McConnell Issues "Republican Response to Irresponsible and Unlimited Democrat Spending"

Senate Minority Leader Mitch McConnell just dropped the following flier in my lap (literally). Senator McConnell apologized for the late notice on the press conference, but stressed its importance given he did not see the need for it until "literally minutes ago." The flier reads as follows:

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Republican Response to Irresponsible and Unlimited Democrat Spending

• Their bill proposes that Congress authprize the Treasury Department to take over any non-bank financial institution if it deems it a 'risk'
• The Bill promises unlimited sums of money to these companies, to be authorized by the Executive Branch
• The Bill provides NO explanation of how this measure will be funded.
• Their own statement admits there is no plan to fund the bill. It may be funded by ex post facto taxes, or some other scheme they have not announced
• The Government is authorized to seize assets from shareholders without being specifically authorized by COngress or approved by the company's shareholders.

BOTTOM LINE

THIS IS A MASSIVE COMMITMENT BY THE US GOVERNMENT WITH NO PLAN TO PAY FOR IT. THIS BILL IS COMPLETELY IRRESPONSIBLE.

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Administration Furious Over Abortion Clause in HOPE Act, Threatens Veto

What seemed yesterday to be a bipartisan and friendly bill, the HOPE Act has now spawned anger in the Obama Administration and provoked a veto threat from the President.

A top official in the Obama Administration told The Claremont Beat today “A clause was included that greatly expands the conscience provision which states the government cannot stop funding to any physician or health care provider” based on the providers decision whether or not to perform abortions”.

The clause originally was enacted to cover “an individual physician” and dealt with the performance of abortions. Republicans inserted “provide coverage of, or pay for” along with “perform”, and also added other health professionals to the coverage.

Finally, the biggest change in the act would be the change to section 245 of the Public Health Service Act expanding the Act’s coverage to “a hospital, a provider sponsored organization, a health maintenance organization, or any other kind of health care facility or organization”.

The President expressed anger over this deceptive behavior by the Republican Party, but his official assured me the call for bipartisanship has not ended. He said, “We hope for more transparency in the future [but this] strains relations”.

“We can’t speak for the Democratic Party, we can only say that the administration will veto the bill if this provision is not removed and transparency is not increased”, he ended.

Both parties have scheduled press conferences for today before hearings begin – Republicans at 5pm and the Obama Administration at 5:45pm.

Busy Day for the Press

There are two major press conferences this evening. Senate Minority Leader Mitch McConnell is hosting the first at 5 pm PST in front of Bauer. President Obama and Treasury Secretary Geithner will host a closed session for the press at 5:45 pm PST.

Check back for blog and twitter coverage.

Obama Administration to Hold Press Conference Tonight; Issues Press Release

Secretary of the Treasury Timothy Geithner announced last night that the Obama Administration will be holding a private Press Conference at 5:45 pm tonight. No outside parties will be allowed, and only those invited and have their press passes will be admitted.

The Subject will be the Senate Resolution Authority for System Significant Financial Companies Act of 2009. Secretary Geithner issued the following Press Release with the announcement:

The legislative proposal would fill a significant void in the current financial services regulatory structure and is one piece of a comprehensive regulatory reform strategy that will mitigate systemic risk, enhance consumer and investor protection, while eliminating gaps in the regulatory structure.
Why We Need Resolution Authority:
The current financial crisis reveals the consequences of this regulatory gap. Generally when a large, interconnected non-bank financial firm is in severe distress, there are currently only two options:

1. Obtain outside capital or funding from the US government as in the case of AIG
2. File for bankruptcy as we witnessed with Lehman Brothers

Those options do not provide the government with the necessary tools to manage the resolution of the firm efficiently and effectively in a manner that limits the systemic risk with the least cost to the taxpayer.

