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MS. BRZEZINSKI: Here with us now, Democratic Missouri Senator Claire McCaskill.
Senator, thank you very much for joining us this morning.
How are we going to find out where all this money went, to the banks, and what are they using it for? I just -- I want to know.
SEN. MCCASKILL: Well, I think that everybody has hyper-focused on that right now, Mika.
And one of the things we're going to do in the next couple of weeks is we're going to enhance the powers of the special inspector general that is supposed to be looking into TARP. My bill will also give him law enforcement authority.
So we're going to have somebody, a cop on the beat within these funds, on the behalf of taxpayers, that are going to be getting the answers to the questions that everybody who's spending this money, which is -- every person in America has a right to know.
MS. BRZEZINSKI: Yes. Yes, yes.
MR. RATIGAN: And here's a question that occurs to me, which is --
MS. BRZEZINSKI: This is Dylan Ratigan, Senator.
SEN. MCCASKILL: Hi, Dylan.
MR. RATIGAN: Hi. Hi, Senator.
We are watching a vetting process of an incoming Treasury secretary who has an opportunity to run the Treasury and to run the money for this country in a way no one has before. He'll have technology available to him and a blank slate available to him that no Treasury secretary's had before, and a problem no one has seen before -- magnitude, et cetera.
Instead of the confirmation process focusing on how he will run the Treasury to the benefit of America and capitalism, we are watching the circus develop around a housekeeper, which -- it's an immigration conversation we should probably all have on a different agenda at a different time.
MS. BRZEZINSKI: Explain to the viewers.
MR. RATIGAN: In other words, Tim Geithner is in trouble here, apparently, because they're concerned about his papers with one of his housekeepers. You may remember from Clinton.
Why are we not seeing a focus on the transparency issue that you're concerned about, as opposed to the idiocy of this immigration conversation?
SEN. MCCASKILL: Well, you probably need to come hang out here more often, and you'd know.
MR. RATIGAN: I'd rather not.
SEN. MCCASKILL: This is a bad habit that we have around here.
MR. RATIGAN: Can you break it for us, please?
SEN. MCCASKILL: Believe me, Barack Obama is trying. If you watch what he's doing, the way -- I know you all talked earlier today about his independent streak -- the time he's spending with Mitch McConnell; the time he's spending with conservative columnists.
This is a guy who gets that we are not going to fix anything if we are taking shots at each other across the bow for cheap, political benefit.
MR. RATIGAN: And the stakes are too high. The stakes are too high.
SEN. MCCASKILL: And the stakes are enormous.
This is a real first test for Barack's presidency in that this TARP, the second half of this TARP money is wildly unpopular in our country. And he is going to push ahead because he believes it's the right thing to do for our country.
And now he's going to have to show America that he's going to do this differently than the Bush administration did, in terms of accountability and transparency.
MR. BARNICLE: Hey, Senator, this is Mike Barnicle. Actually, I am. I just remembered my name --
MS. BRZEZINSKI: Aw, that's great!
MR. RATIGAN: You took a moment there, Mike. I was concerned -- (cross talk) -- you were collecting yourself.
MS. BRZEZINSKI: I have your vitamins --
MR. BARNICLE: Let me ask you about the release of the second segment of the TARP money. What is it, $350 billion or so?
How can you ensure -- how can you tell people in Missouri and people in America this morning that that money, when it is released, that a lot of it or some of it or a certain percentage of it, certainly, will go to someone looking for a car loan or a college loan for their kid, a student loan?
How can you assure us that you will know where that money is going?
SEN. MCCASKILL: Well, a lot of this is going to be, frankly, Mike, trust. It's going to be trust of the new administration. This is, as I said, wildly --
I have a test. If something's unpopular, I can't get to the produce section in the grocery store without someone yelling at me -- it's immediately on my right as I walk in the door. I know how unpopular this thing is.
But this is one of these deals that we have a crisis, and people don't realize that the financial markets are in such severe jeopardy in terms of all of it falling off the table.
And I think this administration gets the mistakes that have been made, this new administration. They've watched the lack of transparency.
They've watched these big, giant financial institutions basically give us the back of their hand, when we want information that we deserve about how they used this money. So --
MR. RATIGAN: Here's -- a couple things that have not been entertained, at least not in a meaningful way in public with this money -- to go to your question, Mike, which is why are we allowing the individuals that ran these institutions into the ground to maintain control over them?
