Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, delivered the following opening statement today at a hearing to examine the settlement practices of U.S. financial regulators:
"Thank you Mr. Chairman and I would like to thank the panel for coming today. However, I am somewhat skeptical about the motivation for holding this hearing. My understanding is that the minority wants to use this forum to pressure the SEC not to exercise its legal "discretion' to enter into settlement agreements with banks because the they think these cases should be tried in court. This strikes me as nothing more than political opportunism, especially when one considers that these same individuals never miss a chance to voice their opposition to Republican bills that curb the SECs "discretion' in the rulemaking process. Is this a double standard? You bet it is!
"Suggesting that Congress interfere with the SEC's discretion to determine whether to spend taxpayer money on protracted litigation or to settle a case based on the facts the lawyers in the Division of Enforcement have evaluated is completely irresponsible.
"According to a Harvard Law School article, over 95 percent of the lawsuits filed in U.S. courts settle before trial. Why? Because trials are time consuming, expensive, risky, and unpredictable. The SEC understands that reality, and it acts in the best interest of the investors and taxpayers when it settles cases, despite what certain people may think.
"The fact that my colleagues on the other side of the aisle are even considering putting pressure on the SEC to use taxpayer funds to go to trial instead of reaching a settlement makes me question their actual motives.
"Do they want the SEC to bleed itself of funds so that they can justify an increase in funding, are they letting the trial lawyers know they haven't forgotten them, or is this merely a political gimmick designed to appease the base of their party that blames the banks for all of society's ills.
"Whatever the reason, the suggestion that this body should substitute its judgment for the judgment of the SEC's lawyers who are privy to the facts and circumstances of specific cases involving complex financial transactions is completely misguided."