WORLD> America
|
WORLD> America
|
|
US Congress begins mapping financial reform
(Agencies)
Updated: 2008-10-22 11:14 Credit rating agencies failed to do their jobs, lawmakers said, while debt piled up, the home-price bubble grew and regulators fell hopelessly behind rapid innovation that spawned a tangle of complex new debt instruments.
"Part of the problem in the past was that we had regulators who didn't believe in regulation," said Nobel Prize-winning economist Joseph Stiglitz, a witness at the hearing. The Columbia University professor urged Congress to do more soon to stem the tide of home foreclosures engulfing many US families. "We need to do something about the foreclosure problem and that needs to be done quickly," he said. The future of housing finance giants Fannie Mae and Freddie Mac, seized by the government last month, needs clarity, lawmakers said. In addition, lawmakers said, they will try again next year to bring order to the patchwork of federal agencies that regulate banking, markets and financial services. Partisan Bickering Frank urged members to look forward to 2009 at the hearing, but partisan bickering erupted. Republicans blamed Democrats for allowing Fannie and Freddie to run amok in the markets and the halls of Congress. Democrats replied that Republicans for years failed to rein in the companies while in charge of Congress and the White House. The Bush administration and Congress in recent weeks have scrambled to stabilize the financial system, injecting hundreds of billions of taxpayer dollars into markets, seizing control of failing institutions and buying stock in major banks. Former Federal Reserve Vice Chairman Alice Rivlin, now a senior fellow at the Brookings Institution think tank, assured lawmakers at the hearing that recent cries about creeping socialism and the downfall of capitalism were overheated. "But market capitalism is a dangerous tool," she said. "Like a machine gun or chainsaw or nuclear reactor, it has to be inspected frequently to see that it is working properly and used with caution according to carefully thought out rules." Resetting the rules will be Congress' job next year, with either Democratic Sen. Barack Obama or Republican Sen. John McCain in the White House. Rivlin urged lawmakers to approach the task with an open mind. "Getting financial market regulation right is a difficult, painstaking job. It is not a job for the lazy, the faint-hearted or the ideologically rigid, applicants should check their slogans at the door," she said. |
