we will see how that pans out. host: covering the story for " the st. petersburg times" and calling from st. petersburg, thank you for your perspective. host: c-span was featured on "saturday night live" last night. >> president obama addressed a rally for a senator harry reid in nevada. [applause] >> mr. president, neither of us is very popular in this state. it would really help the fight to put some distance between us. >> i have your back it, harry. >> thank you, mr. president. [applause] >> i would like to thank

president obama, for that gracious introduction. we are not really that close. >> he is right. not close out all. >> at think we have met maybe a half-dozen times. >> if that. we barely know each other, nevada. >> we have a number of disagreements on a number of issues. >> that is right. we do. >> i do not understand you were born in this country you just will not show us your birth certificate. i mean, is that too much to ask? >> you are right. i probably should. >> i think people have a right to know. >> he makes a good point. >> this president knows that when his policies are good for nevada that he will have my support. >> this is a man wanted in your corner. your hero is a fighter. >> i will fight him to stand now

because i do not care. it is not like we are friends or anything. >> we are not. >> when it is wrong for nevada, i will not compromise. >> you cannot reason with this guy. >> in other situations, i would just pretend to support the president to get something for this state. >> he is very devious. >> than at the last minute i will double cross him. if that is what is best for nevada. >> and deceitful man right here. [laughter] an excerpt from last night's "saturday night live." we will continue our conversation on the midterm election. among our guests, mary kay henry on the midterm elections. this is tomorrow morning at 7:00

a.m. eastern, 4:00 a.m. eastern on the west coast. thank you for being with us on sunday. have a great week ahead. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] .

>> this week on "newsmakers," phil, chairman of the financial crisis inquiry commission, joining us from sacramento. and here in d.c., helping with questioning this morning, zachary of the "washington post." and daniel with the associated press. daniel has the first question. guest: mr. chairman, i understand you need to have a finished copy of the report to the printers sometime next month. so why don't you start by giving us an update on the commission's activities right now. how far along are you? >> we're working hard. as you know, we began our work last fall. we held 19 days of hearings across the country, washington, d.c. and new york, and in communities like bakers field, miami, las vegas, that have been hard hit by this crisis. we reviewed millions of pages of documents and interviewed perhaps 600 to 700 people involved in the crisis, from the

highest government officials, people who run the trading desks to home owners who played by the rules and lost everything they had. we're now putting together the findings of our investigation. we're working furiously. we're deliberating, and we hope to have a report delivered to the american people that helps explain how this clamty came to be. >> mr. chairman, good to see you. today the big news on thursday that the fannie mae and freddie mac, the government mortgage companies, will need billions more dollars of government support out of the financial crisis. they may come to the most expensive part of the crisis. can you tell us which degree that fannie and freddie played in the crisis? were they a cause of the crisis? >> we've looked extraordinarily hard at this issue. we've devoted a lot of time, energy, and resources to it.

i would say just for context, i mean, often people think of the tarp program and as you know government officials are now saying that won't cost as much. but in the end, the taxpayers of this country would have shelved out trillions of dollars through two dozen programs to stabilize our financial system. look, there's no question that fannie and freddie, because of their scale, because they were deeply involved in the mortgage market, played a role. we're in our deliberations so i don't want to get ahead but i'll give you a couple observations. at least from the information i've seen, while fannie and freddie were clearly disasters, of epic proportions, while their business model was extraordinarily flawed, the private, publicly traded corporation, with all the upside incentives of huge compensation for the executives and the taxpayers bearing the downside, it was a tragically flawed model. as we look at the data, it does appear, however, that in the

early to mid 2000s it was wall street that led the charge in subprime lending and it was the wall street package product that began the deep descent in terms of the subprime lending that happened. but there's no question that come 2005, 2006, 2007, fannie mae, freddie mac jumped in full force and because of their scale in this market they had an impact. there's no question about it. >> can i follow up. because if you're going to say that fannie and freddie played a role in this, then will you also be looking at the role that congress played in putting pressure on fannie and freddie to issue these types of loans to take on more risks that more americans could buy homes? >> absolutely. we're looking at what congress did over a long period of time in terms of policy and regulation. we'll look at regulators, what they did themselves. but i also want to point out that in many respects, fannie

