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April 09, 2009

Interview with Senator Chris Dodd

The Ed Show

SCHULTZ: Joining me now is Democratic Senator Chris Dodd of Connecticut. He's the chairman of the Senate Banking Committee, and he's here to kick off this program tonight.

Senator, if you can just give us your quick take, how good is this news? With all the conversation about the TARP program, there is the first report out that somebody made a dollar.

How important is this, in your opinion?

SEN. CHRISTOPHER DODD (D-CT.), CHAIRMAN, BANKING COMMITTEE: Well, it's very important, because the most important words in all of this, and has been since September, is "confidence" and "optimism." And unless we restore confidence and optimism among consumers, among the public at large, among our institutions, then this isn't going to work.

And so what you're seeing tonight with this news--you don't want to overstate it and you haven't, Ed, in my view--is this is hopefully going to build some confidence, that we, in fact, will overcome all of this, we'll get out of this. It's not going to be easy, it's not going to happen overnight, but it's the first indication, along with some of the stock market increases over the last week or two--I wasn't sure whether that was a false start or not, and we want to be careful to not overstate the case. But for the naysayers who just say no to everything--and that's all they've done over the last number of weeks--to President Obama and his team and others, the idea that these ideas are beginning to work, we hope, bit by bit, ought to restore some of that confidence which is absolutely critical in our country.

SCHULTZ: Senator Dodd, I've got to ask you, you, of course, chairing the Banking Committee, you brought forth some legislation that came out of committee, you brought it up early so the lobbyists couldn't take it apart. You got this thing through committee with a 12-11 vote.

How important was this? And I want to detail out exactly what this credit card bill calls for.

DODD: Well, Ed, this is an issue that I've been working on for 20 years, the gouging that goes on. Just to give you in perspective, since March of last year, 2007 (sic), to February of this year, the credit card industry has raised the rates on one out of every four accounts. Seventy million accounts have gone up in the last year, many of them for no reason at all, because the language in the small print says we can raise rates for any reason, any time.

That's their language, any reason, any time. And, ,of course, you're seeing that today with Bank of America. Citigroup and others, I think, are going to raise rates, or knock people off these rolls. You literally are charging rates in some cases that you would have gone to jail for even a few years ago. And so I'm deeply concerned about it.

The bill we passed doesn't allow any time, any reason rate increases. You covered the universal default issue. You got it exactly right, Ed, that if you were late on a utility bill or some other unrelated matter to your credit card, they use that as a justification for adding fees and penalties or penalty rates on individuals. That ought to be wrong.

The whole idea that you can charge interest rates on the penalties you get charged, or increase your rates, and despite the fact you've been current for six months or a year, they never bring them back down again. Those are permanent rate increases.

All of those things, among others, are things that we changed with this credit card bill, including that youngsters, people who are getting these unsolicited, pre-approved credit cards with credit limits of $3,000 to $5,000, in some cases $10,000, knowing full well that that youngster has no credit history, no assets, no income, and knowing full well that, in many cases, they're going to run up those debts, of course, which they're saddled with for years to come, or their parents are, we changed that, too.

SCHULTZ: Senator, I've got to ask you, how are you going to stop the outrageous rates? I mean, are you going to write in there that there's going to be a limit as to what they can charge? There's got to be special conditions? How are you going to do that?

DODD: Well, it's coming to that. Bernie Sanders, my colleague in Vermont, Dick Durbin, a senator from Illinois, among others, have been suggesting that we ought to have a cap on rates.

Now, I know there are many who are opposed to that idea. But as you pointed out earlier--and I had a case here the other day here in the state of Connecticut, Samantha Moore (ph) and her husband, small business owners here in Connecticut, good credit history, perfect, they were late for the first time in 18 years, three days late.

They saw their credit rates--the interest rates double and their credit limits go from $31,000 down to $4,000 for being three days late on a payment for the first time in 18 years. That story gets repeated over and over and over again.

