NBC "Meet the Press" - Transcript

Interview

MR. BROKAW: Mayor Michael Bloomberg of New York City, welcome back to "Meet the Press."

MAYOR BLOOMBERG: Thank you.

MR. BROKAW: You're in a three-way intersection -- you're the mayor of the city that's at the epicenter of this Wall Street implosion; you're a very wealthy investor; and you are also the founder of Bloomberg Financial Services and Bloomberg News. You just watched Secretary Paulson. Were you reassured by his answers, or do you think we need to know more?

MAYOR BLOOMBERG: Well, I think, number one, Hank's the right guy for now. He knows what goes on on Wall Street. He understands these complex financial instruments in ways most people do not and most Treasury secretaries do not, and so if I had to have one person at the helm today, I would pick Hank Paulson.

But I think you've got to sit back and say, "What's the real problem here?" There are two crises. One is the crisis in the financial market, a lack of confidence that almost closed down the financial system this past week and that Hank has to address, and it's up to the Treasury, with the acquiescence of Congress, but to do something quickly, and nobody knows exactly what they should do, but anything is better than nothing. You've got to restore the public's belief and the market's belief that we will go on, and this is not just an American problem, it's financial markets around the world that are all interlinked, and they are all collapsing.

The second problem, which is up to Congress, it's a much longer- term problem and maybe the genesis of the problem that we have today in the financial markets, and that is that people are losing their homes, deserted homes are destroying neighborhoods, people are losing their jobs, we have some industries that Congress tried to protect, and instead of protecting them, they've caused them to not keep up in a competitive world with new products. We have an education system that isn't preparing us for the future, and we have a retirement system that is not just going to be there when we need it.

So there's two things here -- one, you've go to do quickly; one, you really need a lot more thought about, and the Congress should spend their time debating, but I don't know that there is time for a lot of the debate now.

MR. BROKAW: I'm wondering if there is a system, however, that you can build in that is a kind of failsafe system for getting some of those answers once you act with alacrity. This is a country now that has watched us go to war with, in the judgment of a lot of people, not enough questions being asked and being answered. The Patriot Act was passed very swiftly; a lot of people, Republicans, Democrats, believe that was a big mistakes; that it needs to be restructured, the same thing with Homeland Security. Now, how do you build that into getting the passage that needs to be done this week so that the taxpayers can be assured that they're not just carrying Wall Street on their backs after all this irresponsible lending?

MAYOR BLOOMBERG: You can put some safeguards in, but you don't have time to build in the safeguards that you should have for long term, and we're paying the price for the last years where we all wanted something for nothing; where we took risks because we were convinced that we would never have to pay somebody else would pay on the downside, but we'd keep the profit. Congress has been unwilling to address the fundamentals of this country, an energy policy that makes sense, infrastructure, health care, all of these kinds of things.

So you want something that overnight we can do -- what Hank Paulson has been arguing for a long time -- regulation is a good example. Our regulation in this country is designed for the world of 50 years ago. We have separate regulation for different industries, except today those industries all do the same thing.

Also, our regulation isn't consistent with regulation around the world, and every company, every bank, your job, my job, all our jobs, depend on commerce and what happens elsewhere in the world, and we have to find ways to pull together in Congress; not have all of the different oversight committees in the Executive Branch; not have all the different agencies, and not just think that we're the only ones that can do this but pull it all together.

Paulson's been talking about it for a long time, but I think it kind of comes out of this instance gratification. We all were happy when the stock market was going up, we're all happy when there was all this money sloshing around in the economy, and everybody could get a loan whether they could pay it back or not; when companies went out and bought other companies, and people got great bonuses -- it was great, and nobody wanted to say, "Wait a second, this can't go on forever."

I'm happy to say, in New York at least, we didn't think it was going to go on forever, and for the last couple of years, we've been salting away money. I don't know that we've salted away enough, but we've been saying again and again, "nothing goes up in a straight line forever."

MR. BROKAW: I moved to New York in the 1970s. The city was on its backside at that time, real estate prices were depressed -- not just suppressed but depressed. Central Park as a mess, the infrastructure -- it was in desperate need of a lot of work. Are you going to go crashing back into the 1970s in New York as a result of what's happened on Wall Street?

MAYOR BLOOMBERG: No, we're not going to make the mistake -- the mistake that was made in the '70s is we stopped policing the streets, we stopped cleaning the streets, we stopped cleaning the graffiti off buildings, we stopped supporting our cultural institutions and building parks and schools and those kinds of things.

