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Inside Washington (03/31/2011)
* WASHINGTON (4/1/11)--Critics of the Dodd-Frank Act, already wary of overregulation, are also concerned that the costs of the law will be exorbitant. Dodd-Frank is expected to have a final price tag of about $30 billion, but its effect on the federal budget is difficult to forecast because much of the bill will be paid for through regulatory fees on financial institutions (American Banker March 31). The Congressional Budget Office estimates the government’s cost will be $1 billion over five years. But during a House Financial Services subcommittee hearing Wednesday on the law's budgetary and economic costs, Republicans said indirect costs such as losses in capital formation, credit availability, and the U.S economy's ability to compete globally should also be added to the law’s cost. Randy Neugebauer (R-Texas), who chaired the hearing, said regulators should slow the rulemaking process to do more thorough cost analyses. But Democrats said all legislation comes with a price. Jill Sommers, a member of the Commodity Futures Trading Commission, said agencies can do cost-benefit analyses as they implement rules … * WASHINGTON (4/1/11)--The Treasury Department on Wednesday claimed a $23.6 billion profit from measures put in place to stabilize the financial markets during the crisis. Critics were unconvinced (American Banker March 31). The government bailout includes the Troubled Asset Relief Program, programs administered by the Federal Reserve and Federal Deposit Insurance Corp., financial support for Fannie Mae and Freddie Mac, and other initiatives. But Rep. Patrick T. McHenry, (R-N.C.), who is chairman of the House oversight committee’s bailout panel, said the government’s estimates have been inaccurate in the past and Treasury has consistently changed the metric to measure success. But the Treasury maintained that even if the nearly $24 billion figure is optimistic, the positive swing still represents a major turnaround from losses predicted by many. Even the Obama administration projected a $100 billion loss a year ago … * WASHINGTON (4/1/11)--Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, and Rep. Shelley Moore Capito (R-W.Va.), head of the consumer credit subcommittee, have asked Elizabeth Warren, who is in charge of setting up the Consumer Financial Protection Bureau (CFPB), to clarify her role in the mortgage servicer settlement (American Banker March 31). Bachus and Capito sent Warren a letter after a document that she sent to Iowa Attorney General Tom Miller was leaked to the media. In the document, Warren maintains that the largest servicers cut corners in their servicing to save as much as $20 billion and should be fined for that amount. Warren has said her role is advisory, but Bachus and Capito maintain the document is proof that Warren has further involvement. A Warren spokesperson responded in an e-mail that, as Warren previously testified to Congress, the CFPB provided advice to various officials involved in the mortgage servicing law enforcement matter. Warren understands that not everyone agrees with that advice or how to address the deficiencies at the largest U.S. mortgage servicing firms, the e-mail said …


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