October 17, 2008
On Thursday October 16th, Congressman Mike Capuano hosted an economic roundtable to talk about the issues facing our economy and discuss approaches for improving the financial picture, both in the short term and for the future. More than twenty participants shared their thoughts during a two hour exchange.
"I remain convinced that our economy is deeply troubled. Drastic measures have already been taken and more may be needed to ease the financial difficulties we are experiencing. I think most of us recognize that it will take some time for recent measures to work. It is very likely that Congress will take further action in the weeks and months ahead. Because of this, I was interested in talking with academic economists as well as those in the financial services industry, to hear their thoughts on government response to the crisis thus far and also to get a sense of where they think we should go from here," stated Congressman Mike Capuano, a member of the House Committee on Financial Services.
There was broad agreement on the need for some sort of economic stimulus that focused on providing funding for infrastructure improvements, which would create jobs and provide tangible benefits to our cities and towns. Participants also generally believed that the Treasury's recent decision to purchase equity in banks as a way to loosen frozen credit markets and restore confidence in the system was a much more sensible step than earlier proposals to buy up bad debt and take it off the books of troubled entities.
"I am pleased that Secretary Paulson has decided to focus on this approach rather than the original proposal of buying toxic assets from those entities who got themselves in trouble," stated Congressman Capuano.
All in attendance recognized that the current regulatory structure is not sufficient to address the reality of today's financial services industry, but there was a wide range of opinion on how to effectively restructure and expand the existing regulatory framework.
"The issue of regulatory reform is one that I have personally identified and pushed for years in Congress and I know there will be a renewed focus on this in light of the current economic situation, as there clearly should be. It is my hope that we take deliberate and thoughtful steps toward real regulatory reform. Rushing through reactive measures can miss important aspects of the problem and sometimes create overly burdensome regulations that push the pendulum too far to the other side", stated Congressman Capuano.
Finally, participants had a wide ranging discussion about the housing market, which many have identified as the root of the economic crisis. Much like the discussion currently taking place in Washington, there was little consensus on what should be done about it. Suggestions ranged and included lowering interest rates to encourage more home purchases, renegotiating individual mortgages by writing down the principal to the current home value, promoting long-term savings, and allowing home prices to level out on their own.
"I am grateful to the men and women who took time out of their busy day to spend some time with me talking about these issues. I expected and received a wide range of opinion on almost everything we discussed. I anticipate holding more discussions like these as we work toward crafting additional measures to ease our economic crisis," stated Congressman Capuano.
Participants included Robert Smyth from Citizens Bank MA; George Schwartz from the Boston Private Bank; Gene Foley from the Harvard University Credit Union; Mary Ann Clancy from the MA Credit Union League; William Hamilton from the Federal Home Loan Bank Boston; Jim Smith from the Investment Company Institute; Daron Acemoglu from MIT; David Warsh from Economic Principals; Jan Miller from Wainwright Bank; Jim Stone from Plymouth Rock Assurance; Jim Segel from the House Committee on Financial Services; Con Hurley from the Boston University Morin Center; Bill Hornby from Century Bank; Jim Cataldo from Suffolk University Sawyer School; Yannis Ioannides from Tufts University; Dirk Hofschire from Fidelity Corporation; Jack Armstrong from Liberty Mutual; Jim Gallagher from John Hancock Financial; Ben Friedman from Harvard University; and Lynn Browne from the Federal Reserve Bank of Boston.