Economy & Budget

Financial crisis fee punishes those who acted responsibly

In announcing his plan to impose a “Financial Crisis Responsibility Fee” last week, President Obama said he was seeking to get back “every dime” that was owed to the taxpayers.

That’s a laudable goal. Ensuring the taxpayers are paid back the funds they lent to flailing and failing financial institutions through the Troubled Asset Relief Program should be a priority. However, the president’s plan wouldn’t do that.

Created in the wake of the financial meltdown of September 2008, the Troubled Asset Relief Program, or TARP, provided federal dollars to help stabilize financial institutions whose collapse, in the opinion of the Treasury at the time, may have significantly worsened the economic crisis.

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Congress must create Consumer Financial Protection Agency

We all read the reports this past week of excessive executive compensation for banks. It’s hard to imagine that just as our economy starts to regain its financial footing after the worst economic collapse since the Great Depression, the big banks that helped ignite this crisis are giving big bonuses to executives for a job well done.

Why are banking executives being rewarded for irresponsible financial decisions? And, when is enough, well, enough?

On Friday Consumers Union, the nonprofit publisher of Consumer Reports magazine, again called on Congress to enact the proposed Consumer Financial Protection Agency (CFPA) so that the financial collapse of the last two years never happens again. If passed, the CFPA would protect consumers from abusive, unsafe, and deceptive credit and payment products and services. It would require that all financial disclosures be fair, transparent and easy to understand.

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Eliminate transaction fee on Haiti donations (Rep. Markey)

I am continually staggered by the sheer, selfless generosity of the American people.

Every day we are confronted with examples of average people struggling to face this current economic crisis with some measure of dignity and courage.

And then something unimaginably awful happens on a small island thousands of miles from most of our citizens and, as they have done time and time again, the American people step up. By Thursday evening, the American Red Cross had raised more than $35 million for their Earthquake relief fund, including $8 million through an unprecedented text messaging effort propelled by Facebook and Twitter.

According to many relief organizations, while the average donation amount has been lower than in previous international crises, the number of donations has gone up. People may have less to give, but more people than ever are willing to give what they can.

Which is why, after reading reports on the Huffington Post and from other news outlets that some major banks have been taking a cut from donations made through credit cards in the form of a 3% interchange fee, I got mad.

Yesterday, I sent a letter to the major American credit card providers and banks asking them to waive all transaction fees for donations made to relief organizations on behalf of the Haitian earthquake effort. Some, including Visa and Mastercard, stepped up immediately and should be rewarded for that effort by our recognition and support.

I am a pragmatic person. I started and ran two successful businesses in my life before I came to Congress. I try to avoid overheated rhetoric or carte blanche indictments. And I think that companies have a right to make a profit.

But I also think that, in a country where taxpayers had to rush in to bail out big banks just barely over a year ago, where abuses by many of the credit lenders reached such a fever pitch that Congress had to step in and regulate practices just a few short months ago, banks and credit card companies need to apply some level of conscience to their actions.

As any business owner knows, there is a time to be concerned with the bottom line and a time to remember that you have a responsibility to be a good corporate citizen.

American Express announced intentions to waive transaction fees before my letter went out. Shortly after Discover said they would waive some fees. Capitol One is actually the only major credit card provider with a program already in place to waive transaction fees for charitable donations.

We still await word from Citigroup, JP Morgan Chase, Wells Fargo, and Bank of America. My hope is that these providers will follow the example of Capitol One, American Express, Discover, Visa and Mastercard and make sure that every dollar donated to earthquake relief gets directly to the people of Haiti.

Before I came to Congress I served as the chairman of our local food bank. Non-profit organizations that serve those in distress do a tremendous service to our world community and are not often in a position to advocate for business practices that would help them do their job better. And that is where the rest of us, especially those of us elected to serve in Congress, must step in.

(Cross-posted from The Huffington Post)

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A sobering picture (Rep. Carolyn Maloney)

Yesterday, at my request, the Government Accountability Office (GAO) released a report that provides a thorough understanding of the state of the housing market at the end of June 2009. A table in the Appendix of that report, which I have turned into a detailed map, provides a sobering snapshot of the percentage of mortgages in default or in the foreclosure process.

The House recently passed a sweeping regulatory reform package, the Wall Street Reform and Consumer Protection Act, which will help prevent a similar crisis in the future. As part of that package, a provision will create a Consumer Financial Protection Agency to protect borrowers from predatory lending practices associated with many of these nonprime mortgages. The bill will also provide transparency in the over-the-counter derivatives market so that banks will not be able to offer the unregulated mortgaged related securities that led to our financial crisis.

It is now up to the Senate to act. As Senators consider this landmark consumer financial protection legislation, let's hope they remember yesterday’s GAO report, and in particular its map of troubled mortgages. Both serve as powerful reminders that for many American families, the dream of homeownership has turned into a nightmare of foreclosure.

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America's New Year's unemployment hangover (Rep. John Carter)

One cannot drink oneself into sobriety. Yet that is precisely what Congressional Democrats and the Obama Administration have attempted with our economy for the past year with predictable and painful results.

