Garrett RSS Articles

Briefing Members on Cop Killer Joanne Chesimard

Mon, 23 Nov 2009 05:00:00 GMT

On Wednesday, November 18, 2009, I had the opportunity to give a briefing to Members of the House Committee on Foreign Affairs regarding the ongoing threat of the Cuban regime to US interests and security. I was joined by New Jersey State Police Superintendent Colonel Joseph R. Fuentes, who has been one of the leading figures in the continued efforts to secure the return of convicted cop killer Joanne Chesimard from Cuba.

In recent months, President Obama decided to lift travel and remittance restrictions to Cuba and he has also signaled a desire to further engage Raúl Castro and work toward normalizing U.S. relations with Cuba. Normalization cannot come without concessions from the Cuban regime.

One example is that Cuba cannot continue to support and harbor fugitives. The Federal Bureau of Investigation has estimated that there are at least 77 American fugitives living in Cuba. Joanne Chesimard, aka Assata Shakur, the aunt of slain rapper Tupac Shakur, is an example of criminals being harbored in the country. Chesimard is currently one of the Top Ten “Featured Fugitives” on the Federal Bureau of Investigations’ Domestic Terrorism List. Chesimard was a member of the Black Liberation Army on May 2, 1973, when she and two accomplices were stopped on the New Jersey Turnpike for a motor vehicle violation. She and two accomplices opened fire on two New Jersey State police troopers. One trooper was wounded and another, New Jersey State Trooper Werner Foerster was shot and killed execution style at point-blank range.

Chesimard was convicted in 1977. Two years into her sentence, Chesimard escaped from prison and fled to Cuba where she was granted political asylum by Fidel Castro. On September 14, 1998, the U.S. House of Representatives unanimously passed H.Con.Res. 254, a resolution calling on the Government of Cuba to “extradite to the United States convicted felon Joanne Chesimard and all other individuals who have fled the United States to avoid prosecution or confinement for criminal offenses and who are currently living freely in Cuba.” The Senate passed H.Con.Res. 254 on October 21, 1998 by Unanimous Consent. Over a decade later, Ms. Chesimard remains a fugitive and Cuban leaders refuse to cooperate with U.S. officials who seek her extradition.

I believe that the extradition of convicted felons and cop killers should be one of the prerequisites for achieving normal diplomatic relations with Cuba. In June, I sent a letter to President Obama urging him to make Chesimard’s extradition a top priority while he engages the Cuban government. Twenty-four of my colleagues in the House of Representatives—Republican and Democrat alike—joined me in signing the letter. In addition, we wrote that we would welcome an opportunity to accompany President Obama and a contingent of New Jersey State Troopers on a future visit to Cuba.

By aiding a convicted murderer, Cuba has insulted not only the state of New Jersey, but also the U.S. legal system and U.S. law enforcement officers.

In addition to my June letter, my colleague Patrick Murphy and I called for the extradition of cop killers and other convicted felons from Cuba, in the form of an amendment to H.R. 3081, the Department of State, Foreign Operations, and Related Programs Appropriations Act.

This amendment would have prohibited funds from being used to enter into diplomatic relations with Cuba if Cuba refuses to extradite U.S. citizens who have been convicted of killing a law enforcement officer or have been convicted of a criminal offense in the United States for which the maximum penalty is life imprisonment without the possibility of parole.

The House Rules Committee did not allow the amendment to come to the floor for debate and a vote.

I commend President Obama’s intention to renew and repair relations with this vibrant culture just ninety miles off our southern shores. Trade and diplomatic relations would be beneficial to both the United States and Cuba, and an increased U.S. influence could discourage Cuba from further aligning itself with antagonistic regional powers, such as Venezuela.

Normalization cannot come without concessions from the Cuban regime. Namely, we must demand that Cuba recognize the legitimacy of our criminal justice system by returning known fugitives such as Joanne Chesimard. Moreover, Cuba must begin the process of freeing political prisoners, encouraging democratic reform, and honoring international law. I recognize that change will not come over night, but change must begin before we extend our hand.

Garrett Statement on “Doc-Tricks” Bill

Thu, 19 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) issued the following statement regarding H.R. 3961, the Medicare Physician Payment Reform Act of 2009.

