I'm not sure why Rep. Garrett thinks that making sure the banks turn a profit is going to assure they'll lend to anyone. It hasn't worked so far. His solution seems to be just to let them fail and take the economy down again if they do rather than regulating them. The Wonk Room has more--GOP Criticizes Obama Plan Because It Would ‘Confine The Banks And Their Ability To Make Profits’:

In the wake of the Obama administration’s announcement yesterday that it will seek new bank regulations “in the spirit of Glass-Steagall,” one line of thought posited that Republicans had been placed into a box, as they wouldn’t want to give the administration a victory on regulatory reform, but they also wouldn’t want to seem too friendly towards the banks.

But mass opposition has been the staple of the Republican strategy towards Obama so far, and early indications are that they won’t be any more helpful with the plan to reform the banks.

[...]

Garrett’s statement, meanwhile, basically implies that a profit earned in any fashion — whether its by ripping of unknowing consumers or gambling with federally insured money — is alright by him. But it’s not really the level of profits that we’re talking about here at all — it’s the way in which they were earned. Profits of the sort Wall Street has been seeing in recent years are only achievable by amassing a huge amount of risk, which is backed by American taxpayers because the institutions involved are systemically important. It’s the merging off traditional deposit banking and commercial lending with a hedge fund mentality that is the problem Obama’s plan seeks to address.

Transcript via PBS below the fold.

JUDY WOODRUFF: And -- and, without rehashing the whole interview...

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: ... he talked about December and impetus right now that the Senate legislation is going to be.

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: But let me ask you about one-half of this, at least, and that...

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: ... is ensuring no bank owns, invests in or has any sponsorship of a hedge fund or private equity fund. What about that part of the proposal?

REP. SCOTT GARRETT: Well, that would put -- obviously, put the reins in on the current Fed chairman and this administration with what they used in order to try to get us out of the situation that we're in right now, right?

I mean, in other words, had their rules been put in place a year ago, they wouldn't have been able to try to push for some of the mergers that we did see on Wall Street to try to bring us out of this situation. So, that's one real question that we have to put back to the administration. What will they do next time?

And the second major point is this. If we want the banks to lend -- and we all do -- if we want the economy to expand -- and we all do -- do you really want to start confining the banks in their ability to make profits in order to generate more capital to lend out to the people? And that's what these constrictions will now do.

JUDY WOODRUFF: And the core point, though, Congressman Garrett, there behind this...

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: And we heard Secretary Geithner refer to it...

JUDY WOODRUFF: ... and the president, too -- and that is using the so-called safety net of government money, the banks turning around and using that money that they have had access to and making risky investments with it, to their own benefit?

REP. SCOTT GARRETT: Well, there, that's a good point as well.

And that's why, when this administration came out with their package last -- this past year, we said, you know, what you're really doing is continuing the bailout mentality. You're continuing with the legislation that came out of the committee and out of the House and what they support to allow for these institutions to be bailed out.

By who? By you and me, the taxpayer. Republicans, on the other hand, had a proposal, and we laid it all out for them -- they never really allowed us to move it -- that says, no, we need to end the bailout mentality -- taxpayers are calling for that overwhelmingly -- and stop allowing Wall Street to look to the taxpayers to be bailed out.

We go in an entirely different direction than what Secretary Geithner is trying to do right here.

JUDY WOODRUFF: Well, let me just understand.

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: So, going forward, would you and other Republicans support the idea of making sure a bank does not own -- have the ability any longer to own a private equity fund or a hedge fund?

REP. SCOTT GARRETT: No, no, we wouldn't. We wouldn't. And we wouldn't see the need for it because we wouldn't support the idea of that institution being totally bailed out again by the -- by the taxpayer.

JUDY WOODRUFF: And then the other half of this is the idea of...

REP. SCOTT GARRETT: Sure.

JUDY WOODRUFF: ... limiting consolidation, putting limits on the size that any bank would be allowed, the large bank, would be allowed to grow to.

REP. SCOTT GARRETT: Yes.

You know, years ago, and not too long ago, the United States had some of the -- the majority of the largest financial institutions in world. Now we have gone down to the point we only have -- you can count them on one hand. And where's the rest of the large financial institutions? Elsewhere in the world.

If what this administration says is, we're going to tie the hands even more, so that we're going to put a limit on them, the secretary answered your question by saying, do you want to dismantle them? Effectively, he should have said yes, because that's what their legislation allows them, the administration, to do, to dismantle them when they get larger than they want them to be.

We will be uncompetitive with the rest of the financial markets in the world, as we continue to be so with this -- policies they have enacted so far -- or tried to enact, I should say.

JUDY WOODRUFF: Do you believe any limit should be placed on these large mega-banks?

REP. SCOTT GARRETT: Sure. The limit should be on the other side of the page. The limit should be that the taxpayer should not be the avenue for recourse when they have problems.

When the banks grow to or when these financial institutions grow to such a size that they can't sustain themselves, or what have you, they have problems, economic problems, or financial problems, they shouldn't be able to look back to you and I, the taxpayer, to be bailed out. That's where the limit should be.

You put that limit on, and you will not find yourself so much in the situation that we came to today.

JUDY WOODRUFF: So, how...

REP. SCOTT GARRETT: Yes.

JUDY WOODRUFF: Go ahead.

How would that -- how would you enact that?

REP. SCOTT GARRETT: Well, the -- well, we have legislation that we have proposed.

We do have the idea of, you know, a council of regulators out there, so the council of regulators can get all the information out that they need and look over the horizons, what have you. So, we support that general idea. We don't go as far as the administration wants to.

We have the idea of saying that put limitations on bailouts, so that the bailouts don't occur in the future, so that we don't have to do the -- look to see AIG situations or Bear Stearns situations or the Fannie Mae or Freddie Mac, which is probably going to be more money spent on those two institutions than the Congress spent on the TARP program.

JUDY WOODRUFF: We're going to have to leave it there.

REP. SCOTT GARRETT: OK.

JUDY WOODRUFF: Representative Scott Garrett, we thank you very much.

REP. SCOTT GARRETT: I appreciate the chance to be with you again. Thanks so much.