Press Conference with Treasury Secretary Henry Paulson and Senator Christopher Dodd - Transcript

Interview

PRESS CONFERENCE WITH TREASURY SECRETARY HENRY PAULSON AND SENATOR CHRISTOPHER DODD

SEC. PAULSON: (In progress) -- you could just simply say we had a -- we had a good meeting, because there are some important priorities. And I got the chairman's advice on stimulus, and so we talked about that. And we had a good opportunity also to talk about housing issues, generally, and the economy. And I was very pleased to hear him emphasize how focused he's going to be on getting some -- a GSE reform bill passed.

Q Good. Thanks.

SEC. PAULSON: Thank you.

(Cross talk)

Q (Off mike.) Mr. Secretary, is the White House open to extend -- unemployment benefits as part of the stimulus package?

Q Chairman Dodd, what do you think of House proposals to allow Fannie and Freddie to provide different mortgages? Are you willing to let that --

SEN. DODD: Well, I just want to say first of all, I want to commend the administration and the Democratic leadership for the short-term stimulus package. And I'm pleased that they've included some housing components here -- the FHA and the loan limit issue here. I think that could do a lot to deal with liquidity issues.

It's one thing to deal with people's problems, it's another matter here to deal with THE problem. I mean, the face, as I've said before, of the economic crisis is the housing crisis, and the face of the housing crisis is the foreclosure crisis, in my view.

And so the short-term package clearly needs to provide some relief for people out there who are facing very, very serious economic problems. We all know them: the rising costs of energy, health care, education. The inflation rate -- a 17 year high, unemployment rates are moving, housing starts are the lowest they've been in 27 years. So we have some major economic relief issues.

But you need to address the underlying problem as well. So I'm very pleased that we're going to have some loan limit increases here that I think are important. And the FHA bill, which will resolve -- I had breakfast yesterday with Barney Frank -- here to resolve those housing pieces. While it represents a relatively small piece -- at least politically and legislatively, of this short-term package, I think it's the piece of this that will wag the dog in many ways, in terms of dealing with the underlying issues.

Secondly, I'll be meeting after I leave here, in fact, with people who have come down on an infrastructure bill. That's a longer term solution to stimulation, but -- on the economy, but I think a critical one. And we have some other ideas that we'd like to raise, not only in terms of dealing with the future problems not being repeated -- as a result of a failure by the, in my view, the administration and the regulators to step in when they should have, with fraudulent and deceptive lending practices -- but also some ideas on how we can keep people in their homes.

So this needs to be not just a short-term answer here, but some mid-term and longer-term answers as well. And I was pleased -- and I don't want to put words in the secretary's mouth here at all -- but a willingness to look at some of these ideas that could help us -- beyond just what we need to do in the next few days here, with this short-term program.

Q (Off mike.)

SEN. DODD: Not that I know of here. At least I don't think that's part of anything we've talked about -- (inaudible) --

Q Senator, talk about the basic difference of what you see this package is going to be in the Senate, versus what the House --

SEN. DODD: Well, that's a good point. Look, there are issues here -- and Max Baucus, and Senator Reid, obviously, and others, Tom Harkin, have expressed strong views about adding elements to this when it comes to the Senate, whether you're talking about unemployment insurance, or food stamps, LIHEAP, Low Income Energy Assistance and the like. I can't predict for you what's going to happen with all of that, and how it'll even be handled procedurally when it comes over.

In the end, I think it's important that we act pretty quickly here. We don't want to see this go on day in and day out here without getting some answers to these questions. And I'm willing to be helpful in making that happen. I'm committed to be able to do it.

Q (Off mike.) -- (inaudible) -- what's your level of concern about what's happening to -- (inaudible)?

SEN. DODD: Well, at this point here I don't have a view on that. We'll take a look at it. The committee's looking at it.

Q (Off mike.) You didn't discuss it with Secretary --

SEN. DODD: No, I didn't.

