Fox News Interview - Transcript

Interview

Fox News Interview - Transcript

FOX NEWS CHANNEL INTERVIEW WITH REP. ADAM SCHIFF (D-CA) AND REP. SCOTT GARRETT (R-NJ)
SUBJECT: BANKING INDUSTRY INTERVIEWER: MEGYN KELLY

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MS. KELLY: Well, so much for freeing up the credit markets. It turns out the 20 largest banks receiving taxpayer bailout money in that first round of bailouts that we gave to the banks actually reduced lending last year. The 20 top banks reduced lending.

So why on Earth would we continue giving money to them?

New Jersey Congressman Scott Garrett, a Republican and member of the House Financial Services and Budget Committee and California Congressman Adam Schiff, a Democrat, a member of the House Appropriations Committee, joining me now.

Good morning, gentleman.

REP. GARRETT: Good morning. Good to be with you.

REP. SCHIFF: Good morning.

MS. KELLY: All right. So the report comes out and the lending is down, the top 20 banks have decreased their lending to consumers and to businesses, not by huge percentages, but nonetheless, its going in the wrong direction, I mean, Congressman Garrett, how on Earth do they justify that? Why did we give them hundreds of billions of dollars for if not to free up the credit market?

REP. GARRETT: Well, that's why we gave them the money, or I should say, those people who voted in favor of TARP gave them that money, but the ironic thing here was that the money was given out, the first $350 billion in TARP I and $350 billion now in TARP II just a few weeks ago, but there was never any rules put in place to say that the banks had to lend that money out nor was the Treasury even required to keep track of where the money was going.

As a last point, we just had the six heads of the major banks in the country come before our committee just this past week and that was all after the fact and I guess that is the absurdity or the irony of the way the Congress works is that we dole the money out first and then we go back after the fact and say, gee, are they doing just what we hope that they would.

MS. KELLY: Congressman Schiff, what are they using the money for? Didn't you guys -- you voted for it. I know you voted against it first and then you voted for it, but what did you think was going to happen? Didn't you think they were going to free up lending?

REP. SCHIFF: Well, absolutely. The whole purpose of it was to get money flowing again and I think it's appalling that that hasn't happened. The banks make two arguments, neither of which I find credible. They argue that the demand for loans is down and they argue that the problem would have been worse without the assistance we gave them.

The reason I think these arguments don't go far enough is there's a lot of demand out there. There are a lot of good, healthy businesses that want loans to continue their business and can't get them. So the demand is out there and more than that, to just claim that things would have been worse without the help the banks got, that may or may not be true. It's impossible to demonstrate though unless we have some evidence of what they did with the money.

So I would certainly hope that the Secretary of the Treasury in -- further round of TARP requires the banks to disclose what they've done with the money already and also provides a stronger recoupment measure for us to get that money back if the banks aren't using it to lend because I find it just appalling.

MS. KELLY: Really? Hasn't that horse already left the barn? I mean you really think we're going to be able to get any of that dough back?

REP. SCHIFF: Well, I think we can, I mean, the whole idea of getting equity shares in these institutions was so that we can get our money back, but I do think that we need much stronger safeguards in the second tranche of these TARP funds that require disclosure. What did they do with the money? Did they use it to lend? Did they use it for other things? And also, they not only less be assured that future monies will be used to lend, but also give us a greater claim on the money that they've already obtained from the federal government.

MS. KELLY: You know, Congressman Garrett, I think this really ticks people off because they sit at home and they think, all right, you know how people felt. They did not want to bailout Wall Street and it wasn't until you lawmakers got out and started making the argument, not you in particular, but lawmakers who started saying it's not a bailout of Wall Street; it's really a bailout of Main Street. Don't object. This is going to flow back to you. It's going to make mortgages easier and credit cards easier and that's why we're doing it and now we learn that not only has the lending gone down, but 60 percent of the banks have made borrowing even harder so you can't get the loans and that's why the mortgages and the credit cards and so on, that's why we're having such trouble with it.

So people are ticked off. What can be done about it?

REP. GARRETT: Well, people have the right to be ticked off, you know, I'm always the optimist and hopes springs eternal as Adam says, he's hopeful, but the question is why didn't anyone vote yes on both of those TARP bills if there was no restrictions in either one of those bills to say that the banks actually have to lend the money? And there wasn't. And now we're just going to hope for that the banks will start lending out the money and we hope that the Treasury Department will actually do the right thing and try to get some money back. Look, no one thinks we're going to get the money back until the day comes that we should change the rules and makes it easier for the banks to return the money and get out from behind some of the restrictions that we were putting in place for them.

MS. KELLY: Yeah. We're not getting the money back, but what about the additional money? They still stand to get more hundreds of billions.

REP. GARRETT: Well, Congress passed TARP II; Nancy Pelosi pushed that bill through Congress very quickly. We did not have any ability to put restrictions on it in the Senate and the House and so there are no legislative requirements that they do it, maybe we can hope that the Treasury will do the right thing and put some restrictions. But remember this, there's the other caveat to this thing and very quickly is this point, we got into this problem because the federal government through CRA, Fannie Mae, Freddie Mac and all the rest, basically compelled a lot of these subprime banks -- subprime mortgages to be issued in the first place.

MS. KELLY: Right.

REP. GARRETT: We got into this situation because Congress said, we know better than the banking institutions had to lend money and so we're here now because of inter-meddling by the Congress --

MS. KELLY: Congressman Schiff, I've got to go, but I'll give you a quick, final word.

REP. SCHIFF: Yes. Well, thank you. It's the easiest thing in the world of course to oppose any relief for either consumers, mortgage holders, banks, but if we allow ourselves to be paralyzed in action, the economy will spiral even worse.

So we have got to try things. We've got to do a better job and we've got to get it right, but just government gridlock and doing nothing is probably the worst solution of all.

MS. KELLY: Well, I guess, you guys disagree on that, but we'll have to wait and see.

Congressmen, thanks so much for being here.

REP. GARRETT: Thanks. Appreciate it.

END.

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