Sen. Gregg: Wall Street Reform Will ‘Contract Credit’

By Alex Pepper

Jul 22, 2010 3:26pm

ABC News’ Rick Klein reports: With President Obama hailing a new Wall Street reform law as a way to open up the nation’s credit markets, Republicans are arguing that it will have the opposite impact.

“The immediate impact's going to be a lot less credit on Main Street,” Sen. Judd Gregg, R-N.H., said today on ABC/Washington Post’s “Top Line.” “You've got three major items in this bill, which I don't think are all that well-thought-out, that are going to force credit to contract across this country, probably by hundreds of billions of dollars, maybe by even more than a trillion dollars, by the estimates I’ve seen.”

“I think for the next six months to 18 months, maybe even two years, you're going to have much less credit in the system, which is the exact opposite of what we need when we're facing an economically slow situation,” Gregg added.

Gregg, the ranking Republican on the Senate Budget Committee, also rejected the suggestion by Fed Chairman Ben Bernanke that additional stimulus is needed to boost the economic recovery.

“I think one thing we don't need is a major tax increase at the end of this year on capital formation,” he said.

“You've got the credit contraction, you've got the tax increases, you've got this long-term debt issue, you've got the health care bill — which is going to be expensive for a lot of small businesses. Those are not good things for the economy. In fact, if you're on Main Street today, one of the reasons you're probably not expanding if you're a small businessperson is ’cause you're so worried about all this stuff that's coming out of Washington. I mean, we did a 2,700-page health care bill, then we did a 2,300 bill — financial reform bill — and we're running up all this debt. And if you're on Main Street trying to run a little business, you're saying, ‘Whoa, how am I going to have to pay for this?’ ”

More stimulus spending, he said, would “be a mistake. I think the best thing to do is give the people in the private sector — the entrepreneur — the ability to go out and make investments and do it in a climate that's positive to the making of investments.”

Gregg, who serves on President Obama’s bipartisan deficit commission, also said it’s “likely” that the commission will recommend higher taxes – though he said it would call for far steeper spending cuts.

He also said he wasn’t sure whether he would support Elizabeth Warren if she’s chosen to lead the new consumer watchdog agency set up by the reform law. A range of prominent Democrats are lining up behind Warren for the job, though President Obama and his Treasury secretary, Tim Geithner, haven’t settled on a nominee.

“I think I'd want to hear from her, hear what her thoughts are. This consumer protection agency … it's gonna be the most powerful group in Washington, after the Federal Reserve. The chairman of this group, or the director of this group, is not responsible to anyone. I've described them as the new J. Edgar Hoover. Basically, this person is gonna be out there with an $850 million budget, and they're not gonna answer to anybody, including the Congress.”

Watch the interview with Sen. Judd Gregg HERE.

For our “Post Politics” segment, we talked with The Washington Post’s Dan Balz about Sharron Angle’s continuing efforts to avoid questions from Nevada reporters, the latest odd developments plaguing Colorado Republicans, plus the White House’s evolving efforts to cope with the politics of race.

Watch the portion of the program with Dan Balz HERE.

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