Former Sen. Sununu offers bail-out suggestions

SUNUNU

New Hampshire Union Leader

Jillian Jorgensen

Boston University Washington News Service

January 29, 2009

WASHINGTON—Former Sen. John E. Sununu, a member of the congressional oversight panel for the Troubled Assets Relief Program, offered some alternate recommendations for overhauling the nation’s economic regulatory system in a report released to Congress yesterday.

The panel was created last November to oversee the banking and financial services relief program and offer suggestions on how to improve the regulatory oversight of the industry. The five-person panel is made up of three people appointed by Democratic congressional leaders, none of them members of Congress, and two members appointed by GOP leaders. The panel is chaired by Harvard Law School Professor Elizabeth Warren and has so far issued several reports to Congress.  .

Sununu, a New Hampshire Republican who was defeated in his bid for re-election in November, issued a dissenting “Alternate View” to the panel’s report along with the other Republican-appointed member of the panel. Sununu and other members of the panel also met Wednesday with Timothy F. Geithner, the new secretary of treasury, to discuss some of the problems with the administration of the bail-out that the panel had cited in an earlier report released this month.

Sununu said his recommendations this week sought to eliminate unintended consequences of government intervention in the financial markets, increase transparency, protect consumers and foster competition.

He called the panel a “diverse” group and said that while he issued a separate report, the entire group did agree on many issues.

“I think all the panel members agreed that the regulatory system is antiquated. Many of the pieces date back 60 or 70 years,” Sununu said.

Sununu said a major focus of the meeting with Geithner was making sure there was more information available to the public about the performance of the relief program, and the effect the program was having on the financial markets.

He also said it was important to better track whether the banks receiving funds under the relief program were meeting the program requirements – such as restricting dividends or stock repurchases. Geithner told the panel the Treasury Department planned to post the legal agreements for issuing funds under the relief program on the department’s Web site.

“I think the secretary of the treasury understands the importance of transparency,” he said.

He said the entire panel agreed about setting up a clearinghouse for credit default swaps, combining the Securities and Exchange Commission with the Commodity Futures Trading Commission, and adopting higher standards in the mortgage market.

Sununu said he differed from the panel in his views on the government-subsidized mortgage banks, Fannie Mae and Freddie Mac, which Sununu said the government should consider privatizing.

“I believe it’s essential that Congress take steps to make sure that taxpayers are not put on the hook again for losses at these mortgage finance giants,” Sununu said. “Fannie Mae and Freddie Mac should get out of the investment business, because they are subsidized by the taxpayers and they shouldn’t make investments on the taxpayer’s dime.”

Sununu said he also disagreed with the panel’s recommendation for setting up two separate regulatory agencies for consumer financial products and the safety and soundness of financial institutions, because the two can be closely related.

“These things really need to be overseen and regulated by the same organization,” he said.

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