“The Republican Study Committee alternatives would suspend capital gains taxes immediately. We have a liquidity crisis and suspending capital gains taxes would bring as much as a trillion dollars of capital sitting on the sidelines back into the market. Second, we need to suspend the mark to market accounting that has created a credit crunch dust pile for so many businesses across America.
When Fannie Mae and Freddie Mae crumpled – a problem that House Conservatives warned about for years – the whole system started to crumble with it. These troubled financial Frankensteins – created in a government laboratory – are not creatures of the free enterprise system and we must ultimately take their monopoly powers away and return them to the marketplace.
Finally, the Federal Reserve is being pulled in too many directions and we should amend the Humphrey Hawkins Act which currently diverts the Federal Reserve’s attention from long-term price stability to short-term economic growth.”
VAN SUSTEREN: So what would you recommend? I mean, there's obviously sort of a -- it looks cataclysmic, these failures. What would you recommend?
GINGRICH: Well, I'd recommend four things. I'd recommend first that they dramatically change the accounting procedure called "mark to market" because it has forced companies to bankrupt unnecessarily. I would repeal the Sarbanes-Oxley bill, which has turned out to be a disaster and did not warn us about a single one of these bankruptcies, and...[# More #]
VAN SUSTEREN: Wait a minute. Why is that bill -- because what that at least did is made some of the things for some of these board members to be more obvious or be -- take more responsibility.
GINGRICH: Well, I mean, first of all, it did not work in a single one of these. It didn't work at AIG. It didn't work at Lehman Brothers. It didn't work in Bear Stearns. It didn't work in Freddie Mac. It didn't work a Fannie Mae.
But what it does do is it adds about $3 million a year in accounting fee and red tape for a small startup company. And the result is -- I just spent three days at Silicon Valley talking to people about this. The result is they're not bringing any companies to market. There's not a single new company coming out. We had zero new starts, what are called IPOs, in the second quarter, and we had one in the third quarter.
And everyone out there tells me that this bill is a monstrosity, and it doesn't work when you want it to work and it costs you an enormous amount of money and raises the risks so dramatically that no serious entrepreneur that I know of is willing to serve on a board anymore.
VAN SUSTEREN: But that's -- isn't that a little bit different? That's sort of almost a stimulus to the economy issue, as opposed to the actual -- what we're talking here...
VAN SUSTEREN: ... Is the failure at the top of the bank...
GINGRICH: If you don't stimulate the economy...
VAN SUSTEREN: I'm not opposed to stimulating the economy.
GINGRICH: My point's more profound. When they...
VAN SUSTEREN: You're always profound!
GINGRICH: Well, but when they get done spending $700 billion, if they don't have the economy back again, I mean, if they don't have people out there making money, they're going to need another $700 billion.
VAN SUSTEREN: So Paulson, the president and the Senate and the House, they're all just plain wrong.
GINGRICH: They're wrong.
VAN SUSTEREN: All of them.
GINGRICH: And what they're in the process of doing -- and I can appreciate Paulson's view. Paulson was the former chairman of Goldman Sachs. It makes perfect sense if you're from Wall Street to want to bail out Wall Street. But if they don't eliminate the capital gains tax, if they don't pass a strong energy bill -- remember, we're sending $700 billion a year, the amount Paulson wants -- we're sending $700 billion a year overseas for energy. So we now have foreign countries bringing our energy money back to buy out banks.