As his brief Senate term comes to an end, U.S. Sen. Ted Kaufman has another big job ahead of him. Kaufman's term ends this week, shortly after the Tuesday election. Kaufman has been named to chair a committee overseeing the TARP program. TARP, short for the Troubled Asset Relief Program. TARP was the federal program, dating from the Bush Administration that pumped liquidity into the nation's banking system.
During term, Kaufman has become a nationally known advocate for stronger regulation of the financial services industry and was not exactly a favorite on Wall Street. Although he had misgivings about some provisions, he voted for the Dodd-Frank financial reform bill believing the benefits outweighed the flaws.
Kaufman is leaving the Senate before January because the Senate battle between County Executive Chris Coons and Christine O'Donnell is actually a special election to fill the final four years of the term of Vice President Joe Biden. Kaufman served in the period before the next election and quickly became well known nationally for his expertise on the financial system and his continuing demands for reforms.
He was widely quoted on the subject of high frequency trading of stocks, following an apparent glitch in computer systems that in a matter of mintutes. brought a sharp drop in stock prices followed by an equally strong recovery.
Kaufman, a former aide to Senator and now Vice President Joe Biden, said he would not run for the post and stuck with that pledge even when Biden's son Beau decided not to run for Senate. That led to Coons seeking the seat in what was expected to be an uphill batle against Cong. Mike Castle. Instead, perennial candidate Christine O'Donnell beat Castle in the GOP primary and Coons goes into Tuesday's election as the favorite, although a recent poll suggested the gap is narrowing.
Regardles of what happens on Tuesday, Kaufman may be back in the spotlight fairly quickly. That's because the TARP committee has been asked to look into the looming crisis over whether bank officials used improper documentation in foreclosure proceedings.
The issue has led lenders to stop foreclosure actions in some areas and threatens to further weaken a depressed housing market. That's because the market needs to have foreclosures move back into the for-sale market so the inventory can be clared out.
In an interview on Friday following an event at the University of Delaware Kaufman expressed concern about the depth of the foreclosure documentation problems, noting at least a few people who own their homes outright have received foreclosure notices. He went on to add that the old issue of who actually holds the mortgage on the home continues to haunt the mortgage industry
"Very little planning was done," Kaufman said of the sale of the investment vehicles to overseas investors who may not know the homes actually included in the mortgage securities.
Kaufman said he is certain that issues not directly addressed in regulatory legislation may be addressed by the new Congress, including the oft-criticized issue of some institutions being "too big to fail" and having a presence in riskier businesses. A number of institutions, including Wells Fargo, JPMogan Chase and Bank of America are firmly into the "too big to fail category," due to mergers engineered by federal regulators that aimed to prevent a catastrophic failure of the nation's and perhaps world's financial system.
Still Kaufman says he sees some on Wall Street in a "a state of denial" over what has occurred, noting that one individual who was recently interviewed, attacked the notion of regulating Wall Street was ill-conceived, since companies will always will always find ways around regulations.
That's like saying that because police can't stop all crimes, they should be taken off the street," Kaufman said.
While not predicting whether Democrats will retain control of the Senate, Kaufman did say that chances of keeping a Democratic majority have increased in the past few weeks although he added that "anything can happen" in the current environment.
The anger over the state of the economy is understandable, according to Kaufman. By all measures, the economy is growing, but the recovery is not strong enough to reduce the unemployment rate below its nine and one-half percent level nationally and about 8 and one-half percent in Delaware.
However, Kaufman believes that claims of Tea Party forces that the key to recovery is simply to get government out of the way is not realistic. He noted that companies are not interested in expanding employment, even though many have piled up a lot of cash and banks have money to lend.
"I don't blame them," Kaufman said of the cautious stance by employers. However, he said it will take a broad-based recovery before extensive hiring gets under way.
Turning to Delaware, Kaufman said the state is well-positioned for a recovery, thanks in part to the efforts of Gov. Jack Markell and his administration. He noted that luring Fisker Automotive to the GM Boxwood plant, the planned reopening of the former Valero refinery, the decision of student lender Sallie Mae to move its headquarters to Delaware and the University of Delaware's plans to expand at the former Chrysler assembly plant with science-based activities are all good signs for the state.
Kaufman said he doubts that any new Congress would repeal health care legislation. Instead, efforts will continue to deals with issues that will arise.
He noted that some ideas pitched by those who want to repeal health care legislation, such as allowing insurers to sell health care protection across state lines, also present problems. Since the current system has state insurance departments overseeing health coverage, such a change would require a layer of regulation at the federal level, he said.