This Week in ESG and Impact Investing

On July 29th, the Subcommittee on Housing and Community Opportunity held a hearing on Academic Perspectives on the Future of Public Housing. Testifying were Dr. Thomas D. Boston, Professor, School of Economics, Georgia Institute of Technology, Orlando Cabrera, Chief Executive Officer, National Community Renaissance and Nixon Peabody, Dr. James Fraser, Associate Professor, Department of Human and Organizational Development, Vanderbilt University, Dr. Edward Goetz, Director, Center for Urban and Regional Affairs, University of Minnesota, Dr. Laura Harris, Assistant Professor, School of Urban Affairs and Public Policy, University of Memphis, Mr. David R. Jones, President and Chief Executive Officer, Community Service Society of New York, Dr. Mark Joseph, Assistant Professor, Mandel School of Applied Social Sciences, Case Western Reserve University, and Dr. Susan Popkin, Director, Program on Neighborhoods and Youth Development, The Urban Institute. In the opening...

According to MarketWatch.com, "The U.S. government made a 23% return supporting Goldman Sachs during the global financial crisis, the investment bank said Wednesday as it unwound one of the last taxpayer-funded investments it received last year." This is incorrect. If you include the $13 Billion that Goldman received through AIG (to make Goldman whole on Credit Default Swap transactions) we lost around 53%.

On July 21st , Federal Reserve Chairman Ben Bernanke testifies before the Full committee of the House Financial Services Committee for his semiannual Humphrey Hawkins Hearing on Monetary Policy. Mr. Bernanke’s testimony is summarized as follows and copy of the written statement is available on the committee’s web site at: http://www.house.gov/apps/list/hearing/financialsvcs_dem/fchr_072109.shtml Mr. Bernanke’s early responses to the Wall Street Journal (wsj) were cited by Barney Frank (D., Mass.), the Committee’s chairman as his opening statement. Mr. Bernanke’s quotes on the WSJ also became some of the lawmakers concerns. Expansion of GAO audit According to the WSJ’s article “ Bernanke Heads to Congress Battling Calls to Tame the Fed ”, Mr. Bernanke strongly opposed the proposal to audit the Fed, calling it "self-defeating and dangerous." He said that the risk is that if investors see the Fed facing new political oversight, they will doubt its ability to take unpopular steps...

Looks like they got that one wrong. On January 17, 2008, the Chairman of the Federal Reserve Board, Mr. Bernanke, testified that "A recession is probably not on the horizon, but quick passage of an economic-stimulus package plus aggressive action by the Federal Reserve are the appropriate prescription for the ailing economy.." What we got wrong. We note that on June 18, 1998, in a letter to Betsy White, Senior Vice President at the NY Fed, we said: "Finally, it is our continuing belief that the Federal Reserve Board should be designated a 'Superregulator,' with broad responsibility for overseeing the activities of banks, thrifts, pension funds, insurance companies, mutual fund companies, brokerage firms and investment banks. We note our belief that financial institution convergence, driven by recent advancements in financial and computer technology, requires the creation of such a 'Super-regulator.' " We, and others, no longer believe the Federal Res...

On July 16th , the Full committee of the House Financial Services Committee held a hearing on community and consumer advocates’ perspectives on the Obama administration’s financial regulatory reform proposals. Testifying were Joseph L. Flatley- Massachusetts Housing Investment Corporation, Oliver Ireland- Morrison & Foerster LLP, Edmund Mierzwinski-U.S. Public Interest Research Group, Janet Murguia, National Council of La Raza, Travis Plunkett-Consumer Federation of America, John Taylor- National Community Reinvestment Coalition, and Nancy Zirkin- Leadership Conference on Civil Rights. In his opening statement, Chairman Barney Frank replied to yesterday’s arguments on the “plain vanilla” mortgages. There were concerns that “plain vanilla” mortgage product would have the impact of reducing consumer choice and hurt financial innovations. He explained that the innovations are important. But, innovations should be in the context of regulations. He claimed that although excessive regula...

On July 15th , the Full committee of the House Financial Services Committee held a hearing on the banking industry perspectives on the Obama administration’s financial regulatory reform proposals. Testifying were Steve Bartlett-Financial Services Roundtable, John A. Courson- Mortgage Bankers Association, Chris Stinebert- American Financial Services Association, Steven I. Zeisel- Consumer Bankers Association, Professor Todd J. Zywicki- George Mason University, Denise M. Leonard- National Association of Mortgage Brokers, Edward L. Yingling- American Bankers Association, R. Michael S. Menzies- Independent Community Bankers of America. In his opening statement, Chairman Barney Frank explained that there are lots of opinions and complaints with regard to the Obama administration’s financial regulatory reform proposals. He believes that these opinions and complaints are important during the establishment of this new regulation. He anticipated today’s discussion from the banking industry pers...

At 10:00 a.m. on Friday, July 10, 2009, in 1100 Longworth House Office Building, the Full Committee of the House Agriculture Committee and the House Financial Services Committee conducted a hearing titled "A Review of the Administration’s Proposal to Regulate the Over-the-Counter Derivatives Market." Timothy F. Geithner , Secretary, U.S. Department of the Treasury, was the only witness. The hearing began with a consideration of the risk to taxpayers from the over the counter derivatives market. According to Wikipedia , "Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. The OTC derivative market is the largest market for derivatives, and is largely unregulated with respect to disclosure of information between the parties, since the OTC market is made up of banks and other highly sophisticated parties, such as hedge funds. According to the Bank f...

According to the Washington Post , "Sen. Daniel K. Inouye's staff contacted federal regulators last fall to ask about the bailout application of an ailing Hawaii bank that he had helped to establish and where he has invested the bulk of his personal wealth." While we have seen this before , I think the Senator's case differs significantly from the OneUnited case. Black-owned OneUnited "sought aid as community 'beacon'", had few inner city loans, and still "got $12 million from the US bank bailout fund." The cases are different because: "Regulators in October (2008) concluded in a cease-and-desist order that OneUnited.. had poor standards for qualifying and documenting loans, and gave top executives excessive pay and perks. Two of the perks regulators targeted were a $6.4 million beachfront Santa Monica mansion (1% of OneUnited's assets) that management used while in California and a Porsche SUV driven on company business in Boston....