Roundtable on the Senate Banking Hearing

Roundtable on the Senate Banking Hearing

FOX News Special Report With Brit Hume - September 23, 2008


SEN. JIM BUNNING, (R) KENTUCKY: The Paulson plan will not bring a stop to the slide in home prices. But the Paulson plan will spend $700 billion worth of taxpayers' money to prop up and clean up the balance sheets of Wall Street.

SEN. CHRIS DODD, (D-CT) SENATE BANKING COMMITTEE CHAIRMAN: The secretary and the administration need to know what they have said to us is not acceptable. This is not going to work, and they're going to have to come back and work with us.

And we'll make the decision as to whether or not we're going to send something back to them that can work. I'd like to achieve that result. But it is not going to be as though someone will send me a blank check.


HUME: Well, the markets continue to slide today. Whether it was because they were distressed by what they heard from the likes of Jim Bunting, Republican, and Chris Dodd, Democrat, is anybody's guess.

But we will take a few guesses of our own here now with Fred Barnes, Executive Editor of "The Weekly Standard," Mort Kondracke, Executive Editor of "Roll Call," and the syndicated columnist Charles Krauthammer, FOX News contributors all three.

I don't really want guesses here, but some thoughts, anyway. Mort, let's--you're as in touch with the Hill as anybody. What do you make of this reaction up there? Are these guys huffing and puffing, or are they getting ready to dismember this plan and put together their own?

MORT KONDRACKE, EXECUTIVE EDITOR, "ROLL CALL": I think huffing and puffing, or due diligence, you might call it. There are certain conditions which they have to tell their constituents that they're meeting, such as that they're not going to have the CEO's getting golden parachutes after they have been bailed out.

And I think the administration, by the way, when Barack Obama said that Bush is being stubborn, I don't think that's true at all. I think the Bush, the White House understands that CEO pay is going to have to be conditioned some--

HUME: Are you are talking about the outgoing CEOs or are you talking about the incoming CEOs?

KONDRACKE: It depends on whether they're replaced or not.

HUME: What I'm saying though is this--I don't know if you have noticed, but the outgoing CEOs are getting kicked out, and at Fannie and Freddie, for example, their executive compensation departure packages were all cancelled.

I don't have the impression that given the stock hits that these enterprises are taking that a lot of these people's wealth has held up very well.

But what about the new people you bring in to take over?

KONDRACKE: That's the question--do you bring in new people in to take over? When you buy these lousy securities, do you also replace the CEOs? No, you don't.

Hank Paulson said--in fact, his initial position was that if you try to affect the pay packages of the CEOs, then they will not sell their securities to this new entity, whatever it's going to be. It's going to be a discouragement.

I think that that's a bargaining position and that they will deal on that issue.

HUME: OK, so what do you think will happen?

KONDRACKE: I think ultimately the Dow Jones declines if they continue will scare everyone into doing this. Whether or not it's the right thing to do, and, frankly, I'm not smart enough to know whether this is the right thing to do, what--

HUME: Then off with your head!

FRED BARNES, EXECUTIVE EDITOR, "THE WEEKLY STANDARD": I disagree with Mort on one thing. I don't think they're huffing and puffing. I think, basically, Hank Paulson and Ben Bernanke have failed to sell this package to congress in a bipartisan way. Republicans are more opposed to it than Democrats are.

I was on the Hill today, and I'll tell you, there is not a crisis feeling up there. I happen to share Paulson's and Bernanke's feelings that there is a crisis in financial markets that could spread into the economy. But boy, you sure don't feel that up on Capitol Hill.

For Republicans, particularly the conservatives in the House, their mail and calls and everything are running overwhelmingly against it.

And the big problem is, I don't think pay for the CEOs. It's one thing. It's the number--$700 billion. And, Brit, you and I, all of us know that that a lot of that might over time be returned, as it was in the S&L bailout a number of years ago, but that message hasn't gotten through.

Bernanke and Paulson have not been reassuring. And I don't know what's going to happen, but--

HUME: So you think there is chance this thing may not pass?

BARNES: It may not pass, and then they may have to come back and do something else.

Bu the administration has raised these great expectations that something is going to be done. And, look, the best argument right now for it is we have to do something. There's only one thing worse than our package, and that's doing nothing.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Something is going to be done because the markets have spoken. On Monday you had a very steep decline. Today you had another decline.

It's a direct result of the fact that people are looking at Capitol Hill and seeing this resistance, also temporizing, and also the pontificating on the part of these people on the Hill who, as Fred has indicated, don't have a sense of crisis.

If they don't, they are living on the moon. There is a crisis. The credit markets are absolutely in seizure, and everybody's expecting help. And if it doesn't happen, there's going to be a huge reaction.

That's why I think in the end Congress will go along with it. But the attitude right now among Republicans and Democrats is that Paulson is asking for a favor, and they will only give it to him for a quid pro quo, as if he wants the power, as if he wants a trillion dollars to dole out.

He's going to be a lame duck in a month and a half. He's going to be on the street in four months. All of this is going to be the work of his successor.

It's not about him, but people are pretending it is about him. The reason he wants it is the same reason Bernanke wants a bailout and the markets are screaming for a bailout, because there will be a credit crisis, an equity crash, and the economy will go stale.

They all understand that in the end all of these complaints on the part of Congress and the demands of quid pro quos are going to be compromised, but a package is going to have to be passed.

KONDRACKE: Right. And Bernanke is going to have to have a better answer than he has today on what is the price for which these securities will be bought. Is it the face value of the stocks, the securities, which is a phony number--

HUME: Well right now it's zero.

KONDRACKE: No, that's what they would bring in the market because nobody will buy them. But they have a value on them, and the question is, do you give--

HUME: They're talking about a big auction, right? So it would depend--

KONDRACKE: That is the answer, if you had a reverse auction where the government essentially says give us your lowest price, and then the houses go in there and gives the lowest price to the government, and they buy them at the low price. And then perhaps the government can make money.

BARNES: I think it as Paulson today, and maybe I'm wrong, but one of them was asked, basically, what is your plan b, and they didn't have one. But they may have to come up with one.

KRAUTHAMMER: There is no plan b.

BARNES: I know there's not, but they may have to find one.

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