and freddie had a lot of the same characteristics of the big wall street firms. while they were created by the government, they were publicly traded corporations. they had a lot of compensation incentives that led them to take big risks. they were very concerned about their market share. so we'll be looking obviously not only at policy, or we have looked at policy, but we've also been looking at what the management did and why, and why it jumped in feet first. and when you look at the compensation that was paid to the scuteyiffs of fan executives of fannie mae and freddie mac, it's the same thing that happened on wall street. compensation for immediate results, not long-term results. and unfortunately, like wall street, we have a situation here where all the upside was to be gained by those companies. and when the downside came, frankly whether it was the companies on wall street or these two companies on washington, the taxpayers were asked to foot the bill.

>> you've said one of your goals was to issue a unanimous e report. you mentioned also that deliberations are ongoing. as the deadline approaches, do you feel like you're close tore that goal of unanimity or farther away? >> well, this is the kind of process we have ten people from different walks of life, not just of two different parties. actually, we have an independent among our members. but people from very different per spectives. here's what i think is our number one priority. our number one priority is to lay out as much of the facts of this crisis for the american people, to tell more of the story to pull the vail back on more of what happened in this travesty, really, that's affected millions of people, 27 million people now out of work, can't find fulltime work. have stopped looking for work. >> i'm sorry to interrupt. you know our time is short. are you closer to unanimity or farther away?

>> here what i would say. we're in our deliberations. but the most important thing is to have a report that's truthful. i hope that people will come along. but the number one marker is not to make a political deal. that's where where wha a political body could have done. but to lay out the facts as stark and as politically challenging as they may be. and there are very powerful forces in wall street and other places who aren't anxious for us to lay out every fact. and hopefully we'll do a good job. >> the you mentioned that this is a politically charged process. you're going to be taking final votes shortly after the election. do you feel like the effects of the -- the outcome of the election will affect the decisions your fellow commissioners make given that there are republicans who would like to roll back parts of the financial overhaul? >> well, i hope not. my view is that what we were asked to do is to look at what happened. so we've looked at millions of

pages of documents, interviewed hunses of people. the facts are the facts. so i would hope that post election or preelection there wouldn't be a political cal clugs about who gets hurt. who got hurt here were millions of americans. and our charge is to help give a better understanding of what led to this. so you were asking me earlier about fannie mae and freddie mac, that maybe some people see as institutions that democrats or some may have wanted to protect. my view is we lay it out as it happened. and i hope my republican colleagues would be willing to do the same. because when you look at what happened, there's some pretty dramatic failures of policy, regulation, and of corporate management on wall street is stark and the story in many respects will tell itself. >> mr. chairman, could you tell us what you found, or a hint of what you found that we don't already know either from your hearings or public hearings, or s.e.c. investigations? what is something that you have

found which the public didn't already know, by december 15th? >> let me give you one example because all through the year we laid out more information about what ended up being very dark markets worked. we unveiled information about the government decision making around lee man brothers. the official line had been we couldn't save lay man brothers because we didn't have legal authority. that there were forces who didn't want to bail them out. there were political conversations. there was a recognition that it could deeply affect the markets. but i'll gu you an example of what we eleased in the last three or four weeks that i think is pretty significant information. we released information that showed that the major investment banks, whether it was ubs or deutsche bank or goldman sachs or city group had employed due diligence firms to look at the quality of mortgages they were buying from countrywide and new

