Mr. Berg Goes to Washington
On Wednesday, Rich Berg testified as an expert witness before the United States House of Representatives, House Sub Committee on Banking. The subject of the hearing was informally titled, “Mixed Messages”. The Committee was inquiring about credit availability in the US banking system, and whether current regulatory or accounting structures were inhibiting lending.
The first panel called were representatives of the FED, OCC, OTS and SEC. Rich addressed the statement by Tim Long, Director of the OTS and his obervation that lending would not begin, until the securitization market was cured.
Watch Rich Berg’s testimony below.
Rich Berg Testifies to House Committee on Financial Services
The House Committee on Financial Services is holding a hearing entitled, “Exploring the Balance between Increased Credit Availability and Prudent Lending Standards”. The morning session included testimony and question and answers from the top regulators from the Federal Reserve, FDIC, OCC, OTS and the SEC.The afternoon session consisted of testimony from various community bankers, representatives of banking organizations and Rich Berg who all discussed how the credit crunch was effecting the market. Rich Berg focused on how the current credit rating system consisting of a single letter grade is hard coded in investment policies, regulatory policies, and counterparty agreements and is limiting credit. This single letter grade is exaggerating the risk of multiple-obligor securities removing all the natural buyers of the securities and further depressing the market prices. This also takes away market incentives for new securitizations.
Full testimony from all witnesses is posted on the House Committee on Financial Services website. Please read Mr. Richard S. Berg’s testimony to the committee - final witness on Panel Two.
