Heaven Help "US" from Bachus and Co.

I have been pretty focused on the gyrations of the European Sovereign Markets and the forecasters of doom by the assembled masses of anti-Europeans and anti-Euro pundits that I took my eye off the ball for moment in the US.

So to catch up I read some articles and interviews with Mr Spencer Bachus and his equally eloquent sidekick Mr Randy Neugebauer.

Wow!

In an article in American Banker Mr Neugebauer, the House Financial Service's Committee Vice-Chairman stated he wants to focus on regulatory oversight. He was quoted as saying " We just passed this huge new piece of legislation, and now all these agencies and regulators that are impacted are going to be writing rules to implement that, and I'm very concerned."

That's good to know. Mr Neugebauer was first a banker, and then became a real estate developer. His claim to fame is that he understands how a mortgage loan works from the lender's side, and the borrower's. This makes him particularly sympathetic to arguments that Dodd-Frank is overly burdensome.

It is interesting that Mr Neugebauer talks continually about the consumer, and yet in all his discussions the consumer is the developer and/or small businessman, not the end-buyer. His professional constituency are the small bankers and businessmen whose major complaint is the way the consumer bureau is handled, funded and managed as it will "probably raise the cost of capital for the borrowers (i.e. the developers) and reduce the profitability of the financial institutions (i.e. the small bankers).

Neugebauer would like to revisit the creation of the Consumer Financial Protection Agency by "eliminating it,restricting its funding or separating it from the Federal Reserve Board".

That's some visit.

His other pet peeve is Fannie and Freddie. He wants to terminate them and foster the development of a fully private mortgage market. This despite being named along with Mr Bachus as the "guardians" of Fannie and Freddie by none other then the Wall Street Journal!

The editorial focused on the fact that in 2007 Neugebauer coauthored an amendment that limited the GSE regulator restricting Fannie and Freddie's control over their own portfolios specifically with regards to purchasing and managing risky mortgages.

So it would appear that he wants to get rid of them, after stuffing them with toxic waste.

His ability to contradict himself would be funny, if he weren't an important member of the Financial Services Committee. First he argued that he has always preferred a focus on capital rather than overly prescriptive regulations for regulators. Then he says "not that they didn't need strong regulations — I felt like they needed a stronger regulator."

Well which is it Mr Neugebauer?

And then we have Mr Bachus. The "courtly Baptist lawyer" contended that the final bill “won’t address a lot of the root causes” of the financial meltdown, including the structures of Fannie Mae and Freddie Mac. So now it's not the bankers, the shoddy mortgage originators or the creation of NINJA and self-certified mortgages that caused the financial crisis, but rather Fannie and Freddie!

Bachus goes on to say that the bill delves deeply into “day-to-day operational matters,” which he called part of the past two years’ “command-and-control environment up here, where the government begins to intrude in things that are traditionally left up to the corporation.”

Well Mr Bachus, whereas I appreciate your concern that the government might not have all the answers-we did have eight years of GW-it is eminently clear to me that the decisions that were traditionally left up to the corporations have been totally discredited.

Heaven help us once Bachus and Neugebauer get started.