corporate greed, staying in wars that e do not belong in, and talking about bp. thhy supply gas for the wars, but they charge us a noun greatest amount of money for it. i also point out that bp is responsible for one in seven tensions in great britain. guest: it is a very large pension sponsor in the u.k.. like other companies, it is significantly underfunded. there is a federal agency being created in the u.k., the pension protection fund to backstop those promises. it is much younger and does not have as many assets. there are legitimate concerns from the british taxpayers and participants in these plans on

whether or not these are protected. i want to reiterate that there is no issue with respect to his host: thank you for being with us bradley belt. 7:00 a.m. eastern time, 4:00 a.m. on our western coast. tomorrow, the former national intelligence director who served from 2005 until 2007. he will be here to talk about as a position as the president moves forward with his latest nominee to hold that position. also, michael tomasky which is the american editor at large at "the guardian." now, with the school was a public service to serve as the public ambassador to iraq.

thank you for being with us on this sunday. enjoy the rest of your weekend. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] .

>> congressman spencer bachus of alabama is the ranging member of the house financial services committee on "newsmakers" this week. the guests to ask, we are joined by silla brush, the financial services reporter for "the hill" newspaper, and by brady dennis of the "washington post," financial reporter of that newspaper. thank you for being here with us. we will let brady dennis have the first go to question. >> statting broadly, talking about financial reform here in this last sort of chapter, but i anted to look back over the course of this in the past year or year and a half and ask you sort of on both sides of the aisle, everyone said, unlike health care or other issues, financial reform wasn't a naturally partisan thing. we had sort of a broken skm and a deep crisis -- system and a deep crisis, and that wasn't a

party line thing. but at most steps along thh way, we have seen it break down that way. there was a partisan vote in the house, and video for the most part in the senate, we saw yesterday that there are still some of those tensions there. i was wondering why you think it ended up going along that road? >> i think it has increasingly become more partisan. probably in the last 30 years. there used to be the southern -- the southern democrats were conservative and the northern republicans and the new york republicans were sort of a liberal wing. but i think consistently in the past few years, republicans are about less government, limited government, not being as intrusive or making decisions for the individual, where i think most members of the majority feel like there needs to be a heavier imprint by the

government or a tighter government control, which a lot of us see as government management. but you're right. in certain respects, consumer protection ought to be a bipartisan issue. in these things, there are things i think we all afree on, which of them which aren't in the bill but have been used to address what we saw in 2008. there was over leveraging. there was not enough capital. so increased capital requirements, less leverage, those issues unite us. and i think to a certain extent, at least i thought before i saw this bill that the no more bailouts. but we see this bill as squarely in the camp of too big to fail and continuing that doctrine. >> silla brush covering this

issue for "the hill" newspaper. what would it take for some republicans in the house or the -psenate -- for republicans in the senate supporting their version of the bill, and in the house, there were no republicans. what would it take to change this bill to have some republicans, even a handful, in the house to support it? >> well, i think -- basically there are 200 pages that we would heartily endorse. if you would not allow companies to over leverage, and when i say that, companies that are systemically important. we can understand thaa because of the interconnectivity. or companies that depend on a federal guarantee or a deposit other ins -- goatitory -- the

capital requirements were in sufficient, and a lot of them we could agree with. we would also require more disclosure on some instruments. i think we all agree over the past years that has not been a priority for our f he had regulators and a lot of people have been hurt. credit cards were addressed. a lot of times we were willing to address them like i was with subprime lending and proposed a bill. that bill i think could have stopped a lot of damage. but i wanted a right to cure in there. i wanted a safe harbor, and some of the democrats wouldn't agree to it, although chairman

frank and i had come to an >> did you sense any republicans who had not supported it in december that are now supporting, and unless there are the large changes you have just suggested, there you think there are any republicans that will support it? >> not in any number. it is too intrusive. it takes decisions away traditionally made by companies and puts the government in change. i can tell you that we are deeply opposed to this giving the government the right to bail out your systemically important companies by borrowing 90% of the total consolidated assets of those companies, which is section 210 in fact, you have bank of america, let me use that as an

example. that is a $2.5 triilion company. well, this bill authorizes the fdic to borrow 90% of that amount and farrin tee that the obligation -- guarantee the obligations of bank of america, buy their assets, loan them money and basically come in and mannge the company. it also, disturbingly enough, it says the fdic or the treasury can decide to pay certain creditors off and tell others you're out of luck, which gives tremendous discretion. government get it back? we will get it back from the creditors. why pay it to them in the first place if you're going to get it back? just take the largest six

systemically connected companies. that is an over $8 trillion exposure, and the government is already overcommitted. >> on the bailout issue, and that has about a central question in all this, what would be a better alternative beyond just a simple bankruptcy, which we saw how that can go with lehman? >> with lehman, they said ok, they weren't allowed to act immediately. they weren't allowed to issue certain injunk tiff relief. -- we said ok, and we went to bankruptcy experts and corporate governance experts, and we addressed those by giving them the bankruptcy

judges, more power. the primary difference to the general public about the difference in bankruptcy and this procedure, the democrats' procedure, and i say that -- it was a procedure of the bush administration. chairman franks said wait a minute, this is what president bush did or secretary paulson did. i agree with that. the difference now is we want to stop it. but bankruptcy has established practice. it has a body of law behind it. there is predictability. there are preferences. certain senior debt go first. you saw with general motors and a.i.g., some people were told forget it. other people were given 90 cents on the dollar, and other peoole were paid off in full.

