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WASHINGTON — Congressman Jeb Hensarling, the top Republican on the House Financial Services Committee on Financial Institutions and Consumer Credit and lone sitting Member of Congress on the Congressional Oversight Panel for the TARP program released the following statement after being briefed by President Obama at the White House about the Administration’s plans for regulatory restructuring:
“Unfortunately, the Democratic plan has arrived at the wrong diagnosis of what caused the financial crisis, which has caused them to apply the wrong remedy. It wasn’t a lack of regulation that caused the financial crisis, but dumb regulation - government intervention in the markets – that caused the problem.
“It was telling that Secretary Geithner and Mr. Summers never mentioned taxpayers once in their Washington Post rollout of their plan this week. Perhaps that’s because they’ve chosen to create a system that perpetuates bailout nation – at taxpayer’s expense. As I feared when I voted against this plan last year, bailouts are like rabbits – they multiply uncontrollably, all at the expense of working American families. This plan will result in a permanent government occupation of our economy.
“While the White House and Congressional Democrats have offered more of the same, I’m proud to have helped write a Republican alternative that modernizes our financial markets and protects taxpayers. The GOP plan ends taxpayer funded bailouts, ends the government rewarding failure and picking winners and losers and restores market discipline.
“We need smarter regulation, not just more regulation; that’s why we call for streamlining the current framework of overlapping and redundant Federal financial regulatory agencies by centralizing supervision of deposit-taking entities in one agency while preserving charter choice as well as the dual banking system. However, the Administration significantly increases the power of the Federal Reserve, vastly increasing the liability faced by taxpayers.
“Additionally, any regulatory reform plan that does not fundamentally change the structure of Fannie Mae and Freddie Mac is incomplete, insufficient and inexcusable. Fannie and Freddie are the most significant cause of the crisis. That’s why the Republican plan would phase out taxpayer subsidies of Fannie Mae and Freddie Mac over a number of years and end the current model of privatized profits and socialized losses.
“Finally, we should reject any attempt to stifle innovation that would impede the introduction of new financial products on the market. The success or failure of a financial product should be determined by the willingness of the financial markets to use it, not the government’s desire to outlaw it. Once again, the Administration is following the advice of the White House Chief of Staff, Rahm Emmanuel, using a crisis to do things they couldn’t do before. Its clear that consumers need more effective disclosure about the financial products they use, but it is not clear how this plan to restrict consumer choice would have stopped bailout mania – and the White House is taking the opportunity to create a consumer regulator that will put the “no” in financial innovation.
“Republicans look forward to working in bi-partisan fashion with Chairman Frank to enact regulatory reform legislation that modernizes our regulatory rules without installing the government as the final arbiter of justice. The taxpayer has had enough bailout mania, and the Republican plan ends that era once and for all.”
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