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Evolution of an Economic Crisis?: The Subprime Lending Disaster and the Threat to the Broader Economy

Sep 19 2007

216 Hart Senate Office Building - 10:00 am

Washington D.C. - Until recently, most mainstream economic experts—including Federal Reserve Chairman Ben Bernanke—have suggested that the widespread and serious problems in the subprime mortgage market, while a problem for the holders of subprime borrowers and their communities, would have a minimal impact on the larger American economy. However, a number of recent economic developments—including this summer’s credit crises in global financial markets, driven almost entirely by fears about the collapsing American subprime mortgage market, the accelerating slump in housing markets across the country, and the startling August jobs report—have made it increasingly clear that the economic spillover from the subprime mortgage meltdown is unlikely to be contained to one sector of the economy.

The Joint Economic Committee, investigated the economic threat that the subprime mortgage mess poses to the broader economy, and helped us learn more about the kind and size of economic problems this crisis may produce going forward.

A Local Look at the National Foreclosure Crisis: Cleveland Families, Neighborhoods, Economy Under Siege from the Subprime Mortgage Fallout

Jul 25 2007

216 Hart Senate Office Building - 10:00 am
Washington D.C. - There have been widespread and serious problems in the subprime mortgage market over the past several months, but little attention has been paid to the economic impact of foreclosures caused by subprime loan defaults on local communities across the nation.

Over the last year, Ohio has consistently ranked in the top 10 of states with the highest rate of foreclosures in the country. Cities such as Dayton, Akron and Cleveland are ranked in the top 20 metropolitan cities nationally with the highest number of foreclosures in 2006. According to June 2007 data, Cleveland has been hit particularly hard by the increase in foreclosures. In particular, Cuyahoga County has the largest number of new foreclosure filings in the country. With 3,261 new unique address foreclosure filings in June, the county has one new foreclosure filing for every 169 households.  Last year alone, Cuyahoga County had 13,000 foreclosures.

The JEC examined the destructive impact of the foreclosure boom on Cleveland, Ohio, which is currently among the cities with the highest rates of subprime foreclosures in the country.  The hearing investigated the impacts of foreclosures on homeowners, neighborhoods, and cities, and explore federal policy responses.

Investing in Young Children Pays Dividends: The Economic Case for Early Care and Education

Jun 27 2007

216 Hart Senate Office Building - 11:00 am

Washington D.C. - The JEC discussed how investments in early childhood programs can improve child outcomes, ease the burden on public resources, enable higher labor force participation, and lead to higher future productivity and economic growth. The committee heard testimony from expert witnesses including a Nobel Prize winning economist, the Governor of Kansas, Kathleen Sebelius, and a child care expert from Pennsylvania concerning the inadequacy of current investments in child care and early education and how the federal government can help states develop and expand high quality early childhood development and education programs.

 

Importing Success: Why Work-Family Policies from Abroad Make Economic Sense for the U.S.

Jun 14 2007

216 Hart Senate Office Building - 10:00 am

Washington D.C. - The Government Accountability Office (GAO) presented findings from a new report on policies used abroad to help workers - especially women - balance the competing demands of employment and care-giving responsibilities.  The new GAO report shows the U.S. lags far behind other industrialized nations in providing policies that support working parents and their children.  The committee heard testimony from expert witnesses about how American workers, businesses, and the overall economy could benefit from improved workplace policies, including extended maternity and paternity leave, increased access to child care, more paid sick and vacation time, and flexible work schedules.

  
 

Is Market Concentration in the U.S. Petroleum Industry Harming Consumers?

May 23 2007

216 Hart Senate Office Building - 10:00 am
Washington D.C. - The Bush Administration has allowed an increase in oil refinery mergers to go unchecked, even as reduced refining supply seems to be pushing up gas prices.  The rise in gasoline prices is helping refiners generate the highest margins from refining since at least 1990, allowing them to report record profits.  Meanwhile, consumers are facing harmful price spikes and lack of cheaper alternatives, such as E85, at the pumps.

