MEDIA COVERAGE

Rep. Jeb Hensarling (R-Texas), Chairman of the House Financial Services Committee, has opened hearings on much needed reforms to U.S. housing policies, including possible significant reforms to Fannie Mae and Freddie Mac. Chairman Hensarling’s opening statement presents a concise and clear statement of the issues, and I encourage you to take a couple of minutes to read it. Chairman Hensarling is a bright and thoughtful leader determined to do everything in his power to get the right policies and structures in place. He deserves our support in these efforts.

WASHINGTON – House Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing titled ““Beyond GSEs: Examples of Successful Housing Finance Models without Explicit Government Guarantees.”

“This is the 10th full or sub-committee hearing that we have had on the topic dedicated to forging a new sustainable housing policy for America.

[I had the great pleasure of serving as Chairman of the FDIC during much of the period Paul Volcker was Chairman of the Federal Reserve. Inflation was out of control during the 1970s and economic growth was stagnant – “stagflation” was the term coined to describe it. Paul Volcker had the courage to take the extremely difficult and painful measures required to wring inflation out of the economy and set the stage for the longest peacetime economic expansion in U.S. history. Paul is one of the most dedicated public servants I have known, and he has continued to tirelessly advocate for sound economic and government policies throughout the world since leaving the Fed.

The Economic Club of New York honored Paul Volcker with an Award for Leadership Excellence on May 29, 2013. Paul delivered a powerful speech on that occasion and has given me permission to include it on my website. If you read nothing else this week, I encourage you to read this speech. The speech is focused on monetary policy but it is done in pretty plain English so you will get a lot from it.]

[Alex Pollock, Senior Fellow of the American Enterprise Institute and one of the sharpest thinkers I know, wrote a wonderful blog in the American Banker about on the Federal Reserve on May 17, 2013 that I commend to you. It’s short, sweet, and to the point. You can find it through the link below.]

Jim Bullard, the president of the Federal Reserve Bank of St. Louis has laid out an interesting argument, as reported by American Banker (“A Simple TBTF Plan from Fed’s Jim Bullard,” May 9), to determine when a bank is too big and needs to be broken up. In summary, the well-informed argument goes like this:

If a bank is…

Here is the link to the full article

[Robert Pringle, Chairman and Founder of Central Banking Publications, recently published a provocative piece on current massive interventions in the markets by the Federal Reserve and other central banks throughout the world. I recommend that you take a few minutes to read it.]

Money is too loose globally. Trouble is, there’s no obvious trigger that warns governments it is time to raise rates. Only a rise in consumer price inflation – or in inflation expectations – justifies central banks raising rates under their rickety inflation targeting regimes. Even then, governments can prevent them.

The risks and dangers for the global economy are like hidden reefs for a ship – invisible but deadly. It is quite possible, for example, that US monetary policy can cause an asset boom in China so large that its collapse would bring the Chinese economy down with it – and thus throw the world including the US into deep depression. This could happen while US retail prices held absolutely steady. There would be no pressure on the Fed to raise rates, and no justification for doing so from a short-term US perspective.

Fifth Third Bancorp Chairman William Isaac does a lot of traveling and gives a lot of speeches and presentations about the banking business during the year. It’s not typically about Fifth Third, but Isaac’s background as former chairman of the Federal Deposit Insurance Corp. puts him in high demand.

So it’s no surprise he had jetted off to Indonesia late last month to deliver the keynote address at the annual Asian Banker Summit.

Tom Hoenig, currently Vice Chairman of the FDIC who formerly served as President of the Federal Reserve Bank of Kansas City for 20 years, gave an excellent, wide-ranging policy speech at The Asian Banker Summit in Jakarta, Indonesia on April 24. I spoke at the same conference so I had the pleasure of hearing Tom’s speech in person. His speech covers fiscal, monetary and regulatory policies and I highly recommend that you take a few minutes to read it. As usual, his comments are exceptionally thoughtful and provocative. The speech can be found on the FDIC’s website through the link that follows:

Here is the link to the full article