Scott Garrett

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. Then I will yield to the gentleman from Texas (Mr. Sessions) my remaining time.

Mr. GARRETT of New Jersey. I will yield myself 15 more seconds to make the final point. All of these points in the underlying bill will lead to one thing: a loss of credit and therefore a loss of jobs in America today and in the future as well. The American people have spoken loud and strong: Do not pass any legislation that is going to create hardships for the creation of jobs in this country, and this underlying legislation with its language on derivatives would do just that. With that, I yield such time as he may consume to the gentleman from Oklahoma (Mr. Lucas).

Mr. GARRETT of New Jersey. I yield myself 30 additional seconds. Finally, we agree with the chairman in regards to segregating margin for OTC swaps, although we exempt various margining for segregation requirements based on input from both the buy and the sell side. Margins should be treated as such, especially if a dealer's counterparty wishes it to be so, and should not be commingled with the dealer's funds. Many of the problems associated with the Lehman bankruptcy, I am told and I understand, are related to this very issue. And so requiring margin segregation, we believe, would be an appropriate response to that issue and that problem and would solve it for the future. I reserve the balance of my time.

Mr. GARRETT of New Jersey. Madam Chair, I rise to claim the time in opposition.

Mr. GARRETT of New Jersey. I yield the balance of my time to the gentleman from Minnesota (Mr. Peterson).

Mr. GARRETT of New Jersey. I yield myself such time as I may consume. I appreciate the work of the chairman with regard to clarifying some of the definitions here. I think this goes to the overall issue of the complexity of the issues that are before the House tonight on this matter and on the broader matter of the derivative regulations that we are discussing with the previous amendment and this amendment as well. It goes to the point that I raised just a moment ago in my previous remarks, that if we are going to try to answer to the American public to the three most important questions that they are asking of Congress--no more bailouts, no more legislation that destroys jobs, and no more expansive, larger and spending government--we have to look to what we're doing in the derivative area as well. In the derivative area that we see in the underlying legislation, what we have done is create a Byzantine piece of regulation combining the two, working with two entities that have never worked together in the past before, setting in the underlying legislation margin requirements that potentially end users--although I recognize the previous amendment just addressed that point--margin requirements on them which basically, at the end of the day, if we think about it in basically simple terms, means it will be more costly in this country to do business. It will be more difficult for entities to hedge their risk. And if businesses can't hedge their risk, the other fundamental purpose of this legislation that we hear from the other side to end the idea of systemic risk will be thwarted as well. So think about that. We will be thwarting one of the basic functions that they say is the underlying legislation to end systemic risk because we cause hardship on companies to hedge their risk on the one end, and not addressing one of the major problems this country is faced with today, high unemployment. We must do a better job than that. As I stated before, Republicans have offered a better solution to all of those issues. We have offered a solution with regard to the bailouts, to end taxpayer-funded bailouts. We have offered a solution to end the prospects of less jobs in this country. And we offered a solution respectively to the whole derivative market, as I set forth before. The centerpiece of that solution is something that was actually found in the chairman's bill, and that was the repository idea. We can get all the transparency that we need right now through a trade repository where the OTC trades are reported. We can get the accountability and the transparency that the American public looks for as well through the initiatives that are in the Republican substitute. But we can do so in a manner, therefore, that will not impose additional risk or cumbersomeness or a Byzantine structure, and therefore not affect the hedging abilities or the cost of doing business of companies in this country. We can do so in a manner that will not hurt the creation of jobs. When you think about it, we will have probably discussed three different areas, three different titles of this bill that actually will be hurting jobs. What are they? We haven't talked about the first one too much, CFPA, the Consumer Financial Products Agency. It has already been documented that that will cost literally a million jobs. The wind- down authority, we have already talked about that previously, that will also cost jobs. And here, if you do not handle the derivative situation correctly, that potentially can cause job loss in this country as well. We suggest that the Republican substitute should be considered in this area as in other areas as well. With that, I reserve the balance of my time and commend the gentleman for his work on the underlying amendment that we have here before us today.

Mr. GARRETT of New Jersey. I claim the time in opposition.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. I will.

Mr. GARRETT of New Jersey. I yield 3 minutes to the gentleman from New York (Mr. Lee).

Mr. GARRETT of New Jersey. I remember in committee that we had similarity, but I remember, because I wrote it down, that there was nothing in our bill with regard to this.

