i think thaa most members of the majority feel like there needs to be heavier imprint by the government or a tighter government control. government management.%- but you're right. in certain respects, consumer protection not to be a bipartisan issue. .

we believe there ought to have done better oversight, regulation, and that the capital requirements or insufficient. a lot of them are greatly over leveraged. we could agree on that. we all agree on transparency in derivatives and other fiiancial instruments, more disclosure. on consumer protection, i think we all agrre that over the past years that it has not been a priority for our regular -- our federal regulators. credit cards ere addressed. we felt a lot of things we were rolling to address -- we were willing to address. i proposed a bill and i think it could have stopped a lot of damage.+

i wanted a safe harbor and some of the democrats would not agree with it. >> do you see any republicans not supporting it in september now supporting it? you believe there will be any house rrpublicans to support the bill at this time? >> there are just too many thhngs. it is too intrusive to me. it takes away decisions that are traditionally made by individuals and companies. it puts the government in charge. i could tell you that we are deeply opposed to this is giving the government the right to bail out your systemically important companies.

that is section 210 of the bill. you have bank of america, to use as an example, that is a $2.50 trillion company. this bill authorizes the fdic to borrow 0% of that amount and guarantee the obligation for bank of america to pay their counterparties, purchased their assets, loaned the money, and basically come in and manage the company. disturbingly enough, and also says the fdic can decide -- the treasury can decide to pay other creditors off and to tell other creditors there are out of luck. that gives them tremendous discretion. we do not feel like the american people get that back.

why pay them in the first place if you need to get it back? take the largest six connected companies and that is the no. $8 trillion exposure. the government is alreadd over committed. >> the bailout issue has been a central question about all this. what would be a better alternative beyond just a simple could go with lehman brothers. >> with lehman brotters, we said they were nottallowed to aat immediately. there were not allowed to issue a injunctive relief. we said, okay, we ill -- we will allow nhance bankruptcy.

we went to experts and we addressed those by giving the bankruptcyy udge's more power. the primary differences i see to the general public about the differrnce in bankruptcy and this procedure is the democrat procedure. it was a procedure of the bush administration. that is what president bush did. and as the secretary paulson did. they are correct. i did not claim that democrats thouggt this up. the differences we must stop it. bankruptcy has established practice. and has a body of law behind it. there is predictability. there is a list for senior debt goes first. some people were told to forget

it. other people were given 90 cents on the $1. other people were paid off in+ full. aig is the most outrageous of all. for two years i have said that it absolutely is, to me, it offends my sense of fair play that day the foreign banks, goldman and morgan, 100 cents on the $1. two banks in my district still have not been paid. they are not systemically important. as a government, you say one standard is for these zero large companies. pe're going to give them some benefits. we will say we will pay the creditors off, but you do not d+ that for a small bank.

it is a societal problem. people are already saying, wait a minute, when i lost my house, you can say, well wait a minute. when i was in trouble i had to pay off those debtt. no one came in and paid off my creditors. >> republicans have made the point of bailouts going back too january 2009 with the regulatory debates. looking back on the worst financial crisis. you supported the worst around of tarp. do you have any regrets supporttng tarp? >> i will say thhs. i will advocate for dividends. that part of the bill was the other part of the bill, they were never able to pull off the

toxic assets which i think we have been a bad deal for the taxpayers. with the provision that roy and i put in the bill, and has made money. and is the only thing the government has done. reaction said, ok, look. you pay a 5% dividend and warrants. we argue ffr one month than we had a better bill. i was faced with a situation that may be all of us had been+ faced with at some time. they are superior and have a van -- and have authority over us. whether it is the secretary of the treasury, the chairman of the federal reserve, the president, our boss. a lot of people said we had to act. so ww did. i do not know what would have happened if we have not. i imagine most economists say that it nneded to e done.

most of the same economists say that if we continue to do this we will create a moral hazard by the bucket load. the government needs to step back from this. brad sherman said it is tarp on steroids. now, he has somehow come are routed to this. that happens to people in my party, including myself, where you swim against the party. >> the counter argument is that the bill actually said that if we have to step in again that the creditors will suffer and management will be fired. >> as they may or may not suffer. there is too much discretion. pnd the bankruptcy there are establishhd preferences. if i loan the company money, i can choooe and have a senior

status. i can get a lower interest-rate phyletic company money or i can have a junior dead which means the company cost -- ought to be able to ay off the senior debt. i will get more money for that. this is leaving to lecture. there is no record of what is going on. how long did it take you, the media, the press to find out who was even paid off? there are no safeguards. i do not think the government ought to be in a place to say i will pay you, pay you, and not pay you. on it too big to fail, we have been saying this for two years. it is the same song, second verse. you go out and talk to people. thee do not want us to be obligated to bail these

