There is no greater challenge facing families and businesses today than our nation's struggling economy. "Jump-starting" the economy must be Congress' top priority. Americans are asking for help and we had a responsibility to pass an economic stimulus package that is effective, efficient, and timely. Unfortunately, the stimulus package singed into law bears a price tag exceeding one trillion dollars (if you include debt service) and is ineffective, inefficient, and absolutely not an intelligent way to use taxpayers' dollars.
Though this legislation was largely depicted as a transportation and infrastructure "investment" package, the fact is that only $46 billion (a mere six percent) of the spending is directed toward the "shovel ready" road and highway projects that would immediately create jobs.
At the same time, the bill requires all construction projects in the $819 billion bill to pay prevailing union wages, which will effectively shut out non-union construction firms and cost the taxpayers approximately $17 billion.
According to the nonpartisan Congressional Budget Office (CBO), less than half of the funding in H.R. 1 will actually be spent in the next two years! At that rate, an economic recovery would probably outrun this government spending!
Rep. Frelinghuysen believes providing tax relief for New Jersey families and businesses must be a key part of effort to stimulate the economy. Frelinghuysen has worked to make the 2001 and 2003 Congressional tax cuts permanent. Should Congress fail to make these cuts permanent, Americans will see the largest tax increase in our history. This would be especially damaging for families trying to recover from this economic recession.
In the House of Representatives, Rep. Frelinghuysen works to:
* Keep taxes low on families and businesses.
* Continue tax credits and deductions to help New Jersey families afford child care, college tuition, and home ownership while supporting charitable giving.
* Make greater investment in renewable technologies: Energy independence means keeping more money at home and economic stability.
* Open new markets to international trade. New Jersey exported over $30 billion of products to other nations in 2007. In order to expand, New Jersey businesses must have access to new opportunities.
Rep. Frelinghuysen also works with his colleagues in the New Jersey Congressional delegation and groups across our state to strengthen our economy. He regularly meets with local Chambers of Commerce, the New Jersey Chamber of Commerce, the New Jersey Association of Women Business Owners, the New Jersey Business and Industry Association, the Somerset Business Partnership, the National Federation of Independent Businesses, and the U.S. Small Business Administration.
Credit Card Reform
On April 30, 2009, the House passed H.R. 627, the Credit Cardholders Bill of Rights Act of 2009 with Rodney's support in an effort to rein-in unscrupulous credit card practices. On May 20, 2009, the House passed to the Senate Amendments to H.R. 627, again with Rodney's support, and the President signed the bill into law on May 22.
The bill took effect nine months after becoming law: February 22, 2010. Rodney also voted to expedite the implementation of this act to December 1, 2009 after learning that banks had been using this time to increase rates, instead of updating their systems. That bill, the Expedited CARD Reform for Consumers Act of 2009, was passed by the House on November 4, but was never considered by the Senate.
For details of the new regulations included in this law, please visit: http://www.federalreserve.gov/consumerinfo/wyntk_creditcardrules.htm
In December, Rep. Frelinghuysen introduced H.Res.987, which recognizes the Sense of the House of Representatives that the pending Free Trade Agreements with Columbia, South Korea, and Panama should be implemented immediately.
In his State of the Union Address to Congress, the President noted the importance of trade to our economy, yet he has not pushed for these trade agreements to be considered by Congress and signed into law.
Financial Regulatory Reform
On December 11, 2009, the House passed Financial Services Chairman Barney Frank's (MA) Financial Regulatory Reform bill, the Wall Street Reform and Consumer Protection Act of 2009, by a vote of 223 to 202.
On May 20, 2010, the Senate passed its version of this legislation, introduced by Banking Chairman Christopher Dodd (CT), on May 20, 2010 by a vote of 59 to 39.
In June of 2010, the House and Senate convened a Conference Committee to reconcile the two bills and craft a final package, which was completed on June 29.
The House passed the 2,300 page Conference report, which was renamed the Dodd-Frank Act, on June 30, 2010 by a vote of 237 to 192.
The most remarkable feature of this supposedly comprehensive measure is the fact that it will massively increase the size and scope of the federal government while failing to substantively address the root causes of the 2008 crisis: poor underwriting standards and Fannie and Freddie's role in over-inflating the housing market.
Problems with the final bill:
No action on Fannie Mae and Freddie Mac -- instead of establishing a plan to remove Fannie and Freddie from government control and liability, the bill only commissions a report from the Administration on its recommendations for dealing with them.
* Conference Chairman Barney Frank prevented the consideration of any amendments relating to Fannie and Freddie over the past two and a half weeks.
Creates a Financial Stability Oversight Council-- this Council, which contains 9 members to be headed by the Secretary of the Treasury, would have the unprecedented authority to break up firms it deems "too big to fail."
* The Federal Deposit Insurance Commission (FDIC) would dictate the terms for such a break up and determine how creditors of a failed firm would be paid.
* The FDIC would be able to utilize a credit line from the Treasury to pay for the costs of a takeover and then levy a tax on the rest of the financial industry to make up the costs.
