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House Proceeding 12-10-09 on Dec 10th, 2009 :: 0:41:15 to 0:48:10
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Edward R. Royce

0:41:13 to 0:41:33( Edit History Discussion )

Edward R. Royce: that is mismanagement. mr. speaker, at this time i'd like to yield five minutes to the distinguished gentleman from fullerton, california, the gentleman, congressman royce. the speaker pro tempore: th gentleman is recognized for five minutes. mr. royce: thank you, speaker. i rise in opposition to the

Edward R. Royce

0:41:15 to 0:48:10( Edit History Discussion )
Speech By: Edward R. Royce

Edward R. Royce

0:41:34 to 0:41:55( Edit History Discussion )

Edward R. Royce: rule and to this legislation. because for the first time in history washington will be at the center of our financial system. this is not the way our founders intended this system to work. it didn't intend for the decisions and political pl to come out of washington. for the first time in history we will institutionalize the

Edward R. Royce

0:41:56 to 0:42:16( Edit History Discussion )

Edward R. Royce: too big to fail doctrine that has plagued our economy for too long. and for the first time in history, congress is authorizing perpetual bailout authority by those in washington. i have opposed these bailouts. and i have opposed the bill as put forward by -- over the last

Edward R. Royce

0:42:17 to 0:42:38( Edit History Discussion )

Edward R. Royce: 14 months because of the concern i had with the precedent that would be set by using tax dollars to bail out failed institutions. and now we are going to do it and unfortunately, it appears that that precedent that was set last fall is now

Edward R. Royce

0:42:39 to 0:43:02( Edit History Discussion )

Edward R. Royce: official u.s. p this legislation become law. now, our democratic colleagues have controlled the congress for the last three years. i think while some will try to portray this resolution fund as something other t paying for the mistakes of failed financial firms, i would direct my colleagues to the very language in this bill to

Edward R. Royce

0:43:03 to 0:43:25( Edit History Discussion )

Edward R. Royce: page 406, line 22, and it says there, borrowing from the treasury, i quote, the corporation may borrow from the treasury and the secretary of the treasury is authorized to lend to the corporation on such terms as may be fixed by the corporation and secretary such funds as in the judgment of the board of directors of the

Edward R. Royce

0:43:26 to 0:43:46( Edit History Discussion )

Edward R. Royce: corporation are required. unquote. now, this is saying the resolution fund in every inst its purview has the support of who? the u.s. taxpayer. that you are going to be on the hook for these loans. my colleague from california, mr. sherman, referred to this authority as tarp on steroids.

Edward R. Royce

0:43:47 to 0:44:07( Edit History Discussion )

Edward R. Royce: well, considering that the bill fails to even put a potential taxpayer exposure, i think mr. sherman is spot on. it is indeed tarp on steroids. and while some have compared this model to the fdic insurance fund, well, that's, folks, like comparing apples to

Edward R. Royce

0:44:08 to 0:44:28( Edit History Discussion )

Edward R. Royce: oranges. the fdic fund is backed by the full faith and credit of the federal government to protect insured deposits inside the fund. that's what the fdic fund does. while there is a level of moral hazard that comes th this support, insured deposits are

Edward R. Royce

0:44:29 to 0:44:49( Edit History Discussion )

Edward R. Royce: financial system. here it extends far beyond that. this bill gives that type of government support to the vast majority of our capital markets. it is a fundamentally flawed approach. it is what economists call morale hazard for a reason. it is a hazard. we need to scale back that gover

Edward R. Royce

0:44:50 to 0:45:10( Edit History Discussion )

Edward R. Royce: financial system not expand it to everyossible institution. and we need to signal to markets that the federal government is out of the business of bailing out failed firms. that is the only way to officially put an end to the two big too fail problem. this legislation fails to take that critical step.

Edward R. Royce

0:45:11 to 0:45:31( Edit History Discussion )

Edward R. Royce: and i urge my colleagues to oppose this rule and oppose the underlying legislation for a second reason as well. that is my concern with the consumer protect also known as the credit czar. it weakens our regulatory model. every one of our banking regulators has come in to

Edward R. Royce

0:45:32 to 0:45:53( Edit History Discussion )

Edward R. Royce: testify in the financial services committee onthis issue of separating safety and soundness regulation from consumer protection regulation. many have raised the comparison between this model and the regulatory model over fannie mae and freddie mac because with fannie mae and freddie mac which failed and lost $1 trillion, you had the regulator

Edward R. Royce

0:45:54 to 0:46:15( Edit History Discussion )

Edward R. Royce: focused on safety and soundness who was saying one thing, but you had h.u.d. that enforcing the affordable housing goals that congress had given h.u.d., those housing goals were to have one half of the portfolio in subprime lending, in alt a loans. and to make zero down payment loans.

Edward R. Royce

0:46:16 to 0:46:36( Edit History Discussion )

Edward R. Royce: this was what the congress was muscling through h.u.d. now, these things made the regulators very, very nervous. we had the federal reserve regulators come up and tell us, this is a systemic risk to the entire financial system what is happening here. the overleveraging through this

Edward R. Royce

0:46:37 to 0:46:57( Edit History Discussion )

Edward R. Royce: arbitrage now is 170-1. you have to allow the regulators to deleverage this. so to beat these affordable housing mandates, fannie and freddie straight into the junk mortgage market.

Edward R. Royce

0:46:58 to 0:47:18( Edit History Discussion )

Edward R. Royce: they piled up over $1 trillion worth of subprime and alt a loans. and the housing goals were at odds of the liability of these firms and they led to 85% of their losses. as this past example has shown us, separating these two responsibilities can lead to unintended consequences like systemic financial failure down the road. if the ultimate objective of

Edward R. Royce

0:47:19 to 0:47:39( Edit History Discussion )

Edward R. Royce: our regulatory reform effort is to ensure a more resilient and stable financial system, creating another a broad unchecked authority not the right approach. i brought an amendment to the rules committee which would have sold this problem by ensuring the safety and soundness regulators, have a say on the rule writing process

Edward R. Royce

0:47:40 to 0:48:01( Edit History Discussion )

Edward R. Royce: at the cfpa, and it's unfortunate. my amendment was not made in order. it won't even be heard on this floor. i ur my colleagues to listen to those regulators, every one of which urged us to adopt that ty that was in my amendment, not allowed to go forward on this floor today. the safety and soundness of our financial institutions are critical.

Edward R. Royce

0:48:02 to 0:48:11( Edit History Discussion )

Edward R. Royce: and we instead have undercut that and we are walking down that same step that congress took against the advice of the regulators with respect to fannie mae and freddie mac and

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