Bugging Frank
If the subprime mortgage market crisis were an insect, what kind would it be?
Members of the House Financial Services Committee addressed that question last week after Rep. Jeb Hensarling compared problems in the mortgage markets to a mosquito. The conservative Texas Republican said he feared a reform bill championed by House Democrats would go too far and result in a loss of credit.
"I just don't want to take the proverbial sledgehammer to the mosquito and bust the wall," he said.
House Financial Services Chairman Barney Frank took offense at the characterization.
"If the current subprime crisis is a mosquito, it's the kind of mosquito that caused everybody to die when they were building the Panama Canal," Rep. Frank said. "I would differ with the gentleman's trivialization" of the issue.
"As I read and I listen to the regulators, and I listen to the secretary of Treasury, and I listen to the head of the Federal Reserve, no, they do not agree this is a mosquito, or even a praying mantis, or even a larger degree of insect," the chairman said. "This is a very serious problem, and we are trying to deal with this."
Clock Management
That was not the only time that Reps. Frank and Hensarling traded sharp words.
During a vote on Rep. Frank's mortgage reform bill, the Massachusetts Democrat noted that several conservative Republicans, including Rep. Hensarling, were offering amendments that seemed designed to delay the panel's vote.
The amendments, offered by different Republicans but similar in nature, would have nullified the bill if the Fed or others determined it would reduce homeownership opportunities for minorities.
"The last three amendments have not seemed to me a substantial contribution to the discussion," Rep. Frank said. "I regret that we end the debate, which has had a lot of very serious discussions, with three efforts to embarrass people that I think don't seem to be very well suited for the task."
Reps. Hensarling, Patrick McHenry of North Carolina, and Scott Garrett of New Jersey defended themselves by saying they shared concerns the bill would unduly restrict access to credit, particularly for those whom the bill's supporters say they are trying to help.
But Rep. Frank did not appear satisfied with the response.
"The purpose of these amendments was to try to say that we are being inconsistent; that the Democratic majority, which includes a lot of minority members, was disregarding homeownership," he said. "I don't regard them as serious substantive amendments. I regard them as efforts to impute inconsistency and hypocrisy to members who are in no way guilty of that."
Rep. Hensarling fired right back. "I do want to note there appears to be an inconsistency that if you are going to lead and lead by example, to tell me that this is going to be a committee that questions the motives of its members," he said.
Right and Wrong
The Fed chairman often is considered one of the world's most skilled economists, but Sen. John Sununu took Ben Bernanke to task last week for dismissing the New Hampshire Republican's projection earlier in the year that home inventories would rise.
"I'm sure I'll never have the opportunity to say at any other time that I was right and you were wrong," Sen. Sununu said.
Mr. Bernanke acknowledged that the lawmaker had been correct but declined to offer another prediction for the future.
"Senator, you were right and I was wrong," he said. "Our anticipation — and it depends very much on the home builders' response and the buyers' response — is that those inventories are not going much further from here. But in six months, you can tell me I was wrong again."
"I will not look forward to doing that," Sen. Sununu responded.
Regional Post Filled
The Federal Deposit Insurance Corp. named Stan Ivie last week as the San Francisco regional director of the division of supervision and consumer protection.
Mr. Ivie, formerly the regional director in Dallas, will start his new job Jan. 1 and will oversee bank supervision in 11 western states and Guam.
He will succeed John Carter, who left the San Francisco office in April to head the FDIC's minority banking program in Washington. He will retire from the agency at yearend after more than 35 years with the agency.
Mr. Ivie has been the San Francisco office's acting director since Mr. Carter's departure.
By Cheyenne Hopkins, Stacy Kaper, Steven Sloan, and Joe Adler
