FOX "Your World" Interview With Representative Scott Garrett - New Regulatory Structure For Financial Industry - Transcript

Interview

Fox News Channel "Your World" Interview With Rep. Scott Garrett (R-Nj) Interviewer: Neil Cavuto
Subject: New Regulatory Structure For Financial Industry

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PRESIDENT OBAMA: (From videotape.) I am proposing that the Federal Reserve be granted new authority and accountability for regulating bank holding companies and other large firms that pose a risk to the entire economy in the event of failure.

MR. CAVUTO: All right. Well, the president laying out his rules of the road, as we've been talking about, clamping down today on the nation's financial system. Now, he says it's going to spur investor confidence. My next guest, though, fears the opposite. Republican Congressman Scott Garrett, a member of the Financial Services Committee.

Congressman, what do you make of that that this is a way of kind of streamlining what we've got and making everyone more accountable. What do you think of that?

REP. GARRETT: Well, it's good words. I think that much of what he said, both Republican Republicans and Democrats would agree on. We want to have more accountability. We want to have more transparency. The question is how you get there. And unfortunately, once you begin reading his document, you realize that basically he's stuck on square one, and that is he's stuck on the philosophy we're going to have in statute and in law perpetuate the bailout mentality that we've had in Washington over the last year. And we're going to have more regulation, more government to try to solve the problem and putting the taxpayer on the hook into perpetuity. And I think America --

MR. CAVUTO: But you know the rap against Republicans, you guys haven't come up with anything smarter. You say rely on the system and the structures we have now, but many argue those systems and structures fail. They fail the average investor, they fail the average bank stock holder, the average bank depositor, the average mortgage holder. So your solution is no better.

REP. GARRETT: Well, actually, we rolled out a plan a week ago Thursday, so we were actually ahead of the game or ahead of the curve with regard to this administration rolling out a multi-point plan on how to address the situation. Because as I said, we agree that there are problems in the marketplace that need transparency, need accountability. But we say, let's draw a line in the sand and say all this idea of bailouts in the past has got to end. And going forward, we don't need a resolution authority like the president talks about where you're going to continue bailouts. We say, allow the bankruptcy courts to handle that.

MR. CAVUTO: I know this wasn't your vote, but why didn't you say that last fall then when President Bush was looking at these same bailouts and these same rescues? Many in your party went right along with that, merrily right off the cliff.

REP. GARRETT: Unfortunately, many of my party did. As you know, I was one that was leading the charge in the other direction against the president, saying that we cannot do TARP, do not do TARP I or TARP II, III, IV, V or whatever we're up to. We were saying that the president was leading us in the wrong direction. And the poll numbers in the November election sort of showed that the American public agreed.

But the problem now is is that Obama has bought into so much of what President Bush was doing. The bailout idea, to say that the government can be the solution, to say that more regulation -- it's the same type of regulations that were on banks, which didn't solve the problem, they want to extend to the rest of corporate America and hedge funds. Well, if they didn't solve the problem for the banks, why do they think it's going to solve in an area that didn't really cause the problems in the first place?

MR. CAVUTO: So bottom line, Congressman, you think that another layer of regulation or another, let's say, consumer protection watchdog agency, whatever they're calling it, another that would be in charge of handling the next bailout, if and when one comes up, is just layering on layering, right?

REP. GARRETT: It's doing two things. One, it's layering upon layering. And actually, it could be doing more harm than good. If you set up this consumer financial products safety commission that he wants to set up, all the bankers, all the experts say that's going to create more problems than just separate the two functions. There's just so many problems with it.

MR. CAVUTO: All right, Congressman, thank you very much. Just a reminder here. I was presenting the administration's arguments why they think this works because no one from the administration of any heft is coming on this show or network.

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