“H.R. 3961, the Medicare Physician Payment Reform Act of 2009, is not a permanent fix for physicians. While it is well-intended to stop the 21 percent payment cut physicians face next year and the roughly 5 percent cut projected for each of the next several years thereafter, I cannot support the deficit spending in this legislation. According to the Congressional Budget Office (CBO), this bill would increase the federal deficit by more than $210 billion and would increase Medicare premiums by $49 billion. An analysis of the official data by Tom Saving, former Medicare public trustee, shows that this bill would increase Medicare’s unfunded obligations by up to $1.9 trillion over a 75-year period.

“This legislation borrows from our children's future to pay for the problems of today. I believe that Medicare should reimburse physicians fairly to ensure that Medicare beneficiaries have access to the health care they need. I also believe that Congress must be responsible in our spending, which is why I support a fiscally responsible plan that would provide physicians with a Medicare payment rate increase in each of the next four years without increasing the deficit. The cost would be offset with savings from medical liability reform, resources from the Medicare Improvement Fund, creation of a pathway for follow-on biologics, and insurance administrative simplification. This would erase the scheduled physician payment cuts for the four year period, a longer period of Medicare certainty than physicians have experienced in nearly a decade, and longer than would be provided under H.R. 3961.”

Details on the Republican plan, the Motion to Recommit:

While Rep. Garrett believes that physicians should be reimbursed fairly, he believes it must be done in a responsible way. The Republican plan:
• Increases physician Medicare reimbursement each year for the next 4 years.
• Keeps the scheduled 21.2% cut in 2010 and the roughly 5% cuts in 2011, 2012, and 2013 from occurring, and uses the remaining $26.3 billion in savings to address future cuts.
• Provides a more generous physician payment increase. According to CBO, under the Democrats’ bill, doctors would receive a 1.2% increase in 2010 (and just like under the current SGR formula doctors could still see payment cuts in 2011). By contrast the Republican MTR would provide for a 2% increase.

The plan Rep. Garrett supports contains a total of $101 billion in savings, including:
• $54 billion in savings from medical liability reform that would enact caps on non-economic damages and lawyers’ fees, encouraging speedy resolutions of claims, and limiting punitive damages, among other things. This will reduce defensive medicine, protect doctors from frivolous lawsuits, and bring down the cost of health care.
• $22.3 billion from the “Medicare Improvement Fund,” which was established under MIPPA in 2008 (Public Law 110-275) and designed to improve physician payments.
• $5.7 billion in savings from the creation of a pathway for approval at the FDA for biosimilar products (“follow-on biologics) with appropriate protections that continue to promote innovation while providing access to affordable drugs.
• $19 billion in savings through enacting health insurance administrative simplification policies such as the creation of standardized forms and transactions.

Background on Sustainable Growth Rate (SGR) System

Medicare Part B (the physician services component) payments are done through a fee schedule created by CMS in order to “accurately” reimburse for services. Congress first moved to a Sustainable Growth Rate (SGR) system under the Balanced Budget Act of 1997 due to mounting concerns over reining in the rising costs of physician reimbursements. However, this was not the first time “expenditure targets” were deployed. In 1989, Congress passed the Omnibus Budget Reconciliation Act which established Medicare Volume Performance Standards (MPVs) with three conversion factors for different categories of services. The SGR system attempted to fix the problems with MPVs by moving to one conversion factor and attaching consequences to exceeding expenditure targets that were tied to Gross Domestic Product (GDP) in order to hold reimbursement costs constant to national income.