I know this is something that you and I, Pat, have talked about in the past.
MR. BUCHANAN: Right.
MR. RATIGAN: And why are we not seeing the use of some of this money, Senator, to form new banks? To answer your --
Do you want to lend money? You want car loans? You want student loans?
MR. BARNICLE: Community banks.
MR. RATIGAN: Pat Buchanan will start a bank. We'll capitalize him with taxpayer money and the only way he can make money is to lend money to the people at this table.
And I recognize that it's not as easy as that because of the bank formation laws and all the rest of it --
SEN. MCCASKILL: Right. Right.
MR. RATIGAN: But the fact of the matter is, giving money to banks that have basically already gutted their financial foundation in order to accrue a bonus for themselves -- and we're basically repopulating their financial foundation with taxpayer money, which is now leaving them lending nothing to anybody -- is an idiotic solution to the problem.
SEN. MCCASKILL: Well, and as you well understand, banks aren't going to make money if they don't lend money. So there are certain --
MR. RATIGAN: Well, they -- but the fact of the matter is if we let the banks run themselves into the dirt and then we repopulate their foundation, they'll never lend the money.
SEN. MCCASKILL: And the big guys have stabilized themselves, but they have not loosened up on credit like we need in this economy right now.
MR. RATIGAN: Nor have they returned the bonuses that they received for gutting their own financial institutions.
SEN. MCCASKILL: Exactly. Exactly.
So I think you're going to see a much tighter leash. You're going to see this administration saying to these big financial institutions hey, we want to know about your labor costs. We want to know about your executive compensation. We want to know about your bonuses.
MR. BUCHANAN: Senator McCaskill, look, you've got $700 billion you're going to bail out these banks. Nobody knows where it went. We're going to have a 1 (trillion dollars) to $2 trillion or something like that, stimulus package you're going to put together in a matter of a couple of weeks.
You've got money pouring out from the Fed. I mean, is there not a real risk that you all are creating another, bigger bubble, as per George Melloan in the Wall Street Journal --
MS. BRZEZINSKI: Oh, good question.
MR. BUCHANAN: -- which is going to blow up later on and just destroy the value of the American dollar? Is there any sense of the tremendous risks that are being run here?
SEN. MCCASKILL: Oh, I think -- there is certainly a sense of the risk. Everyone is walking around with their stomach in knots over the risk.
And so it's about weighing risks, Pat. It's about deciding whether the risk of doing nothing is greater than the risk of doing something.
Now, having said that, there are some of us that are hyper- focused on how this money is going to be spent in the stimulus. It should be only about jobs, and it should be only about using taxpayer money in a way that is effective in terms of stimulating the economy.
We cannot fix government -- government cannot fix this problem. Government can't fix everything with this money. Government has to be conservative in the way they use the stimulus. If we don't, then we are really jeopardizing, long-term, our economic strength.
MR. RATIGAN: Is your sense, Senator McCaskill, that tax policies on the table -- in other words, if we look at tax policy as the thing that most influences business formation and what people do, is that something that will be central to this --
And I don't just mean tax cuts to stimulate consumption; I mean tax policy to encourage business formation in health care, in energy. We don't just need to stimulate the economy we have; we need to actually establish new economic engines here, which requires smarter thinking than just throwing money at the American consumer.
Is that what's going on?
SEN. MCCASKILL: Well, absolutely. And there's a lot of discussion about that.
In fact, one of the things that's happened this week, because of the discussions between some of the Republican leaders and some of us in the Democratic Caucus, is maybe moving some of this tax policy in energy, alternative job creation -- doing more tax incentives to stimulate that sector of our economy, as opposed to just a blanket $3,000 tax credit for job creation, which could be abused.
It could be used by businesses that were already on a growth pattern. We want to make sure we're stimulating a new kind of job in this country that will also be a win-win for our environment and also for getting out from underneath the thumb of foreign oil.
MS. BRZEZINSKI: Okay. I just -- I want that transparency. That's what I'm saying.
MR. BARNICLE: Thanks for cheering us up, Senator.
SEN. MCCASKILL: Okay!
MS. BRZEZINSKI: I feel sick now.
MR. BARNICLE: Oh, by the way, we need a gas tax.
(Laughter, cross talk.)
MS. BRZEZINSKI: Senator Claire McCaskill.
SEN. MCCASKILL: Thank you, guys.