Subject: HRC's Financial Policy
From: "Altman, Roger" <[email-masked]>
To: "'Jake Sullivan ([email-masked])'" <[email-masked]>
Cc: 'John D. Podesta - Washington Center for Equitable Growth ([email-masked])' <[email-masked]>
Date: Wed, 8 Apr 2015 23:59:06 +0000

To:       Jake Sullivan
From:   Roger Altman
Re:       HRC's Financial Policy

Following our conversation, I thought further about this subject.
Let me review the rhetorical agenda first, keeping in mind the importance of conveying authenticity.  My suggestion is that she find an opportunity to acknowledge the depth of past abuses and the resultant damage inflicted on tens of millions of American.  And, that the regulators have been right to tighten capital, liquidity, transparency and other requirements and should keep it up.
Then, under the heading of "unfinished business," she might present her own financial reform agenda.  I would suggest some or all of these steps.

¾    Housing Finance

¾    Housing starts are only 2/3 of their pre-bubble (2004) level, and this is suppressive growth.  Household formation dates have not fully recovered, and that's one explanation.  Another big one is reduced mortgage availability.  Following 2008, the pendulum on credit scores, as judged by the GSE'S, has swung too far in the other direction.  Recall Ben Bernanke's recent observation that he was denied a mortgage.  And, The Urban Institute reports that, had 2001 credit score requirements applied over the past five years, four million more American families would have mortgages.  Making mortgages available to the middle class again would seem important.  This would require GSE reform legislation.

¾    Expanding Credit Availability for Small and Minority-Owned Businesses

¾    Business formation rates are down, which is an unhealthy development.  There is much debate over the causes, but the post-2008 lack of credit availability is one.  Outside of technology, it is harder for average Americans to start a business.

¾    Strengthening, expanding  and deregulating community banks would address some of this.  Also may have bipartisan appeal.

¾    Better and Smarter Financial Regulation

¾    the process of tightening bank capital ratios, limiting leverage, applying stress tests...should continue

¾    there are too many overlapping regulators, however....Fed, OCC, FDIC, SEC, CFTC, FHFA, etc.  We need fewer but stronger regulators to deter "capture and shopping"

¾    also need better oversight of the shadow banking system; hedge funds, credit opportunity funds, non-bank mortgage servicing organizations and the like

¾    Consumer Financial Protection

¾    there likely are additional constructive reforms which apply to payday lending, certain credit card practices, and student loan servicing

¾    Executive Compensation

¾    Consider whether the non-deductibility of annual compensation over $1 million should be applied to performance pay, either in financial services or throughout U.S. business

cc:        John Podesta

Roger Altman
Evercore Partners
55 East 52nd Street
35th Floor
New York, NY  10022
T:  212.857.3110

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