CNBC Interview With Senator Claire McCaskill and Senator Charles Grassley
Interview
MS. LEE: Our next guests just introduced the bill seeking to arm the inspector general overseeing the TARP with broader authority of the $700 billion in taxpayer funds.
Joining us now from Capitol Hill in a First on CNBC interview, Democratic Senator Claire McCaskill and Republican Senator Chuck Grassley.
Senators, it is pleasure to have you with us on "The Call."
SEN. MCCASKILL: Thank you.
MS. LEE: Senator McCaskill, I want to start off with you. You've said that you voted on the original measure for the TARP, understanding that there would be responsible oversight of how taxpayer money is being spent. With this bill, is there an implicit statement that perhaps the way the taxpayer money has been spent so far has been in an irresponsible manner?
SEN. MCCASKILL: Well, I think more importantly, it's an acknowledgment that we haven't done enough on oversight. Senator Grassley, my Republican colleague, has a great record of looking after taxpayer dollars and I'm proud that he has joined me in this effort to make sure the inspector general can quickly hire the auditors and investigators necessary to do the watchdog job; they must for taxpayer money in this regard. So this is going to kind of jumpstart their ability to staff up.
MS. LEE: Senator Grassley, you both voted on this plan. You both had a role in crafting the language. Is there some regret perhaps that you didn't think of this in the first place and that all this money has been spent without that oversight that you are now proposing?
SEN. GRASSLEY: Well, it wouldn't have made any difference if we had written it in a perfect way because the inspector general is just now being hired and we've just had a hearing in my Finance Committee on him today. So he's not even staffed up. Senator McCaskill came up with the idea of quicker hiring of the staff because you don't have to go through all the civil service procedures; that's very good, but also a very important thing that makes a difference why this bill is necessary is because when the bill was originally written, we thought the only approach was going to be taking the toxic paper out of the credit pipeline so that good credit can flow and so we just had the inspector general work on that program. Now, we've gone the route of putting, liquefying the banks and it didn't even apply to that.
So everything that is in the TARP bill, now the inspector general will have broad authority to make sure there's no waste of taxpayers' money.
MS. LEE: And certainly, there has been a lot of criticism of Treasury Secretary Paulson in terms of moving away from the purchase of liquid assets and moving towards capital injections and so I'm curious, is there a disappointment here in that it has moved away from the original plan? And isn't there an acknowledgment that perhaps this is, in fact, a crisis that we have not seen before and as Secretary Paulson has said that you have to change the game plan when the game changes?
SEN. MCCASKILL: Well, I don't think that Secretary Paulson is getting the phone calls we're getting. It is uncomfortable for us to have to rationalize that what we voted for turns out to be not what they're going to do. Saying that, I understand what Secretary Paulson has done. I think the credit markets are beginning to become liquid again. We are beginning to see credit being extended in our country in a way that is necessary for us to have any kind of economic help.
So I applaud that Secretary Paulson is trying to do what he thinks is best, but he has to understand in this climate, it's very frustrating for average Americans to not really understand what we're doing and it feels like to them that we're buying out rich banks instead of helping them.
SEN. GRASSLEY: The surprise came to us that he moved to the banks. He has authority under TARP to do that, but the point is that all of the discussion we had during late September and early October dealt with dealing with securitized mortgages and taking that toxic paper out. And so the abrupt change, albeit maybe necessary, is one in which just kind of caught us by shock because that was not part of the debate back on October the 1st.
MS. LEE: Is there some hope that with the remaining TARP funds that there will be a return to that original plan? Or do you acknowledge, perhaps, that Secretary Paulson is right in the changing of the strategy of the use of the TARP?
SEN. GRASSLEY: Well, there's a smaller program that's being pushed by the Federal Deposit Insurance Corporation to go in and recalculate some mortgages that are in foreclosure with the idea that if people can spend up to 31 percent of their income on a 30-year mortgage at a fixed rate, then the FDIC will assume 50 percent of anything that's lost in the future. But the banks have to -- they have to lower their mortgage in order for that to kick in. So the banks have to give a lot for it to even kick in.
SEN. MCCASKILL: And we want these inspector generals to be looking, Melissa, to make sure that the banks that we're buying equity in are using that cash to, in fact, extend more loans. We don't want them just to be feathering the bottom line, although in the long run, that probably helps us in terms of the price of that stock, but in the short run, we've got to make sure we get money out there. We've got to make sure small businesses can borrow. We've got to make sure that our economy continues to function.
So that's what we hope these inspector generals will begin taking a look at.
MS. LEE: Okay, senators, we're going to leave it there. Thanks so much for your time. We appreciate it.
SEN. MCCASKILL: Thank you.
MS. LEE: Senators Claire McCaskill and Chuck Grassley.
http://www.fnsg.com/transcript.htm?id=20081120t0880&nquery=&query=mccaskill
Source