Hastert Agrees to Create Financial 'Supercommittee'

Justin Torres | July 7, 2008 | 8:27pm EDT
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(CNSNews.com) - The House leadership has agreed to a jurisdictional change for the House Banking Committee that will defuse a longstanding conflict over committee chairmanships in the next Congress, and create a massive new financial "supercommittee."

Sources on Capitol Hill say House Speaker Dennis Hastert has agreed to move jurisdiction over the securities and insurance industries from the House Commerce Committee to the House Banking Committee and put Rep. Michael Oxley (R-Ohio) in charge of the newly expanded body, to be renamed the Financial Services Committee.

The move will also create a "super-subcommittee," in the words of one Capitol Hill staff member, with oversight over government-sponsored enterprises such as Fannie Mae and Freddie Mac. That banking subcommittee will be led by Rep. Richard Baker (R-La.), who has battled the housing lending agencies for a year.

"This jurisdictional change, if ratified by the House, represents a victory for consumers and free markets," Baker said. "It's a public-policy decision long in the making and whose time has thankfully come."

Sources say Hastert made his decision last week. A House Republican steering committee will ratify the move Wednesday.

The House currently operates under Depression-era rules that divided banking oversight from securities and insurance. But with passage of last year's Gramm-Leach-Bliley Banking Act, which eased rules prohibiting banks from entering the securities and insurance markets, Baker proposed the restructuring.

"It does make sense," said Pete Blocklin, a government affairs officer with the American Bankers Association. "Everyone in this business has known for a while that it is inefficient to have jurisdiction divided up over several committees."

The changes are criticized by Democrats, especially the Commerce Committee's ranking member, Rep. John Dingell (D-Mich.), who in a statement called the moves "misguided and asinine" and raised the possibility that a rapid deregulation of the securities and insurance industries would occur, leading to unwise practices.

"I hope the securities and insurance industries do not suffer the same fate as the saving and loan industry, but I won't be holding my breath," said Dingell.

The choice of Oxley to head Financial Services will likely freeze out Rep. Marge Roukema (R-N.J.), a liberal Republican who has seniority over Baker. Roukema made her pitch for the chairmanship in December before the GOP steering committee, emphasizing her district's ties to the New York financial industry and her seniority.

But several sources say Roukema is too liberal for the House leadership - she has only a 51 percent lifetime rating from the American Conservative Union - and did not present a compelling case before the steering committee.

Several sources on Capitol Hill indicated Roukema might be considering a job in the Bush administration, possibly at the Small Business Administration.

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