Lew Faces More Questions on Dodd-Frank Rules, GSE Reform

WASHINGTON — Treasury Secretary Jacob Lew reiterated his commitment Wednesday to ensuring swift completion of the remaining Dodd-Frank Act rules even as he faced tough questions from Republicans on the House Financial Services Committee.

Lew, who was confirmed in February, repeated many of his talking points from a Tuesday appearance before the Senate Banking Committee. Officially, the back-to-back hearings were held to discuss the annual report of the Financial Stability Oversight Council, which Lew chairs. But lawmakers in both chambers peppered Lew on a whole variety of issues, including concerns about implementation of Dodd-Frank provisions. Topics included mortgage finance reform, a section in Dodd-Frank known as the Volcker Rule that prohibits banks from engaging in proprietary trading and the ongoing scandal related to the Internal Revenue Service's purported targeting of political groups.

Lew said finishing Dodd-Frank rulemakings remain high on his priority list. He recalled that he chaired his first meeting of FSOC, which was created under the reform law, within an hour of being sworn in.

"From literally my first day as Treasury Secretary I have been putting an enormous amount of my time into stepping on the accelerator in the implementation of Dodd-Frank," Lew said Wednesday.

He added that the banking agencies continue to finalize the Volcker Rule, although he provided no further detail about the timetable. Lew also continued to defend a proposal for implementing Basel III capital reforms and reiterated his concerns that enacting a package of new proposed bills reforming derivatives oversight would be "premature" in light of a pending series of swaps-related rules mandated under Dodd-Frank.

But lawmakers on both sides of the aisle continued to press the Treasury secretary on the progress of several policies, including questions over why the Obama administration has not done more to advance a plan for reforming the government-sponsored enterprises Fannie Mae and Freddie Mac.

"In the FSOC report on page 13 it states, 'The Council recommends that the Treasury, [Department of Housing and Urban Development] and [Federal Housing Finance Agency] continue to work with Congress and other stakeholders to develop a housing reform system," said Financial Services Committee Chairman Jeb Hensarling, a Texas Republican. "I have been the chairman or the vice chairman of this committee for the past two and a half years, and I'm unaware of any activities by either HUD or Treasury to work with Congress.

Hensarling added that an administration white paper on potential options for GSE reform has "now gathered dust for over two years, so I'm not sure who Treasury and HUD have been working with, but it hasn't been this committee."