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Darrell Issa: 'Greed and Incentives' Caused Fiscal Crisis

By Jim Meyers   |   Thursday, 07 May 2009 08:28 PM

California Rep. Darrell Issa tells Newsmax that "greed and incentives" were major contributors to the current economic crisis — and the Bush and Obama administrations both failed to protect American tax dollars.

Rep. Issa, the Ranking Republican on the Oversight and Government Reform Committee, also said Republicans need to set aside the issues that divide them if the GOP is to be revived.

Newsmax.TV's Kathleen Walter noted that the House has passed legislation that sets up an independent panel to investigate the root causes of the economic crisis, and asked Rep. Issa for his views on the commission.

See Video: Rep. Darrell Issa discusses the national commission to investigate the country’s economic crisis - Click Here Now

"It is an exciting step in the right direction," Issa said.

"As far back as September and October, many of us were pushing for and presenting legislation to take the party politics out of a crisis for all Americans, and to get this to a 9/11-type commission. We now have that.

"The structure of it is not what I would have preferred. Right now it's going to be six Democrats and four Republicans as far as appointments. We're urging Speaker [Nancy] Pelosi to make sure that one of her appointments is either neutral or nonpartisan, so it becomes closer to the five-five split that we had in the 9/11 Commission that worked out so well.

"This commission will have subpoena power. It will be independent once named, and it will reach its conclusions in all likelihood very similar to the way the 9/11 Commission did."

Walter asked what Issa expects those conclusions will be.

"I think the conclusion will be that greed and incentives that led to greater and greater leverage, with less and less control, was part of the problem," the congressman responded.

"I think it's going to find that government incentives to lend to those who were less and less credit-worthy played a part in it. I think it's the merging of [greed and incentives] that's going to cause us to make a different set of changes for the long run, one that protects from over-leverage, one that also says the likelihood that someone is going to be able to pay back a debt should be the criterion and not government interest in somehow getting more people loans, which ultimately has not been a good idea."

As the Ranking Republican on the Oversight and Government Reform Committee, how does Issa begin to hold the Obama administration responsible for how money is spent? Walter asked.

"Primarily our job is once legislation is passed, making sure it lives up to its claim. Certainly [that's true] in the case of stimulus, which already has countless redirections of funds and failure to account for them, and the TARP, the bailout money as it's called, which we've already seen had hundreds of billions of dollars that either were overspent for assets or were spent on assets that left the United States.

"We're already beginning to be able to show that, not [just] the Obama administration, but the last days of the Bush administration and the Obama administration have failed to protect American tax dollars."

Walter asked: "How much more has been spent or is being spent than really needs to be spent?"

"That's one of the great questions that we're hoping this commission helps us work on," Issa said.

"America between the time of [then Federal Reserve Chairman] Paul Volcker in the 1980s and the time of the crash more than doubled the amount of debt as a percentage of the wealth of the nation. One of the questions that nobody has begun working on, that has to be answered, is what is the appropriate amount of debt.

"Right now what we're seeing is that private debt is being replaced by public debt, by taxpayer debt . . . Between the Fed and the FDIC and the actual bailout money, we've got four-and-a-half, five-and-a-half trillion dollars that essentially has been moved to the books of the American people and off the books of private investors. That's unsustainable.

"We're going to have to figure out how to get some of that back to responsible people who are using their own money and not other people's money."

Walter pointed out that former Secretary of State Colin Powell recently said the Republican Party is in deep trouble, and asked Issa for his thoughts on reviving the GOP.

"Secretary Powell is right," Issa declared.

"It became very hard to define what was a Republican based on what they said plus what they did . . . We need to make it very clear the Republican Party will do a few things right. We will in fact stand for smaller government. We will stand for local control. We're not trying to say who will educate your children, we're trying to say you should make the decision locally.

"Those kinds of statements have to be said by Republicans, believed by Republicans, and many of the issues that divide Republicans have to be set aside so that the issues that all Americans care about can be forefront."

See Video: Rep. Darrell Issa discusses the national commission to investigate the country’s economic crisis - Click Here Now

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