Home Governmental Affairs U.S. Senator Johnny Isakson 05-14-10 - Weekly eNewsletter
05-14-10 - Weekly eNewsletter
Dear Friends,

This week the Senate continued debating legislation to reform the financial industry.

On Thursday, the Senate unanimously passed my amendment to the financial reform bill that would require regulators to establish a category of well-underwritten loans and to exempt banks from retaining risk in those loans that regulators determine are safely securitized.

The current bill did not ensure an exemption for mortgages that are safely securitized. Without an explicit exemption for such well-underwritten mortgages, I am afraid that the bill’s one-size-fits-all requirements would have reduced consumer choice, increase the cost of credit and cost our economy jobs.

The amendment, which I offered with Sen. Mary Landrieu, D-La., would require regulators to establish a category of well-underwritten loans called “Qualified Residential Mortgages” that would be exempt from the risk retention requirements in the bill. To define a “Qualified Residential Mortgage,” regulators would use back-to-basics underwriting and product features proven to reduce consumer defaults, such as requiring documentation of income, setting reasonable payment-to-income ratios and prohibiting the use of features such as negative amortization.

By creating a regulatory “gold standard” for well-underwritten mortgages, the qualified mortgage safe harbor strengthens sound lending behavior within the primary market for qualified mortgages while discouraging excessive risk taking in the non-qualified sector through risk retention.

The amendment was endorsed by the American Bankers Association, Community Mortgage Banking Project, Community Mortgage Lenders of America, Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, Mortgage Insurance Companies of America, National Association of Homebuilders and Real Estate Services Providers Council, Inc.

Risk retention is not the cure-all to good lending. Underwriting is.  We’re not going back to making zero down, interest-only, reverse amortization loans anymore. But we are going back to the good old days where there is a down payment, where there’s skin in the game, where there’s an income-to-debt ratio and where the borrower is qualified to borrow the money that they’re borrowing. The only risk retention that will be required is when somebody is making a bad loan, which means people will stop making bad loans.

‘Disapproval Resolution’ to Stop Rule Designed to Ease Path to Unionization
On Tuesday, I introduced a “disapproval resolution” seeking to stop the National Mediation Board from overturning 75 years of precedent to make it easier for airline and railway employees to unionize.

The final rule change, which was issued on May 10, would affect companies under the jurisdiction of the Railway Labor Act by allowing union elections to be decided by only a majority of workers who cast ballots, reducing the number of votes it takes for a union to win. Since the creation of the National Mediation Board in 1934, employees who did not vote on whether to create a union had been counted as “no” votes. Under this previous “majority rule” procedure, a union could only be approved if a full majority of all employees voted to do so.

The National Mediation Board does not have the authority to change this election procedure without Congressional authorization. The Supreme Court has upheld the “majority rule” twice, and the National Mediation Board previously rejected requests to change it four times under both Democratic and Republican administrations.

The AFL-CIO requested the rule change in a Sept. 2, 2009, letter to the National Mediation Board. I, along with seven of his Senate colleagues, filed official comments on the rule change with the National Mediation Board on Jan. 4, 2010, urging the board to reject the changes proposed by the AFL-CIO and claiming that the “integrity of the Board’s rulemaking process has been compromised.”

Upon introduction, a disapproval resolution is referred to the committee of jurisdiction, which in this case will be the Senate Committee on Health, Education, Labor and Pensions. If the committee does not favorably report the resolution, it may be discharged upon petition by 30 Senators. Once a disapproval resolution is placed on the Senate calendar, it is then subject to expedited consideration on the Senate floor, and not subject to filibuster. If passed by the Senate, the resolution still must clear the U.S. House and be signed by the President before it could go into effect.

The National Mediation Board simply does not have the legal authority to make such a radical change without Congressional authorization. With this rule change, a union could be permanently recognized without a majority of employees having ever supported representation.  I will not stand by and let this administration compromise fairness to grant favors to labor unions. I will do everything in my power to stop this backdoor attempt to shift the balance between labor and management.

Legislation to Create Earmark Database
On Wednesday I co-sponsored legislation that would create a single, searchable database of all congressional earmark requests.

The Earmark Transparency Act of 2010 would create a user-friendly, online database that would allow citizens to sort, search and download earmark data. Under the legislation, the database would provide details on projects, including the amount of the initial request, the amount approved by the congressional committee, the amount approved in the final legislation, the sponsor’s name, the sponsor’s state or district and the project name as well as other relevant information.

The bill would require the website to include the earmark request letter written by a member of Congress and any documents supporting the request that is sent to a congressional committee. The legislation is consistent with President Obama’s statements that all requested earmarks that are approved should be made public before a vote.

In 2008, I supported an amendment to establish a one-year moratorium on earmarks to enable Congress to create new disciplines in the earmarking process. In March 2010, I co-sponsored and again voted for legislation that called for a one-year moratorium on earmarks in the Senate.

In 2008, I served on the Fiscal Reform Working Group, which was created to address spending and earmark reform. On April 3, 2008, the group released its recommendations on how to bring about more confidence in the authorization and appropriations process through increased transparency, debt reduction and oversight.

One of the problems we have in Congress with spending is spending money on projects that shouldn’t be funded with taxpayer dollars.  We must establish transparency and disclosure in the appropriations process.

Supreme Court Nominee
On April 9, 2010, Supreme Court Justice John Paul Stevens announced his plans to retire from the court later this year. This week President Obama nominated Solicitor General Elena Kagan to replace Justice Stevens.

On March 19, 2009, I voted against the confirmation of Elena Kagan to be Solicitor General.

A nomination to the Supreme Court is another matter and I look forward to a thorough examination and debate of Elena Kagan’s credentials for the U.S. Supreme Court. A qualified judge is one who understands the value and the strength and the power of the Constitution of the United States of America, who will rule based on the law, and who will not legislate through activist judicial decisions.  Therefore, I will pay particular attention to her judicial philosophy and temperament.

What’s on Tap?


Next week, the Senate will continue debate on financial regulatory reform.

Sincerely,
Johnny Isakson
 

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