We are going to go ahead and continue those things. We may have to stretch out some construction projects, we may have to ask people to do more with less, we may not be able to have the frills at the edge, but we are not going to walk away from our city. That's the prescription for disaster. When you do that, your tax base leaves, and the rest of this country as well as New York are going to have exactly the same decisions to make. The taxpayers are going to have to decide -- do they want to have a future or not?

If they don't want to have a future, then they're not going to have to pay as much now. But if they want to leave a better world for their kids, they're going to have to pay the bills up front.

MR. BROKAW: We do know that you are exploring the possibility of getting a third term. The rules would have to be changed. You're too limited out at the end of the two terms, there is some exploration going on. Would you like to serve a third term under these circumstances?

MAYOR BLOOMBERG: Well, I have 466 days left to go in my job, and I was sort of thinking maybe to be host of this program. That would be a nice job for me. It probably pays a little bit better than the $1 a year I get now.

MR. BROKAW: Your net worth, however, puts the rest of us to shame.

MAYOR BLOOMBERG: Well, be that as it may, it's all going to charity. You know, I think one of the things we have to focus on here, Tom, all kidding aside, is that there is a partisanship that has paralyzed our country. Both parties have redistricted themselves such that they don't have a worry about a challenge across the aisle, but they worry about a challenge from their flanks. So the conservatives are less willing to move to the middle, and the liberals are less willing to move to the middle, and we've got to get over that, and we've got to understand that we're all in this together unless we have bipartisan legislation and bipartisan governing at the federal, state, and city level. We're just going to have one problem after another, and the future is not as bright as I think it should be for America.

MR. BROKAW: We want to share with our audience what you had to say about society, in general, not just Wall Street.

This comes from The Daily News: "In an 'I want it now' society that refuses to live within its means, that's partly responsible for the subprime mortgage prices,' Mayor Bloomberg said. 'I think you can't blame just the banks,' he said, 'taking borrowers to task. 'They say, I want the great American dream, I want it now, and I'm not going to wait until I put some money in the bank. That's where we lost the moral compass of saying no to people who did not have the earnings capacity to support a mortgage.'"

Most people believe that you have, for a public figure, as strong a take on what the country needs to do as anyone in public office right now. So why not follow Warren Buffett's recommendation -- come to Wall Street, come to Washington, and say, "I'm here to serve this country, I'd like to take over the agency and try to manage our way out of all this."

MAYOR BLOOMBERG: Well, number one, I'd do anything that the country asked me to do, but I do have a job in New York. I've committed myself to the voters and the taxpayers and the citizens of New York to do the best job I can, and we're going to go through some very tough times.

We've been prudent, we've cut back, we've saved money, but this will hurt us, it will hurt every city, small town, big town, big cities in this country. It's hurting us around the world, and I think that there are other people who have plenty of qualifications. But I do have a job already. If the government asks me to help, I'd be happy to give my advice, and I've tried to stay in contact with both the presidential candidates, talk to both of them every couple of weeks, and give them my views. They should just not take them as gospel but add them into the mix, and they should get advice from a lot of people. There are a lot of smart people out there.

MR. BROKAW: In the spirit of what the country needs to face up to, and in the candid spirit of Mike Bloomberg, going beyond the borders of New York City, is this country in for a no-growth year, very likely a recession, as a result of what we're going through?

MAYOR BLOOMBERG: Well, I would describe the country as resilient, and I think that we have a better hand to play than anybody else. We are not immune to problems or to problems overseas, and we've got to understand that.

But if you take a look at all of the great strengths of America in entrepreneurialship, work ethic, natural resources, a democracy, a transparency, a willingness to be critical, you know, around the world they look at us, and they say, "Why are you criticizing yourself? Why are you people arguing during the political process to elect a president or somebody else?" That's the great strength of this country.

So, long term, I think we're in good shape. Short term, we are going to have problems like everybody else, and I think the general economic consensus is that this will be a year of no growth or perhaps worse. We are projecting tax revenues in New York City to fall -- the economically sensitive taxes -- by 12 percent this fiscal year, and I think that's not being too conservative. I hope it's not being too expansive and too optimistic. I am -- I think everybody should be doing this in all parts of government -- I am planning for the worst and hoping for the best.

MR. BROKAW: Is Wall Street going to have to be completely restructured in terms of the regulations that govern it?

MAYOR BLOOMBERG: Paulson has always talked about reforming regulation. I think the first thing we need is more disclosure visibility. The problem is that nobody knows what any institution owns and what the terms of the securities they own are and what they are worth. If that was out in the public domain, then there wouldn't be this crisis of confidence.

You could say, "This company is worth less," "This company is worth more," "I don't like what they own," "I do like what they own," but right now nobody knows what they own. In fact, the managements of a lot of these companies, I'm convinced, never knew what their traders were buying and what the risks were and they, every day, wake up not having any idea what's going to happen to them.

