Unanimous-Consent Request--Executive Calendar

Floor Speech

UNANIMOUS-CONSENT REQUEST--EXECUTIVE CALENDAR -- (Senate - June 17, 2009)

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GOVERNMENTAL POWER

Mr. BENNETT. Mr. President, when the Founding Fathers wrote the Constitution and gave us our government, they did so out of a deep distrust of the power of government coming out of their experience with King George, and they created a government that limits the use of power, deliberately setting up a system of checks and balances, a doctrine of separation of powers and so on, with which we are all familiar.

Out of that, Americans have become used to the idea that there are limits on governmental power, and one of the concerns I hear when I visit with my constituents in Utah is that they are afraid there are now no limits on governmental power, or at least there is certainly not enough limits on governmental power. I am asked: Where does it stop? The government can take over insurance companies. The government can take over financial institutions. The government can take over an automobile company. The government can dictate who gets to be chief executive and how much he or she will be paid. Aren't there supposed to be limits on governmental power?

Today, we have a proposal brought forward by the administration with respect to how the regulatory pattern for our financial institutions should be changed. As I look at that proposal, I ask the same questions my constituents are asking: Shouldn't there be some limits on governmental power? Isn't this going a bit far? Indeed, I think it is a legitimate question, and I wanted to address it for a moment.

First, let's understand a fundamental truth about the economy. That is that all wealth comes from taking risks. Farmers take risks when they plant seeds, not knowing what the weather is going to do. Businessmen and women take risks when they open businesses, not knowing what the market is going to do. New wealth comes out when we have a bumper crop. New wealth comes out when a business started in a garage turns into Hewlett Packard, but in every instance you take risks.

The second element that has to be added to risk-taking is the access to accumulated wealth. Sometimes it comes by a wealth you have accumulated yourself. Sometimes it comes from loans from your brother-in-law. Sometimes it comes from running up your credit card. Sometimes it comes from venture capitalists. In many instances, it comes from banks.

But you take a risk, and you have to have access to some kind of accumulated capital or you cannot create new wealth.

All right. Why do people take risks? Because they expect there will be a reward in the form of a return on the capital they have taken. Whether it comes from a bank loan that they can pay back or from investor capital that will then receive dividends, there will be a reward. The risk/reward relationship is at the base of the growth and power of the American economy.

In the present crisis, we have had people saying: Yes, but there are some entities that are simply too big to fail, we must not allow them to fail, and particularly in the financial services industry. So that is why we have this proposal today from the Obama administration. They want to deal with systemic risk, as they call it, or those tier 1 entities which they describe as what I have just said: They are too big to fail and we are not going to allow them to fail, and this is the regulatory regime we will set up.

If there are companies or entities that are too big to fail, this regime is too big to function. It is so focused on preventing failure that it is stacked in such a way that it will penalize the risk taker and prevent the risk taker from taking a risk and therefore not reap any kind of a reward.

There is a heavy emphasis on consumer protection. I am all for that. I think we should have all of the kinds of regulations that say you need labels on things that might not be safe. That protects the consumer. You need nutritional information on things that might make you too fat, which protects the consumer. But let's not protect the consumer to the point where they cannot buy anything or, in this case, protect the system from any possible failure to the point that there is no risk and therefore ultimately no reward. By giving the Federal Reserve the kinds of powers this proposal does, we are moving down that road, and once again we are raising the question: Are there no limits on the amount of power that government can have and accumulate?

I am convinced that if this massive, new expansion of power in the hands of the government goes forward unimpeded, we will see the shutting off of sources of credit and therefore the contraction of the economy and ultimately the need for more bailouts, more expenditures of Federal funds to try to keep entities alive. They can stay alive if they can attract capital from the private markets, but that is risky. So if we say: No, we are not going to allow the risks, we shut off the incentive of the private market to invest in some of these entities or to loan money to some of these entities. And then we say: But the entity is so important to our economy that we cannot allow it to fail. So we turn to the taxpayer and say: Let's put more taxpayer money into the entity because it is too big to fail.

That is what I see down the road for this proposal. I may be wrong. But I point out that we in the Congress have, by law, created a commission to study what caused the present mess we are in and report back to the Congress. We wrote into that law a specific date--December 15, 2010--to make sure the commission had enough time to examine all of the possibilities, to delve deeply enough into the issue to fully understand it, and then report back to us with their findings. Now we are being told: Forget the commission. Forget the analysis of what happened. We think we know. Let's put this regulatory regime in place--one that is too big to function--now. Let's do it quickly. Let's have it done by the August recess. All right, we can't get it done by the August recess. We are going to have health care done by the August recess, so we will do it before Halloween, or whatever artificial date some may choose to put on it.

The reality is, the issue is huge, the issue needs to be examined carefully, and we need to do it within the parameters of the basic suspicion the Founding Fathers had about the government. We should do it with an understanding that there are limits to government power and that government power has the capacity to damage the economy every bit as much as it has the power to help it move forward.

Mr. President, I say let's not move with the speed and haste we are hearing about this proposal. Let's subject it to the most careful examination we possibly can throughout the processes of Congress, and let's make sure that when we do make regulatory changes with respect to the financial institutions, we do them in a way that will not fail and that can properly function.

I yield the floor and suggest the absence of a quorum.

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