However, every year since 2002, the SGR formula has called for cuts to reimbursement, and every year Congress has acted to override the reductions culminating in a 21.2% scheduled cut for 2010 unless Congress acts once again. It is important to note that SGR, while setting caps on payments for specific services, does not set caps on volume, thus as volume went up cuts were triggered. Numerous concerns exist with the SGR formula, including concerns with tying the target rates to GDP when many argue that the Medicare Economic Index (MEI) is a more accurate measure of medical inflation, fundamental flaws with the formula itself, or simply the government’s price setting scheme more concerned with dollars and cents than quality patient care

Garrett Introduces Amendment to Study FAS 166 and 167

Wed, 18 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) offered an amendment to conduct a study of FAS 166 and 167 during the Financial Services Committee markup of the Financial Stability Improvement Act of 2009. This amendment would require the Financial Accounting Standards Board (FASB) to conduct a study of the combined impact by each individual asset-backed security of the new credit risk retention requirements contained in the bill and the new securitization accounting rules (FAS 166 and 167) and make statutory and regulatory recommendations for eliminating any negative impacts on the continued viability of the asset-backed securitization markets and on the availability of credit for new lending. This study would be required to be completed in 90 days and in coordination and consultation with the Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC).

Garrett’s prepared remarks for the introduction of his amendment are included below:

“Thank you Mr. Chairman. The U.S. capital markets have been experiencing significant financial market turmoil since last year that has required policymakers to examine and address many issues with careful and deliberate consideration.

“One of the policies we have been debating and that I think many here agree with is the concept of risk-retention for lenders and entities involved in the securitization process. At the same time, the Financial Accounting Standards Board (FASB) is considering far-reaching changes to securitization accounting standards during this challenging time.

“At the end of this year, FASB’s new securitization accounting rules, FAS 166 & 167 are scheduled to go into effect. These new rules will eliminate “Qualified Special Purpose Entities” which are the primary securitization accounting vehicle for asset-backed securities. They will also change the criteria for the sales treatment and consolidation of financial assets and apply all of these changes retroactively.

“As we all know, we don’t legislate in a vacuum. We are not the only body setting rules. What we do here taken together with other changes might compound problems or have serious unintended negative consequences. As regulators and policymakers continue to examine the state of our financial market and cautiously contemplate improvements, changes in accounting standards is another aspect that we must take account for.

“The new securitization requirements in this legislation and the changes by FASB to the securitization accounting rules will undoubtedly impact BOTH U.S. financial sector AND securitization – which provides substantial financing options to consumers and businesses.

“For example, the $9 trillion U.S. securitization markets (including commercial and residential mortgage loans, student loans, automobile loans, credit card debt, etc.) currently do not “consolidate” the issuing entities used in securitizations. But, proposed changes could require consolidation by many if not all of these entities, which will impact BOTH capital AND liquidity.

“As such, it is critical that policymakers and market participants fully examine all policy options and implications of any changes to securitization during these challenging times.

“Recently, when asked about the possible impact of the changes in accounting rules combined with risk-retention requirements, Federal Reserve Board Member Elizabeth Duke noted:

“If the risk retention requirements, combined with accounting standards governing the treatment of off-balance-sheet entities, make it impossible for firms to reduce the balance sheet through securitization and if, at the same time, leverage ratios limit balance sheet growth, we could be faced with substantially less credit availability. I’m not arguing with the accounting standards or the regulatory direction. I am just saying they must be coordinated to avoid potentially limiting the free flow of credit... As policymakers and others work to create a new framework for securitization, we need to be mindful of falling into the trap of letting either the accounting or regulatory capital drive us to the wrong model. This may mean we have to revisit the accounting or regulatory capital in order to achieve our objectives for a viable securitization market.”

“So, this amendment would simply require the Board in 90 days and in coordination and consultation with the OCC, OTS, FDIC and SEC to conduct a study of the combined impact by each individual asset-backed security of the new credit risk retention requirements contained in the bill and the new securitization accounting rules (FAS 166 & 167) and make statutory and regulatory recommendations for eliminating any negative impacts on the continued viability of the asset-backed securitization markets and on the availability of credit for new lending.

“Again, given the potential impact on our financial markets and consumers seeking credit, it is imperative that all policymakers and market participants have a better understanding of how these combined changes will impact the market.

“Thank you for your consideration and I would ask that all members support this amendment. I yield back.”

Garrett Introduces Covered Bonds Amendment

Wed, 18 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) offered a covered bonds amendment during the Financial Services Committee markup of the Financial Stability Improvement Act of 2009. This amendment similarly mirrors the legislation Garrett and Rep. Paul E. Kanjorski (D-PA-11) introduced earlier this year, the Equal Treatment for Covered Bonds Act, which aims to help facilitate a robust covered bonds market in the US to add liquidity and certainty to our nation's housing market.

