Promoting Economic Recovery and Job Creation: The Road Forward
Congresswoman Maxine Waters (D-Calif.), Ranking Member of the Financial Services Capital Markets and GSEs Subcommittee, offered the following opening remarks today at a full committee hearing entitled ‘Promoting Economic Recovery and Job Creation: The Road Forward.'
And in this video clip, the Congresswoman questions a witness about why he brought up Fannie Mae and Freddie Mac, and why he thinks the private financial institutions that helped cause the economic and housing crises - then took government bailouts - could do a better job in a hypothetical post-GSE market.
"Thank you, Mr. Chairman for holding this hearing on "Promoting Economic Recovery and Job Creation: the Road Forward." While the economy has shown some signs of recovery, it is clear that more aggressive action is needed from Congress in order to put our country back on the right track. In spite of a slight decrease, unemployment remains unacceptably high at 9.4 percent, the economy shows no signs of regaining the 8.5 million jobs that have been lost since 2008, and foreclosures remain will be 20 percent higher in 2011.
"The Federal Reserve has acted because Congress failed to provide an adequately large stimulus given the magnitude of this crisis. The Fed's recently implemented quantitative easing policy is consistent with the Fed's dual mandate of fostering maximum employment and stabilizing prices. It's clear to me that since interest rates can't get much lower, that buying long-term securities is one of a handful of options left to the Fed to stimulate the economy. While reasonable people can have differing opinions about the manner in which the Fed has chosen to stimulate the economy, ending the Fed's dual mandate to both reduce unemployment AND keep inflation low-- as some on the other side of the aisle have suggested-- is not the answer.
"I think what we must remember, and what has been lost on some of my colleagues on the other side of the aisle, is that this unemployment is a result of the financial crisis of 2008. This crisis—which represents the biggest challenge to the nation's economy since the Great Depression— led to less credit for small businesses, prospective homebuyers, and other groups that traditionally drive local economies. While they played no role in creating this crisis, they, like everyone else, are now suffering the consequences of the systemic risk caused by the risky behavior of a few reckless institutions, behavior which culminated in a bailout of Wall Street.
"The logical response to this systemic collapse of the financial market was for Congress to fill in the regulatory gaps so that this never happens again. The Dodd-Frank Act reforms the derivatives market, establishes a Financial Stability Oversight Council to monitor for systemic risk, bans proprietary trading, and makes other fundamental changes to a financial industry that we can't afford to bail out again.
"Unfortunately, instead of focusing on solutions to create jobs, today's hearing seems to be aimed at criticizing the Fed for acting in a manner consistent with its dual mandate and criticizing the legislation that will prevent another bailout. I am interested in working on solutions to create more jobs. However, I believe that we must protect the reforms in Dodd-Frank because by preventing another bailout, we are preventing another financial collapse that would result in the loss of millions more jobs.
"Thank you, Mr. Chairman. I yield back the balance of my time."
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