THE RETIREMENT OF CONGRESSMAN DAVE WELDON -- (House of Representatives - October 02, 2008)
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Mr. WELDON of Florida. I will be brief. I want to thank you for rising as you have tonight and acknowledging this time for me, my retirement from the U.S. Congress. It is extremely kind and very nice of you to do this. We couldn't be busier than we are today, and for you, JOHN MICA, to take a moment to acknowledge me and as I understand it, you are also going to say a few words about some of the other retiring Members, I think it speaks very well of you.
I want to thank you for you being my big brother. I got elected in 1994. I came right out of my medical practice. The delegation or Newt Gingrich assigned you to make sure that I would be able to find the restroom and things like that. Of course I am being silly on that point. You gave me a lot of excellent advice on how to be a good servant of the people. I want to thank you for that.
Certainly I am going to be missing people such as yourself, obviously a man very dedicated to fighting for good Republican conservative principles here in Washington; but really more importantly, American principles of freedom and democracy. So you have been an outstanding role model for me.
There will be a replacement for me in a few short months, and perhaps you can take that new congressman under your wing and provide them continued leadership as you have done in the past.
I also want to thank you for all you have done for the State of Florida on the Transportation Committee. Your work has been very, very helpful to my constituents and I really think to the entire State. So thank you, JOHN MICA, for all you do. Certainly I extend my thanks to your wonderful wife, Pat. It has been great getting to know her over the years. I am hoping this is not good-bye, that I will be in some capacity involved to the degree I will be able to see you and your family in the months and years ahead.
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Mr. WELDON of Florida. Well, I thank the gentleman for yielding. I wanted to stay and linger and listen to the direction of your special order here. And I couldn't help but feel the need to come down here and ask you to yield time, and I thank you for doing that.
I sat on the Financial Services Committee from 1996 through to 2002. And one of the first things that was brought to my attention, once I got on the committee, was the concern that many of us had on the committee about the rapid growth of Fannie Mae and Freddie Mac, the two very, very large government-sponsored entities--they call them GSEs. It was sort of a mongrel creation that was somewhat free market, selling stocks and bonds. And then, nonetheless, it had a Federal backing to it creating an impression that it was an arm of the Federal Government.
And the concern was, essentially, that it was not a properly regulated entity. There was this very small agency within Treasury called OFHEO, which was given the responsibility, very small staff, very limited number of examiners, to monitor these two gigantic entities that had assets into the trillions--not billions--but trillions of dollars. And the concern that many of us, many of the Republicans had on the committee was that if one of these entities had significant problems, that it could be a major, major hit to our economy.
And we got tremendous resistance from the left, from the Democrats. They were telling us there is nothing wrong with Fannie and Freddie. Indeed, what I found to be particularly objectionable whenever we would bring up the thing that we were most concerned about, which was giving loans to people who had limited ability to pay back their loans and the potential systemic effect that that could have on our economy, we were accused of being racists. And low and behold--and thank you for mentioning President Bush.
President Bush repeatedly brought bills forward saying Fannie Mae and Freddie Mac represented a significant risk to our economy and that we needed to regulate them better. Of course, the President was rejected by the other side of the aisle in his initiatives, and you can never get anything like this through Congress if you can't get Democrats in the Senate on board because of the cloture rule over there. So we were essentially never able to really move forward in this.
And low and behold, it was discovered in 2004 there were significant problems with fraud, abuse, executives getting--cooking the books, getting huge multimillion dollar payoffs. Some of these--a lot of these people were former Clinton administration people. And then low and behold, we come to today where we have this huge meltdown in the real estate market and the Federal Government literally has to step in and take over both of these entities.
And the important thing that is worth mentioning, we now have a credit crisis, and the reason we have a credit crisis is we have all of these banks holding stocks and bonds in Freddie and Fannie, a lot of it which is now worthless, and so they're seeing their balance sheets very negatively affected by that. And banks, of course, lend out money on a 10-1 ratio. For every $1 of deposits they have, they can loan out $10.
They're seeing hundreds of millions of dollars of their holdings in mortgage-backed securities collapsing in value, and so, therefore, of course, we have a systemic credit crisis and, as a result, one of the toughest economic times that we've had in years and years and years, and a lot of it goes back to failure.
And I really appreciate the gentleman doing this because there were many Republicans on that Financial Services Committee, and I was one of them, who wanted to get better regulation, strengthen OFEO so that they would become a better regulatory agency and actually reduce the size of Fannie and Freddie.
And I will say this, those two entities should never be allowed to be resuscitated. The good assets they have should get sold off to private investors. The money, the revenue that comes in from that should be used to repay the taxpayer for the lost taxpayer money that's going to result from us having to bailout Fannie and Freddie, and they should never be allowed to occur again.
I'm all for helping lower-income people who have the resources to pay for a mortgage to get into a mortgage, but we shouldn't be doing it to the extent that we did do, and the result now is some of the economic problems we're having today.
So thank you, JOHN MICA, for bringing this up. This is an important issue, and I again applaud you for your work on the Government Reform Committee because I know you have been working this issue as well for years.
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