By Brandon Moseley
Alabama Political Reporter
The House Financial Services Committee will vote on legislation Wednesday that reduces the deficit by $35 billion. The plan would help avert “catastrophic” automatic spending cuts to national security.
Rep. Spencer Bachus (R) from Vestavia is the Chairman of the Financial Services Committee. Rep Bachus said in a written statement: “Our deficits and debt are a threat to both our economic security and our national security. Congress has an obligation to make tough choices that cut spending, reduce the deficit and do so in a way that does not imperil our nation’s defenses.”
The House Financial Services Committee were one of six Committees directed by the budget resolution adopted by the House last month to approve measures to reduce the deficit so automatic cuts to defense and other discretionary programs can be prevented in January. The legislation asked Chairman Bachus and the Financial Services Committee to pass cuts of $29.8 billion over the next 10 years in programs and agencies under the Committee’s jurisdiction. Chairman Bachus and the Committee went further than what was asked of them and have proposed $35 billion in proposed savings according to the Congressional Budget Office.
Ending the Dodd-Frank Act’s “Too Big to Fail” Bailout Fund would save taxpayers $22 billion. Eliminating a TARP-funded foreclosure program, HAMP, that has been criticized for its ineffectiveness would save $2.8 billion. Making the Consumer Financial Protection Bureau subject to the Congressional appropriations process would save $5.4 billion while bringing accountability and oversight to the CFPB’s spending. Chairman Bachus said that reauthorizing the National Flood Insurance Program for five years and instituting reforms would save another $4.9 billion
The Committee will address the deficit reduction package of legislation on Wednesday at 10:00 am.
The Dodd-Frank Act was signed into law in July 2010. It established a permanent bailout authority to bailout creditors of failed firms. The Act also gave the FDIC additional bailout authority, including authority to lend to a failing firm, purchase a failing firm’s assets, and authority to guarantee the failing firm’s credit obligations. The FDIC can also “borrow up to 10% of the book value of the failed firm’s total consolidated assets in the 30 days immediately following its appointment as receiver; after those 30 days, the FDIC is authorized to borrow up to 90% of the fair value of the failed firm’s total consolidated assets.” Rep. Bachus said, “By eliminating these authorities, the Committee is bringing a real end to taxpayer funded bailouts and ensuring taxpayers are never again asked to pay for bad bets on Wall Street.”
Another element of Chairman Bachus’s deficit reduction proposals is eliminating HAMP. HAMP is the Home Affordable Modification Program. Bachus says that “HAMP has proven to be ineffective and failed to achieve any of the Administration’s stated goals.” HAMP was established in 2009 and has cost the Treasury $2.54 billion. The CBO estimates eliminating HAMP will save $2.8 billion over 10 years.
Rep. Bachus says that the CFPB is accountable to neither the executive branch nor Congress. The Dodd-Frank Act empowered the Director of the CFPB to set his budget with no oversight from Congress, the Administration or the Federal Reserve. Subjecting the CFPB to the appropriations process will save an estimated $5.4 billion over ten years.
H.R. 1309 will reauthorize and reform the National Flood Insurance Program. H.R. 1309 is a five-year NFIP reauthorization and reform bill that passed the House 406-22 on July 12, 2011. Since September 2008, Congress has passed 11 short-term extensions and allowed the program to temporarily lapse three times. Passing H.R. 1309 will generate an additional $4.9 billion in net income for the NFIP over the next 10 years, according to the CBO.
Congressman Spencer Bachus represents Alabama’s 6th Congressional District. Rep. Bachus is seeking his 11th term in the United States Congress.