For more information:
CRS Report on Covered Bonds
Treasury Best Practices for Residential Covered Bonds
Federal Deposit Insurance Corporation (FDIC) Covered Bond Policy Statement here

Garrett’s prepared remarks for the introduction of his amendment are included below:

“Thank you Mr. Chairman. And I want to thank my good friend from Pennsylvania, the Chairman of the subcommittee, Mr. Kanjorski, for all of his and his staff’s hard work on this important issue as well as the Ranking Member, Mr. Bachus.

“I think everyone on this committee believes that the concept of risk-retention is a good thing. I also believe that, because of the current problems with our secondary mortgage market and the lack of liquidity for the securitization process, we must continue to look for new and innovative ways to provide increased funding for our credit markets.

“One of those innovative ways that I believe could provide additional liquidity to our credit markets is by establishing a covered bonds marketplace in the U.S. Covered bonds are debt instruments issued by financial institutions and backed (or covered) by a pool of high quality loans. Covered bonds are kept on the balance sheet of the issuing institution and investors have a dual recourse to both the assets used as collateral as well as the underlying institution.

“Covered bonds have been used in Europe for hundreds of years to help provide additional funding options for the issuing institutions. They are a major source of liquidity for many European nations’ mortgage markets. Covered bonds have performed extremely well during the financial crisis largely because of the high underwriting standards used for the loans in the covered pools.

“In the summer of ‘08, a month before the financial crisis began to set in, there was an attempt by the administration to get this market off the ground. The Treasury Department issued a list of Best Practices which described the most prudent ways for interested issuers to offer covered bonds. Also, the FDIC published a final policy statement that provided guidance to investors as to what access the FDIC would offer to the collateral in case of a bank failure.

“To date, there have only been two issuances of covered bonds in the U.S., by Bank of America and Washington Mutual which is now a part of J.P. Morgan. Over the last several months however, there has been a tremendous increase in demand by investors for these bonds. In one week in September alone, there were 7 new issuances in a variety of different European countries that totaled over $20 billion. One financial analyst went so far as to call it an “unprecedented supply frenzy.” So, at a time when we desperately need more private investment and additional liquidity in our credit markets, I believe we must work to set up a system that will allow covered bonds to flourish and their full promise to be explored.

“This amendment would lay out a detailed statutory framework to help facilitate the broader use of these funding instruments in the U.S. A detailed statutory framework is common in the European countries where these bonds flourish and it is needed in this country to provide investors greater certainty in regards to their exact recourse if the issuing institution fails.

“The legislation spells out the variety of different asset classes which would be eligible to be included in a covered bond. It designates the Secretary of the Treasury as the covered bond regulator because of the Department of Treasury’s unique knowledge and expertise of U.S. debt markets. The amendment also details the procedures that are to be followed in the case that an issuer or covered bond issuance fails or defaults.

“Because Subtitle F of the underlying legislation deals with risk-retention and the securitization process, this bill is an appropriate place to include this language which will help jumpstart this marketplace in the U.S. I don’t believe covered bonds are a cure-all to our credit markets but I do believe they would help alleviate some of the current stress they face.

“I want to thank Chairman Kanjorski and Ranking Member Bachus again for working with me closely on this important legislation and ask all the members to support the amendment.”

Garrett Amendment Strikes New Fed Powers

Wed, 18 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) offered an amendment to strike the new powers given to the Federal Reserve within the Financial Stability Improvement Act of 2009, during the Financial Services Committee markup of the legislation.

Section 1104, subsection (5) is included below:

MITIGATION OF SYSTEMIC RISK.—If the Board determines, after notice and an opportunity for hearing, that the size of an identified financial holding company or the scope or nature of activities directly or indirectly conducted by an identified financial holding company poses a threat to the safety and soundness of such company or to the financial stability of the United States, the Board may require the identified financial holding company to sell or otherwise transfer assets or off-balance sheet items to unaffiliated firms, to terminate one or more activities, or to impose conditions on the manner in which the identified financial holding company conducts one or more activities.