• In the case of AIG, the government has provided financial assistance in order to avert the risks to the global financial system of the rapid and disorderly failure of such a large, complex entity in a fragile market environment. Had the government possessed the authorities contained in the proposed legislation, it could have resolved AIG in an orderly manner that shared losses among equity and debt holders in a way that maintained confidence in the institution's ability to fulfill its obligations to insurance policyholders and other systemically important customers.
• The Lehman Brothers bankruptcy illustrates the potential impact of the bankruptcy of a large interconnected financial firm during a period of severe financial stress. Several money market funds had significant exposure to Lehman. Concern about the stability of money market funds caused investors to withdraw funds, thus creating further instability in the financial system. That instability ultimately obliged the Treasury Department to establish the money market fund guarantee program.

What the Legislation Would Do:
Instead of subjecting a firm to bankruptcy or simply injecting taxpayers' funds with no real control, the legislation would:

• Grant the US government resolution authority, which would allow the government to put the firm into conservatorship or receivership and then to administer its effective, orderly reorganization or wind-down.
• Enable the government to reduce the need for taxpayer funds. For example, it would enable the federal agency acting as conservator or receiver to sell or transfer the assets or liabilities of the institution in question, to renegotiate or repudiate the institution's contracts (including with its employees), and to address the derivatives portfolio, thus reducing the potential for further disruption

More Details on the Proposed Legislation:

• The legislation would authorize the US government, in appropriately limited circumstances, to intervene at the appropriate time to avert the systemic risks posed by the potential insolvency of a significant financial firm.

• Many aspects of the bill are modeled on the statutory framework that governs the FDIC's exercise of emergency resolution and other authority with respect to banks. 

Key

Features of the Proposed Legislation:

• Covered institutions: It would cover financial institutions that have the potential to pose systemic risks to our economy but that are not currently subject to the resolution authority of the FDIC. This would include bank and thrift holding companies and holding companies that control broker-dealers, insurance companies, and futures commission merchants.

• Prerequisites for the actions to be taken: Parallel to the current provisions of law that apply to depository institutions, before any of the emergency measures specified in the proposed legislation may be taken, the Secretary, upon the positive recommendations of both the Federal Reserve Board and the appropriate federal regulatory agency and in consultation with the President, must make a triggering determination that -- (1) the financial institution in question is in danger of becoming insolvent; 
(2) its insolvency would have serious adverse effects on economic conditions or financial stability in the United States; and 
(3) taking emergency action as provided for in the law would avoid or mitigate those adverse effects. 

• Selection of emergency measures: The decision whether to provide financial assistance to the institution or to put it into conservatorship/receivership will be made by the Secretary and the FDIC, and will be informed by the recommendations of the Federal Reserve Board and the appropriate federal regulatory agency (if different from the FDIC). 

• Financial assistance measures: The proposed legislation permits the US government to utilize a number of different forms of financial assistance in order to stabilize the institution in question. These include making loans to the financial institution in question, purchasing its obligations or assets, assuming or guaranteeing its liabilities, and purchasing an equity interest in the institution. This authority is modeled on current law with respect to banks. The Deposit Insurance Fund will not be used to fund such assistance.
• Conservatorship/receivership: This authority is modeled on the resolution authority that the FDIC has under current law with respect to banks and that the Federal Housing Finance Agency has with regard to the GSEs. 

• The objective of a conservatorship is to take actions that are necessary and appropriate to restore the institution to a position of solvency so that it can carry on its business; the objective of a receivership is to provide for the orderly liquidation of the institution. 

• Here, the goal of the conservatorships or receiverships would be to minimize the impact of the potential failure of the financial institution on the financial system and consumers as a whole, rather than simply addressing the rights of the institution's creditors as in bankruptcy. 

• The trustee of the conservatorship or receivership would have broad powers, including to sell or transfer the assets or liabilities of the institution in question, to renegotiate or repudiate the institution's contracts (including with its employees), and to deal with a derivatives book. A conservator would also have the power to fundamentally restructure the institution by, for example, replacing its board of directors and its senior officers. None of these actions would be subject to the approval of the institution's creditors or other stakeholders.

