Cantor says US needs ‘smarter regulations’ not just more

By Kay B. Day

Democrats in Congress, with help from a few Republicans, hope to push through a financial reform bill many conservatives and libertarians are criticizing. [Photo by Kay B. Day]In a conference call with bloggers on Monday, House Republican Whip Eric Cantor (Va.) said the US needs “smarter regulations” rather than simply a “more regulations” approach. Cantor was responding to a question about new financial regulations put forth by Sen. Chris Dodd (D-Conn.)

Cantor and House Deputy Whip Peter Roskam (R-Ill.) held the conference call they described as a discussion of “how federal policies are hurting employers large and small.”

Cantor joined Roskam in Chicago, visiting constitutents as well as other residents in the metro area. Roskam joked about Cantor’s popularity—people on the street wanted to meet him. Obviously Cantor has a national brand.

The conference call was held at the Chicago Tribune Tower.

“People have had it with Washington,” Roskam said. “Promises made in the context of the campaign are not coming to fruition.”

Cantor believes the financial regulation bill Dodd wants pushed through Congress will establish a “permanent bailout bill…a permanent construct of the presence of the federal government on Wall St. and business.”

The Virginia congressman stressed, “None of us will condone any type of illegal behavior.” He wants transparency on the proposed regulations and he expressed concern about the reform proposals put forth by Congress and the administration.

Cantor said, “I don’t think we want to scare off capital in America and have the CEOs of our country having to go to China on bended knee…so we can create jobs.”

While some Republicans agree with Dodd’s regulatory proposals, most do not.

Mark A. Calabria, Director of Financial Regulation Studies at the Cato Institute, writing about the bill, was not as kind about Cantor and Roskam's misgivings expressed in the conference call. The institute is a Libertarian think tank, and thereby takes the purest approach to the free market. Calabria called Dodd’s legislation “a bailout bonanza.”

Calabria said, “Sen. Chris Dodd's latest bill to fix the financial system is another failure.”

At the Cato Institute, Calabria offered an excellent analysis of the bill, getting to the heart of the problem. “A bill that essentially says, ‘No more bailouts -- except under conditions A, B, C and D,’ is not a bill that ends bailouts.”

Calabria's analysis supports Cantor's statement about fears on the part of investors. He wrote, "Even Dodd's claim to shut down companies is full of holes. On page 145, the bill clearly states that the FDIC 'may' liquidate and wind up a failing company. That means the FDIC 'may' also decide not to...In short, Dodd's bill wouldn't see failed firms put out of business in the next crisis, but instead produce ad hoc bailouts like those of 2008."

Roskam said current actions in Washington amount to “generational theft.” He added, “What you’re seeing is a leadership that’s a sinkhole of self-absorption—spending to…put liability on the next generation.”

Cantor said we need to “provide as much incentive as possible” so investors get back into the game.

Cantor also noted the pending higher taxes Democrats favor will result in “less incentive to engage in risk because the price of risk is higher now.”

A recent Pew poll on trust in government seems to support Cantor and Roskam’s claim. A wire story summing up The Pew report noted, “Public confidence in government is at one of the lowest points in a half century…Nearly 8 in 10 Americans say they don't trust the federal government and have little faith it can solve America's ills.”