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Congressional Oversight on the Economy: Fall 2008 - 2009

ECONOMIC RECOVERY

Together the 111th Congress and President Obama are working to restore stability to our nation's economy and invest in a secure economic future for America's working families. On February 17, President Obama signed the House- and Senate-passed American Recovery and Reinvestment Act - legislation to create and save jobs, get our economy moving again, and transform it for long-term growth and stability.  To help ensure that taxpayer dollars are spent wisely and effectively, the Recovery Act contains unprecedented accountability and transparency measures - including no earmarks, new state whistleblower protections, strong oversight, and a new www.recovery.gov website allowing Americans for the first time to track the investments online, and contact local and state officials about how it's working. Congressional oversight is ongoing.

2009

  1. April 29: Under Chairman Jim Oberstar, the Transportation and Infrastructure Committee held a hearing to examine the implementation of the American Recovery and Reinvestment Act so far.
  2. April 28: Chairman John Tanner, of the Ways and Means Subcommittee on Social Security, held a hearing top examine the progress the Social Security Administration is making implementing provisions included in the American Recovery and Reinvestment Act
  3. April 28: The House Natural Resources Water and Power Subcommittee held a hearing on some of the water resources funding contained in the American Recovery and Reinvestment Act including the $1 billion investment in Reclamation projects across the country.
  4. April 23: The Ways and Means Subcommittee on Income Security and Family Support held a hearing on the implementation of Unemployment Insurance Provisions in the Recovery Act.  Chairman McDermott: “We must now ensure the [unemployment] benefits are reaching jobless workers - both to help them and the economy.  I expect most Governors will ultimately seize this opportunity to help workers who have paid taxes and who have lost their jobs through no fault of their own.”
  5. April 2: The House Energy and Commerce Communications, Technology and the Internet Subcommittee held an oversight hearing on the $7.2 billion included in the economic recovery package to provide broadband service, including infrastructure and equipment, in unserved and underserved areas.
  6. March 31: Under Chairwoman Lynn Woolsey, the Education and Labor Workforce Protection Subcommittee, held a hearing to highlight the important role green jobs will play in our economic recovery.
  7. March 24: Speaker Pelosi and the Democratic Women's Working Group held a roundtable discussion with economists, advocacy groups, and women-owned business leaders to discuss the impact of the American Recovery and Reinvestment Act on women and children.
  8. March 19: The Science and Technology Investigations and Oversight Subcommittee held an oversight hearing on accountability and transparency in science funding included in the American Recovery and Reinvestment Act.
  9. March 12: Chairman Glenn Nye held a Small Business Contracting and Technology Subcommittee hearing to ensure small businesses and veteran-owned businesses receive economic recovery contracts.  

FINANCIAL STABILIZATION (TARP)

Last year, the Bush Administration urged Congress to pass the Troubled Asset Relief Program (TARP) to help stabilize financial institutions and restore the flow of credit to businesses and families.  Despite objections by the Administration, the measure was written to provide public accountability, transparency and protections for taxpayers, and to help homeowners avoid foreclosure. Building on that, on April 24, President Obama signed into law the TARP oversight bill - a measure to strengthen accountability and oversight of the financial rescue package by the TARP's Special Inspector General. Congressional oversight continues.

