CongressionalHearings/Dodd-Frank/CHRG-111hhrg53238/CHRG-111hhrg53238--36.txt Mr. Chairman , MBA looks forward to working with the committee on new consumer protection and regulatory modernization legislation as these proposals develop . CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--185.txt Mr. Yingling claims that the creation of the CFPA will result in a `` potentially massive new regulatory burden . '' CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--185.txt It is simply not true under our proposal that community banks will pay higher fees to fund the CFPA . CongressionalHearings/Dodd-Frank/CHRG-111shrg56262/CHRG-111shrg56262--91.txt --------------------------------------------------------------------------- The Federal Reserve 's 2008 rule for higher-cost loans accomplished part of this goal , \ 14 \ but all loans need protection , not just subprime loans . CongressionalHearings/Dodd-Frank/CHRG-111shrg56262/CHRG-111shrg56262--91.txt Rating Agency Reform -- The most critical rating agency reform is banning the `` issuer pays '' system , in which issuers pay for ratings . CongressionalHearings/Dodd-Frank/CHRG-111hhrg54872/CHRG-111hhrg54872--249.txt At the same time , we have noted that Mr. Frank was quoted as saying last week that Congress would enact death panels for nonbanks . CongressionalHearings/Dodd-Frank/CHRG-111hhrg54872/CHRG-111hhrg54872--249.txt First , the CFPA would try to fix what is still working and use a one-size-fits-all approach , as mentioned by Mr. Scott , to financial service products . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--175.txt State examinations act as a check on financial problems , evasion of consumer protections and sales practices gone astray . CongressionalHearings/Dodd-Frank/CHRG-111hhrg54868/CHRG-111hhrg54868--190.txt Mr. Smith , '' Whoever was providing the money -- someone provided financing to these alleged unregulated subprime originators . '' CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--187.txt For many years , until the current recession , the personal saving rate in the United States has been exceedingly low . CongressionalHearings/Dodd-Frank/CHRG-111shrg53085/CHRG-111shrg53085--213.txt One federal bank regulator has even attempted to weaken efforts by another federal agency to protect consumers from increases in credit card interest rates on funds already borrowed . CongressionalHearings/Dodd-Frank/CHRG-111shrg52619/CHRG-111shrg52619--173.txt For large insurance companies , a federal insurance regulator would be available to provide more comprehensive , coordinated and effective oversight than a collection of individual state insurance regulators . CongressionalHearings/Dodd-Frank/CHRG-111shrg54675/CHRG-111shrg54675--19.txt As a rule , small banks and credit unions avoided subprime credit and provided stability and diversification in the financial sector . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--63.txt --------------------------------------------------------------------------- These nontraditional mortgages and subprime loans inflicted incalculable harm on borrowers , their neighbors , and ultimately the global economy . CongressionalHearings/Dodd-Frank/CHRG-111hhrg55814/CHRG-111hhrg55814--27.txt In 2007 , as chairman of this committee , I made as our first major order of business adopting the regulation of Fannie Mae and Freddie Mac that the Bush Administration wanted . CongressionalHearings/Dodd-Frank/CHRG-111shrg50564/CHRG-111shrg50564--2.txt Today , we continue the Senate Banking Committee 's examination of how to modernize our outdated financial regulatory system . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--39.txt But the purchase of loans by Fannie and Freddie is a very , very important device and I would n't want that to be compromised in the efforts to remove the investment portfolio authority . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--67.txt This became a problem because Federal regulators did not replace the preempted State laws with strong Federal underwriting rules .1 . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--67.txt Federal Law Following deregulation of home mortgages in the early 1980 's , disclosure became the most important type of Federal mortgage regulation . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--67.txt State attorneys general and State banking commissioners spearheaded some of the most important enforcement actions against deceptive mortgage lenders . