications for the federal budget and taxpayers of the recent action by the Fed and the Bush Administration.
Joint Economic Committee
- Wednesday, September 24: Hearing to discuss the effects of the credit crunch and housing crisis, growing inflation, and current state of the economic downturn with Chairman of the Board of Governors of the Federal Reserve System, Ben Bernanke.
President Bush and Sen. John McCain have repeatedly called for less regulation:
“…I'm deeply concerned about law and regulation that will make it harder for the markets to recover -- and when they recover, make it harder for this economy to be robust.”
- President George W. Bush [3/14/08]
“I'm always for less regulation…I'd like to see a lot of the unnecessary government regulations eliminated.”
- Sen. John McCain [Wall Street Journal, 3/3/08]
“You are interviewing the greatest free trader you will ever interview, and the greatest deregulator you will ever interview.”
- Sen. John McCain [Wall Street Journal, 5/29/07]
“…Excessive litigation and over-regulation threaten to make our financial markets less attractive to investors…”
- President George W. Bush [1/31/07]
FROM THE EXPERTS
Douglas Elmendorf, a senior fellow in economic studies at the Brookings Institution
“We need to restructure the system to reduce the chance of having another crisis.” [Christian Science Monitor, 9/17/08]
Steve Thel, Fordham Law School Business Law Professor and former SEC lawyer
“This is a consequence of a deregulatory scheme that was adopted in part as a matter of ideology rather than expertise… It's the role of the regulators and the Federal Reserve to make sure people don't get too exuberant particularly if the private sector gets to take the upside and the public sector takes the downside.”
[Newark Star-Ledger, 9/16/08]
Joe Battipaglia, market strategist for Stifel Nicolaus
“It's a systemic shortcoming by the financial system, whereby risk managers, auditors, regulators and then investors all looked the other way on the shortcomings of the evolution of the financial system.”
[Newark Star-Ledger, 9/16/08]
Fred Crowley, University of Colorado at Colorado Springs, College of Business Professor
“Because of the misbehavings of Wall Street people it's more difficult for us to get a loan to buy a house a car or whatever else so we're feeling the misbehavings of theirs, not our fault.” [KOAA, 9/15/08]