WASHINGTON, DC — Congressman Jeb Hensarling, the top Republican on the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, and the author of H.R. 4889, the GSE Bailout Elimination and Taxpayer Protection Act and H.R. 5391, the Federal Housing Finance Oversight Board Increased Transparency Act of 2010 offered the following comments during debate on his amendment to strike language providing for a further federal intrusion into private compensation practices.

Congressman Hensarling:

“I think the Chairman said that I objected to the fundamental principle [of this section of the bill].  Yes, I want to be on the public record saying that I object to the fundamental principle of bailouts.  The answer to excessive compensation agreements at financial institutions is to let them go bankrupt.  Do not bail them out.”

“Yes, I object to the fundamental principle.  When the chairman said that no one believes that this language will be used in such a fashion, well no one actually believed that somehow Chrysler and GM could somehow be found to be financial institutions under the TARP Act.  But lo and behold, but roughly $80 billion later, they were found to be quote-unquote, ‘financial companies.’  So it happened.”

“We have annual say on pay dealing with executive compensation. Shareholder vote on golden parachutes, executive independent compensation committee, executive additional executive pay disclosures, claw-back provisions…My point is, if we, there are plenty of provisions that deal with the question of executive compensation.”

“I do not believe there has been a sufficient answer of why you would grant such incredible, powerful, discretionary authority to the regulators again, to regulate the compensation of a bank teller.  Regulate the compensation, who knows, maybe GM and Chrysler retailers will be found to be financial companies. Now are we going to regulate the commissions for auto salesman?  Again I don’t understand why the language doesn’t match the rhetoric.”

“And when we look at the studies, what we see is that those firms that fail do not have significantly different compensation structures from those that didn’t and yet the true root cause of the whole crisis, inflating the real estate bubble, the GSE’s are totally unaddressed. So we’re addressing something that did not create the financial meltdown, and we’re not addressing something that did. I see my time is up. Thank you, Mr. Chairman.”