2009

  1. April 29: The Congressional Oversight Panel for Economic Stabilization held a field hearing in Milwaukee, Wisconsin to examine credit markets for local small businesses, with a focus on the impact of the Troubled Asset Relief Program (TARP), on lending in Wisconsin. 
  2. April 23: The Joint Economic Committee held an oversight hearing to receive a quarterly report from Neil Barofsky, the Special Inspector General for the TARP.
  3. April 21: The Congressional Oversight Panel for Economic Stabilization held a hearing with Treasury Secretary Geithner calling for greater transparency and accountability with the implementation of TARP. COP Chair Elizabeth Warren: “People want to see action described in terms that make sense to them and that seem fair…They want to see that their money--taxpayer money--is used to advance the public interest-- not just the interests of Wall Street insiders.”
  4. March 19: Under Chairman John Lewis, the House Ways and Means Oversight Subcommittee held a hearing on TARP and the oversight of Federal borrowing and the use of federal funds. In the hearing, Chairman Lewis brought to the TARP Inspector General's attention that at least 13 firms that have received TARP funds owe more than $220 million in unpaid federal taxes.
  5. March 19: The Congressional Oversight Panel for Economic Stabilization held a hearing on what the United States could learn from previous banking crises - in Japan, Sweden, the Savings and Loan collapse, and the Great Depression.
  6. March 11: Under Chair Carolyn Maloney, the Joint Economic Committee held a hearing with members of the Congressional Oversight Panel for the Emergency Economic Stabilization Act to discuss TARP accountability, oversight and transparency.
  7. March 11: Chairman Dennis Kucinich of the House Oversight and Government Reform Domestic Policy Subcommittee held a hearing to investigate whether the Treasury Department is receiving sufficiently detailed information to conduct thorough oversight of TARP.
  8. March 4: Chairman Gutierrez of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit held an oversight hearing to investigate how TARP was impacting Main Street with a special focus on lending for community banks and small businesses.
  9. February 27: The Congressional Oversight Panel for Economic Stabilization held a field hearing in Prince George's County to examine state and local foreclosure reduction and prevention efforts in the state of Maryland
  10. February 24: The Oversight and Investigations Subcommittee of House Financial Services Committee held a hearing to review TARP oversight and accountability measures.
  11. February 24: Chairman Frank, along with 17 Democrats on the committee, sent a letter today to Frederick H. Waddell, the President and CEO of Northern Trust, in response to published media reports that the company hosted a PGA golf tournament and several related parties. The letter called on the bank to return an equivalent amount of funds to the government to make up for that which they had “frittered away.” 
  12. February 11: Chairman Frank called the CEOs of eight banks that had received TARP funds before the Financial Services Committee to discuss the use of taxpayer funds to stabilize their companies and whether or not they were taking steps to address the underlying credit crisis impacting America's families and businesses.
  13. January 14: The Congressional Oversight Panel for Economic Stabilization held a hearing to investigate how the existing regulatory structure contributed to the ongoing financial and mortgage crises.
  14. January 13: Chairman Barney Frank held a Financial Services Committee hearing on the priorities for the incoming Obama Administration on using TARP funds under the Emergency Economic Stabilization Act of 2008

2008

  1. December 16: The Congressional Oversight Panel for Economic Stabilization - created in October to ensure transparency and accountability in TARP implementation - held a field hearing in Clark County, Nevada - “ground zero” of the housing and financial crisis.
  2. December 10:  The Financial Services Committee held an oversight hearing on the Treasury Department's implementation of TARP of the economic rescue plan.
  3. December 2:  The first in a series of congressionally-mandated oversight reports by the Government Accountability Office (GAO) on TARP established in the economic rescue package revealed a number of problems with the program, including a lack of control over potential conflicts of interest and no way for Treasury to gauge the success of its efforts.  Speaker Pelosi said:  “The GAO's discouraging report makes clear that the Treasury Department's implementation of the TARP is insufficiently transparent and is not accountable to American taxpayers.” 
  4. November 20:  House Financial Services Committee Chairman Frank sent a letter to Treasury Secretary Henry Paulson urging him to immediately use funds authorized by TARP legislation to help stem foreclosures, stating 'We cannot afford to miss this opportunity to act.'
  5. November 14: At the Oversight Subcommittee on Domestic Policy hearing on the TARP program, Chairman Kucinich said that Treasury had 'abdicated its responsibility' to stem the tide of home foreclosures. Other lawmakers said Treasury is too focused on banks and not on consumers. 'This Administration wants to privatize Wall Street's gains and socialize Wall Street's losses,' said Rep. Cummings.
  6. October 14:  The Financial Services Committee under Chairman Barney Frank held a briefing with the GAO on implementation of the oversight and conflict of interest requirements in the new economic rescue plan
  7. October 7:  Speaker Pelosi wrote Secretary Paulson expressing concerns with the interim guidelines released by Treasury for the hiring of contractors, which did not adequately ensure that conflicts of interest would be averted. 