Garrett’s prepared remarks for the introduction of his amendment are included below:

“In the last several months, it was my impression that there was a developing consensus that the Federal Reserve should be given less power, not more. But in reading over this discussion draft I am struck by how much power it is given.

“As discussed, although not singled out as a systemic uber-regulator in name, don’t be fooled. The Fed is given primary supervision over firms identified as too big to fail, as well as an array of other new powers.

“One of the new powers particularly caught my attention: Section 1104, subsection (5) on page 30 of the Committee print.

“In the name of mitigating systemic risk, the Fed is given unlimited authority to systematically dismantle a private company. This is a lot more sweeping than imposing tougher capital standards.

“I understand that Congressman Kanjorski is contemplating an amendment that I believe is similar to this section of the underlying bill. I understand the motivation behind such language, but if the majority truly believes they have done away with moral hazard due to the liquidation-only receivership of their proposed resolution authority, counterparties of large institutions should take this into account, and this section of the bill is unnecessary.

“Given the extraordinary government interventions into private firms we’ve already seen, with the trampling of the rule of law in order to benefit political favorites in the auto bankruptcies for instance, I am very uncomfortable with this sweeping, unchecked power – especially for an entity that failed to effectively regulate many of the large bank holding companies already under its purview.”

Garrett Gazette Opening Message

Mon, 16 Nov 2009 05:00:00 GMT

On September 22, 2009, the Unemployment Compensation Extension Act of 2009 came up for a vote in the House of Representatives, and I voted with 331 of my colleagues to pass this bill and extend unemployment benefits to assist those that had been hit hardest by this recession. The bill went to the Senate for approval, where they amended it to include an expansion of the First-Time Homebuyer Tax Credit Program – a program shown to be rife with fraud and misuse of taxpayer money. When the bill came back to the House last week, I could not vote to support the squandering of taxpayer dollars through the Homebuyer Tax Credit Program, a program that I believe is in serious need of reform.

When Congress passed the so-called “stimulus” package in February, it included an expansion of a 2008 tax credit for homebuyers. The program uses your tax dollars to provide a refund of 10 percent of the purchase price of a home, up to $8,000, and the program is administered through the Internal Revenue Service (IRS).

It must first be stated that the government’s role in incentivizing homeownership has been proven to be one of the key factors that led to the current economic crisis, so expanded federal action is debatable at best.

On October 22, 2009, the Department of the Treasury’s inspector general for tax administration testified to Congress, revealing rampant fraud and abuse within the program. The IRS ignored the Inspector General’s initial recommendation for increased documentation for this program, claiming it would be “burdensome for both the taxpayer and the IRS.” As a result, this taxpayer-funded program contained:

• 19,300 electronically filed 2008 tax returns where people claimed the First-Time Homebuyer Credit, yet had not purchased a house, claiming that they intended to do so in the future. Cost to the taxpayer: $139 million.

• 74,000 credit claims by filers who it was later determined weren’t first-time homebuyers. Cost to the taxpayer: $500 million.

• 580 taxpayers younger than 18 years of age who claimed First-Time Homebuyer Credits; the youngest of whom was a four-year old. Cost to the taxpayer: $4 million.

• 3,200 individuals claiming credits thought to be alien residents, which are prohibited from receiving most Federal public benefits. Cost to the taxpayer: $20.8 million.

• 48,500 taxpayers who were legitimately qualified to receive the First-Time Homebuyer Credit that failed to receive the full amount to which they were entitled.

So, in sum, we have a program rampant with fraud, which gives taxpayer dollars to people who don’t legitimately qualify, and fails to appropriately credit the individuals that do qualify. It’s clear that employees of the IRS were aware of the problems with claims process for this program, as the inspector general found 53 cases of IRS employees filing "illegal or inappropriate" claims for the credit. In its current form, this program costs taxpayer about $1 billion a month and is expected to cost $15 billion for the year. Rather than terminate this program, Congress voted on November 5 to expand the program to homeowners looking to buy a replacement principle residence. How many more four-year olds will fraudulently receive taxpayer money under this program before Congress realizes this is a terrible idea?