When things were going up, it was great. Nobody paid attention. We were all comfortable with letting that situation continue. Now, all of a sudden, things are going down for a variety of reasons. It started with maybe the increase in oil; it started with overbuilding in the real estate residential part of the market; it started with just the end of a cycle. Nothing goes up forever. And then, all of a sudden, we've said, you know, "What's happening here?"

So if you started with disclosure, then you could really approach the regulation issue. We need more regulation. But I think -- let me get back to this bipartisan or partisan thing. What the Democrats have to understand is that while we do need to reform our regulation, and we do need more restrictions, it is true that it is capitalism and free enterprise in companies that create jobs and wealth for every American, and that the Republicans have to understand is while it may be capitalism and free enterprise and companies that create jobs, we have to have regulations that are realistic, and they have to be followed.

And I think if both parties could learn that and come together, then there really isn't that much difference between them, and they can go and take this country to the next level.

MR. BROKAW: But shouldn't there be an urgency about that and a parallel track to this bailout?

MAYOR BLOOMBERG: Absolutely, absolutely, but I think one is literally measured in weeks and the Executive Branch of government has to be the solution, and that's the lack of confidence in our financial markets and in the institutions that make up those markets.

The other is the longer-term focusing on the problems that, in the end, got us here. We spend money we don't have. We have trillion-dollar deficits; we have a birth rate that's too low to support Social Security; we have a health care system that's going to bankrupt us. We're going to spend 25 percent of our GNP on health care, and we get worse health care than they do in Western Europe, and they spend less money. Our public education system throughout this country -- we worked hard on it in New York, but we all have -- and other cities are doing, too, but we have a long ways to go.

We have an energy policy, we are transferring our wealth to overseas to a bunch of countries that don't have the same values as us. In some cases, they're using our money to finance terrorism against us.

We've got to sit down at infrastructure as well. There's a whole list of things -- immigration -- we don't have an intelligent policy. Those are the things we've got to go, but that has got to be done in Congress. It needs leadership from the other end of Pennsylvania Avenue, from the White House, but it needs bipartisan cooperation no matter how this next election turns out.

MR. BROKAW: Mr. Mayor, I can just see a viewer out there in Lubbock, Texas, for example, or Kearney, Nebraska, or Dahlonega, Georgia, or any small down in the Northeast saying, "Wait a minute. I didn't do all of this. This is Wall Street wildly out of control, big executives walking away with hundreds of millions of dollars in bonuses, for failing, in effect. Why am I paying the price?"

MAYOR BLOOMBERG: Number one, I do not think that anybody should get paid for lousy performance, I've said that for a long time, and we don't do that in my company. If you work hard, and you do good, you get paid well, that's the answer. And I was pleased to see, when we bailed out Freddie and Fannie and AIG, the top management got fired, and the stockholders basically had all of their value wiped out. Bear Stearns went out of business, so everybody lost everything, jobs as well as --

MR. BROKAW: Do you think your old company, Lehman, should have gone out of business?

MAYOR BLOOMBERG: I never worked at Lehman, but I think -- it's easy --

MR. BROKAW: You were at Salomon.

MAYOR BLOOMBERG: Salomon -- you can have a discussion as to whether, in the case of Lehman or Bear Stearns, the Treasury should bailed out both, neither or one or the other.

I think that just happens to be more the luck of the draw. Bear Stearns was first, got bailed out; Lehman came a little bit too late in the process, but I do think that the government had no choice but to stand up and do the right thing and bail out Freddie, Fannie, and AIG.

Fannie and Freddie would have destroyed homes for people throughout this country. The people in those small towns that you talked about -- it's their homes that got financed through Freddie and Fannie, and AIG could have just destabilized the whole system. It's at a different level, but sometimes it isn't that they're too big to fail, they're too important to fail, and that's not true, necessarily, of individual brokerage firms. It is true of these poorly constructed, poorly designed institutions like Freddie and Fannie where we socialize the losses and privatize the profits, and it is also true of AIG that has these enormous contracts on their books that probably nobody understands, and we have better disclosure.

Then you could take a look and say, "Well, maybe we could have let them go under," but without knowing -- and that's the situation that the Treasury is in -- they don't know the facts. The facts are not discernible right now because we never put in the regulation that would let us be able to measure. Why didn't we? We all are guilty. I come back to it -- our pension funds were getting better, our 401ks were getting better, we were getting mortgages at low interest rates, everybody was happy.