with a.i.g., it was the most outrageous of all. i have saiddfor two years that to me -- it just offends my sense of fair play, that they paid the foreign banks, goldman and morgan, 100 ents on the dollar. i have two banks in my district that still haven't been paid. well, they are not systemically important. well, as a government you say ok, there's one standard that is forethese large -- forethese large companies, we are going to give them benefit. but you don't do that for a small bangor individual, it is not only an economic problem for you, but it is a societal

problem for you. people say wait a minute, i lost my house. or you can say, "wait a minute, when i was troubled, i had to go to bankruptcy. i had to pay those debts. no one came in and paid my creditors off." >> looking back on the worst of the financial crisis in september and october of 2008, you supported the fiist round of the financial rescue package, tarp. do you have any regrets about supporting it at that time? >> no. but i have regrets -- and i will say ttis. roy blunt and i were able to advocate for dividends and warrants. and that art of the bill was the part they found was practical and could do. they were never able to pull off the toxic assets thing, which i think would have been a bad deal for the taxpayers. you noticc with the provision

that roy and i put in the bill, that has made money. that is the only thing the government has done. we said, we are going to pay a 5% differ denied, and you have to do the warrant. paulson said we wouldn't do the warrant. i was faced with a situation that maybe all of us have been faced with at some point, where those who are superior or in authority over us, whether our parents, a boss, the secretary of the treasury, the chairman of the federal reserve said you have to act. we did act. i don't know what would have happened if we hadn't, but i imagine most economists say it needed to be done. i think most of those same economists say now if you continue to do this, you're going to create hazard by tte

bucket load. the government needs to step back from this. this bill just institutionalized it. brad sherman said it's tarp on steroids. now he has somehow come around to it. i've seen that happen to people in my party, including myself, when you swim against the mainstream of your party. >> the counter argument to that is the bill actually says if wee have to step in again, the company isn't going to survive and the management will be fired. >> well, the creditor may or may not suffer. there's too much discretion. there bankruptcy there is established preferences. if i loan a company money, i can have a senior status. now i get less interest rate. if i loan a company money that way. or i can have something that is a junior debt.

which means the company has to be able to pay off all the senior debt. but i'm going to get more money for that. well, this is just leaving too much -- there's no report of what goes on. in a.i.g., how long did it take you, the media and the press to find out who was paid off? there are no safeguaad in this. it doesn't tell you who we are going to pay. i don't think the government should ever be in a position to say i will pay you, but i won't pay you. and too big to fail -- and let me say this. we have been saying it for two years, brady. it is the same song, second verse. the american people are -plistening. you go out there and talk to people. -pthey don't want us to be obligated to bail these companies out, and neither do 999 other companies in america,

or individuals. they don't undeestand why you do such a thing. >> congressman, what do you say about the american people listening? what do you think they want to hear by the time election comes around. what do you want to be able to say to them that you and congress have done in terms of regulation? >> don't let the big companies get in trouble to the extent that they bring the economy down like you saw with leyman others. there's a way to do that. they have to have a certain level of capital. they can't overleverage. it was a mistake to go from 12 to 1 to 30-1. it was an awful mistake. about -- we had regulators on the scene with lehman that didn't stop some of this. just like with the bip oil spills, we had an agency that was supposed to take care of that. we had an agency that said there are things you need to do that you are not doing, but

they sort f suggested it. they didn't require it. we had a lack of effective oversight. i think the american people, before we create more bureaucracy up here, they want to know that the one is here, the securities exchange commission and others are doing their job. i think mary schapiro is doing a good job. they want consumer protection. free markets -- and i say that. capitalism doesn't work. if consumers are abuseded. i think they are saying it now, which to me is disturbing. they are saying, "that all the things we believe in, look at all this that has happened. maybe we ought to let the governmeet come in and do more management." they may not say that. they may not know that is what

they are advocating. so you need strong consumer protection. >> if, as you said earlier, you expect a few republicans to support this bill if it remains on the path that it is, do you worry politically in the fall that what those votes in opposition to the bill will mean for members of the house or senators rung for re-election? is this a political concern for you or the republican party? >> silla, that's a good question. in 2008 when i voted for the first tarp bill, and i voted against the other one, but people in my district were saying 99-1 "i'm opposed to this." i voted for it because i felt like it was necessary. but it was a near-death experience. it's the gift that keeps on

giving. i jjst got past my primary with 76% offthe vote. i think senator shelby, who did not vote for it, and who said it was a terrible mistake, we ran within four percentage points, and he ran ads, and we didn't. i think the people have said maybe it was necessary at that time, but never again. that is what i think. >> we have under 10 minutes with congressman bachus. this bill, when it comes out of committee, say anything specifically about fannie mae and freddie ac? >> no, it won't, and that's a big disappointment to us. my democratic colleagues say it's too complicated an issue. my goodness. we are dealing with derivatives and credit default swaps. we are dealing with what is

