or Login to see your representatives.

Access Candidates' and Representatives' Biographies, Voting Records, Interest Group Ratings, Issue Positions, Public Statements, and Campaign Finances

Simply enter your zip code above to get to all of your candidates and representatives, or enter a name. Then, just click on the person you are interested in, and you can navigate to the categories of information we track for them.

Public Statements

Hearing of the Senate Banking, Housing and Urban Affairs Committee - Examining the European Debt Crisis

Statement

By:
Date:
Location: Washington, DC

U.S. Senator Richard Shelby, ranking Republican on the Committee on Banking, Housing and Urban Affairs, today made the following statement at a hearing to examine the European debt crisis.

Statement of Senator Richard C. Shelby

Committee on Banking, Housing and Urban Affairs

February 16, 2012

"Thank you, Mr. Chairman.

"During the past year, the European Union has been embroiled in a fiscal crisis, brought on by years of reckless government budget deficits and sluggish economic growth. The focus of the crisis has been on the relatively small economy of Greece, but E.U. governments fear that it could quickly spread across the continent.

"Other European countries are particularly vulnerable because of their own strained balance sheets. Portugal's debt-to-GDP is expected to exceed 111 percent this year. Italy's debt-to-GDP is about 120 percent. Meanwhile, economic growth in the Eurozone has averaged between one and two percent for the past decade.

"To contain the crisis, European leaders have taken a series of unprecedented actions. Most of these actions have required substantial backing by European taxpayers. EU leaders established the European Financial Stability Facility, which can borrow more than $500 billion from member states to loan money to countries at risk.

"The IMF has also provided numerous loans to European countries. It recently bolstered a special lending facility with the capacity to lend another $500 billion. Because the United States is the single-largest contributor to the IMF, this means that U.S. taxpayers are on the hook for bailing out Europe.

"In addition, the European Central Bank has stepped in with emergency interventions. The E.C.B. has purchased about $300 billion in risky sovereign debt and has provided more than $600 billion in three-year liquidity to Eurozone banks.

"But, it looks like the bailouts and backstops will not end there. European and IMF leaders have said there is a need for even more firewalls backed by hundreds of billions of dollars.

"Despite all of these extraordinary actions, however, there remains a great deal of uncertainty about whether the E.U. has done enough to weather the crisis.

"I hope our witnesses today can provide an assessment of the crisis and how it is likely to play out over the next several months. In particular, do they believe that Europe's response has been adequate? Are there specific actions that they recommend be taken to stop the crisis from spreading?

"Given the global nature of finance, we should be under no illusions that our economy is somehow immune from the effects of the European crisis. I hope, therefore, that our witnesses will provide their assessments of how serious a threat the E.U. crisis is to the U.S. economy.

"More importantly, I would like to know what they have done to protect the U.S. financial system. If the crisis in Europe does spread to the U.S., are the financial regulators prepared and able to minimize its impact? In particular, what has the Federal Reserve done to ensure that U.S. banks have in place appropriate safeguards?

"One of the lessons from the 2008 financial crisis was that regulators and policymakers need to take decisive and pro-active steps to prevent manageable financial problems from growing into uncontrollable systemic shocks. Not only were the Federal regulators too slow to react to the 2008 crisis, they were, in some respects, co-conspirators. I hope they will not be caught off guard again.

"The fiscal crisis in Europe should also be a cautionary tale for this country. Europe's fate may be our own if we do not act aggressively to get our own fiscal house in order. The E.U. crisis shows that even advanced economies cannot avoid the consequences of excessive government debt, high taxes and subpar economic growth.

"Unfortunately, the President's budget released this week contains the fourth year in a row of deficits over $1 trillion. Combined with the slowest economic growth in a generation, these deficits have caused our debt-to-GDP to soar from 40% to nearly 70% in 4 short years. This is clearly an unsustainable path.

"Therefore, we need to get serious about controlling the Federal government's debt while we still have the opportunity. Otherwise, we will share Europe's fate.

"Thank you, Mr. Chairman."


Source:
Back to top