WASHINGTON (10/7/11)--U.S. Treasury Secretary Timothy Geithner appeared before the Senate Banking Committee Thursday to review recommendations that were included in the Financial Stability and Oversight Council’s (FSOC’s) first annual report, which was released in July. The report included a comprehensive view of financial market developments and potential threats to the U.S. financial system and Geithner is the current chair of FSOC. The council is comprised of 10 voting members--nine federal financial regulators, including the National Credit Union Administration (NCUA), and one independent member--and five nonvoting members. Geithner used the opportunity of the hearing to express his support for The American Jobs Act, stating that, “according to estimates by outside economists, [the act] would raise economic growth by one to two percentage points and help create one to two million new jobs.” The Obama administration noted on its twitter feed, WHLIVE, Thursday that the U.S. Senate will begin consideration of the jobs bill Tuesday; it is expected that the early votes will be mainly on procedural matters. Secretary Geithner summarized the recommendations of FSOC’s report, which include:
* Taking further action to strengthen the financial position of the core of the U.S. financial system, particularly the largest institutions, which should be able to manage their businesses so that they have the ability to weather more challenging future environments without government assistance in crisis; * Reforming the housing finance system, including taking action to establish national standards for the mortgage servicing market, in order to better align incentives and help reestablish confidence in the integrity of the housing market.
The report emphasizes the importance of broader reforms to help return private capital to the housing market, strengthen mortgage underwriting, and reduce over time the role of the government in the housing markets. While saying he was optimistic about the future, Geithner acknowledged that much work remains to sufficiently strengthen the financial system, stating that the U.S. must continue to implement financial reform and move forward with the other recommendations in the report. “We will do this with a balanced approach, weighing the benefits of regulation against the costs of excessive restraint.” This is an approach that the Credit Union National Association (CUNA) strongly supports, and one that CUNA urges the NCUA to follow to avoid unnecessary regulatory burdens for credit unions. Geithner, in his prepared remarks to the committee, also said that in order to continue to repair our financial system, the country must have qualified people in place to run the financial agencies, which, he added, requires that Congress provide sufficient funding for enforcement agencies to do their jobs in a complicated and challenging financial environment. Geithner testified later in the day before the House Financial Services Committee.