[Congressional Record Volume 154, Number 154 (Friday, September 26, 2008)]
[House]
[Pages H10120-H10121]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            DEAL OR NO DEAL

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey (Mr. Garrett) is recognized for 5 minutes.
  Mr. GARRETT of New Jersey. Mr. Speaker, I come to the floor to follow 
the gentlewoman from North Carolina (Ms. Foxx) and address the issue of 
the bailout. She started her talk with deal or no deal. There was talk 
in the media that there was a deal. We heard from Senator Dodd and the 
chairman of our committee and other leaders on the other side of the 
aisle yesterday that there was a deal. Unfortunately, the fact of the 
matter was that there may have been a deal between themselves and the 
White House, there was no deal obviously to bring the bill to the 
floor, or at 8 or 9 at night, we would have seen the Speaker of the 
House bring the bill to the floor. That is evidence of the fact that 
there never was a deal.
  We do know the fact is we have a serious problem in this country, a 
problem that must be addressed now, a problem which requires both sides 
coming together to try to find the solution to the problem.
  As the previous speaker said, there are alternative solutions on the 
table, solutions that economists and business schools across the 
country have come behind and said can be the credible solution and one 
which would not put the taxpayers of the country on the hook.
  I would suggest that one way of coming to a solution is to decide 
that we are not going to go back to those same people who helped bring 
us to this problem in the first place.
  One of the underlying problems that brought us to this situation is 
the fact that there was easy money in the economy for too long a period 
of time. From 2001 to 2004, interest rates slid from 6 percent all of 
the way down to 1 percent of the Fed's fund rate. There was an 
expression used of the Greenspan put, if you will, as far as trying to 
boost the economy and Wall Street all during that time.
  Then that was followed from a switch turnaround from 2004 to 2007 
where the interest rates shot up from 1 percent up to 5\1/2\ percent. 
Let me suggest to you that those higher interest rates have been 
reflected in the housing market today, and will be potentially affected 
due to a lag time to other sections of the economy later. And that is 
another reason why we should not engage and support a measure as has 
been proposed by the White House and the other side of the aisle of 
spending $700 billion or anywhere near that amount of money that would 
put the taxpayers on hook because we can anticipate future problems due 
to that tightening up of the credit market by the Fed.

                              {time}  2045

  Now, another area where we should not go back to the same people who 
helped bring us to this problem are those very same people who helped 
exacerbate the problem by their misregulation of the GSEs. The GSEs, 
what are they? They are your Fannie Mae and Freddie Mac.
  Those entities that supply the credit for about half of the mortgages 
in this country were allowed to grow out of control and to grow too 
large to fail and to grow to such an extent that there was systemic 
risk in this country

[[Page H10121]]

and in the marketplaces that brought us to where we are today with the 
crisis we are facing.
  Now, this is something that was not unpredicted and not unforeseen. 
Our own administration came to this Congress in 2002, 2003, 2004, and 
2005, in their budget requests and elsewhere, making pleas to this 
Congress to try to put in some regulation. ``World-class regulators'' 
is what they called them. Secretary Snow came to the Financial Services 
Committee and made that request and said we should have regulation. 
However, we were thwarted on every front. The current chairman of the 
Financial Services Committee was one who stood and said we should not 
do so.
  I went back and looked into what the record of this was in 2005 to 
see what my position was on it and to read what I said on it. At that 
time in 2005, the gentleman from California (Mr. Royce) suggested that 
we could begin the process of reining in the GSEs so as to avoid 
systemic risk in this country with regard to them and avoid a future 
crisis. He put in an amendment to the bill to provide and to prevent 
systemic risk.
  I came down to the floor to support the gentleman from California 
(Mr. Royce) in his amendment. At that time, I said that I rise in 
support of this legislation which strengthens the language with regard 
to portfolios and GSEs. I indicated that GSEs claimed that they are 
shock absorbers. This line is somewhat ironic today. The GSEs claimed 
back in 2005 that they were shock absorbers to the system and that one 
of the main reasons that Fannie and Freddie claimed they should not 
have portfolio limits was that they provided a stable means of support 
for the residential financial market in times of crisis. How ironic 
that they were claiming that they could be of help in a time of crisis 
when, in fact, they are what have now brought us to this time of 
crisis.
  Back in 2005, Fannie's CEO, Dan Mudd, testified: ``Our mortgage 
portfolios allow us to play a shock-absorbing function for the finance 
system during times of potential difficulty.'' Well, there is no 
function that they're serving now except that they are causing the 
difficulty.
  This week, they said Freddie's president, Eugene McQuade, was quoted 
as saying: ``The enterprises provide a source of stability to the 
market, mortgage, finance system.''
  With that, Mr. Speaker, I would just like to conclude by saying that 
the problems that the GSEs have brought us to today--although we were 
warned by the administration and although many saw it and many people 
from this side of the aisle--were because of the failure to implement 
those regulations on a timely basis. We'll discuss this further at a 
later date.

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