ALERT: Exploring Solutions for the Market Crisis: A Summary of the 9/24 House Financial Services Hearing

This post refers to the Client Alert produced by Public Law and Policy. Read the full alert here.

For questions regarding this alert, please contact—

• David Carlin, 202.887.4133, Washington DC

What follows is an excerpt from the full alert:

• In general, members were displeased with the lack of oversight protections in the Department of the Treasury proposal.
• Representative Sherman attacked the plan by Secretary of the Treasury, Henry Paulson, for endowing the Treasury with sweeping authority. He recommended a cosigner on all decisions and phased authorization.
• Representative Hensarling proposed a temporary suspension of the capital gains tax to inject liquidity into the market. He further suggested suspending mark to market accounting and embraced executive compensation limits.
• Chairman Frank noted that the procedures for floor debate on the measure will be bipartisan. He also noted that Congress will be pursuing immediate tax relief for preferred stock holders in Fannie Mae and Freddie Mac.

• Many Democratic members assailed what they perceived to be a lack of executive leadership, calling on President Bush to clearly articulate the consequences of inaction to the American people.
• Representative Barrett said that the plan should actively involve private equity and hedge funds in the bidding process for distressed assets.
• Representative Garrett made clear his hesitancy to support the proposal outright, stressing the need for viable alternatives to be considered.
• Representative Crowley called for active investigations, stating that Wall Street needs “metal bracelets, not golden parachutes.”
• Representatives Kind, Carson and Foster specifically called for taxpayer equity provisions.