century. now, we've known for quite some time that the quality of those loans had become toxic. what we unveiled is the fact that the major banks had very specific information about the quality of those loans. that some 28% of the loans in total from january of 2006 to the second quarter of 2007, that were being bought by firms like goldman sachs and merrill lynch didn't even meet the miserable underwriting standards of countrywide or new century. but they never revealed that information to the people who were buying those mortgages. nor did they -- >> i'm sorry to interrupt. is that a violation of securities law? >> well, that's certainly something that clearly the law enforcement entities will have to make a determination. >> have you referred it to the s.e.c.? >> well, as you know, we have the obligation to refer matters where we think there's been a violation of law and we have to respect the judicial and

investigative process. but i will tell you that we take that charge seriously and we will fulfill our obobligation. >> it's reasonable to assume that your panel has referred this issue for mortgage backed securities to the s.e.c. >> i wouldn't make any assumptions about what we have or have not referred. i mean, we really do have to respect the investigative process. but what i did point out to you is that we uncovered information that showed that big banks knew about the deficient quality of loans. not wids standing that, they padged them. and the disclosures meernl said that some loans may not meet underwriting standards. so we've unveiled a number of kind of new facets of what people knew was obviously a disaster on wall street and washington. we unveiled new information about the federal reserve and the information they had, the warnings they had about subprime lending and not withstanding that they didn't act to regulate

subprime lending. we've revealed dramatic failures in corporate management in entities like a.i.g. and city group. >> i want to ask two quick followups. first, can you tell us us quickly if you are under some obligation not to disclose what you have or have not referred to law enforcement? and then second, on the matter of the federal reserve, the fed gained significant power in terms of financial stability oversight of the largest companies under the recently passed financial overhaul. given your criticism a moment ago of the fed, do you feel like it's problematic to invest them with additional power now? >> so lets me take the first issue. as i said, we have an obligation to refer where we find there may have been violations. we also have an obligation as a commission to respect the investigative and judicial process. and we're not in the business really of holding press conferences or trying to make news when we have information we

do what's appropriate with it. what i would tell you is with respect to the fed, as we look at the record, and again we have not come to conclusions but i will just say this. the fed had enormous power before the crisis. they are the one entity that could have regulated out-of-control subprime lending and in 2001 they did adopt some rules that they thought would cover 38% of the subprime lending market. the rules were so weak that they only covered 1%. when chairman greenspan was queried about this, he said, well, when we see unfair and deceptive lending, we refer those matters to law enforcement. and then we looked and we found from 2000 to 2006, the fed under mr. greenspan only made two referrals, one small bank in palm desert california, and one small bank in i believe centerville, illinois. so clearly the fed had tremendous power and it's yet to be seen whether, given their new powers they'll use them more

forcefully in the 81 run to this crisis. >> i want to ask you mr. chairman about some specific players in the financial crisis. particularly goldman sachs which has received a lot of attention here in washington. did goldman sachs take action before the financial crisis that ultimately accelerated and deepnd the pain of the financial crisis either by mutting pressure on a.i.g. to meet collateral calls or by selling against the housing market at the same time it was leading investors to bet in favor of the housing market? >> well, again, let me just at least talk about the facts that we put on the record. clearly what we have established is that starting in july of 2007 goldman sachs was very aggressively demanding cash from a.i.g. under its credit default swap contracts. now, i do want to say one thing. one of the most stunning things about that is the fact that all the executives at a.i.g. had no knowledge that they had signed 80 billion worth of contracts

with various companies, including 20 billion plus of goldman sachs and they didn't realize they would have to post cash if the market value of those securities went down. but it was very clear that they were very aggressive in demanding cash from a.i.g., that the prices they put on securities when they made those demands were much lower than the rest of the market. and by september of 2008, gold man has been joined by many other entities in demanding tens of billions of dollars of cash from a.i.g. which helped bring it down. that's what their position would be that's what their contracts called for but we've laid the facts out. with respect to the role that goldman and other firms played in the marketplace, again, we hope our report and the facts we've laid out will let people come to their own conclusions. but let me point out that the real housing market had topped out in about 2005 in many markets across this country. certainly by 2006. but the wall street secured mortgage security machine just kept moving. it was goldman, merrill lynch,