Mr. GARRETT of New Jersey. Reclaiming my time, and there is the point. We have this 1,300-page bill that I would hazard the great guess that the vast majority of this body here tonight has not ever had the opportunity to, nor the inclination to, nor, in fact, did read. And now we seem to hear that when it comes to what the impact, the vast impact that this will have on our economy, where is there information as to what they inquired that it would do? It is absent. I spoke before about the point that this bill goes contrary to the American public's claim that they do not want any more bailouts, and I raised reference to one section of the bill which in perpetuity it allows for the creation of switching from receivership into bankruptcy and makes it basically a political decision. Another provision of the bill on page 408 basically says that the Treasury Secretary has unlimited authority to borrow an unlimited amount of money from the Federal Treasury, which means from the American taxpayer. How do we see this? Page 408 of the bill, section 3, ``Borrowing authority when fund assets are less than $150 billion.'' Section (B), ``The corporation may borrow, and the Secretary may lend, any amount of funds that, when added to the amount available in the fund on the date the corporation makes a request to borrow funds, would not exceed $150 billion.'' What does that mean? That means today, as we start this program out, there are zero dollars in the fund. The Treasury Secretary can go to the Treasury, meaning the American taxpayer, and ask for $150 billion from the American public, and they could bail out some company, maybe AIG again, as this past administration helped facilitate. And then after that, there's no money in the fund again, so they go back to Treasury and say, We need another $150 billion, because, under the terms of the bill as written right now, there's no money in the fund and they can borrow up to $150 billion. They ask for another $150 billion. And then a company akin to Lehman or something goes under, or another company over here or the auto companies go under, and they pay it all out the next day. How much is in the fund then? Zero. At which point the Treasury Secretary can go back to the American taxpayer a third time and ask for an additional $150 billion. When does it end? This bill puts absolutely no limit on it whatsoever. It could be $150 billion. It can be $1 trillion. It could be $10 trillion. It's all in the hands of the political appointee, Secretary Geithner, for him to decide where this money goes and how much it goes to, and it can be a political decision because, as we have seen before, he can prop up favorite companies and allow them then to go into receivership and then allow them to come back out of it after he has asked the American public to spend $10 billion, $100 billion, $1 trillion in order to do so. Where is the limitation in this bill? There is absolutely none. So when the other side of the aisle looks chagrined when we say the American taxpayer is on the hook for bailouts, they need only to look at their own bill, page 408 or page 3 over here in the Judiciary Committee, to see that is an unlimited drain on the American taxpayer, that this will allow perpetual bailouts that are never ending and will be made by political appointees for their favorite companies that they want to prop up to the end of the Earth. That, I think, is reason one why we should be opposed to this bill. If there's nothing else in this bill besides those few pages, we should all be voting ``no.'' If there's nothing else in this bill, every American listening to this floor debate tonight should be calling up their Member of Congress and saying, Why are you putting us on the hook to bail out bad businesses and bad business decisions? Why are you putting us on the hook to bail out your political favorite companies that you want to bail out, and why do you want to do so without limitation?

Mr. GARRETT of New Jersey. That provision alone will raise interest rates between 1.4 or 1.6, but say 1.5 percentage points, that means that businesses and individuals trying to get loans will see their loans go from 6 percent up to 7\1/2\ percent. That will mean less jobs today and in the future. How many jobs? Well, one study points out roughly over 1 million jobs under that provision alone. Where else will we be losing jobs? We will be losing jobs due to this whole bailout proposal in this bill. If you put a tax on anything, you're meaning that those businesses can't spend the money here when they have to send it over to the government to be stored over here for some other purposes. So if we are going to ask businesses to spend $150 billion, $200 billion on this new bailout tax, well, some studies have looked at that and said that will result in higher costs for those businesses naturally, less ability for them to invest. If they can't invest it in new plants, materials, and employees, they will be putting it over here. The numbers there we are seeing is around some 450,000 less jobs because of that provision. You're talking between those two provisions alone in the over millions range of jobs not being created or lost because of this legislation. So I will leave to later on my last point, which is that this bill obviously also creates bigger government, more expansive growth of government, more expansive takeover of the private sector and private individuals' lives as well, their decisionmaking lives, as Ranking Member Bachus said at the very beginning comments, all things the American taxpayer has spoken out against. The American taxpayer has spoken out against taxpayer-funded bailouts. They said we want less job destruction. We want less big government. This bill gives us taxpayer-funded bailouts. This bill gives us destruction of more jobs. And this bill gives us a bigger government. All things the American public is opposed to. And that's why I come to the floor tonight and oppose this piece of legislation.

Mr. GARRETT of New Jersey. I thank the Chair, and I thank the gentleman from Texas. Just to go back to a comment--the gentleman from North Carolina made two comments--what is the solution? Well, the gentleman from Texas said here is our solution, and I leave a copy here in case he has not had an opportunity to read it. It is by size a lot less than what you have before you. The gentleman from North Carolina also asked about our studies; and where we say this will hurt jobs because you will be raising credit interest rates by 1.4 or 1.6, I average it out to about 1.5 percent. It translates into X number of jobs, millions of jobs lost. The questions are studies before we implement this. My question to the gentleman is before we pass this legislation today and implement it and impose this burden onto the American business sector and the American public in general, can you tell me which study you are referring to that will not cause a loss of jobs?