Voting to expand this program would have been irresponsible of me, and an abdication of my responsibility as a guardian of taxpayer dollars. The Homebuyer Tax Credit Program was a poison pill to otherwise well-intended legislation.

Sincerely,

Scott Garrett
Member of Congress

Mobile Constituent Service Hours

Mon, 16 Nov 2009 05:00:00 GMT

Congressman Garrett’s staff will be holding Mobile Constituent Service Hours in a number of Fifth District towns this week. The Congressman’s Constituent Service Officers are trained to act as your liaisons with Federal agencies. But, it’s not always easy to make it out to one of the Congressman’s district offices – in Paramus and Newton – to meet with one of them, especially when you are dealing with government red tape. These Mobile Constituent Service Hours sessions bring the Congressman’s office to you. So, if you are having trouble with a Federal program, such as Medicare, veterans benefits, Social Security, or more, please feel free to come by. And, please bring copies of any relevant paperwork with you to facilitate their work.

Tuesday, November 17, 2009
Westwood MCS - 1:00-3:00pm
Borough Hall, 101 Washington Avenue

Wednesday, November 18, 2009
Allendale MCS - 1:00-3:00pm
Borough Hall, 500 W. Crescent Avenue

Mobile Constituent Service Schedule though December:

Allendale
Third Wednesday of every month
1pm-3pm
Borough Hall, 500 W. Crescent Ave

Emerson
First Wednesday of every month
5:30pm-7:00pm
Borough Hall, 1 Municipal Place

Hackettstown
Third Tuesday of every month
10am-12pm
Municipal Building, 215 Stiger Street

Mahwah
Second Wednesday of every month
1pm-3pm
Mahwah Senior Center 475 Corporate Drive

Midland Park
First Wednesday of every month
10am-12pm
Library, 250 Godwin Ave

Montvale
Second Thursday of every month
1pm-3pm
Borough Hall, 12 Mercedes Drive

Oakland
Fourth Thursday of every month
10am-12pm
Borough Hall, One Municipal Plaza

River Vale
First Thursday of every month
10am-12pm
Municipal Building, 460 RiverVale Road

Rochelle Park
First Thursday of every month
1pm-3pm
Rochelle Park Library, 151 W. Passaic Street

Tenafly
First Monday of every month
10am-12pm
Tenafly Public Library, 100 River Edge Road

Vernon
Fourth Tuesday of every month
10am-12pm
Senior Center, 21 Church Street

Wanaque
Second Thursday of every month
1pm-3pm
Library, 616 Ringwood Ave

Washington (Warren County)
Fourth Thursday of every month
1:30pm-3:30pm
Chamber of Commerce, 10 Brass Castle Road

West Milford
First Thursday of every month
10am-12pm
Borough Hall, 1480 Union Valley Road

Westwood
Third Tuesday of every month
1pm-3pm
Borough Hall, 101 Washington Avenue

Woodcliff Lake
First Tuesday of every month
10am-12pm
Borough Hall, 188 Pascack Road

Wyckoff
First Tuesday of every month
1pm-3pm
340 Franklin Ave, Scott Plaza

Garrett to Geithner: Who Pays Into the Bailout Fund?

Mon, 16 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) questioned Treasury Secretary Timothy Geithner about the financial companies that would be subject to assessments in order to capitalize the “bailout fund.”

In a letter to Geithner, Garrett cites Section 1609 of the legislation, which outlines the powers and the duties of the Federal Deposit Insurance Corporation under the proposed enhanced resolution authority, and asks Geithner to provide a list of the financial companies that would be required to pay into the systemic resolution fund. This bailout fund could be used in myriad ways, including propping up failed companies in conservatorship.

A concern Garrett has with the section highlighted by this letter is the lack of clarity in the legislation with regard to the universe of “financial companies” that would be required to pay into this fund.

The text of Garrett’s letter is below:

November 16, 2009

The Honorable Timothy Geithner
United States Secretary of the Treasury
U.S. Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, DC 20220

Dear Secretary Geithner,

The draft “Financial Stability Improvement Act” recently submitted to Congress by the Treasury Department and Chairman Frank is currently being considered by the House Financial Services Committee, where we are scheduled to finish marking up this legislation later this week.

