1:15 PM EDT
Scott Garrett, R-NJ 5th

Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.

I just want to take a moment to respond as well to the gentleman from Massachusetts. He indicated that he is probably not going to convince anyone who is supporting the bill. I presume I am probably not going to convince him either, as I look over there, because he is now off the floor; but if he is back in his office and tuning us in, let me just make some points where he might be convinced.

He spoke about the fire sale that will not occur now under the proposed Volcker Rule. Well, yes, it still will occur, just because you are not saying that the sale has to occur this afternoon, but it is going to occur at a set point in time, either 6 months from now, a year from now, or as they are proposing, 2 years from now. In either case, when you set a date certain for a sale, then everyone else out there knows that this is the day that they might as well wait for; and eventually, they will

have to sell, and at that point in time, they will engage in a fire sale.

In other words, by setting a date when you have to sell all of your assets or whatever you have, you are basically pushing the price down in that market.

Secondly, with regard to sales up, I guess the gentleman from Kentucky already raised that point. Sales were going down until Congress came together in a unique experience for Congress, which was a bipartisan effort, and once the rest of Main Street and Wall Street saw that Congress can actually do things together and work together in a bipartisan manner, they did what the rest of Americans will do and said: good thing. They said: let's get that market going back up again.

As the gentleman from Kentucky pointed out, that is exactly what occurred.

Thirdly, the gentleman from Massachusetts admitted that the CLO market was not the cause or any cause of the crisis that we had back in 2008, and I have not heard any testimony from anyone on any panel from either end of the spectrum that the CLOs would be a basis for the next crisis that inevitably will come.

Next, the gentleman from Massachusetts raised the point that something like 70 percent of all the CLOs out there are captured by something like three large banks or three financial institutions and made it sound as though the smaller and midsized banks are not really playing here.

Then you had to listen to the next thing that he said. He said that most of those CLOs held by those would already be protected by the current Volcker proposal out of the administration.

Well, that tells you right there that the legislation from the gentleman from Kentucky is not addressing or not trying to solve a problem for the three large banks. The legislation he is trying to put forward in a bipartisan manner is, in fact, doing just as he explained for the smaller banks, for the midsized banks, those are the ones that we are concerned about; and we want to make sure that they are not hurt through fire sales or further restrictions on them.

Finally, last--but maybe not least--is the fact that this bill will not end too big to fail. Well, we know that Dodd-Frank, unfortunately, did not end too big to fail.

Dodd-Frank did a number of things, but it did not end too big to fail, and the way to solve that is not by nitpicking around the edges on areas such as this that did not cause the crisis in the first place.

In fact, the authors and the proponents of Dodd-Frank understood that when they passed Dodd-Frank--because, look, what is the language in [Page: H3261]

Dodd-Frank when it comes to the Volcker Rule and the CLO matter that is before us today? Did they want to have this included in the rule that Volcker would eventually come out with? The answer is no.

The language specifically in 619 of Dodd-Frank--voted in favor of, by the way, by the gentleman from Massachusetts--says:

Nothing in this section shall be construed to limit or restrict the ability of a banking entity or nonbank financial company supervised by the Federal Reserve Board to sell or secure type loans in a manner otherwise permitted by law.

What does that sentence mean? That means that the sponsors of--and those like the gentleman from Massachusetts who supported Dodd-Frank--specifically put into the Dodd-Frank law the direction to the Fed and the other regulators that they should not be doing what they are doing right now. They should not be putting, as it says, limitations on this type of instrument.

So for all of those reasons, if the gentleman from Massachusetts is still watching what we are doing on the floor, perhaps we have convinced him that he should join with the majority on both sides of the House and not be part of the three or so who remain opposed to this and support the legislation, H.R. 4167.

With that, I yield back the balance of my time.