Financial Reform Watch

In another indication of the knock-on effects of the financial crisis, the auto industry's number one supporter in Congress suffered a preliminary defeat today in his effort to retain a powerful House committee chairmanship. House Energy and Commerce Committee Chairman John Dingell (D-MI) failed to get enough Democratic leadership votes today to retain his chairmanship over challenger Rep. Henry Waxman (D-CA). The Democratic Steering Committee, a leadership organization responsible for determining Democratic committee assignments, voted for Waxman by a vote of 25-22. Waxman is one of the most liberal members of Congress and a champion of environmental issues. Many environmental activists believe that Dingell has spent too long protecting the auto industry, which has resulted in a weakened industry that has failed to produce the cleaner, more efficient cars that consumers want.

The good news for Dingell is he gets a do-over with the full Democratic Caucus which is likely to vote tomorrow to accept or reject the steering committee decision. Dingell believes he has enough votes to prevail over Waxman. The two-dozen incoming Democratic freshmen will participate in that vote, and some believe that Waxman, who endorsed Barack Obama in the Democratic primary, will have more sway with the freshman class. Dingell, who endorsed Hillary Clinton, is expected to draw support from politically moderate members and older members, who are committed to preserving the seniority system.

Also worth noting, today the Republican House and Senate leaders picked two of their own to fill out the membership of the TARP Congressional Oversight Panel – Sen. Judd Gregg (R-NH) and Rep. Jeb Hensarling (R-TX). Gregg was instrumental in negotiating the details and passage of the Emergency Economic Stabilization Act. Hensarling chairs the influential Republican Study Group, comprised of the most conservative House members, and played a pivotal role in defeating Treasury Secretary Hank Paulson’s first attempt to pass a financial bailout package. Gregg and Hensarling join New York State Superintendent of Banks Richard Neiman, Harvard University legal professor Elizabeth Warren, and AFL-CIO Associate General Counsel Damon Silvers. The Hensarling appointment was clearly intended to ideologically offset the labor union representative.

In other news, earlier this week Treasury released its term sheet for private banks to participate in the TARP Capital Purchase Program (CPP). Private banks have until December 8, 2008 to apply.

The CPP deadline for publicly held banks was November 14th, and Treasury maintains there will be no exceptions to that deadline.

 TARP CPP Term Sheet for Private Banks (PDF)