Within Section 1609 of the legislation, which outlines the powers and the duties of the Federal Deposit Insurance Corporation under the proposed Enhanced Resolution Authority, is a section titled “Assessment Threshold and Graduated Assessment Rate.” This section states, “The Corporation shall assess any financial company with $10 billion or more in total consolidated assets on a graduated basis that assesses financial companies with greater assets at a higher rate.”

So that I may be better informed about the universe of companies that would be subject to the proposed assessment regime, please provide my office with a list of all companies, if the legislation were enacted today, that would be subject to assessments to capitalize the systemic resolution fund.

Given the tight time constraints we are working under to consider this legislation, I would appreciate a response before a vote on final passage in Committee later this week.

Sincerely,

Scott Garrett
Member of Congress

Garrett Expresses Further Concern Regarding FHA Capital Ratio

Thu, 12 Nov 2009 05:00:00 GMT

Rep. Scott Garrett (R-NJ) issued the following statement in response to the Federal Housing Administration (FHA) announcement that the capital reserve ratio dropped below the 2% Congressionally-mandated level to 0.53%:

“The American taxpayers are tired of bailouts. The FHA announcement that their capital reserve ratio has fallen to 0.53%, just over a quarter of the congressionally-mandated level, calls into question the fiscal soundness of the agency. Many have noted the risk the FHA poses to the taxpayers, including Office of Management and Budget (OMB) Director Peter Orszag, who noted that FHA loans have accrued $15 billion in losses over recent years. I believe we should take significant steps to reduce this risk, starting with increasing the down payment requirement for FHA loans. The government's involvement in the housing market has been one of great concern to me ever since I came to Congress. I have been a vocal critic of the backing that the federal government grants Fannie Mae and Freddie Mac, and I believe that we could have avoided placing the taxpayers on the hook for their failure if we had severed their relationship with the government long ago. We have an opportunity to learn from our past mistakes and take aggressive action to remedy the problems with the FHA. I look forward to working directly with FHA Commissioner David Stevens, as well as the agency’s new Chief Risk Officer, Robert Ryan, on this effort. This situation deserves our immediate attention so we can avoid yet another taxpayer-funded bailout. Americans should not continue to foot the bill for their government’s failings.”

Garrett introduced legislation earlier this year to require borrowers under FHA-insured mortgages to make down payments of at least 5%. Garrett’s bill, the “FHA Taxpayer Protection Act of 2009” is aimed at shielding taxpayers from the risk that the FHA portfolio presents. In addition to the 5% down payment requirement, an increase from the current required rate of 3.5%, Garrett’s legislation would also prohibit financing of closing costs under such mortgages, and require a Government Accountability Office (GAO) study of FHA fiscal soundness. In the Housing and Economic Recovery Act (HERA), Congress set the FHA down payment requirement at 3.5% and allowed closing costs to be included as part of that number. This effectively allowed FHA down payment levels to be as low as 2.5%.

By raising the down payment requirement to 5% and studying the challenges presented by the increased leverage ratio, Garrett believes Congress can begin to address the main concerns with the solvency concerns of the FHA. The FHA’s own actuarial report provided reasoning to support this increase, as it stated, “Based on previous econometric studies of mortgage behavior, a borrower’s equity position in the mortgaged house is one of the most important drivers of default behavior. The larger the equity position a borrower has, the greater the incentive to avoid default on the loan.”

Office of Management and Budget (OMB) Director Peter Orszag dispelled FHA claims that the agency “costs the taxpayers nothing” by stating, “Over the past few years, the program has been anything but costless.”

Inspector General Kenneth Donohue outlined the growth in FHA market share from 3% in 2006 to over 20% in 2009, stating, “the current degree of FHA predominance in the market in unparalleled.” This growth in market share is especially troubling considering the increased rate of delinquency for FHA loans, which is now over 14%.

Garrett Statement on Committee Passage of SOX Amendment

Wed, 04 Nov 2009 05:00:00 GMT

Rep. Scott Garrett’s (R-NJ) Sarbanes-Oxley amendment to the Investor Protection Act of 2009, cosponsored by Rep. John Adler (D-NJ), was approved by the Financial Services Committee today by a roll call vote of 37-32.