LENDING AND CONSUMER/HOMEOWNER PROTECTIONS

As household budgets tighten across the country and foreclosure rates continue to climb, Congress continues to work to strengthen consumer and homeowner protections and ease the credit crunch hurting American families and small businesses.  The Obama Administration has launched a plan that will help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure--as well as their neighbors whose own house values will drop as a result of a nearby foreclosure. On March 5, the House passed the Helping Families Save their Homes Act, H.R. 1106 - a bill to spur refinancings and loan modifications to get more families into affordable mortgages by fixing the Hope for Homeowners Program and protecting lenders from lawsuits. On April 30th, the House passed the Credit Cardholders' Bill of Rights Act, H.R. 627, to level the playing field between card issuers and cardholders by applying common-sense regulations that would ban retroactive interest rate hikes on existing balances, double-cycle billing, and due-date gimmicksCongressional oversight on the housing and credit crisis continues.

2009

  1. April 2: Chairman Luis Gutierrez of the Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing to examine ways to reform predatory payday lending practices to protect consumers
  2. March 25: The Financial Services Committee held a hearing to examine current lending standards and credit availability with a special focus on smaller banks and consumers
  3. March 24: Chairman Bobby Rush of the Commerce, Trade and Consumer Protection Subcommittee of House Energy and Commerce Committee held a hearing to address ways to strengthen the Federal Trade Commission to protect consumers from unfair and deceptive lending practices and fraud.
  4. March 5: Chairman Bobby Rush of the Commerce, Trade and Consumer Protection Subcommittee of House Energy and Commerce Committee held a hearing to learn more about the need for consumer protection measures in the subprime, used car market
  5. February 24: Financial Services Housing and Community Subcommittee Chairwoman Maxine Waters called on banking industry leaders to help struggling American families stay in their homes through mortgage modifications.
  6. February 3: The Financial Services Committee held a hearing on methods for promoting bank liquidity through deposit insurance, Hope for Homeowners program and other measures.

2008

  1. December 9: The Oversight and Government Reform Committee, under Chairman Waxman, held a hearing on Fannie Mae and Freddie Mac to examine their financial collapse.
  2. December 4: Speaker Pelosi, Leader Reid, and Chairmen Frank and Dodd sent a letter to the President calling on him to provide limited, temporary assistance to the automobile industry through the Administration's authority under the Troubled Assets Relief Program.
  3. November 20:  At the Small Business Committee hearing, Chairwoman Velazquez pressed the Federal Reserve and Treasury Department to take swift action to help a growing number of businesses struggling to secure loans through the Small Business Administration (SBA).  On November 25th, Federal Reserve and Treasury Department announced a new lending facility aimed at providing liquidity to the small business finance markets.
  4. November 20:  Speaker Pelosi and Leader Reid insisted that the automakers provide to Congress, by December 2nd, detailed credible restructuring plans that result in a viable industry, producing fuel-efficient cars with the latest technology, with quality jobs while protecting taxpayer investments.
  5. November 19:  The Financial Services Committee heard from the heads of the Big Three auto companies -- General Motors, Chrysler, and Ford -- on providing financial assistance to the automobile industry during this economic crisis.
  6. November 18:  The Financial Services Committee held an oversight hearing to examine the Administration's failure to address the mortgage foreclosure crisis crippling our economy, questioning Treasury Secretary Paulson, Federal Reserve Chairman Bernanke, and FDIC Chairwoman Bair about the implementation of the Emergency Economic Stabilization Act of 2008 and the lack of progress by the Administration to help Americans stay in their homes.
  7. November 17:  Democratic leaders called on the Treasury Department to move swiftly to address the mortgage foreclosure crisis at a meeting with Treasury Secretary Paulson and Federal Reserve Chairman Bernanke.
  8. November 12:  At the Financial Services Committee hearing, Members encouraged the financial industry to alter the terms of more mortgages to allow people to stay in their homes - focusing on mortgages that had been sold in packages to investors like pension funds, hedge funds and insurance companies.
  9. November 11:  Speaker Pelosi called for immediate action by the Bush Administration and Congress on legislation to help protect 1 in 10 American jobs by providing loans to the auto industry saying, “[the failure of one or more of the Detroit automakers] would have a devastating impact on our economy…It is essential for the domestic automobile manufacturing industry to re-emerge as a global, competitive leader in fuel efficiency and in new, path-breaking energy-efficient technologies that protect our environment.'
  10. November 8:  Speaker Pelosi and Leader Reid sent a letter to Secretary Paulson calling on him to review the feasibility of using the authority given under the Emergency Economic Stabilization Act (EESA) to provide temporary, and conditional, assistance to the automobile industry during this financial crisis.
  11. October 29:  Judiciary Committee Chairman Conyers and others sent a letter to DOJ and FBI raising concerns about delays or lack of federal effort to investigate and prosecute mortgage fraud.
  12. October 22:  The Judiciary Committee held a briefing on home foreclosures and bankruptcy in Boston.
  13. October 22:  The Education and Labor Committee held a San Francisco field hearing on the impact of the financial crisis on retirement security. The federal agency that guarantees pensions has lost $2.1 billion on investments this year, raising serious concerns about the impact of the financial crisis on retirement security.
  14. October 17:  Speaker Pelosi sent a letter to Secretary Paulson urging him to send a clear signal to financial institutions about to receive $250 billion in capital infusions from the federal government that part of such capital should be used to relieve the credit crunch, as intended by Congress and the Administration.
  15. October 7:  At the Education and Labor Committee hearing on the financial crisis impact on Americans' retirement security, CBO director Orszag testified that $2 trillion in retirement savings have been lost.

