Unintended Consequences?

" So much for bringing up the credit markets it turns out the twenty largest banks receiving taxpayer bailout money and that first round of bail out that we gave to the banks. Actually reduced lending last year the wake up 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 that health critic congressman Adam Schiff a Democrat and member of the House Appropriations Committee. Joining me now good morning gentlemen we're going to be with the morning are right so the report comes out and the lending is down. That -- the top twenty banks have. And to businesses. Not by huge percentages but nonetheless it's going in the wrong direction I mean congressman Gary. How how on earth can they justify that would we give them hundreds of billions of dollars were it not to forget the credit market."

" Well that's why we gave them the money -- say those people who voted in favor of -- given that money but the ironic thing here was is that. Does the money was given out first 350 billion in TARP on and 350 billion dollars now -- to 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 he's in that required to keep track of where the money was going. As a last point we just had the the six heads of the major banks in the country come before our committee just this past week. And that was off after the fact and that's I -- is is the absurdity -- the irony of the way congress works is that we -- the money out first and then we go back after the fact the CT are they doing just what we hope that they would."

" Crack crack bishop what what are what are they using the money for I mean and what did you got you voted for this and you voted against the first many voted for it but but what did you think was going to happen did you think -- going to. Free up lending."

" Well that's a live in 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 that neither which I find credible. They argue that the demand for loans is down and they argued that the problem would have been worse without the assistance we gave them. -- I think these arguments don't go far enough is. There's 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's just this claim that things would have been worse so without the help the banks got. That may or may not be true it's impossible to demonstrate though unless we have some evidence what they did with the money. So I would I would certainly hope that the secretary of the treasury in another the further round of -- requires the banks this -- what they've done with the money already. And also provides a stronger recruitment measure for us to get that money back if the banks aren't using it to land because I find it just appalling really."

" How we get that you have Heidi as and that -- are you left the barn I mean you really think we're going to that would getting that they'll back."

" Well I think we can and 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 try to these TARP funds. That require disclosure what do they do with the money did they use it to land that they use -- for other things and also that not only let us be assured of that future moneys will be used to land but also give us a greater claim on the money that they've already obtained from the federal."

" You know county -- I like ticks people off is this holiday thank. -- you know how people thought about the did not want to bail out Wall Street and it wasn't until you lawmakers got out started making the argument -- in particular the lawmakers and started saying it's not velocity it's really about main street. Don objectives is going to flow back to you what's going to make mortgages easier credit -- is easier and that's why we're doing it and now we learn. That not only has the landing not down but 60% of the banks have made borrowing. Even harder. So you can't get the loans and that's why the mortgages and ended and the credit Arkansas that that's why we're having such trouble -- so it's not what can be done about it."

" Well the people of right to vote right to be ticked off you know I'm not I'm always optimistic and hope springs eternal as Adams says he's hopeful. But the question is is why did anyone vote yes on both of those -- bills. If there was no restrictions and either one of those bills to say that the banks actually have to lend the money and that wasn't and now we're just going to hope for that the banks -- start lending out money and we hope that the Treasury Department will actually do the right thing and try to get some money back. And look no when things really get the money back. Until the day comes that we can change the rules and makes it easier for the bank's return the money get out from behind some of the restrictions are putting in place for them."

" We're back into my back but what about the additional money. I mean there's still they still can't get more hundreds of billions."

" Well we we passed a while congress -- start to Nancy Pelosi push that bill through congress very quickly we did not have any ability to put restrictions on that the Senate and the house. And so there are no R&R 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 -- caveat to this thing very quickly and that is this point. We got he did this problem because the federal government through CRA Fannie Mae Freddie Mac and all the rest. Basically compelled to a lot of these sub prime banks for subprime mortgages to be issued in the first leg. We've got into this situation because congress that we're we know better than the banking institutions that lend money and so and so we're here now because of the entered. Into meddling by the congress."

" Countries I gotta go -- an hour."

" Well thank you get -- it's easiest thing in the world of course to oppose any relief for either consumers mortgage holders banks. But if we allow ourselves be paralyzed in action the economy will spiral even worse so we have got to try things we've got to do better job we've got to get her right. But just government gridlock and doing nothing is probably the worst solution of all."

" I guess yeah. You guys disagree on that a lot to wait sea captain thanks so much for being urged it to you moment we're going to get more."