Democrats Name Three Members to EESA Congressional Oversight Panel

While the machinery to oversee Treasury's management of the programs under the Emergency Economic Stabilization Act (EESA) has been slow to gear up, there are signs that the pieces are beginning to fall into place. This comes not a moment too soon, as the clamor from the media and from Capitol Hill for more transparency has been building in the past ten days.

On Friday, November 14th, House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Harry Reid (D-NV) announced they have picked three of the five members of the Congressional Oversight Panel (COP) established by the EESA. The other two members are to be chosen by House Minority Leader John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY). The fact that the Democratic leaders did not coordinate the announcement of appointments with their Republican counterparts makes it clear that the day of bipartisan cooperation on Capitol Hill has not yet dawned.

Speaker Pelosi named New York State Superintendent of Banks Richard Neiman to the panel. He was appointed to serve as New York State’s Superintendent of Banks in March 2007. Prior that, Neiman was President and Chief Executive Officer of TD Bank USA, N.A. He currently serves on the board of the Conference of State Bank Supervisors and chairs the Halt Abusive Lending Transactions Task Force to address the housing and foreclosure crisis. In calling for "mass modifications" to the terms of mortgages in a recent speech to the New York Bankers Association, Neiman said that "unfreezing credit markets is vital, but lasting stability needs a solution that also addresses the origins of the problem: the escalating numbers of American families who are losing their most valuable asset—their homes."

Majority Leader Reid named Elizabeth Warren, the Leo Gottlieb Professor of Law at Harvard University, where her research areas include bankruptcy and commercial law and financially distressed companies. She serves on the FDIC’s Advisory Committee on Economic Inclusion and previously served as Vice President of the American Law Institute and as an advisor to the National Bankruptcy Review Commission. In a New York Times column on November 15, Nobel Laureate Paul Krugman wrote that Warren is an "expert on personal bankruptcy (and) crusader against credit card industry lobbyists."

The Democratic leaders teamed up to name Damon Silvers to the panel. Mr. Silvers currently serves as Associate General Counsel at the AFL-CIO, where he has represented the labor movement before the Securities and Exchange Commission. He assumed his position in 1997. He also chairs the Subcommittee on Concentration and Competition in the Treasury Department’s Advisory Committee on the Auditing Profession and serves on the Treasury Department’s Investor’s Practice Committee of the Presidents’ Working Group on Financial Markets. Silvers' name has surfaced recently as a possible successor to SEC Chairman Christopher Cox, who has announced he will step down from his post when President Bush leaves office.

By appointing a state bank regulator, an academic, and a representative of organized labor, the Democratic leadership has worked to bring a variety of perspectives to the panel—but none that would necessarily be considered a "friend" of the financial services industry.

The COP is required to submit monthly reports to Congress on the Treasury's use of its broad authority under the EESA. There has been no announcement as to when the first report will be forthcoming. The law also requires the COP submit by January 20, 2009, a report that analyzes the effectiveness of the current regulatory structure in overseeing the financial system and protecting consumers and that provides recommendations on improved regulation for market participants that fall outside of the current regulatory structure.

Another milestone in the development of the EESA oversight functions occurred on November 14th, when President Bush announced the nomination of Neil M. Barofsky to be Special Inspector General for the Troubled Asset Relief Program at the Department of the Treasury. He currently serves as an Assistant U.S. Attorney for the Southern District of New York and Chief of the Mortgage Fraud Group. Prior to this, he served as a lead prosecutor in the Southern District's Securities Fraud Unit. Barofsky's nomination must be confirmed by the Senate. That appears likely to occur this week, as the Senate Banking Committee will hold a hearing on Wednesday and is likely to approve the nomination and send it to the floor.

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