March 31, 2008


The President and his advisors recently put up $30 billion of taxpayer funds to help one company on Wall Street. That may or may not have been appropriate I intend to investigate the deal at a Banking Committee hearing that I will chair on Thursday. But this much is true: if the President and his advisors can find $30 billion to help one company on Wall Street, they can surely find a way to help millions of Americans facing higher mortgage payments and falling home prices. This regulatory Blueprint will do little, if anything, for those Americans. It will do nothing to end the housing crisis, which is the root cause of the recession we are now experiencing. The Blueprint plan will receive a thorough review by the Congress, as do all efforts to make government more efficient and effective. But on first glance, it has serious flaws: On the one hand, it would allow the Fed to examine all financial companies -- not just banks -- to be sure they are not posing a risk to the overall financial system. On the other hand, it fails to realize that the Fed helped create this crisis by ignoring the red flags as far back as five years ago. It does not make sense to give a bigger shovel to the very people who helped dig us into this hole. Similarly, on the one hand, it would reduce the fragmentation and balkanization that has often encouraged regulators to compete with each other by weakening rather than strengthening regulation. On the other hand, it would create weaker standards to protect investors and consumers. Again, that does not seem sensible in light of the beating investors and consumers are taking at the moment. We should be guided by a couple of basic, common-sense principles. First, where we can simplify and rationalize regulation, we should. More effective and efficient regulation will help keep our financial sector competitive in the global economy. Second, we must restore the trust and confidence of investors and consumers. That trust has been shattered -- not because regulators did too much, but because they did too little. If the President and his advisors really want to help, they should work with those of us in Congress who are trying to reduce foreclosures and end the credit crunch.