called in a book a demon of our own design. we are dealing with a lot of things that i don't think many members of congress understands. we do understand that the government has come in on -- on christmas eve, president obama said we are going to guarantee fanny and freddie's obligations 100%, and we are going to stand behind them. if you're going to beef up regulations, do it on something that the government is guaranteeing 100%. don't go out and assume some other obligations. address that. that really ought to have been the first thing. it and a.i.g. were the first two big bailouts.. the first one was fanny and freddie. i voted against that bill. i said if we give them this money, we have to do the reform

right now, and there are things we have to do them. but we didn't do them. we have passeded the f.h.a. bill, which i think was a great bill, a day or two ago. we passed it out of the house. so yes, there are some things we can do. but it is a disappointment, and it is an awful lot of money. as a republican maybe i couldn't say it, but it is the elephant in the room. >> given what you have said about fannie mae and freddie mac, what would you like them to be in the future? should then private, half public and half private or utilities? what do you think? >> i don't think they ought to be public utilities because that is basically saying the public is going to guarantee them. the private market is not there

now, and i think we all agree. so it is going to have to be a slow transition. but i think we can make that transition. it may take 10 years. it may take 15 years. in our bill we had a three or four-year thing. i think that is overly ambitious, but some of my colleagues felt like we could do that. i do think the problem was not in the securitizing particularly. it was that they were buying so many mortgages. and i think the benefit that everyone argued was where they wwuld come in and stewartize them. there was also a benefit in the implied government guarantee. the chinese loaned money because they felt the government was backing them up. we said we didn't, but when they got in trouble, the government backed them up. so with that arrange, the

taxpayers to lose. for years they got a fourth or 3/8 lower mortgage, which was very googe, but we may end up paying a lot of that back. >> you talked about some of the the bill, and i want to focus on one that has goten attention. one is a provision by senator blanche lincoln, which could move the swaps desk outside of the business. what are your thoughts on that? >> they would have to move them to an exchange, and the exchange are operateded by the four largest corporations in america, financial firms. they basically control that business. so you would move them into what is almost a monopoly right now before you could have a company -- say john deere..

they could executt another agreement with a private party. i don't see any problem with them doing that. john deere, caterpillar, ford, i.b.m., you name it, every large company, they hedged on their exposure. the airlines hedge it on aviation fuel. a lot of your international companies that do business overseas, they have currency hedges. i don't see why you have to have a gatekeeper at one of the four largest financial firms. that is what we have done in this bill. we fixed things that weren't a problem. we have had company after company after company that has come to us -- and this is a lot of the lobbying. but they have cooe to us and said this is going to cost us jobs. car guile -- cargyle said it is

going to cost us 400 jobs in omaha alone. we have been doing this and doing it safely. now there needs to be disclosure and transparency, and with a lot of them, they need to be traded now. your other question was with banks. should she be able to do this? they should be able to speculate on their own account. they shouldn't be able to use the people's money or go to the discount window. if you have a federally insured bank where the deposits are being guaranteed by really the insurance fund, there's a valid thing to say now maybe -- i mean there ought to be restrictions on that. in fact, there have been. there are restriitioned now. that isn't what a.i.g. did. >> we have just a couple of minutes, so i want to see if our reporters can wrap up here. we will start with hire silla

brush. >> another provision generating interest is a provision for the federal reserve to look into and possibly set lower rates that merchants and retailers pay to issuers of credit cards, banks and credit unions. this is a provision that wasn't in the bill and has split democrats and republicans in the senate. >> you can say that again. >> what is yourrposition and where are they with this issue? >> there are problems with the one of the problems is the company says if you use us, you can't use someone else. one of the problems is retailers say on a minimum trance action, i lose money on this. i think a retailer ought to say if you want to use your debit

or credit card, it is going to cost me 20 cents, and i can say no to a $2 or $3 transaction. that is an inconvenience to the public, but i think retailers ought to have more rights in that regard. there is a big problem on the cost. how do you calculate the cost? i think everybody agrees that the durbin amendment as written has problems with it. but there are questions on interchange fees and legitimate gripes that retailers have, and i hope we can address that with this bill. >> let wrap up wwth a question + from brady dennis. >> we saw a rare hing in coogress this week, which was an actual meeting with the house and senate, a conference, in which a lot of republicans complained that the democrats have kind of put together a lot of this behind closed doors, and the democrats said this is

more open than any other conference. could i comment on that and if you -- could you comment on that and if you think the republicans in the room have a chance to make any changes in the next couple of weeks before this bill goes to the president? >> well, the proof will be in the pudding. we had 1,600-page bill. we were told that it would be the senate language, and the 1,600 pages turned out to be lot of the house language too, so it was a mesh of the two. we read the senate bill thinking that is what are we were going to get. plus we got another 400 pages, and in two weeks we have to vote on that. you look at the agenda for tuesday, and you're dealing with three or four subjects that problem at a minimum, the smartest economist in the world woofer to take a