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Senators Grill Obama Administration Nominees

The ""Senate Banking Committee"":http://banking.senate.gov/public/ pressed nominees for the nation's major financial services and housing agencies over a myriad of recent issues Thursday, with insolvency for the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration (FHA) and an increasing number of bank failures prevailing in discussions.


The nomination hearing for the three Obama administration prospects ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô FHA commissioner-nominee Carol Galante, ""FDIC"":http://www.fdic.gov/ vice-chairman nominee Thomas Hoenig, and ""HUD"":http://portal.hud.gov/portal/page/portal/HUD deputy secretary-nominee Maurice Jones ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô quickly transitioned from congratulatory to tense and at times awkward.

""Sen. Richard Shelby"":http://shelby.senate.gov/public/ (R-Alabama) led the charge with a line of question ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô particularly for Hoenig, a former Fed president from Kansas City known for his controversial views on regulation ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô as the lawmaker asked the nominee to describe his approach to challenges in the banking sector.

Laying out two supervisory methods, he said that regulators should ensure a capital base, to which Shelby


responded by interjecting and asking, ""Two? There are two?""

""Yes, there are two,"" Hoenig offered before saying, ""Examine the assets and make sure they are sound and if not, force the right actions that will minimize the losses first to the bank, then to the [Deposit Insurance Fund].""

Bank failures continue to spread across the country, with the national tally for this year recently hitting 85 as the FDIC steps in to insure depositors and sign off on the sale of assets to acquiring institutions.

Galante had praised Hoenig earlier before she herself fell under scrutiny from Shelby over the matter of a future bailout scenario for the FHA, which made headlines recently for failing to meet a 2-percent capital reserve threshold required by law.

Asked by Shelby about her beliefs over conforming loan limits, which ""President Barack Obama"":http://www.whitehouse.gov/administration/president-obama/ again fixed at $729,750 Friday, she responded by saying, ""We believe that lowering the limits is a step to ensure that private capital will return to the market.""

Said Galante: ""There are people who would like to see us continue to stay in the business, and I just want to say that we will implement whatever Congress decides on this matter.""

She also acknowledged criticisms about FHA's larger position in the market by calling it ""a somewhat outsized role,"" expressing a desire by the agency to return to a ""traditional"" role, often cited as one in which the FHA guarantees only 5 percent of government-backed loans.

The Senate has as yet scheduled no further nomination hearings for the three officials.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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