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Unemployment continues to stand at an official 10% for the third month in a row, the worst joblessness in 27 years.  The real unemployment rate is far worse.  Included in the December economic figures was a shocker – the percentage of adult men who are working has fallen to the lowest level in recorded U.S. history at just 80%.  That means that one in five men in this country between 18 and 54 are neither working nor claiming unemployment.  They have fallen completely out of the workforce.

That helps explain why December’s unemployment rate remained at November’s 10% rate in spite of an additional 85,000 Americans losing their jobs.  At the same time the new jobless claims were added, many of the previously unemployed were simply removed from the workforce numbers altogether.

Economists estimate our true jobless rate as high as 17%, and that could grow in coming months as more Americans exhaust their unemployment benefits and lose homes to foreclosure.

When Barack Obama was sworn into office last January, unemployment stood at 7.2%.  President Obama of course blamed this on the preceding Bush Administration, while ignoring the fact that his fellow Democrats had total control of the House and Senate since 2006.

We were told that unless we passed his $757 billion stimulus plan immediately, unemployment could jump to 8% before we started recovering midway through 2009.  Democrats passed it, and unemployment has soared to over 10% and stayed there.

Did any of this budget-breaking spending do any good? Not according to the Associated Press:

“Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an ‘urgent need to accelerate job growth” (AP, 1/11/10).

So Congressional Democrats and the President pushed for a “cap and trade” energy tax and a health care takeover that will add millions more to the jobless roles through massive new taxes, higher consumer prices, oppressive regulations, and out-of-control federal spending and deficits.

The unemployment rate soared even higher, but Obama and Pelosi learned nothing.  They pushed another “stimulus” bill through the House in December, putting taxpayers another $75 billion in debt.

Deficit spending undermines economic growth.  Shoring up failed businesses and business practices undermines economic growth.  Piling on debt for our children and grandchildren undermines economic growth.  Lack of economic growth means more joblessness.

The Obama Administration and the House of Pelosi spent 2009 in a drunken binge of government spending and power grabs.  We are left in January 2010 with a splitting deficit hangover, and the only way to recover is to set aside the bottle of fiscal irresponsibility.

We can begin by repealing whatever is left of the Bush and Obama Administration “stimulus” plans, ending the energy and health care takeovers, and recovering the taxpayer funds handed over to failed companies.

Then we can start creating sustainable new jobs through cutting taxes for individuals and small businesses, taking the burden of debt off our children, and restoring the vibrancy of our free market economy that has been stifled by Washington.

Cross-posted from Big Government

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The Big Question: Will a new bank fee help?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

Will a new fee on banks help Democrats lower the debt and win public approval?

(Read today's responses after the jump.)

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'Stimulus' is not creating jobs (Rep. Michele Bachmann)

If the 2.7 millions jobs that have been lost since the so-called stimulus was signed into the law did not convince you that government spending does not correlate into economic growth, take a look at this story from the Associated Press: Stimulus Cash Doesn't Create Local Jobs:

“A federal spending surge of more than $20 billion for roads and bridges in President Obama's first stimulus has had NO EFFECT on local unemployment rates, raising questions about his argument for billions more to address an ‘urgent need to accelerate job growth.’ An Associated Press analysis of stimulus spending found that it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.”

Yet, President Obama wants to pass a second stimulus calling for billions of dollars of more spending. When will the President and Democrat leadership learn that spending money we don’t have isn’t always the remedy to fix whatever problem confronts us? When will they get the hint? Republicans have put forth a better way to give our families the relief they need that will turn our economy around.

Cross-posted to Townhall

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Congress is committed to creating jobs on Main Street (Rep. Edolphus Towns)

Across the nation, in our communities and neighborhoods, we are experiencing the effects of the economic downturn. Jobs have vanished at rates not seen since the Great Depression, and many know someone who lost their job as a result of the recession.

The Democratic Congress has been focused on turning around our economy, and acted on our commitment by enacting several measures that have already created or saved more than a million jobs this year. We moved quickly at the beginning of 2009 to pass the American Recovery and Reinvestment Act, or "Recovery Act," which has helped keep cops on the beat and teachers in classrooms, while making critical investments in green technology and our nation's infrastructure.

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Let’s be frank, Mr. Vice President: The stimulus failed (Rep. Tom Price)

Today, the State of Georgia welcomes Vice President Joe Biden for an update on the administration’s so-called stimulus bill. With national unemployment sitting today at 10%, and worse in Georgia, the White House’s credibility on stimulus success is dubious at best. Yet as proper manners would dictate, we owe the Vice President an opportunity to make his case.

President Obama tapped Mr. Biden to oversee the stimulus program because, as he put it, “nobody messes with Joe.”  While that may be so, as the Vice President has been traveling around the nation touting the various spending priorities of the stimulus bill, their alleged benefits have yet to materialize into jobs.  So if the Vice President is visiting to have us believe expanding broadband is how jobs are created or that we can “weatherize” our way back to prosperity, it may be Joe who is messing with Georgia.

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