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--67.txt Applicable Law Despite these differences in regulatory regimes , the Federal Reserve Board did have the power to prohibit reckless mortgages across the entire mortgage industry . CongressionalHearings/Dodd-Frank/CHRG-111shrg51290/CHRG-111shrg51290--11.txt Second , to address systemic risk , we propose that the Federal Reserve Board be authorized as a market stability regulator . CongressionalHearings/Dodd-Frank/CHRG-111hhrg48867/CHRG-111hhrg48867--32.txt Mr. Wallison , '' Thank you , Mr. Chairman , and Ranking Member Bachus , for this opportunity to testify about a systemic risk regulator . CongressionalHearings/Dodd-Frank/CHRG-111hhrg48867/CHRG-111hhrg48867--32.txt These loans are defaulting at unprecedented rates , and I believe will ultimately cost U.S. taxpayers $ 400 billion . CongressionalHearings/Dodd-Frank/CHRG-111hhrg54872/CHRG-111hhrg54872--163.txt Mr. Castle is right , a relatively small number of the bad subprime loans were made by depository institutions subsequent to the Community Reinvestment Act . CongressionalHearings/Dodd-Frank/CHRG-111shrg54675/CHRG-111shrg54675--81.txt Now the regulator requires a 12 percent capital level for all banks that have commercial real estate loan volumes three times their level of capital -LRB- e.g. , $ 30 million in commercial loans and $ 10 million of capital -RRB- . CongressionalHearings/Dodd-Frank/CHRG-111shrg56262/CHRG-111shrg56262--98.txt Since the economic and housing finance crisis began , investors have shunned securitization products , including mortgage-backed securities -LRB- MBS -RRB- , particularly those issued by private entities . CongressionalHearings/Dodd-Frank/CHRG-111shrg56262/CHRG-111shrg56262--98.txt Finally , it fosters competition among capital providers to ensure more efficient pricing of credit to borrowers.Current Conditions of Consumer ABS and Residential MBS Markets At present , the RMBS and ABS markets are sharply bifurcated . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--176.txt The CDS market needs more consistent terms and conditions and greater depth in market participants to avoid future concentration risks similar to AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--176.txt My testimony will focus primarily on AIG , the holding company , and AIG Financial Products -LRB- AIGFP -RRB- . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--176.txt Many of the initial problems in the AIG group were centered in AIGFP and AIG 's Securities Lending Business . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--176.txt I believe that Congress should consider legislation to bring CDS under regulatory oversight , considering the disruption these instruments caused in the marketplace . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--176.txt At the Committee 's request , in my testimony today , I will discuss the complicated set of circumstances that led to the government intervention in AIG . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--127.txt Both Countrywide Bank , N.A. , and its finance company affiliate , Countrywide Home Loans , engaged in mortgage lending activities . CongressionalHearings/Dodd-Frank/CHRG-111shrg56376/CHRG-111shrg56376--127.txt The Treasury Proposal would make these types of firms subject to the Bank Holding Company Act and supervision by the Federal Reserve Board . CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--178.txt Federal agencies would no longer compete to attract institutions based on weak consumer protection standards or anemic enforcement of consumer rules . CongressionalHearings/Dodd-Frank/CHRG-111shrg54789/CHRG-111shrg54789--178.txt Therefore , the CFPA should be allowed to set minimum national credit standards , which States could then enforce -LRB- as well as victimized consumers -RRB- . CongressionalHearings/Dodd-Frank/CHRG-111shrg51303/CHRG-111shrg51303--12.txt The scope of the Government intervention on behalf of AIG has generated enormous public interest and acute attention by policymakers . CongressionalHearings/Dodd-Frank/CHRG-111shrg56415/CHRG-111shrg56415--13.txt Mr. Tarullo , '' Senator , other than the fact that each presents a significant and troubled portfolio of assets for financial institutions , I think there are some salient differences . CongressionalHearings/Dodd-Frank/CHRG-111shrg56415/CHRG-111shrg56415--13.txt Ms. Bair , do you have any concerns about smaller institutions having risk concentrated in one product area or one geographic area ?