The JEC examined the impacts of consolidation in the oil and gas industry on competition, gasoline prices, and consumers’ energy choices.  Specifically, the Committee investigated whether oil industry mergers and increased market concentration have enabled firms to raise their prices above competitive levels and strategically withhold capacity to keep prices high; and investigated whether firms are preventing the entry of cheaper fuel alternatives for consumers at the pump.

Are the Explosive Costs of Elder Care hurting Family Finances and Business Competition?

May 16 2007

216 Hart Senate Office Building - 10:00 am
Washington D.C. - The “Sandwich Generation,” is the growing number of families who are caught between the conflicting demands of caring for their aging parents, while raising their children.  From 1992 to 2004, the percentage of households 55 and older with more debt than assets grew faster compared with the overall population.  The trends toward delayed childbearing, smaller family size, longer life expectancy, and increasing costs, are placing substantial burdens on the sandwich generation, just when they should be saving for their children’s college tuition and investing in their own retirement.

The JEC examined the growing economic impact of elder care on families, businesses, and the broader economy.  As the 77 million baby boomers approach retirement and as more women enter the workforce, these problems are only expected to increase. The number of aging parents per worker between the ages of 45 and 54 is expected to double by 2035.

The Economic Outlook

Mar 28 2007

216 Hart Senate Office Building - 10:30 am

This was the first Congressional appearance for Chairman Bernanke after the March 21 FOMC statement, which showed greater uncertainty about the future direction of the economy and Fed policy than previous statements but without specifically mentioning the subprime mortgage market.  As the subprime loan market continues its downward spiral, trade deficits continue to be large and unsustainable and other economic news breaks, Sen. Schumer and the JEC members asked Chairman Bernanke for his views and guidance on the economic outlook. 

Addressing the Problem on African-American Male Unemployment

Mar 08 2007

562 Dirksen Senate Office Building - 10:00 am

Washington D.C. - There is a growing crisis of joblessness for African-American men. Across the country, far too many black men – especially in urban areas – face difficulty finding and keeping work. The numbers are staggering and getting worse.  As far back as 1980, a 20-year old black man was almost twice as likely to be unemployed than a white male of the same age.  Even during the economic boom of the 1990s, the annual labor force participation rate of African American males over 20 dropped from 75 percent in 1990 to 72 percent in 1999, and it remained between three and four percentage points below that of white males with few exceptions. The recent downturn in manufacturing jobs will exacerbate African-American male unemployment numbers because they make up a large share of those jobs.

The JEC examined federal policy solutions, such as job training and social insurance reform, that will help us meet the challenges of this serious problem.  The landmark JEC hearing marked the first significant effort by the committee to address the economic status of African Americans since 1990 and it came on the eve of the release of new employment figures by the federal government.  As of January 2007, the unemployment rate for African American men age 20 and older is 7.5%.

Meeting the Challenge of Income Instability

Feb 28 2007

562 Dirksen Senate Office Building - 10:00 am

Washington D.C. - Many American families experience substantial variability in their year-to-year earnings and income, and their economic instability may be greater than in the past due to the consequences of globalization and technology. This hearing explored the extent of earnings and income instability faced by middle-class families in our dynamic economy and examine policies like wage insurance and income averaging to empower workers to manage both temporary earnings losses and more permanent declines.  Senator Schumer is working with Rep. Jim McDermott (D-WA), Chairman of the Ways and Means Income Security and Family Support Subcommittee, on a wage insurance proposal to be introduced next month.

Ensuring Our Economic Future by Promoting Middle-Class Prosperity

Jan 31 2007

106 Dirksen Senate Office Building - 9:30 am

Washington D.C. - In an increasingly dynamic global economy, many American families are facing substantial new economic risks that are undermining their ability to save for their retirements or invest in their futures.  Unless action is taken to restore a sense of economic security and chance for prosperity to the middle class, the excessive risk shouldered by most American families will take its toll on economic growth. In its first hearing of the 110th Congress the Joint Economic Committee examined the impact of middle class economic insecurity on long-term economic growth.