Mr. GARRETT of New Jersey. So the bill does have what the American taxpayer does not want to have, which is a continuation of bailouts at their expense. What else does the bill have that the American public is asking not to have? And that is the loss of jobs. I remember being on this floor, and I do remember this conversation very well standing right over there when the majority leader was standing over here at the beginning of the year, and he was predicting, he was promising that if we only passed the $700 billion or $800 billion stimulus package, as the gentleman from Texas said earlier, that we would see the results immediately, not by the summer, not by the end of the year, not by next year, but we would see immediate job growth in this country. We would never see 8 or 8\1/2\ percent unemployment, and we would see the results immediately. Well, that tune changed when unemployment went up to 8, then 8\1/2\ percent, then 9, then 9\1/2\, then 10, then 10.2 percent. Then, all of a sudden, their tune changed to say, well, you won't see it immediately. We will see it some time next year. And now, of course, we're coming to the floor with the majority leader saying that we will see job growth some time next year, but we just need another stimulus package. However many dollars from the American taxpayer pockets that's going to cost, I'm not sure.

Mr. GARRETT of New Jersey. Thank you. Actually, you're right. We saw two things immediately. We saw the loss of 3\1/2\ million jobs during that period of time, and, of course, we saw more borrowing from the American taxpayer and also actually from overseas, China and elsewhere, to the tune of $700 billion or $800 billion. So those are the predictions, those are the promises there. What do we see in this bill? What we see in the bill is the creation of a number of entities, a number of pieces in this bill that will result in losses of even greater numbers of jobs. Just like we saw the studies showing that if we ever passed cap-and-trade we will be seeing millions of jobs lost there, just as we saw the documentation coming out with the health care bill saying we would lose millions of jobs because of that. Here too studies have looked at the CFPA and said that provision alone would raise the interest rates for businesses.

Mr. GARRETT of New Jersey. Yes.

Mr. GARRETT of New Jersey. May I inquire of the Chair the amount of time remaining on both sides?

Mr. GARRETT of New Jersey. Madam Chairman, I yield 4 minutes to the gentleman from Texas (Mr. Neugebauer).

Mr. GARRETT of New Jersey. Madam Chairman, I now yield 6 minutes to the gentleman from Texas (Mr. Hensarling), who has been probably one of the most outspoken leaders in our committee to try to end the continuation of taxpayer-funded bailouts.

Mr. GARRETT of New Jersey. I thought I heard it from you, just as I thought I heard it from you saying that there was nothing in our bill with regard to executive compensation, and I know that we do have language in our bill which also was discussed in committee with regard to executive compensation. So at least in that area I know I heard this from the chairman, and it is in our bill. I thought I heard the chairman say that there's nothing in here with regard to Federal powers. Regardless, if it's just one issue or two, I would just ask the chairman to refer back to my earlier comments, the reason we're concerned with the extensive nature of the largeness of the bill is because when it gets so large, 1,300 pages, your side of the aisle is not familiar with what's in your bill, and even our bill, which pales in comparison by size, you fail to know exactly what's in ours as well. The American public has spoken out and says they're opposed to more taxpayer-funded bailouts. This was one point where we were in discussion just a moment ago, an hour ago, where I did have to point out to the chairman that in your bill, in the Judiciary Committee self- executing amendment, there is language in there which basically perpetuates what has occurred already in this year that the American people are opposed to is taxpayer-funded bailouts. Let me explain it very quickly. What happens is the Federal Government is able to set up a taxing mechanism on businesses in this country to the tune of $150 or $200 billion, and until we establish that, you can--the Treasury Secretary can draw on the taxpayer dollar to help fund this mechanism. And even after that is set up, under this provision on page 3, the corporation may, as I said before, convert what is called a receivership--which basically would be putting the business out of business, which is something that the chairman says would occur--but then would allow it to proceed to a chapter 7 or a chapter 11 bankruptcy, and, of course, that basically means that the business is reorganized. So what's occurring here is we are allowing the Treasury Secretary, a political appointee, to make the decision, the life-and-death decisions of businesses of this country. And they will say that this company is going to survive, and this company is not going to survive, and this company over here is going to survive on the backs of American taxpayers. This company is going to survive even though it made bad decisions, risky decisions, but for whatever political purposes or otherwise, the Treasury Secretary can sign off and say, take taxpayer dollars, funnel it into that company for a while under the corporations act, under the bridge loans and bridge proposals and what have you, and then under section B on page 3 convert it back into a reorganization and allow it to flourish once again with the blessing of the Treasury Secretary and of this administration and of the American taxpayer as well.

Mr. GARRETT of New Jersey. I yield the gentleman an additional 1 minute.

Mr. GARRETT of New Jersey. Madam Chair, I yield 2 minutes to the gentleman from Florida (Mr. Putnam) who recognizes that Glass-Steagall had absolutely nothing to do with the bailout of Bear Sterns and Lehman and the S and L crisis, and the gentleman who also recognizes that the American public is tired of the bailout mentality which would be sustained by this bill.

Mr. GARRETT of New Jersey. I will yield the gentleman another 2 minutes.

Mr. GARRETT of New Jersey

Mr. GARRETT of New Jersey. You yielded me 2 minutes, I believe.

Mr. GARRETT of New Jersey. I'm sorry, I thought you wanted a response.