This amendment would exempt small businesses from the burdensome reporting requirements contained within Section 404(b) of the Sarbanes-Oxley (SOX) Act of 2002 .

The amendment language mirrors legislation Garrett introduced earlier this year, the “Small Business SOX Compliance Relief Act.”

“Although the stated intent of Sarbanes-Oxley was to provide investor confidence in our markets through greater accountability and disclosure, the Act has had the unintended effect of creating undue—and often unbearable—burdens on small businesses,” Garrett said. “There is a place for Federal oversight, but the weighty cost of compliance under Section 404 is slowly strangling small businesses. It is diverting valuable resources away from other legitimate business needs; creating massive and tedious documentation requirements; and discouraging the public listing of both international and domestic companies on U.S. markets. Honest companies are being punished and the U.S. economy will suffer as a result. Especially now, as our country struggles to emerge from a recession, the last thing American small businesses need is another barrier to economic stabilization. I would like to thank my colleague from New Jersey for working with me on this bipartisan amendment that will free small businesses from onerous regulations and allow them to return their focus and their resources to creating jobs for unemployed Americans and innovating for our economy.”

The Securities and Exchange Commission (SEC) has repeatedly extended the deadline for non-accelerated filers to begin providing audited assessments of their internal controls over financial reporting, an acknowledgement of continued concern about compliance costs. Although reforms were made in 2007 to relax the guidelines for smaller companies, businesses of all sizes still report excessive compliance costs, as noted in an SEC report from September 2009 . In summarizing survey responses from businesses regarding the benefits of Section 404 compliance, the SEC wrote, “[A] majority felt that the costs of compliance outweighed the benefits. This was especially true among smaller companies.”

The extra requirements of Section 404 increase costs to small companies significantly. Section 404 adds external consulting costs, including legal fees, and substantially increases the audit and attestation fees for these companies. Research by NASDAQ shows that the burden of compliance, on a percentage of revenue basis, is 11 times greater for small companies . This creates an unfair competitive advantage for larger companies.

Rep. Scott Garrett on FOX Business

Thu, 28 Aug 2008 04:00:00 GMT

Rep. Scott Garrett on FOX Business

Rep. Scott Garrett on FOX Business News

Wed, 20 Aug 2008 04:00:00 GMT

Rep. Scott Garrett on FOX Business News

Congressman Garrett Seeks Funding for Paramus Vets Home

Thu, 31 Jul 2008 04:00:00 GMT

Congressman Garrett spoke on the House floor tonight to secure funding for the expansion of the Veterans Memorial Home in Paramus through an amendment to H.R. 6599, The Military Construction and Veterans Affairs FY09 Appropriations bill.

Rep. Scott Garrett on FOX Business News

Thu, 24 Jul 2008 04:00:00 GMT

Rep. Scott Garrett (R-NJ) appeared on FOX Business News this evening on Cavuto’s Deal at 6:20pm in an interview to discuss the GSE reform legislation.

Rep. Scott Garrett on Newshour with Jim Lehrer

Mon, 14 Jul 2008 04:00:00 GMT

Rep. Scott Garrett on Newshour with Jim Lehrer

Rep. Garrett Speaks about the Mortgage Crisis on the Fox Business Channell

Fri, 04 Apr 2008 04:00:00 GMT

Congressman Scott Garrett speaks on the mortgage crisis.

Rep. Garrett on Fox Business

Thu, 17 Jan 2008 05:00:00 GMT

Rep. Garrett discusses the Economic Stimulus.

Rep. Garrett Speaks Out Against Massive Tax Increase

Wed, 14 Nov 2007 05:00:00 GMT

Rep. Garrett Speaks Out Against Massive Tax Increase

Rep. Garrett on C-SPAN Washington Journal

Tue, 02 Oct 2007 04:00:00 GMT

Rep. Garrett discusses current issues before the Financial Services Committee

Rep. Garrett on CNBC's Squawkbox

Fri, 28 Sep 2007 04:00:00 GMT

Rep. Garrett appears along with Democratic Leader Steny Hoyer