citigroup kept packaging and repackaging securities. they kept moving them. they then began shorting them. and clearly looking at all the synthetic mortgage securities which were just pure bets on the mortgage markets that in a sense amplified that potential for losses in the mortgage market, clearly those activities in 2006 and 2007 were very important in this crisis. >> mr. chairman, you have said you're going to lay out the facts in your report. but ultimately, that report is about describing what were the causes of the financial crisis. a lot of wall street banks in the process you just described have claimed that they were essentially victims of weak underwriting and fraud by mortgage lenders. how do you separate the cuppability of those big firms on wall street that were feeding money and creating the machinesry necessary to make the securitization process run from

the cuppability of the jont ground loan officers and those who may have made those bad loans? >> well, this notion that wall street was noncullpable is ridiculous. one of the things that's really struck me throughout the whole year is the extent to all fingers point away from personal responsibility. here's the fact. it was those firms, goldman faction and merrill lynch and city group that bought those loans that padged them up that sold them to investors. and the notion that somehow they're not responsible for the quality of those loans and the quality of the product that they were selling, it just b doesn't wash. i remember at our first hearing mr. blank fine made the point we're just market makers. i don't believe that's the standard to which we should hold our financial system. they in fact were creating products that they were selling into the marketplace. they clearly turned out to be tragically deficient products, and now we've uncovered information not just, by the way, in the recent information

we put out, but information we found that citigroup or people within citigroup were telling citigroup that 40, 60 puts of the loans didn't meet the standards that the lenders said they did. and those weren't exactly gold standards for lending. but the fact is, clearly there was involvement. and either people knew and didn't care, or they didn't know and they didn't care to know. >> we have about 10 minutes left. >> of all the people and companies you have interviewed and investigated in the past year, does any one or two stand out as more cullpable for causing this crisis than any other? >> by the way, when i've said we'll let the facts speak for themselves, let me be clear. it is our role to lay out causes. i just don't want to get out of the deliberations of our members. and you should fully expect that our company and report of the facts will be the assessment of what went wrong and of cullpablet both on the private

sector side and regulators and policy makers. i'm not going to start ranking the companies. but we've seen dramatic failures at a.i.g., that this company would offer 80 billion of quote unquote insurance and not have is the capital to back it. was devastating. the fact that goldman and marle and citigroup and a whole set of other companies packaged up hundreds of billions of dollars of what turned out to be tragically flawed securities was clearly very damaging. the fact that fannie mae and freddie mac in 2005, 2006 and 2007 joined this party clearly was of impact. so i will say this. i think there is significant participation. but i also don't buy this it was a perfect storm. i do believe ultimately you have to look to leadership, both corporate leadership, folks who drove their companies over the cliff, as well as public leadership. there's a line that we've gotten out of washington and wall street is that no one could see it coming.

that's there are lots of yellow and red lites along the way. >> companies are made up of people. which people at the companies or people in government, specifically names, are responsible for making the bad decisions that led to their companies or regulators dropping the ball? >> so that's what our report is about but let me give you my personal view. leadership is about responsibility. and at the end of the day, tone at the top does count. so when you look at key policy makers you have to look at who led the federal reserve during this time period. you've got to look at who led the regulatory agencies. the company, ultimately the buck stops in the c.e.o.'s office. and the bucks did stop there. you had many, many companies where of course c.e.o.s were being paid tens of millions if not hundreds of millions of dollars. so while there may have been a broader societyal involvement in the you're foria and mania of home prices going up, at the end