companies out. these other companies added to bills do not understand why we would do such a thing. >> congressman, what do think the american people listening want to hear by the time the elections come around? what do you want to be able to say that critics say to them that congress has done on regulations? >> do not let these big companies get in trouble to where they can burn the economy down and saw with aig and lehman brothers. there is a way to do that. that is bb having a certain level of capital. they cannot over leverage. they cannot go from 12 to 12321. better oversight. -- they cannot go from 12 to 1230 to one.+ this is just like with the bp oil's bill. we had an agency that was supposed to take care of that. we had an agency who said there

was things they need to do that they were not doing. they were just suggestions. why did they not require this? there was a lack of effective oversight. i think the american people before we create more bureaucracy, they want to know that thh bureaacracy that is here, the sec and others, are doing their job. i think mary schapiro is doing her job. for markets and capitalism do not work if it is abused. i am not sure that capitalism, free enterprise, and all of these thingssi believe in -- look at what happened. maybe we ought to let the government protect us and come

in and doing more management. they may not say thaa and they may ot know what they are advocating, but we need strong consumer protection. >> you expect your republicans -pto support thii bill if it remains on the same path. do you worry politically in the fall about what the votes in the opposition of the bill will meen for members running for reelection? is this a political concern for you are the republican party? >> that is a good question, silla. in 2008 when i oted for tarp, people in my district were saying in 1919 to one that they were opposed. -- they were saying 99 to 1.

it was a near-death experience, i can tell you. it is the gift that keeps on giving. i just got past my primary. i got 76% of the vote. senator shelby who did not vvte mistake ran side-by-side.rible i spent money and ads and he did not. i think the american people, to a certain extent, think maybe it was thought necessary at that time, but never again. that is what i think. >> i have less than 10 minutes with rep back is. will this bill say anything specifically about fannie and freddie? >> atmel lot. that is a big disappointment. -- it will not. that is a big disappointment. it is too complicated an issse.

my goodness. we are dealing wwth bb derivatives and credit default swaps. -- we are dealing with derivatives and credit default swaps. we are dealing with a lot of things that iido not think any understand.ers of congress we understand that the government has come in on christmas eve and obama came in and said they were going to guarantee their obligations of 100% several trillion dollars.3 up regulation, due in on sooething that the government is guaranteeing when her%. do not go out and do other regulations. address that. that ought to have been the first thing. thht an aig were the irst to the bailoots. the first one was fannie and freddie. i voted against that bill.

i said it at that time if we gave him -- give them that money we needed to o the reform right then. we have done some of those now. we passed the fha what are two days ago we passed it out of the house. there are things we can do. it is a disappointment. is an awful lot of money. ps a republican, maybe i cannot say this with the elephants in the room. republicans like to see fannie and freddie become in the future. should they be private entities? should they be split have government and half private lacks -- half private? where do you stand? >> i do not think they should be public utilities.

that is saying the puulic will guarantee themm the private market is not there now. i think we all agree. it will need to be a slow transition. i think we can make that transition. it may take 10 years. it may take 15 years. in our bill, we have a three or four years of thing. i think that is oveely ambitious. some of our colleagues felt we could do that. i do think the problem was not in the securitization particularly. it was that they were buying so many mmrtgages. i think the benefit that everyone argued is where they would come in and securitized that. there is the implied government guarantees of the chinese know that they felt that the government was backing. government backed them up.-

that benefit, the taxpayers coull lose self -- could lose. then they get a lower mortgage which is a very good. we may end up paying a lot of that back. >> spoke about ssme of the complicated parts in the current bill. i wanted to focus on one which is the provision by senator blanche incoln on derivatives. it would force banks to move their swaps desk outside the federally insured part of their business was our number thoughts on that are >> there will have to move them to an exchange. the exchanges are operated by the four largest corporations in america. financial firms, they basically control laad business. you remove them from what is almost a monopoly right now

beeore you can have a company, say john deere, and they could execute an agreement with another private party. i do not see a problem with that. -pno one got in trouble doing that. as john deere, caterpillar come at aay of those firms, ford, ibm, you name it. every company hedges of their expossre. the airlines had that on a lot of your international's have currency hedges. i do not see why you need to have a gatekeeper. that is what we have done in this bill. we fix things that were not problems. we have had company after company after company that as come to us. this has led the lobbbing people to come to us and say these will

