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As a senior member of the House Financial Services Committee, Mike Castle has supported policies to improve our economic climate by supporting measures to restore investor confidence, encourage responsible homeownership, reduce foreclosures and help individuals who are struggling despite having played by the rules. Specific initiatives include;
Housing and Economic Crisis
• Housing and Economic Recovery - Castle supported and authored provisions in the Housing and Economic Recovery Act (HERA). This bill created the HOPE for Homeowners Program, a voluntary program authorizing the Federal Housing Administration to insure $300 billion worth of refinanced mortgages of homeowners unable to pay their current mortgage.
• Emergency Mortgage Loan Modification Act - Rep. Castle introduced this legislation, with provisions included in the HERA, to provide a legal safe harbor for servicers who sit down with struggling borrowers to allow modification of their home loans. He is a co-author of an amendment to expand this idea to further help homeowners, which is pending in the 111th Congress.
• Counseling for Homeowners - Castle actively supported measures to provide funding for foreclosure prevention counseling activities through NeighborWorks America, a non-profit created by Congress in 1978 that has a national network of community partners.
• Emergency Economic Stabilization Act - In response to dramatic instability in our financial markets, former Treasury Secretary Henry Paulsen came to Congress to pass a massive economic rescue package. Rep. Castle negotiated to slow down authorization of the package, which included the Troubled Asset Relief Program (TARP) until it included appropriate checks and balances, an elimination of "golden parachutes", measures to protect taxpayers, and new oversight authority. He continues to push for greater accountability over the expenditure of TARP funds and substantial market reforms.
Market Reform and Regulation
• Systemic Risk Monitor - Rep. Castle has introduced the Financial System Stabilization and Reform Act, the House companion to Senator Susan Collins' S644. This bill would set up an independent Financial Stability Council (FSC) to serve as a 'systemic-risk monitor' to strengthen oversight and accountability and bring more trust through modernized financial regulation and transparency. The Council would maintain comprehensive oversight of all systemic risks to the financial system, and would have the power to prevent or mitigate those risks.
• Hedge Fund Regulation - Hedge funds are high-risk investment pools that account for 30 percent of U.S. stock trading, yet remain virtually unregulated. To improve transparency of this $1.5 trillion industry, Rep. Castle introduced the Hedge Fund Study Act to measure the impacts of these funds on our economy and the risks they pose to investors. Recent reports have indicated tremendous growth of pension plan investment in hedge funds, posing substantial risk to these retirement accounts. For this reason, Rep. Castle introduced the Pension Security Act to require pension plans to disclose any investment in hedge funds. To ensure the Securities and Exchange Commission (SEC) can adequately track hedge funds, Rep. Castle has joined Rep. Capuano (D-MA) in introducing the Hedge Fund Adviser Registration Act, which closes a loophole that currently allows hedge fund managers with less than 15 clients to escape registration with the SEC.
• Uptick Rule - Short selling (borrowing stock with the objective of making a profit if its price falls) has been described as a destructive force for both stock markets and the firms whose shares are sold short. In the 1930s, the uptick rule was installed to prohibit short sales on stocks unless a stock's previous price movement had been upward. In June 2007, the SEC rescinded the uptick rule. Since that time, domestic stock markets have experienced greater volatility than expected. Rep. Castle believes the return of the uptick rule should be considered because of the relationship between greater volatility and the cessation of the uptick rule and continues to call on the SEC to reinstate this important measure.
• Credit Rating Agencies - Rep. Castle and Rep. Gary Ackerman (D-NY) introduced a bill requiring the SEC to issue rules to determine what types of structured investments are eligible for nationally recognized statistical rating organization (NRSRO) status. The measure aims to ensure that rating companies never again rate financial products that are poorly understood and have a limited history.
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