of the day leaders must take responsibility. >> on that point, i had the pleasure of attending your public hearing with treasury secretary geithner. as you know, he was head of the federal reserve bank of new york in the years leading up to the crisis and also during the immediate response to the crisis. your questions for him, frankly, were not as hard as your questions for hank paulson who was the treasury secretary when the crisis hit. the questions for tim geithner did not really follow issues other oversilingt bodies were pointed out, how billions of those dollars went to other wall street firms and overseas banks. why you showed him that deference? and what do you think the leadership was during that issue? >> well, i would beg to differ with you. we tried to be sil in our questioning but tough. by the way, our focus is not so much what happened after the bailout but how the heck did we get to the point where the only

choices for the american people were to allow the financial system to collapse or to shell out trillions of dollars. and i pointed out that mr. geithner himself had made many warnings about risks in the system and hadn't acted on them. we pointed out in our hearing on citigroup that in fact other federal reserve banks had reviewed the conduct of the federal reserve bank of new york and found it extraordinarily wanting in its oversight of citigroup. and i think you can expect us to be as critical and as tough on the federal reserve bank as new york, as is warranted. we're not going to play any favorites here and i will tell you that i think that as i look at the evidence i said lots of yellow and red warning lights. there was a lot along the way here that should have warned people like mr. geithner, like mr. paulson, like mr. greenspan that big trouble was on the way. >> in that light, you said you don't want politics or political consequences to influence the decisions you make. i wonder if you've gin any

thought to what the political ramifications might be of assigning substantial blame to individuals like tim geithner or ben bernanke. >> well, wf a job to do. and i don't think our job, by the way, is to get out the noose and necessarily roll heads. our job is to lay out the facts of what happened and call it as we see it. and i just made the observation that i do think when you're talking about institutions, leaders do have to take a measure of responsibility. i think one of the things that's been most disturbing about this crisis, i will just say, is because the american people waded in with trillions of dollars of assistance, there hasn't been the kind of self-examination in the leadership that otherwise might have occurred. normally you change behavior when you suffer the consequences of the behavior. but the american people saved wall street from much of that pain. in many respects the regulatory system was spared from the kind of withering criticism that perhaps should have been

directed there. and i think part of our job is to lay out more of the facts so there can be a coming to account. but as of today there's been very little consequence for the missteps leading up to this crisis. >> and on that point, mr. chairman, will your report recommend action against these people that you plan to lay out? the leaders of these wall street companies? because it seems that the american people is anry over the fact that many of these executives have walked away without a scratch on them. >> look, our job is to provide a report to the american people about what happened. and our job is then to say what we think the primary causes of this crisis were. and of course it falls to the shareholders of companies to frankly step up and be more responsible than they have in the past and lit fall to policy makers to make the changes, and it will also fall to law enforcement if they see potential violations of law to be vigorous in the pursuit. but again, i want to add there's been very little consequence.

if you look at some of the information we unveiled about citigroup, they apparently dramatically misled their shareholders. the only consequence? $100,000 fine to the cfo who made $7 million in the year in which he misrepresented the position of the company. and the company was find $75 million which means the shareholders were hit again. in the case of mr. missouri la the other day, he made over $500 million in the period 2000 to 07. he sold 40 million worth of stock. hi ultimate penalty is he will pay $45 million. there's been very little consequence for tremendous damage to the american economy. and people across this country. >> we have time for probably one or two quick questions. >> that sounds like a critim of the s.e.c. for not taking a harder tack with both mr. mosillo and citigroup and its executives. it sounds you are concerned that

regulators are not going after these people strongly enough. >> i think that regulators have an obligation to do their jobs, to do it in a tough way. i was observing the fact that i think a lot of americans see that a lot went wrong, the train ran off the rails, and there's been very, very little real consequence. and if you notice, almost every settlement that occurs always is accompanied by no admission of responsibility. and i just think that if we're going to move by this crisis, one of the rolls our commission can play is to lay the facts out there, spur a deeper self-examination. but i'm really saying at both wall street and washington there needs to be more self-reflection about what went wrong. my concern is, if we do not make changes, we're doomed to bail out history again. >> and a final question, mr. chairman. on the point of the regulators, not just the specifics of the financial overhaul legislation