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Ed Royce’s case to chair Financial Services in the House

Monday, November 15, 2010
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HH: The Republicans will gather next week in Washington, D.C., beginning a process of establishing their leadership for the two years ahead, including a process of selecting people who will run the most important committees, one of which is Financial Services. I’ve reported this week that the would-be chairman of Financial Services, Spencer Bauchus, began last weekend by insulting the Tea Parties and Sarah Palin. And now, there’s another hat in the ring, Congressman Ed Royce from Orange County, California, where he’s served in the Congress for I think about twenty years now, maybe eighteen years. Congressman Ed Royce joins me now. Hello, Congressman, welcome back.

ER: Hugh, thank you.

HH: Now are you still a candidate for the chairmanship of Financial Services?

ER: I certainly am. You know, I’ve been addressing these problems for a number of years, but we’ve got to his this head on. We’ve got a situation where Barney Frank is still going to be the ranking Democrat on that committee. And we either take him on, as I’ve done in the past with the government sponsored enterprises like Fannie Mae and Freddie Mac, and with the bailouts, and with the idea of the cash for clunkers program, or we go along with Barney. And I think we’ve got to oppose him, and that’s where I’m different from the ranking member.

HH: Now how is your campaign going? I know it’s kind of a quiet campaign. It’s all sort of winks and nods and quiet conversations, but do you feel confident that not only your long standing stance towards Freddie and Fannie, but also the ranking member’s comments about the Tea Party have propelled you forward?

ER: Well, I think it has. I mean, we need to change the message coming from Washington. And if members don’t understand that they’ve been on the wrong side of these issues, especially after the collapse of the housing market, where we had a situation where I offered up legislation. And the members remember this, because Barney Frank and I locked horns on this issue on the House floor. And I offered up a bill that would have regulated Fannie Mae and Freddie Mac for systemic risk, and in the view of the Fed, would have helped prevent the collapse in housing, because if they could have de-leveraged those portfolios, gotten rid of the junk that they had in the portfolios. Then they could have slowly wound down the problem created by Barney Frank and others that had championed the original legislation. The support I’m getting are from those members who are looking at where my opponent for this position was, and where I was at the time. And because he was with Barney Frank on that, and with Barney on the bailouts, and with Barney on the cash for clunkers program, they’re saying well, what would the contrast be? What would the difference be? What I think many of our steering committee members on the Republican side now want to see is someone who wants to stand up and lay out our logic, lay out our case, persuade the public as to why the left, the hard left, was so wrong on these issues, and why we have a better alternative. And we have to be willing to do that. And even the left, even the left in its reports in the news, have indicated that Royce in this fight is the guy that shows no hesitation in locking horns with Barney Frank, that Royce repeatedly clashes with Barney Frank on the absence of any reforms for Fannie and Freddie, and has the willingness to trade barbs with him. And I think that you know, even the left can have second thoughts, Hugh. So as you lay out the case every day, as you present these arguments, wouldn’t it be nice if we had a committee chairman who would lay out these arguments as to why free enterprise is right, and why this type of managed socialism is wrong.

HH: Yeah, it’s really one of the most important jobs of a chairman of a committee, is that public moment when the cameras are in and the reporters are there, and they’re watching the debate. Now Ed, I’m also concerned, you were here with George Pataki and with Van Tran…

ER: Yes.

HH: …who unfortunately did not get over the hump. He’ll be back. But we spent a lot of time talking about Obamacare, talking about the issues in front of us. And all three of you were very respectful of, and congratulatory towards the Tea Party. You really embrace it. Now I don’t know Spencer Bachus from Adam, but if you start kicking the Tea Party right now, I’ve got to question whether or not you’re in touch with American politics at this moment. And does the long standing veterans of the House, do the long standing veterans of the House, understand the revolution that’s underway in American politics?

ER: Well, I think the question is in terms of the interests that’s articulated by members of the Tea Party, their number one concern is the amount of the debt, what’s going to happen to future generations, repealing Obamacare, ending too big to fail. And our members, I think, understand that. But I think that when it comes to too big to fail, we just allowed Barney Frank, because the Democrats controlled both chambers and the President signed the bill, but we’ve just allowed him to run a bill which gives the largest banks an advantage of a hundred basis points. In other words, one interest percent higher lower advantage in terms of their ability to borrow money from their creditors over their competition. And we’ve done that because Barney Frank has passed this permanent bailout authority, this resolution authority, in which it’s quite likely that if you’re doing business, if you’re a counter party doing business with one of the big banks, you’re going to be much better off than facing potentially a bankruptcy judge, which will happen if you’re too small to save. We have put into law now the very problem that we had with Fannie Mae and Freddie Mac, where they could borrow at so much cheaper a rate than their competitors, and thus put their competitors out of business. So there are these important issues that I think people who are involved in the Tea Party worry about, the advantages that are built in for ever more government spending, and the fact that the taxpayer ends up having to do the bailout with this collapses, that have to be addressed.

HH: So Ed, when does this vote on the chairmanship come from the steering committee? When do you find out if you’ve won?

ER: Hugh, on the 29th, we’re going to go into session. We’ll go back in this Monday. But on the 29th, we’ll convene for this special purpose. And during that week, the steering committee will hear from each of us who is challenging and making our case to chair a committee. And we will know shortly thereafter.

HH: Are you confident?

ER: Oh, I’m confident that I’ve put forward the best possible arguments as to why we need to address these issues, why we need to take on Barney Frank and reverse what he’s done, that will cause future problems. And I’m also confident and gotten the encouragement from people in certain regulatory agencies, people I know in the Fed and so forth, that have encouraged me and said Ed, just as you laid out the case on Fannie Mae and Freddie Mac, on the GSE’s, and as you laid out the case on Too Big To Fail, we have to raise these issues now, and create the environment in which we can repeal some of this bad legislation.

HH: Good luck, Ed Royce. I hope the steering committee is listening. It’s an important, important vote not just for the financial industry, but for the Tea Party, the party, and the country. Ed Royce, great to talk to you again.

End of interview.

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