Those kind of rates they're now being asked to pay I think are criminal. And so it may come that we have to put a cap. And if we have to do it retroactively, I would say to Bank of Americas and others, don't think you're going to get away with this by trying to get this done before my bill gets to the floor of the United States Senate. This is wrong, it's unfair, it hurts people out there who are in desperate conditions today.

SCHULTZ: This affects every American, especially the middle class. And I'm going to tell you, if it was a Republican majority, we wouldn't even be talking about this tonight, because the chairman of the committee wouldn't be pushing the issue the way you have, and I really commend you for that.

DODD: Thanks.

SCHULTZ: I want to talk about the housing industry. The president made an appeal today to a lot of Americans to go out and refinance their home. Here's what he had to say.

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: There are seven to nine million people across the country who, right now, could be taking advantage of lower mortgage rates. That is money in their pocket. And we estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of these various mortgage programs that have been put in place.

(END VIDEO CLIP)

SCHULTZ: Now, what about folks who can't do the refinancing, Senator?

What's your answer to them?

DODD: Well, the president and others put together this package using $75 billion of the so-called TARP money available mitigating foreclosure issues, and so allowing people who are on that brink, who may fall into having a distressed mortgage or a mortgage that's under water, of reworking that mortgage in a way so they can stay in that home, that's going to be needed in those cases. Others the president talked about don't need that, but can refinance and put themselves in far better shape. So you've got a combination of ideas here that would allow us to mitigate the problem.

And this really gets to the heart of it, Ed, because at the heart of all of this is the residential mortgage market, is the foreclosure problem. Ten thousand people a day are falling into foreclosure, 20,000 a day losing their jobs.

Jobs, and dealing with people's homes. Not everyone wants to sell their home. You've got an awful lot of them who are under water. That is, the mortgage is a greater cost than the value of the home at this juncture. But if we're able to get to the bottom of this residential mortgage market, those people in distress, then I think along with the information you talked about at the top of the program, would begin to indicate that we may actually get out of this problem sooner than we thought earlier.

SCHULTZ: Well, I'll tell you what, if the banks don't pay back the TARP money, and this is just a snapshot of a great beginning, there's not going to be an economic recovery. We have got to have the financial institutions in this country be successful early on, I think, to start this entire comeback, and I think it can happen.

Senator, I've got to ask you about some pretty troubling poll numbers that you've got in Connecticut, if I may.

Fifty-eight percent of your constituents think that you're not getting the job done, 33 percent approve. This is a fallout from AIG.

How much do you think that hurt you, the reversal of your position, and also the way you changed your position on the bonuses as to who was responsible for how the bonuses were dished out?

DODD: Well, it hurt terribly. And I acknowledge that.

In February, when this matter--I wrote an eight-page amendment to deal with bonuses, golden parachutes, luxury items, and the like, to try and deal with these issues across the board, not one fact (ph) situation after another. And that was the right thing to do, and I still stand by it.

And in February, if I had known then what I now know--no one had brought up or had any idea there were any bonuses for AIG involved in all of this--then we obviously would have taken a different position. But the administration came to me, along with some others, and said, look, this is going to create some real legal problems. It made some sense, I thought, at the time.

I now know that it was a mistake. Would love to have that moment back.

SCHULTZ: So you were afraid of the legal aspect of all of this?

DODD: Those were the arguments raised to me. As I said, no one ever brought up AIG at the time. And had they done so, or I had known that we would be confronting the problem here, I would have had a very different position.

I regret that deeply. It caused an awful lot of frustration, an awful lot of anger at me in my state. I understand it, I acknowledge it, and I'm going to try to fix it.

SCHULTZ: Senator, good to have you on the program tonight. And thanks for being with us, and thanks for the work you're doing to help families deal with these credit card issues in America.

We'll do it again. Thanks a lot.

DODD: Thanks, Ed. Thank you very much.

SCHULTZ: You bet. dod

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