ICYMI: Chairman McHenry Discusses the Debt Ceiling and Recent Bank Failures on Face the Nation
Washington,
May 8, 2023 -
In case you missed it, the Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), joined Face the Nation on CBS News, where he discussed House Republicans’ efforts to limit federal spending, save taxpayer money, and grow the economy in coordination with raising the debt ceiling. Chairman McHenry also outlined the state of the American banking system and Congress’ response to recent bank failures.
Watch Chairman McHenry’s full interview here or by clicking the image above.
Read a transcript of key moments from the interview below:
On his confidence level that the debt ceiling will be lifted:
“Instead of being at the depths of the ocean, I'm merely drowning. … So, my level of optimism is from complete and utter pessimism that anything can get done to some level of modest pessimism now. What's changed since that interview is that the House acted, we passed a debt ceiling increase with a Republican plan attached to it. … We dealt with growth, we dealt with immediate spending and long-term savings. … The President said, show us your plan, we've not only shown him the plan, we've passed a plan. The Senate can't do it, now with 43 senators saying we're not going to go along with the Schumer plan for a clean debt ceiling increase, the Biden plan. And now the Biden- President Biden has to come to the table for a negotiated solution.”
On what a potential negotiated debt ceiling deal could look like:
“Well, we sent a significant large bill, that brings down the cost of government by four and a half trillion dollars over the next decade. It's big, yes. But we sent growth, short-term caps deal on spending, so we can fund our government for the next two years without drama, and then long-term savings. So, pairing of one, two and three, that’s what a deal looks like. I’ve talked to a lot of senators, lot of Democrats and Republicans in the House and the Senate to try to see what a deal would look like. And at this stage of the game, the one key ingredient I don’t have is what the administration would come to terms with. We have to have something that can pass, that addresses our fiscal house at a time where we have record inflation and record federal spending, and we need to have something that can both pass with Republicans and Democrats.”
On President Biden’s refusal to negotiate with Republicans on a fiscal deal attached to a debt ceiling increase:
“You're saying this to a Member of the House that actually passed a debt ceiling increase, and a President who would not have a second meeting with the Speaker of the House. The first meeting was February 1st, we're 100 days past. Everyone knows in divided government, you have to negotiate, and the President says he will not negotiate. So the absurdity of the position the President's put himself in, where he is playing politics with the economy, is markedly different than previous debt ceiling increases, where Republicans have been viewed as a recalcitrance. We've actually done something, and the administration says we're not going to talk.”
On the underlying causes of recent bank failures:
“If we look at the reason why these banks, the three of the 30 largest banks in America have failed in the last two months, it's because of interest rate sensitivity of their balance sheet. Which means they misjudged inflation. The Fed misjudged inflation, they've admitted it, they're behind the curve. The administration has been asleep at the switch for the supervisors of these institutions, but the root cause of this is inflation. And if we can address inflation, it gets to the disease rather than addressing the symptom.”
On upcoming House Financial Services Committee hearings to examine recent bank failures and the government’s response:
“In the next two months the House Financial Services Committee will have the CEOs of these failed institutions, we're going to have the regulators in, including Secretary Yellen, and Chair Powell at the end of June. We're going to have our Humphrey Hawkins hearing to hear from the Chair of the Federal Reserve, Jay Powell. Those are important dates in the calendar, especially given the state of banking in America today.”
On the state of the American banking system and the safety of consumers’ deposits:
“Unfortunately, we're not out of the woods. But what depositors need to understand is, since 1933, when we enacted and created the FDIC, insured deposits have never had a penny of loss. We have 99% of the accounts in America are under the insured deposit cap level. And so, 99% of the deposits in America are safe and sound. What we have to do is address over a period of time, the safety and stability of smaller banks, at a time where the market is judging their business model, their interest rate sensitivity, and the assumption that regulators are going to require a lot more capital for these banks to exist. They're making a big assumption, but the stability of the accounts? They're there.”
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