Funding: The proposed legislation would create an appropriate mechanism to fund the appropriately limited exercise of the resolution authorities it confers. This could take the form of a mandatory appropriation to the FDIC out of the general fund of the Treasury (subject to all the restrictions on the use of appropriated funds, including apportionments under the Anti-Deficiency Act), and/or through a scheme of assessments, ex ante or ex post, on the financial institutions covered by the legislation. The government would also receive repayment from the redemption of any loans made to the financial institution

Reid: Romney Sent Mixed Messages

Late last night, Majority Leader Reid issued a statement on the SOTU and Mitt Romney's response:

President Obama and Mr. Romney both stated their positions with commendable eloquence. President Obama in particular summed up the challenges that we face today as a nation and what we need to overcome them, while Mr. Romney sent mixed messages, at times bashing the Democratic Party, while at other times encouraging "reaching across the aisle". I don't believe Mr. Romney will be disappointed in this last respect, assuming he takes a realistic look at today's crises.

McConnell: Democrats set to announce "massive reckless open-ended bailout"

A press statement issued moments ago by Republican Minority Leader Mitch McConnell:

The GOP will be holding a press conference today at 5pm. Sorry for the late notice, but the press conference will deal with events which we only just found out about.

The GOP will be discussing the massive reckless open-ended, bailout which the Democrat Administration plans to announce tonight. We will also take questions on any issue you would like to raise.

I appreciate that this is late notice, but I would hope as many of you as possible could attend. Also (side note out of simulation) please do not feel that you have to wear reporter attire, you can ask your questions from off camera if you wish.

Best,
Mitch McConnell

EPW Republicans Respond to Obama's State of the Union

President Obama’s historic State of the Union Speech yesterday, he highlighted a number of initiatives on his agenda that pertained directly to the Environment and Public Works Committee. Following his speech, Senator Crapo (R-ID) a member of the Environment and Public Works committee had the following reaction:

Tonight was a great night for democracy and a great night for America. We saw our first African-American president with our first female Speaker. Both have rightfully earned their place on the world stage. And although I'd be lying if I told you I wasn't disappointed that my party was giving up leadership, I still think that significance of this transition of power--peaceful for the 43rd time--should not be overlooked. 

As for Mr. Obama's speech, it is clear that the administration and my party share many of the same goals. We both agree that fixing the economy is imperative, and should be the top priority. Millions of Americans are suffering because of the greed on Wall Street and their defenders in Washington, and something needs to be done about it. We also agree that our skyrocketing health care costs need to be reexamined and made affordable for all Americans. And when it comes to the environment, action is needed to wean ourselves from our dangerous addiction to foreign oil and to begin encouraging a reduction in our greenhouse gas emissions.

But although we may share these goals, we clearly see two very different roads to get there. I'll talk specifically about our approach in the Environment and Public Works Committee. Addressing climate change is sure to be a priority in our committee, as it should. But the Democrats and the Administration need to know that we will not allow this country to dive head-first into their extensive liberal fantasy just because they (dubiously) claim the banner of climate protection. Enacting strict cap-and-trade legislation or could significantly raise costs on American businesses is a tall order in the midst of a recession. Instead of adding additional costs to the already overburdened American consumers, we should further encourage the development of renewable energy. The great state of Idaho gets the vast majority of its electricity from clean renewable sources, including hydropower, wind, solar, biofuels, and nuclear energy. I would like to see more states follow in our path instead of further expanding government with strict mandates and more taxes from Washington. 

I look forward to the days ahead. The first meeting went okay. It seems that our colleagues across the aisle don't quite have their policy agenda fully in order. This further reinforces our fear that the Democrats may be attempting to rush the American people into some very major changes through half-baked legislation rather than wait and begin a more intensive dialogue about whether our citizens true interests are best being served. 

Senator James Inhofe (R-OK), the ranking member of the Environment and Public Works Committee, further echoed Sen. Crapo’s call for a revitalization of the economy with the proposition of the Generating the Requisite Opportunities for Work in the United States Act (GROW US Act). Sen. Inhofe remarked that “this act is instrumental in helping those who have been hard hit by the decline of the auto industry and outsourcing and serves to better the current economic situation in the United States.” The act aims to provide opportunities for entrepreneurial Americans and pump money back in to the nation’s economy.

Senator Crapo and Senator Inhofe have both demonstrated that the Republican agenda in the Environment and Public Works Committee centers on a revitalization of the US economy through the support of alternative sources of energy and the reliance on the ingenuity of the American people.