09/24/08
Lou Dobbs interviews Congressman Frank
http://transcripts.cnn.com/TRANSCRIPTS/0809/24/ldt.01.html
DOBBS: Well, Democrats on Capitol Hill saying tonight there
is progress in negotiations over the bailout on Wall Street. Barney Frank is
the chairman of the House Federal Services Committee. The chairman joins us
toot. Congressman Frank, good to have you with us.
REP. BARNEY FRANK (D-MA), FINANCIAL SERVICES CHAIRMAN: Thank you.
DOBBS: We have heard reports there is some progress in the compromise. Can you
articulate what they are?
FRANK: First of all, we're going to set a precedent because we're going to get
restrictions on CEO compensation. They won't be everything we want, they will
apply to only the companies that are benefiting from this, but it's a pattern
I'm trying to take and apply broadly.
We're also doing proxy access, a very important improvement in corporate
governance where you have these boards of directors that are immune to anybody.
And we're going to give the shareholders the right to petition so they can
elect the directors.
Next we have in our bill the right of people to invoke bankruptcy for their
primary residence. Right now, you can for your vacation home, but not your
primary residence. They say we're going to lose the federal control for
foreclosures.
Beyond that, we're giving them authority they didn't want, not just to buy
paper, but to take shares in the company, that will, a, give the dividends, and
b, get warrants so the results of the companies become more profitable than
they have been. The federal government gets extra help.
DOBBS: You say you're giving them authority. Does that mean you're making it a
mandate that they will take equity in any company they provide direct
assistance to?
FRANK: No, because we want them to buy up some assets so we can do some
foreclosure relief. For that they've got to buy up securities.
We are also setting up contrary to what they requested, a very tough oversight
board. They will be appointed by the Senate majority leader and speak. Every
single transaction they take if the bill passes will have to be immediately in
real time reported to the oversight board. It will be totally public, what they
bought and paid for it. If there was any suggestion there was a problem how
they're doing it, that will be public.
In addition, the speaker is talking very much about having money to pay for
this that would come from some levy on the securities exchange themselves or a
tax on people of great wealth, but finally, we have been arguing strongly that
they should go with a stimulus to provide money for infrastructure, medical
care, and low-income energy assistance.
DOBBS: With all of that, let's go over the causes of that. One, the executive
compensation issue. Any numbers you want to share with us? FRANK: We reached a
point, a very good study done a couple years ago at Harvard that said the
percentage of after-tax income in the top corporation, the top 500, doubled
from 5 percent to 9 percent. When you're sending 9 percent to compensate, and
this is just the top people. We're not talking about the working person, you're
biting into what you get. We passed in the House last year a bill to begin the
process by saying shareholders have to vote on this. We couldn't get it through
the Senate, but we're not going to have the leverage to go beyond that.
DOBBS: How are we to -- do we have an understanding as to how the treasury
would deal with buying the assets at what price and what form?
FRANK: We don't have an exact one, but that's what we have the oversight for.
DOBBS: If I may, there is no one in that Congress right now who is qualified to
oversee these --
FRANK: Right.
DOBBS: Some of these are --
FRANK: Lou, the oversight board will not be members of Congress. They will be
elected by Speaker Pelosi and Harry Reid and they will be experts in the
financial field whom we trust. I agree. We're not doing this ourselves. I'm not
sure everybody --
DOBBS: I have talked to a number of people in Wall Street. Some of the best
minds there, and they will acknowledge right now they do not understand what is
going on, yet we're watching -- go ahead.
FRANK: Warren Buffett told us he has a rule that he won't own anything he
doesn't understand, and he sold a lot of companies. And there are people who
understand and they had warning that these abuses were coming. And the treasury
would have to report to them.
DOBBS: What you're basically talking about, the Republicans are going to get
this administration is going to get a bailout of Wall Street. The Democrats are
going to get a new deal. And the result is going to be what? A nationalized --
FRANK: No. Nothing nationalized. The ownership we're going to take is going to
have no voting rights. I don't think it's Wall Street -- here is the problem, a
lack of regulation going back to Ronald Reagan allowed the private sector to
make the mistakes that put us in this situation.
DOBBS: May I point out that the President Jimmy Carter is the one who started
deregulation in 1978. The partisan thing doesn't work for me.
FRANK: I'm not being partisan. If you'd stop interrupting me -- he never said
it was the problem. He never said government is dumb and markets are smart. I'm
sorry, Lou. We're not going to have a serious conversation. Jimmy Carter is
very different from Ronald Reagan. He moved for regulations in two specific
industries, but we're talking about not about whether or not you lack
regulation or if you have no regulation. And Carter never regulated the
financial markets.
DOBBS: My final question, what in the world has this administration said to
frighten Congress to the point that you guys would try to put through
legislation in some short order?
FRANK: Hire is what they have said. They have acknowledged that the philosophy
and Alan Greenspan, we passed a bill for him in 1994. He refused to do that.
They're acknowledging the mistake to the private sector. Has so messed things
up that we're being in threat of loans being cut off, to finance industry to be
cut off. That's what we're told, and we believe it's going to hurt -- the guys on
Wall Street are going to be fine. It's the guy who's trying to sell
automobiles, furniture, running a small business, they're in peril of being
hurt if the lending industry shuts down.
DOBBS: All right. Chairman Frank, thank you. It's a shame for us to be talking
about fear on everything corner, it seems, domestic or foreign policy. It will
be nice to talk when --
FRANK: I agree. Irresponsibility breeds that. We have to put an end to
irresponsibility.
DOBBS: We can finish on a point we have absolute agreement. Chairman Barney
Frank, thank you.