By Peter Schroeder - 01/26/11 11:32 AM EST
A Republican who will play a leading role in the oversight of the Wall Street reform law said federal regulators should not be “rewarded” with budget increases for past mistakes.
Rep. Scott Garrett (R-N.J.) told The Hill in an exclusive interview that it is “troubling” that financial regulators want to be given more funds and staff after failing to prevent the worst financial crisis since the Great Depression.
As chairman of the House Financial Services subcommittee on Capital Markets and Government Sponsored Enterprises, Garrett is poised to play a key role in the 112th Congress as an emboldened GOP looks to exert its influence on financial reform and the restructuring of Fannie Mae and Freddie Mac.
The 52-year-old Republican has served in Congress since 2003 and is heading the subcommittee for the first time after serving as ranking member of the panel while Democrats controlled the House.
The Securities and Exchange Commission and the Commodity Futures Trading Commission say they need hundreds of millions of dollars in additional funding to hire the staff needed to implement and enforce all the provisions in the Dodd-Frank reform law.
Agency officials have warned that their current budgets are nowhere near sufficient to meet their new responsibilities, but Garrett is not sympathetic.
“In the private sector, if you had a unit of a company that failed, normally what happens is that unit ... doesn’t exist anymore and you make changes,” he said. “It seems to be the practice of government that there seems to be some sort of reward.”
The failure to pass an omnibus budget bill during 2010’s lame-duck session puts the question of Dodd-Frank funding in GOP hands. Lawmakers opted for a short-term continuing resolution (CR) funding the government into March, which means the GOP-led House will play a significant role in setting spending levels for the rest of the year.
House Majority Leader Eric Cantor (R-Va.) said Tuesday that the House would vote on the CR two weeks before it expires to show “how serious we are on delivering on our commitment to cut spending.”
While not looking to hand out more funds, Garrett said he is in no rush to join a fledgling effort to repeal Dodd-Frank wholesale. A handful of House Republicans, led by Rep. Michele Bachmann (R-Minn.), is pushing a bill to do just that. But while House Republicans made passing a bill to repeal healthcare reform one of their first actions in the majority, overturning financial reform has failed to gain traction.
Garrett said that he is primarily focused on “what is here before us that we can do initially on the oversight portion of it.”
He said he wants to hold hearings exploring various facets of the bill and may support legislative tweaks to some sections, but that total repeal is not currently on the table.
“I can just imagine that would be tough to get that done,” he said, noting that “someone in the White House” might be opposed to such an effort.
“That would be a tough sell to him,” Garrett joked.
But on the housing front, Garrett said he is looking forward to the administration’s report on how to reform the nation’s housing finance system and is hoping that some common ground may emerge on the issue. The White House report is due at the end of January, but recent reports indicate it may be pushed back to February.
“It’s my hope that we’re going to be on the same page ... because that’s the best way to resolve the issue and provide certainty to the market that we all agree is necessary,” he said.
The debate on housing reform is likely to center on where the line should be drawn between the private sector and the government. The administration has argued that some sort of government guarantee must be in place to support traditional mortgages, while Republicans are pushing legislation moving Fannie and Freddie entirely into the private sector.
The fact that the government and American taxpayer are now on the hook for any current and future losses incurred by Fannie and Freddie hopefully will provide “a degree of commonality of purpose” to tackle the housing issue quickly, Garrett said.
“The administration’s not blind to that,” he said.
But until the report comes out, Garrett cannot say where the GOP and White House might be on the same page.
“Until I get this document in front me that says, ‘We need to do x, y and z’ and what their plan is, I can’t tell you that we’re there at all,” he said.
Garrett said he is looking forward to the return of regular order at the committee and subcommittee levels, which he said is the plan of Finance Chairman Spencer Bachus (R-Ala.).
“He wants all the subcommittees to have all the hearings,” he said. “We’ll get back to regular order and do it the right way.”
Garrett was critical of how the committee handled its workload with Democrats in charge, saying that current ranking member Rep. Barney Frank (D-Mass.) exerted too much singular influence.
“Last time it was, what? We just had Barney run most of the stuff,” he said.
He is also looking forward to an injection of freshman blood onto the subcommittee for Republicans. He said several new members have extensive experience in the financial sector, and that “practical, real life experience” will be an asset as the panel tries to delve through the real-world ramifications of legislative efforts. For example, freshman Rep. Steve Stivers (R-Ohio) previously was a vice president of government relations for Bank One.
“It’s a subcommittee and a committee overall ... with a lot more experience and expertise on it,” he said. “These are people coming to the committee that can start out pretty quickly.”