Congressman Disagrees With Obama Clamping Down on U.S. Financial System

This is a rush transcript from "Your World With Neil Cavuto," June 17, 2009. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am proposing that the Federal Reserve be granted new authority and accountability for regulating bank holding companies and other large firms that pose a risk to the entire economy in the event of failure.

(END VIDEO CLIP)

NEIL CAVUTO, HOST: All right, the president laying out his rules of the road, as we have been talking about, clamping down today on the nation's financial system. Now, he says it's going to spur investor confidence.

My next guest, though, fears the opposite, Republican Congressman Scott Garrett, a member of the Financial Services Committee.

Congressman, what do you make of that, that this is a way of kind of streamlining what we have got, and making everyone more accountable? What do you think of that?

• Video: Watch Cavuto's interview

REP. SCOTT GARRETT (R), NEW JERSEY: Well, it's good words.

I think that much of what he said, both Republicans and Democrats would agree on. We want to have more accountability. We want to have more transparency. The question is how you get there.

And, unfortunately, once you begin reading his document, you realize that, basically, he is stuck on square one. And by that is, he's stuck on the philosophy we are going to have, in — in statute and in law, perpetuate the bailout mentality that we have had in Washington over the last year, and we are going to have more regulation, more government, to try to solve the problem, and putting the taxpayer on the hook in — into perpetuity.

And I think...

(CROSSTALK)

GARRETT: ... Americans are fed up with that.

CAVUTO: All right.

But, you know, the rap against Republicans, that you guys have not come up with anything smart. And you say rely on the system and the structures we have now, but many argue those systems and structures failed. They failed the average investor. They failed the average bank stockholder, the average bank depositor, the average mortgage holder. So, your solution is no better.

GARRETT: Well, actually, we — we — we rolled out a plan a week ago Thursday. So, we were actually ahead of the game or ahead of the curve with regard to this administration, rolling out a multipoint plan on how to address the situation, because, as I said, we agree that there are problems in the marketplace that need transparency, need accountability.

We — but we say, let's draw a line in the sand and say all this idea of bailouts in the past has got to end, and, going forward, we don't need a resolution authority, like the president talks about, where you're going to continue bailouts. We say, allow the bankruptcy courts to handle that.

And we say, we don't need...

CAVUTO: Well, why didn't your — now, I know this wasn't your vote, but why didn't you say that last fall, then, when President Bush was looking at these same bailouts, these same rescues? Many in your party went right along with that, merrily right off the cliff.

GARRETT: Yes.

Unfortunately, many of my party did. As you know, I was one who was leading the charge in the other direction...

CAVUTO: Right.

GARRETT: ... against the president, saying that we cannot do TARP, do not do TARP one, or TARP two, three, four, five, or whatever we're up to.

We were saying that the president was leading us in the wrong direction. And the poll numbers in the November election sort of showed what the American public agreed.

But the problem now is, is that Obama has bought into so much of what President Bush was doing, the bailout idea, to say that the government can be the solution, to say that more regulation — you know, the same types of regulations that were on banks, which didn't solve the problem, they want to extend to the rest of Corporate America and hedge funds.

Well, if they didn't solve the problem for the banks, why do they think it's going to solve in an area that didn't really cause the problems in the first place?

(CROSSTALK)

CAVUTO: So, you — you — bottom line, Congressman, you think that another layer of regulation, or another, let's say, consumer protection, watchdog agency, whatever they are calling it, another that would be in charge of handling the next bailout, if and when one comes up, is just layering on layering, right?

(CROSSTALK)

GARRETT: It is doing two things. One, it is layering upon layering. And, actually, it could be doing more harm than good.

If you set up this consumer financial products safety commission that he wants to set up, that could — all the bankers, all the experts say that that is going to create more problems...

CAVUTO: Gotcha.

(CROSSTALK)

GARRETT: ... separate the two functions. There are just so many problems with it.

CAVUTO: All right. Congressman, thank you very much.

GARRETT: Thanks.

CAVUTO: Just a reminder here: I was presenting the administration's arguments, why they think this works, because no one from the administration of any heft is coming on this show or network. They had booked for us the White House groundskeeper. We had said no, just to be clear. All right.

Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.