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The Republican Newsroom |
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by The Republican Newsroom U.S. Reps. Richard Neal, John Olver call for greater oversight of financial markets in wake of mortgage crisis U.S. Rep. Richard E. Neal, D-Springfield, said the move should give the federal government a greater say over what happens to the homeowners who are in arrears on their mortgages. "It will have a tremendous impact on cities like Springfield, Holyoke and Chicopee," Neal said. Last week, bad mortgage debt forced investment bank Lehman Brothers into bankruptcy and resulted in the government bailout of insurance giant American Insurance Group Inc. Sunday, the Federal Reserve allowed two remaining investment banks - Morgan Stanley and Goldman Sachs - to convert to bank holding companies that are able to accept deposits. The move is expected to bolster both banks. The concern about bad mortgage debt, caused the stock market to sharply last week only to recover as the bailout was announced. The market fell again today as investors nervously awaited details on the federal plan. The Dow Jones Industrial Average closed down nearly 370 points today. A vote by the House and Senate is expected by the end of the week. Neal said he'll get a chance to review the plan, or at least the tax implications of the bailout, Wednesday as a member of the House Ways and Means Committee. But Eugene B. Berman, chairman of he Hampden County Bar Association Foreclosure Task Force, said he doesn't like the fact that that congressional leaders and the Bush Administration are hashing out the details behind closed doors. "It's just uncertain," Berman said. "Who are you going to make your mortgage payments to? Who are you going to talk to when you lose your job? It appears to be a bailout for the lender with little regard for the homeowner, right now." The Bar Association has a hotline for people in mortgage trouble can get legal help, possibly free of charge: (413) 322-7404 Both Neal and U.S. Rep. John W. Olver, D-Amherst, said in separate interviews Monday that there needs to be more regulation of the complex financial instruments backed by the mortgage debt that are now failing. "It became too complicated," Olver said. "It became a game, a Ponzi scheme if you will." Neal said the bailout will come with the price of more oversight and more stringent reporting requirements that companies will have to meet. He compared the bailout to Franklin D. Roosevelt's New Deal. The New Deal was a package of regulations for the financial world, deposit insurance for banks and programs like the Civilian Conservation Corps that were all responses to the Great Depression. "FDR saved capitalism," Neal said. "It's a fascinating argument for those who thought there was too much regulation." The congressmen also called for limits on the severance pay leaders of the now-failing Wall Street companies will receive. "If you are going to take a 80 percent stake in AIG, I hope that gives you a say in the severance packages it gives executives," Neal said. He also expressed concerns about how the assets of firms like AIG will be sold off eventually. Neal doesn't want the re-insurance business sold to a place like Bermuda where it would pay no federal taxes. Business writer Jim Kinney can be reached at jkinney@repub.com |