Q (Off mike.) Was Secretary Paulson open to adding -- (inaudible) -- employees to the health bill --

SEN. DODD: No, I don't think -- I don't think he's enthusiastic about that. And I know -- I know, in fact, that Senator Baucus has expressed to him, in some strong feelings, about the Senate wants to be heard on some of these matters as well. We appreciate what the House has done, but there are members who are going to want to add, or try to add some provisions to this bill -- (inaudible) --

Q (Off mike.)

SEN. DODD: Well, -- (inaudible) -- again -- listen, I'm grateful here in that we're going to have some temporary loan limit increases here. I think that's very, very important. But I also wanted the secretary to know -- and he said it right here -- and that is I'm going to get a GSE bill done.

We're going to work on that and make it happen, because I know there are members, including my good friend Dick Shelby and others, who want to make sure we're going to get that GSE bill done, and probably not enthusiastic about having a temporary -- even a temporary increase in these loans in the absence of a GSE bill.

So I want -- I want others to know here that we're going to get that bill done. And I made that commitment to the secretary this morning.

Q (Off mike.)

SEN. DODD: Well, I said we're going to work on it and try to get a bill done. I can't predict actually what happens in a committee, other than we can set it to a mark-up and try and get it done. Now, I'm not -- I've got my own views on what ought to be in the GSE bill here, but I'm certainly going to make an effort to get that bill done.

Q (Off mike.)

SEN. DODD: Here -- I'm supportive of that. And as I said before with a 12-month period, what they're talking about as part of this short-term -- a permanent one at this point.

Q (Off mike.)

SEN. DODD: I'm sorry?

Q (Off mike.)

SEN. DODD: No. Here it's, again it's -- I think maybe some of these issues are helping clarify the importance of -- I mean, I'm an advocate of the GSE. I -- Fannie and Freddie, I think, have done a great job in many ways, putting aside, obviously, their difficulties. I'm not talking about the problems they've had.

But the idea here, historically, providing that fixed-rate mortgage for so many homeowners here has been of great value and a wealth creator. And I don't think that would have happened in the absence of Fannie and Freddie. So I approach the reform of that with a different perspective. There are those, candidly, who would love to see them disappear and go away. I'm not in that camp, obviously, at all.

Q (Off mike.)

SEN. DODD: Well, at this point here I think you do a lot. And -- (inaudible) -- others, obviously they can do it, they don't need legislation, whereas the other ones will require some.

Q (Off mike.) Sir, do you think -- (inaudible) -- the White House bill came together too fast? Do you think the deal came together too fast -- a very dangerous bill?

SEN. DODD: No, I think it's an important -- look, this is a, you know, this is a, this is beyond a slow-down, or beyond a near recession. This is global as well. And this would -- this $150 billion package is, in a $14 trillion economy. And that's not even a fair description of this.

This is a global problem. It isn't just a domestic problem here. And so you -- if we're only talking about this in this context, and not further steps that need to be taken, then I think this is not going to work -- if by working you mean it's going to jump-start an economy and get it moving right.

But I think it's a good first step, and I think timing is important, and, therefore, it's important we move quickly to get this done.

Q But given that -- (inaudible.)

SEN. DODD: I tried to -- in fact, I tried to reach Dick this morning, -- (inaudible) -- he could join us here. He's on a -- he's left town. And I'll be talking to him about that obviously. I think -- I want him to be assured that what I've said to the secretary I'm saying to him as well -- we're going to move on this GSE bill.

Q (Off mike.)

SEN. DODD: Well, I'm hopeful -- I'm hopeful it will be -- hopeful it will be.

Q (Off mike.)

SEN. DODD: Thank you, everybody.

Q (Off mike.) How do you respond to the president saying that increasing the loan limit will only increase risks for Fannie and Freddie which are already suffering greater credit losses?

SEN. DODD: Well, I'm sure they'll make that argument. But at this point here the greater risk is a lack of liquidity in the market. And this why we could help -- by raising those loan limits could really do a lot right now. That could probably do more, a lot more, to dealing with the underlying problem that has created so many problems for people. So I'm in favor of taking that risk.

Q (Off mike.)

SEN. DODD: Thank you, everybody.

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