* This authority further concentrates power in the federal government to pick "winners and losers" in financial markets.
* Through this Council, the Federal Reserve's regulatory power would be greatly increased, despite the fact that it has already injected over $2 trillion directly into the market with another $12 trillion in guarantees and insurance, without any public debate or disclosures, compared to the $700 billion Troubled Asset Relief Program (TARP).
Executive Pay Restrictions -- tucked into the conference report are provisions that would heavily regulate executive pay.
All employees, not just top executives, at financial firms would have to have their compensation packages approved by their appropriate federal regulators.
* Further, all publicly traded companies would have to have non-binding votes on top pay and retirement packages each year at their annual meetings. They would also be mandated to establish compensation committees that would include independent consultants.
Consumer Protection Bureaucracy -- a new Consumer Financial Protection Bureau would be housed in the Federal Reserve and run by a Presidential appointee, thereby politicizing the Bureau within the "independent" Fed.
* This Bureau would have broad authority to regulate any firm that provides any sort of "credit" to customers, such as stores that provide layaway plans or manufacturers trying to insure against risk.
* This essentially separates the long-standing practice of considering both consumer protection and overall systemic soundness when writing regulations.
Increased lawsuits -- The Dodd-Frank Act will force the Securities and Exchange Commission (SEC) and the new Consumer Financial Protection Agency (CFPA) to restrict mandatory pre-dispute arbitration agreements under securities laws.
* By removing arbitration agreements, the SEC and CFPA will be open to a flood of lawsuits based on technicalities, greatly increasing uncertainty in pricing financial products.
Removing Capital from the Economy -- The bill struck out a careful, bipartisan compromise on the regulation of derivatives that passed the House by a voice vote and inserted new restrictions on "end users," the actual users of commodities rather than the traders who simply buy and sell contracts, known as "swaps."
* Included in the final bill is a prohibition on companies using non-capital assets (i.e. equipment) as collateral for commodities contracts. Now, companies such as airlines that are trying to lock-in the price of fuel, will have to put up cash as collateral rather than other assets, preventing those funds from being invested elsewhere.
Lastly, many in the financial services industry remain concerned and uncertain about the future, as broad authorities have been delegated to the regulatory agencies, which will be producing their own rules and regulations.
Interchange Fees: Interchange fees, on debit cards only and not credit cards, will be monitored by the Federal Reserve, which would have the authority to set limits. (Currently the fees run between 1-2% of a purchase and provide $20 billion for banks and credit card companies.)
Derivatives Spin-offs: Wall Street firms that dominate the $615-trillion over-the-counter (OTC) derivatives market would have to spin off dealing operations in some derivative trading ("swaps"), but could keep others swaps in-house, including derivatives to hedge their own risk.
Much OTC derivatives trading would be redirected through more accountable channels such as exchanges and clearinghouses. Many OTC contracts end-users could carry on as before.
(Modified) Volcker Rule: A new rule would limit "proprietary trading" (investing their own money in the markets separate from their customers) by banks with investment operations or other financial institutions to three percent of their Tier I capital.
This is designed to limit banks' involvement in private equity and hedge funds, except for small investments.
Hedge Fun Registration: Private equity and hedge funds would have to register with regulators and open their books to scrutiny. Not so for venture capital funds, which would be exempt.
Insurance Monitor: The bill creates a Federal Insurance Office, housed within the Treasury Department, to monitor, not regulate, insurance industry practices.
Capital Standards: The Fed will have the authority to set new capital reserve standards for banks with more than $15 billion in assets, though they will get several years to comply and details of the requirements are to be determined in the future.
"Auditing" of the Fed: Instead of allowing audits of the Fed in the future, the bill only allows for a review of the Fed's emergency lending since 2007, but not its action on interest rates. This is an extremely watered down version of Rep. Ron Paul's "Audit the Fed" legislation, of which you are a cosponsor.
Auto Dealers: Auto Dealers' financing of car loans will be exempt from the Consumer Financial Protection Bureau, which is what they had sought. However, language was included that would allow the Federal Trade Commission (FTC) "enhanced powers" to act more quickly on consumer complaints about auto loan practices.
Rodney has cosponsored H.R. 3310, the Consumer Protection and Regulatory Enhancement Act, which would:
* Establish a new chapter of the bankruptcy code that would provide for the resolution of insolvent financial institutions instead of creating the bail-out "slush fund";
* Create a consumer protection council comprised of existing federal regulators to revise and promulgate model regulations to enhance consumer protection and improve disclosure;
* Create a Market Stability and Capital Adequacy Board to monitor market interactions and assess regulatory gaps;
* Strengthen anti-fraud laws and increase enforcement and penalties;
* Regulate over-the-counter derivatives markets by requiring "major market participants" to abide by margin requirements and report their transactions;
* Removes the statutory reliance on credit rating agencies, which allowed for the manipulation of the credit ratings of complex securities;
* Reform the Government Sponsored Enterprises (Fannie Mae and Freddie Mac) and puts them on a path to be removed from the government control;
* Create a Federal Insurance Office to monitor the insurance industry and "alternative" products.