Three things to look for in the week ahead. . .

September 10, 2012 at 7:20 am Leave a comment

Now that the national conventions are  over (although if you told me that Clint Eastwood was still in Florida muttering to an empty chair, I would believe you) politicians are reconvening in Washington this week to continue to posture about the need to take decisive action to help the ailing economy while continuing to take no action to aid the ailing economy.

Obviously we shouldn’t expect any deficit reduction deals until after the election, which means that we will hear more and more about the fiscal cliff.  Generally speaking, the most overused metaphor in politics these days refers to the combination of cuts to both military and domestic spending and tax increases set to take effect in 2013 unless Congress and the White House agree on an alternative fiscal plan.  Although no one thinks the cuts will actually take effect, stranger things have happened when politicians play chicken.  At the very least, it’s likely that any substantial legislative activity will be impacted by the ability of Congress to deal with this issue.

That’s why the most interesting report expected out of Washington this week is one mandated by Congress in which the White House will explain what steps it will take to implement $109 billion in spending cuts required if Congress and the White House don’t agree to repeal the sequestration plan.  It’s probably not a coincidence that Mitt Romney used an appearance on NBC’s Meet the Press yesterday to explain that he thought the Republicans made a mistake when agreeing to sequestration in the first place.  The White House has already missed a previous deadline for submitting the report to Congress.

One man in Washington who doesn’t have to wait for election day to get anything done is Federal Reserve chairman Ben Bernanke, provided he can get the Open Market Committee to go along with him when it meets this week.  This means we will know if the Federal Reserve plans to take additional steps to stimulate the economy such as another round of quantitative easing.  The chairman used a recent  appearance at Jackson Hole, Wyoming to argue that the “employment situation was far from satisfactory” despite the fact that the Fed’s actions in buying securities had made the economy stronger than it would otherwise be.  The case for action was strengthened by the August jobs report which indicated that only 96,000 new jobs were created.  At some point the Fed can justifiably be accused of whipping a dead horse and doing so at the expense of small financial institutions, which are more dependent on making loans than the financial behemoths which got us into this mess in the first place.

NAFCU will be holding its annual Congressional Caucus this week and among the speakers will be Edward DeMarco, the acting director of the Federal Housing Administration.  You may not know the name, but as the head of the agency responsible for overseeing Fannie Mae and Freddie Mac, DeMarco has emerged as one of the most intriguing figures in the housing policy debate in Washington.  He has consistently resisted increasingly loud calls to allow the GSE’s to more aggressively modify lending terms on underwater mortgages .  Whether you agree or disagree with his position, as I’ve  pointed out previously, De Marco is concerned that writing down mortgages too aggressively might actually cost the American taxpayer money.  Sooner or later we will have to have a serious debate about what to do with Fannie and Freddie, and I for one hope that DeMarco has a voice in the discussion.

 

 

 

 

 

 

Entry filed under: Advocacy, General, Political, Regulatory. Tags: , , , , , , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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