AIG & EXCESSIVE RiSK-TAKING AND EXECUTIVE COMPENSATION

The American International Group (AIG) bonus scandal that surfaced earlier this year exposed the extraordinary abuses of the public trust by companies rewarding some employees with excessive compensation, even while taxpayers are on the hook for billions to address the consequences of these companies' unchecked risk-taking. The 111th Congress is working to rein in this kind of egregious behavior and protect American taxpayers. To this end, on April 1st, the House passed the Pay for Performance Act, H.R. 1664, which prohibits payment of unreasonable or excessive compensation and non-performance based bonuses for companies while direct capital investments from the TARP remain outstanding. Congressional oversight has helped bring to light some of the irresponsible decisions.

2009

  1. April 2: Chairman Ed Towns of the House Oversight and Government Reform Committee held an oversight hearing on the collapse and federal rescue of AIG and what it means for the U.S. economy.
  2. March 24: Chairman Frank held a Financial Services oversight hearing to investigate the government intervention at AIG to follow-up on the March 18 hearing held by Mr. Kanjorski.
  3. March 19: Chairman Frank of the Financial Service Committee sent a letter to Federal Housing Finance Agency director James Lockhart urging him to cancel the retention bonus programs at Fannie Mae and Freddie Mac. Chairman Frank: “The public, having provided significant support for the purpose of restoring trust and confidence in our country's financial system, rightfully insists that large bonuses such as these awarded by institutions receiving public funds at a time of a serious economic downturn cannot continue.” 
  4. March 18: Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing on AIG.  Chairman Kanjorski: “Unfortunately, taxpayers do not understand how AIG ended up in such a terrible situation, nor do they understand why the federal government continues to give it money.  We must assess AIG's progress, as well as how we move forward to ensure that any taxpayer money AIG receives is spent efficiently and effectively.”
  5. March 4: JEC Chair Maloney sent a letter to Federal Reserve Chairman Ben Bernanke renewing her request for information pertaining to the Federal Reserve's purchase of collateralized debt obligations and residential mortgage backed securities from AIG.  

2008

  1. October 29:  Speaker Pelosi and Leader Reid sent a letter calling on Secretary Paulson to strengthen restrictions on golden parachutes for CEOs and top executives in the newly devised portion of the financial rescue that injects capital into banks.
  2. October 7:   At the Oversight and Government Reform Committee hearing on the regulatory mistakes and financial excesses that led to the government bailout of AIG, it was found that only days after receiving tens of billions of dollars in government funds, executives of AIG took part in a $440,000 company retreat.

ORIGINS AND IMPACT OF THE FINANCIAL CRISIS

Congress is determined to get to the bottom of the causes and factors leading up to the worst financial crisis since the Great Depression.  On May 6, the House passed S. 386, Fraud Enforcement and Recovery Act of 2009 to establish a Financial Markets Inquiry Commission that will produce a detailed and clear-eyed examination of what went wrong.  This is critical to bring accountability to a financial system that rewards unduly risky behavior, and to help inform Congress as we move forward with common sense reforms to prevent these crises from happening in the future. 

