Washington Update - 06/19/2009 (Plain Text Version)

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Obama Proposes Sweeping Financial Overhaul

President Barack Obama on June 17 announced a sweeping financial reform plan that is intended to restore confidence in the integrity of the U.S. and global financial system. Upon unveiling the proposal, Obama emphasized that the proposed reforms seek to build a new foundation for financial regulation and supervision that is simpler and more effectively enforced, protect consumers and investors, reward innovation and adapt and evolve with changes in the financial market.

The plan, which the President wants to complete this year, centers on expanding the power of the Federal Reserve to police large, systemically important institutions, allowing the government to break firms apart, implementing new rules for complex instruments and creating a new federal agency to oversee consumer products such as mortgages and credit cards.

NAHB staff are presently reviewing the far-ranging proposal, which would touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products, such as credit derivatives. It would bring many of the products and companies that previously operated outside of the banking system under federal scrutiny.

The Administration's blueprint would give the government the power to take over and wind down a large financial company, a power that government officials lacked last year when the financial crisis was intensifying. It would also give the central bank more powers over the payments and settlements systems in U.S. financial markets to prevent a breakdown that officials fear could destabilize the economy.

The plan proposes reforms to meet the following five key objectives:

1. Promote robust supervision and regulation of financial firms.
2. Establish comprehensive regulation of financial markets.
3. Protect consumer and investors from financial abuse.
4. Provide the government with the tools it needs to manage financial crises.
5. Raise international regulatory standards and improve international cooperation.

The Administration has not submitted legislative language and there are likely to be significant changes to the plan as it works its way through Congress. Given the already full congressional agenda it is not likely that the plan will be enacted this year, as Obama would like, so NAHB should have ample opportunities to weigh in during the debate.

Details of the Administration’s proposal are outlined in an 80-plus page white paper. The white paper and fact sheets on the five major components of the plan are posted on Treasury’s Web site at: http://www.ustreas.gov/news/index1.html.

For additional information, contact David Ledford at 1-800-368-5242, x8265.

Senate Panel Approves Expansion of Clean Water Act

The Senate Environment and Public Works Committee on June 18 voted 12-to-7 along party lines to approve S. 787, the Clean Water Restoration Act. The legislation would dramatically expand the scope of the Clean Water Act by replacing the phrase “navigable waters of the United States” in the law with “waters of the United States.

This change would have an enormously negative impact on the home building industry, effectively extending the federal government’s reach to all waters, including storm sewers and retention basins, roadside ditches, seasonal streams and any “activities affecting” all waters in the nation.

During the committee mark up, the underlying bill was replaced by a substitute offered by Sens. Max Baucus (D-Mont.), Amy Klobuchar (D-Minn.) and Committee Chairman Barbara Boxer (D-Calif.). Unfortunately, the Baucus-Klobuchar-Boxer substitute retains the original bill’s goal of removing the term “navigable waters of the United States” from the Clean Water Act and, therefore, does nothing to limit the federal government’s jurisdictional reach. Further, the bill fails to address the broken federal permitting process.

NAHB opposed S. 787 and participated in a coalition to defeat the measure along with other stakeholder groups such as the Associated Builders and Contractors, the National Stone, Sand & Gravel Association, the American Forest and Paper Association, the American Farm Bureau Federation and the National Association of Realtors

Prior to the Senate panel’s vote, NAHB sent a letter to every committee member urging that they oppose the measure. “Because of the unprecedented scope and enormous regulatory burden the legislation will place on home building activities, I urge your opposition to S. 787,” the letter said. The letter explained that home builders, who are involved in all facets of home construction and land development, must often obtain Clean Water Act permits to construct their residential, commercial and mixed-use projects.

“The expansion of federal jurisdiction proposed by S. 787 will lead to many more projects requiring federal permits and will exacerbate permitting delays, which will increase construction costs and drive down housing affordability,” the letter said. “As the housing economy, and the national economy as a whole, tries to claw its way out of this recession, now is not the time to increase the cost of homeownership.”

During consideration of the bill, several Republicans committee members expressed serious reservations that it would infringe on state and local rights. Sen. Michael Crapo (R-Idaho) said he has placed a “hold” on the bill and indicated that he would filibuster to prevent it from moving to the Senate floor.

To view the legislation, click here and type the bill number in the box in the upper center screen. For more information, contact Annie Raymond at 1-800-368-5242, x8307. [return to top]

Sticker Shock Puts Health Care Reform Off to Shaky Start

The independent Congressional Budget Office (CBO) this week said that a draft health care bill by the Senate Finance Committee would cost $1.6 trillion, prompting Chairman Max Baucus (D-Mont.) to delay consideration of his bill most likely until after July 4 while members work to rein in the costs. The delay casts doubts on whether the Senate will be able to clear a bill before the Congress adjourns for the August recess.

Meanwhile, the Senate Health, Education, Labor and Pensions (HELP) Committee this week began a markup session on its health care proposal that will go into next week. Sen. Chris Dodd (D-Conn.) is temporarily chairing the panel as HELP Chairman Ted Kennedy (D-Mass.) is battling brain cancer and was unable to attend the sessions. The CBO estimates that the HELP bill would cost $1 trillion and cover just 16 million more people, leaving 30 million without health insurance.

Republican members on the HELP Committee have complained that they have been left out of the process and that it makes no sense to consider the legislation at this time, since the partial draft omits some of the most costly and controversial sections of the bill. Sen. Judd Gregg (R-N.H.) said that the bill’s price tag could easily reach $2 trillion.

Three House committees – Energy and Commerce, Ways and Means and Education and Labor – are expected to begin debate on a House Democratic health care plan next week. The House still appears on track to approve its health care legislation by the end of July. However, delays are possible should conservative and centrist Democrats balk at the bill being written by House Democratic leaders.

Lawmakers in both chambers continue to explore a host of funding options, including a surtax on the rich, an increase in the payroll tax imposed on all U.S. workers, new taxes on sugary drinks and alcohol, a national value-added tax of up to 3 percent, new taxes on the health benefits that millions of workers receive through their employers, a change in the taxation of carried interest and a plan espoused by President Obama that would limit the value of all itemized deductions – including mortgage interest and real estate deductions – for higher-income taxpayers.

As details continue to unfold, NAHB will stand firm against employer mandates as well as changes to the current tax code that would impact the housing community. To view the HELP legislation, click here. For more information, contact Erin Tario at x8413. [return to top]

NAHB Opposes National Ocean Policy Proposal

NAHB submitted written testimony this week during a House Natural Resources Subcommittee hearing on H.R. 21, the "Ocean Conservation, Education, and National Strategy for the 21st Century Act.” H.R. 21 calls for the federal government to develop a National Ocean Policy and would require federal agencies to adopt regulations to comply with such policy within two years. NAHB expressed concerns that the legislation is so broadly written that the impact on the activities of home builders, private landowners and other businesses “would be significant.”

By linking land-based activities to the health of the ocean, it is likely that any type of permit application under the Endangered Species Act or Clean Water Act would be impacted by the National Ocean Policy. In submitting comments for the record, NAHB said that this legislation “would likely become one of the broadest environmental statutes ever enacted. NAHB believes that this is a flawed bill, is unlikely to improve the health of oceans, will lead to decades of litigation, and would urge the Committee to reject it.” For more information, contact J.P. Delmore at x8412. [return to top]