cost us jobs. they said it will cost us 400 jobs in omaha alone. we do not know why. we have been doing this safely. now, there needs to be disclosure. there needs to be transparency. a lot of the need to be traded. your ther question was about banks. should they be able to do this? they should nottbe with to speculate on their own accounts. they should not be able to use the people's monee. they hould not go to the discount window. if you have a federally insured bank with deposits are being guaranteed by the insurance fund, it is a valid thing to say, maybe there ought to be restrictions on that. in fact, the fed started this. there are restrictions now. >> we have just a few minutes,

congressman, so i was the star reporters can wrap up with a questions. another provision creating interest in the last month is a provision requiring the federal reserve to look into and -ppossibly said lower rates at normal retailers pay to the issuers of debit card banks and credit unions. this is a provision that was not in the house bill. the interchange issue. what is your position on this? wherr are house republicans on the interchange issue? >> there are problems with the basic setup and interchange fees. one problem is the companies say if you use us, you cannot use someone else. one of the main problems is retailers can say on the minimum transaction, i lose money on that.

i think a retailer on to say, if you want to use your credit or debit card, it will cost me 20 cents. i can say no to a $2 or $3 transaction. i 3 -- i think retailers ought to have more rights in that regard. there re big problems on the cost in this provision and how you calculate it. i think everyone agrees that thereeare real problems with it. interchange fees.s with%- there are the dimon gripes the retailers have. i hope we will adddess that in this bill. >> let's wrap it up. >> i will bring it back to yesterday. we saw everything in the congress which is an actual meeting, the conference, in which a lot of republicans complained that democrats put

this together behinn closed doors and the democrat said it was more open than any other conference. i was wondering if you could comment on that and if you think the republicans in the room had a chance to make changes before the billlgoes to >> the proof will beein the pudding. you're supposed to have a 1600 page bill. we were told it would be in the senate language. it turned out to bb a lot of language from the house, too, o it was a lash. we had read the senate bill. ww got another 400 pages. in two weeks we will have to vote on that. we are going to have to deal -- but at the agenda for tuesday. you're dealing with three or four subjects that the smartest

economist at the world would need to take one week or two to give some thought on it. we are being ruuhed. this and i agree. these will be decisions made behind closed door. we will have to live with this for years. i do not see republicans having a lot of input. we're being marginalized. the have not done so in public. >> congressman spencer bachus, you have your work cut out for us.3 on "newsmakers." silla brush of "the hill" and dennis brady.. he said there is no way the bill

can come out of committee and get much republican support in the house. >> i think that is what he was indicating. the attached changes it woold take for republicans to support it in any way, the congressman in and month. as a result, few republicans in the house are likely to support thh bill in the end. >> i found it interesting in talking about tarp, he said he had his regrets voting for tarp. yet he said there was a piece of the legislation they got in there that actually worked. it sounds as if he has some hooe that republicans can have a voice in this. >> i think so, but that is probably a fleeting help. we are in the ninth inning here. unlike some legislation that

goes to the body, i hink this was unique over tte last yyar because rather than getting+ weakened or water down, the bill it tougher against financialnd%- ittis a hard subject to vote+ against at least rhetorically. it probably will not change much. >> and has been out of the house's and since the fall or december when they voted on this. other than the chairman barney frank, there was no work on >> that is correct. the bill the conference committee is working on now is what the senate center with several changes, 300 pages, that were added after the senate passed the legislation.

it is very much a product of the senateeanddwill be sent over to the house. the house will be trying to flex its power and sea changes in the nnxt month. >> do either of you see that there will be many surprises or republican victories coming out of this conference committee? something they can crow about? >> there could be surprises and changes made, certain provisions that are tweaked in the coming weeks. i do not see a lot of surprises on republican victories because in a conferencc committee, you have a very strong democratic majority. they remain fairly united to that -- this is their show. >> some of the issues that remained like the derivatives provision from senator lincolnn these to some degree split democrats. ssme of the largest issues that

will be taken off and try to be resolved in the next month are pssues that need to resolve where they stand exactly. there are a couple of large issues. >> this is a quick yes-no questton on blanche lincoln's does that strengthen her position on the derivatives peace in the legislation? >> people have seen this both ways. they think her win gives her a -plouder voice and a stronger perch from which to abdicate her position. some people say that now that she has won and russia cannot coast to reelection, it perhaps gives the voice of opposition a greater hand. >> i will let dennis brady have the last word. >> i think they exppcted that particullr provision to disappear all along.