2009

  1. March 12: Chairman Kanjorski held a Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee hearing on mark-to-market accounting rules, and whether they exacerbated the current financial crisis.
  2. March 3: Chairman José Serrano of the House Appropriations Financial Services and General Government Subcommittee held a hearing to examine Securities and Exchange Commission (SEC) actions as they related to the ongoing financial crisis.
  3. February 10: Financial Services Committee Chairman Frank held an oversight hearing on the Federal Reserve Board's response to the financial crisis with Fed Chairman Ben Bernanke.
  4. February 4: At a Financial Services Subcommittee hearing, led by Chairman Kanjorski, whistle-blower Harry Markopolos testified about the investment fraud engineered by Madoff and the failure of federal regulatory agencies to detect the problem. Mr. Markopolos described the SEC as 'captive to the industry it regulates and…afraid of bringing big cases against the largest, most powerful firms.'
  5. January 5: The Financial Services Committee held a hearing on the failure of the financial regulatory system and the Bernard Madoff scandal.

2008

  1. December 8: The House Agriculture Committee, under Chairman Peterson, held a hearing to review the role of credit derivatives in the U.S. economy.
  2. November 20:  At an Agriculture Committee hearing on credit default swaps, Chairman Peterson said, 'the next Congress will have to get to the root of the problem before it is too late and allow for some real oversight of these markets, to provide transparency and accountability for both buyers and sellers, and to reduce systemic risk.'
  3. November 13: At the Oversight and Government Reform Committee hearing on the role of hedge funds in the financial markets, hedge fund managers said they would support new rules requiring their industry, controlling nearly $2 trillion, to become more transparent. 
  4. October 23:  At the Oversight and Government Reform Committee hearing on federal regulation of financial markets, former Fed Chairman Alan Greenspan admitted that he 'made a mistake' in trusting that free markets could regulate themselves without government oversight. 
  5. October 22:  At the Oversight and Government Reform Committee hearing on the role of the credit rating agencies in the financial excesses on Wall Street, it was revealed that executives at the leading credit-rating companies had privately acknowledged they had created 'a monster' with overly optimistic assessments of risky mortgage-backed securities, which helped fuel the financial meltdown.
  6. October 15:  The Agriculture Committee under Chairman Collin Peterson held a hearing on the financial markets and the growing use of unregulated swaps that contributed to the downfall of AIG and Bear Stearns. 
  7. October 6:  At the Oversight and Government Reform Committee hearing on the regulatory mistakes and financial excesses that led to the bankruptcy filing by Lehman Brothers, it was found that just days before it collapsed as it was looking for a federal rescue, Lehman Brothers agreed to pay more than $23 million to three executives leaving the firm.

PREVENTING FUTURE ECONOMIC CRISES

2009

  1. April 23: Chairman Frank held a full Financial Services Committee hearing to discuss mortgage reform and anti-predatory lending legislation designed to protect current and potential homeowners.
  2. April 21: Under Chair Maloney, the Joint Economic Committee held a hearing to examine the systemic threats of large financial institutions and what actions regulators can take if these institutions become insolvent.
  3. March 26: Chairman Frank held a full Financial Services Committee hearing on addressing the need for comprehensive regulatory reform of the financial services industry
  4. March 20: The Financial Services Committee held a hearing on federal and state enforcement of financial consumer protection laws.  Chairman Frank: “Perhaps most importantly, the American public has the right to know what enforcement actions are contemplated against those irresponsible and, in some cases, criminal actions that lead to the current situation. Preventing a reoccurrence is very important.” 
  5. March 17: Chairman Frank held a Financial Services Committee hearing to discuss systemic risk in the financial services industry and the possibility of creating a new “systemic risk regulator” to help restore order to the industry.
  6. March 17: House Judiciary Subcommittee on Courts and Competition Policy, led by Chairman Hank Johnson, held a hearing to investigate the role banking industry consolidation played in the current economic crisis and possible regulatory solutions to protect consumers and taxpayers in the future
  7. March 5: Chairman Paul Kanjorski of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on the creation of a system to monitor and regulate systemic risk in the financial services industry.
  8. February 26: The Joint Economic Committee, led by Chair Carolyn Maloney, held a hearing on restoring the economy to create a functioning credit system and preventative measures to guard against another financial crisis in the future.
  9. February 3-4: Under Chairman Peterson, the Agriculture Committee held a two-part hearing on strengthening federal regulation of the derivatives market and increasing transparency.