The trouble is, it was something for nothing, and there's the old story about you've got to pay the piper. In the end, the bill comes due, and I think that you and I have to worry about the person that can't get through this that really needs help, and that's what we're trying to focus on in New York City. We can't go pay off people's mortgages but we're trying to do the best we can to help them when they get in trouble.

And we have a program in the city, incidentally. We've made thousands of mortgages, a housing program for people who are really starting up the economic ladder, and I checked early this morning with the guy running it, John Donovan -- we've had only five defaults out of thousands of mortgages.

So if you act intelligently, if you work with people who want a mortgage, show them what kind of deposit they have to have and make them work hard until they get it and make them not over-extend and say, "What happens if you lose your job?" You can have an intelligent housing policy. We just have gotten carried away, and now we're getting the other end of it.

MR. BROKAW: Let's talk politics for a moment. John McCain began this campaign cycle as a man with the most experience, then he became an agent of change, now we saw in his advertisement here that he's back to experience again. Here is what you had to say about McCain: "McCain can say he's had more experience. It's harder to argue that he would dramatically change where we have come from. He insists that he will. The Democrats are going to make the case this is just a third term of George W. Bush."

MAYOR BLOOMBERG: I think there are two separate things here: You say one thing to get elected, and both candidates have to be very careful. They have to explain complex problems and come up with solutions for basically insoluble problems that have been with us for a long time, and the public demands that they do that in 30 seconds. I am sympathetic to them -- they just cannot give you specifics on how they're going to a lot of these things.

Number two, they are going to face different problems than we have today. So when I look at them, I don't have this litmus test issue on different things -- what are you going to do about A, B, and C -- because they are going to face D, E, and F, whoever wins when they are in office.

And I said to Barack Obama the other day on the phone, I said, "You know, you'd rather start thinking about, for example, who we bail out. We can't spend our time talking about the bailouts in the past. You've got an automobile industry that has -- in Detroit, they've cut employment from 500,000 people down to 250,000 people. That's 250,000 Americans, a group of 250,000 people, that's a lot of people that have lost their jobs.

Today, if they have jobs, they probably don't have as good jobs. Why? What were we doing wrong? I would argue that we tried to protect an industry where we should have been assisting people, we should have been working on training, we should have been working on regulation that would force them to come up with products that are good for the world so they can sell them and keep jobs, good paying jobs with benefits. That's what we're trying to do in this country, and whether you let the free markets work, generally, it does. But free markets cannot work without some regulation.

MR. BROKAW: Joe Biden, who is the vice presidential candidate on the Democratic ticket --

MAYOR BLOOMBERG: I know who he is.

MR. BROKAW: Says -- "It's patriotic for wealthy Americans to pay more taxes."

MAYOR BLOOMBERG: Well, Joe Biden was in my office last year, and I don't remember him saying that.

MR. BROKAW: Well, he said it this past year.

MAYOR BLOOMBERG: I do remember reading that. You know, I think -- I've always been a believer that one of the real differences between America and other countries is that we do pay our taxes. There are very few people here that don't pay the taxes. We have lots of arguments over what those taxes should be, and there are tax shelters, and sometimes there are abuses, and we have to work on that.

MR. BROKAW: Should capital gains tax to up from 15%?

MAYOR BLOOMBERG: I think you can make -- economists will make the argument that capital gains taxes going up will dissuade people to invest. People will make the argument that it's not fair that some people make their money in capital gains form rather than in ordinary income. I'll leave that for the economists and the tax policy writers to debate, but I think everybody understands -- we like to have lower taxes. But if we want services, we're going to have to pay for them, and the worst thing we're doing is to do the worst -- take the services but not have us pay for them. That's the situation where we're going to leave a terrible world for our children and grandchildren.

MR. BROKAW: Finally, Mr. Mayor, are you going to endorse in the presidential race before the election?

MAYOR BLOOMBERG: Well, I've listened to both candidates, and I want to make sure that for as long as can, I have a good dialog with both; that I can give them my views and the perspective of New York. I represent 8.3 million people in New York, and it's important that these two candidates understand what's in the interest of those people, and so I want to make sure that I have a good dialog with both.

The future of this country is great, it's better than anyplace else, but it is going to require great judgment and leadership on the part of whoever wins, and their main job is going to be to lead Congress to work together and to give us the kind of regulation, the kind of tax policy, the kind of financial world, and investments that, in tough times, we've got to make that this country needs.

MR. BROKAW: Mr. Mayor, thanks very much for being with us, thank you.

MAYOR BLOOMBERG: My pleasure.

MR. BROKAW: Thank you. Coming up next -- insights and analysis from our economic and political roundtable -- Erin Burnett, Steve Liesman, and Steven Pearlstein are all here -- only on "Meet the Press."

Source