Dodd-Frank News Center

Bernanke Reflects on Policy Response to Financial Crisis

This story appeared in Bank Digest.

In a speech before the Conference on “Rethinking Finance: Perspectives on the Crisis,” presented by the Russell Sage Foundation and The Century Foundation in New York City, Fed Chairman Ben Bernanke discussed the financial crisis and the Fed’s response in its capacity as liquidity provider of last resort. Bernanke based his speech on the talks and testimonies that he gave during the crisis and its aftermath, particularly his testimony to the Financial Crisis Inquiry Commission in September 2010. The Fed Chairman noted that the financial crisis of 2007-2009 was “difficult to anticipate,” but once identified was addressed to a significant extent using classic tools, including backstop liquidity provision by central banks, both here and abroad. Bernanke concluded that “to avoid or at least mitigate future panics, the vulnerabilities that underlay the recent crisis must be fully addressed” and “going forward, for the Federal Reserve as well as other central banks, the promotion of financial stability must be on an equal footing with the management of monetary policy as the most critical policy priorities.”

 

Johnson Warns Against Dismantling Dodd-Frank

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Senate Banking Committee Chairman Tim Johnson, D-S.D. warned that attempts to dismantle the Dodd-Frank Act would be “dangerous and irresponsible,” and stressed that “we simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars.”

At a May 10, 2011, committee hearing (webcast) reviewing the final report of the Financial Crisis Inquiry Commission, Johnson said that repealing or undermining the Dodd-Frank Act would result in a return to the weak financial system that created the worst economic crisis in generations.

Frank Clarifies FCIC Dissenting Statement

This story appeared in Bank Digest.

Barney Frank, D-Mass., The Ranking Member of the Financial Services Committee, has clarified what he deems an inaccuracy in Peter Wallison's dissent to the Financial Crisis Inquiry Commission Report. According to Frank, Wallison quotes Frank, who in an appearance on the CNBC program The Kudlow Report, said that “it was a great mistake to push lower-income people into housing they couldn't afford...” and implies that Frank was claiming the mistake was his own.

Frank points to his opposition to this policy, as promulgated by the Clinton and Bush administrations, asserting that, in 2004, during the Bush administration, HUD significantly increased targets for purchases by Fannie Mae and Freddie Mac of home mortgages fitting certain criteria for affordability. “I opposed those increases, and was quoted at the time in Bloomberg News as saying that the White House “could do some harm if you don't revise the goals.”“ Frank goes on to point out that Larry Lindsey, adviser to Presidents Ronald Reagan, George H.W. Bush and George W. Bush, later wrote that Frank “was the only politician [he knows] who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters.” Frank contends that “The distinction between support of rental housing and of homeownership is critical, and Mr. Wallison's critique is based on conflating the two. This is an obvious error that cannot stand, especially as we begin to debate national housing policy.”

Bachus Rejects Financial Crisis Inquiry Commission Report

This story appeared in Bank Digest.

Financial Services Committee Chairman Spencer Bachus, R-Ala., has criticized the Financial Crisis Inquiry Commission report issued on Jan. 27, 2011, complaining that the Commission failed to reach a consensus and that the report was politicized. He also charged that enacting the Dodd-Frank Act without waiting for the report's conclusions made the report “little more than a minor footnote to the financial crisis.”

Inquiry Commission Says Financial Crisis Was Avoidable

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

There were enough warning signs before the financial crisis struck that it could have been prevented, according to the final report of the Financial Crisis Inquiry Commission. Commission Chairman Phil Angelides said that "The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again."

"The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble," the report asserts.

FCIC Announces Release Date of Final Report

This story appeared in Bank Digest.

The Financial Crisis Inquiry Commission has announced that it will release its report on the causes of the financial crisis on Thursday, Jan. 27, 2011. The FCIC’s conclusions as to the causes of the financial crisis will be included in the report. In December 2010, the FCIC Republican Commissioners have released a Financial Crisis Primer including preliminary findings and conclusions that will be included in the final report. At the time of the Primer’s release, the FCIC noted that since the transmission of the report of the FCIC to the President and Congress requires a majority vote of the Commission, the Primer’s findings and conclusions do not constitute the Commission’s report.

FCIC Discusses the Release of Financial Crisis Primer

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest.

The FCIC Republican Commissioners have released a Financial Crisis Primer including preliminary findings and conclusions that will be included in the report required by the Fraud Enforcement and Recovery Act of 2009. The Primer represents a portion of the findings and conclusions resulting from the FCIC’s work. The FCIC noted that since the transmission of the report of the FCIC to the President and Congress requires a majority vote of the Commission, these findings and conclusions do not constitute the Commission’s report. The FCIC will deliver its report in January based on facts and evidence from its more than year-long investigation—including 19 days of public hearings, an analysis of hundreds of thousands of documents and interviews with more than 700 witnesses. The report will also include the Commission’s findings and conclusions as to the causes of the financial crisis based on this inquiry.

New Date for Final FCIC Report Announced

This story appeared in Bank Digest.

In order to produce and disseminate more thorough information about the facts and causes of the financial crisis that best serves the public interest, the Financial Crisis Inquiry Commission announced that it is delaying its final report from Dec. 15, 2010, to January 2011. The decision has been criticized by FCIC Vice Chairman Rep. Bill Thomas, R-Calif., and FCIC Commissioners Keith Hennessey, Douglas Holtz-Eakin and Peter Wallison. They assert that the FCIC “has had over a year to complete the report and we believe the delivery of the report to the President and Congress is being delayed to accommodate the publication of a book-length document to coincide with the presentation of the FCIC's findings and conclusions.”

Correspondence Clarifies FCIC Hearing Testimony

This story appeared in Bank Digest.

The Financial Crisis Inquiry Commission has released a letter from Paul T. Bossidy, President & Chief Executive Officer, Clayton Holdings, LLC, Shelton, Conn., to clarify and correct testimony (hearing webcast) provided by current and former officials of Clayton Holdings (testimony of Vicki Beal, Senior Vice President, Transaction Management, Clayton Holdings, LLC and testimony of D. Keith Johnson, Former President of Clayton Holdings, LLC and Former President and Chief Executive Officer, Washington Mutual's Long Beach Mortgage). The clarifications and corrections addressed questions related to Clayton’s meetings with rating agencies during 2006 and 2007, the company’s “Exceptions and Trending Reports” and disclosures of Clayton’s work to investors in prospectuses.

FCIC Announces Details for Sacramento Field Hearing

This story appeared in Bank Digest

The Financial Crisis Inquiry Commission has released details of its field hearing titled “The Financial Crisis at the Community Level—Sacramento, California.” The topics to be discussed are: (1) Overview of the Sacramento Housing and Mortgage Markets and the Impact of the Financial Crisis on the Region; (2) Mortgage Origination, Mortgage Fraud and Predatory Lending in the Sacramento Region; (3) The Mortgage Securitization Chain: From Sacramento to Wall Street; and (4) The Impact of the Financial Crisis on Sacramento Neighborhoods and Families.