By Peter Schroeder - 01/26/11 05:53 PM EST
New committee Chairman Spencer Bachus (R-Ala.) worked to manage the feisty panel, limiting lawmakers to their time allotted, and at one point admonishing members for talking while witnesses were testifying.
Rep. Jeb Hensarling (R-Texas), the vice chairman of the panel, said federal regulators need to focus on getting regulations right, rather than meeting rapidly approaching deadlines mandated by Congress. And Rep. Scott Garrett (R-N.J.) said the nation's "massive national debt" is the most significant "systemic risk" facing the nation's economy.
Democrats, meanwhile, said the government needs to play a role in the housing market, pushing back against a Republican plan to privatize Fannie and Freddie.
Some witnesses, such as William Poole, a scholar at the Alfred Lerner College of Business and Economics at the University of Delaware, advocated for no government backstop for the nation's mortgage market. He pointed out that Americans manage to get car loans and other types of loans without federal assistance.
But Hal Scott, a Harvard law professor, warned against a Republican plan to deny the Securities and Exchange Commission and Commodity Futures Trading Commission increased funding requested to implement new Dodd-Frank responsibilities.
"Tightening the purse strings won’t stop the rulemaking process; it will only make it worse," he said. Scott is also the director of the nonprofit Committee on Capital Markets Regulation.
The debate also gave a taste of what could be the most closely watched subcommittee in the 112th Congress — the domestic monetary policy panel that is now headed by longtime Fed critic Rep. Ron Paul (R-Texas).
The Tea Party favorite said all the discussion about the economy was for naught, unless lawmakers tackled the "overall cause for why we have these boom periods, and then we have the inevitable corrections."
Paul has long argued that the Fed's monetary policy has fed a boom-and-bust economic cycle.