On this week’s “Political Capital with Al Hunt,” airing Friday, July 16th, 2010 at 7:00 PM/ET, Bloomberg Television anchor and Washington D.C. executive editor Al Hunt speaks with House Financial Services Committee Chairman Barney Frank about the financial regulation bill.
Frank tells Bloomberg TV that he plans to begin drafting legislation in September to overhaul finance giants Fannie Mae (FNM) and Freddie Mac (FRE), commenting that the current structure of the companies “doesn’t work.” Frank also says he wants Congress to take up the White House plan for a $90B bank tax saying: “I don’t understand how members can say they’re for reducing the deficit and then let Goldman Sachs (GS) and JPMorgan Chase (JPM) off the hook entirely. They were the major beneficiaries of the intervention.”
Here are the key highlights from the interview, courtesy of Bloomberg Television:
On Goldman Sachs settlement with the SEC:
“Well, I have not read [the case] with specificity. I’m aware of it in general. I would say this. First of all, it is clearly an acknowledgement by Goldman that they had done things they shouldn’t have done, the original notion.”
On whether Congress will get to act on the proposed $90B bank tax:
“I hope so. I don’t understand how members can say they’re for reducing the deficit and then let Goldman Sachs and JPMorgan Chase off the hook entirely. They were the major beneficiaries of the intervention. Now, it was to do the whole economy, not them, but they benefited. Many of them had engaged in activities they shouldn’t have. Look, $500 million, that’s pocket change for Goldman Sachs. Well, I agree. We were talking about asking all of them to put up a couple of billion here collectively.”
On Fannie Mae and Freddie Mac:
“Here’s the problem with the keeping them. This hybrid, in which you have private-shareholder-owned entities that also have a public mission, doesn’t work. I think you have to separate them out. Yes, there’s room for a shareholder-owned corporation. To the extent that we want subsidy, I think we have to separate it out. I think I’m more on the side now of trying to separate out this hybrid thing.
“But, we will start it – I’ll tell you, make an announcement now. When we come back in September, we’ll have several weeks, not enough time to pass a bill but enough to time to write one. I believe we should go out of here with the version of what’s going to replace it. We will now begin with the rhetoric of politics behind us as this bill is passed figure out what set of arrangements replaces the current one.”
On whether the Bush tax cuts should expire:
“Many of them not, I think for the middle income and below, yes, but I was very pleased to see that Bloomberg interview with Alan Greenspan where he said, ‘No.’ I think Alan is being an intellectually honest conservative here…We had this test, but does it hurt the economy if you raise taxes by a fairly small amount, 3%, from 36% to 39% on income above $200,000? When Bill Clinton asked us to do that in 1993 and we did, we got these predictions that it would be terrible for the economy. They were simply, flatly wrong. There was no negative effective whatsoever from raising the top marginal rate. Bush got it lowered and we got no economic benefit, unless you happen to have that money. I believe that that’s absolutely right, that with regards to the estate tax and with regard to incomes above $200,000, and I honor Alan Greenspan for breaking with the kind of right-wing, knee-jerk ideality in saying so.”