Rep. Jeb Hensarling (R-Texas), the new chairman of the House Financial Services Committee, wants to limit taxpayers' exposure to losses in banking, insurance and mortgage lending by unwinding government control of institutions and programs the private sector depends on, from mortgage giants Fannie Mae and Freddie Mac to flood insurance, the Wall Street Journal reported today. Banks and other large financial institutions are particularly concerned because Hensarling plans to push legislation that could require them to hold significantly more capital and establish new barriers between their federally insured deposits and other activities, including trading and investment banking. "A great case can be made that we need greater capital and liquidity standards," Hensarling said. "Certainly, we have to do a better job ring-fencing, fire-walling—whatever metaphor you want to use—between an insured depository institution and a noninsured investment bank." Industry representatives expressed some level of anxiety about Hensarling's legislative agenda, but because the chairman has not offered details yet, they were reluctant to speak publicly about his plans.
