MSNBC Interview - Transcript

Interview

Interview With Rep. Brad Sherman - Regulatory Reform, California Economy

Interviewer: Contessa Brewer

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MS. BREWER: President Obama has some wrangling to do on Capitol Hill. He's depending on lawmakers now to push through his plans to reshape Wall Street and the way our nation does business.

Democratic Congressman Brad Sherman of California sits on the House Financial Services Committee.

So what do you make of some of these proposals to overhaul the way our nation does business, Congressman?

REP. SHERMAN: Well, I think they're generally a step in the right direction, but they don't go near far enough. I'm concerned about giving all this additional power to the Fed, while at least the Federal Reserve's 12 branches are not even governmental entities. Their boards are selected by bank executives and are not responsive to the electorate in this democracy.

I'm also concerned that systemic risk regulation may bleed over into more bailout authority and we have to make it plain that while we want regulation, this is not an authority to the government to use taxpayer money to invest in or bail out private companies.

So we did that once. It's over.

MS. BREWER: Congressman Sherman, it's interesting that you bring up your concerns about the Federal Reserve because I expressed the same concern to Charlie Gasparino, CNBC's on air editor today. He is all for it. He says, look, the Federal Reserve did a much better job than all these other agencies like the SEC in keeping a handle on what was happening with the financial crisis. But here you have a quasi- private agency that's going to have oversight over other private agencies. I just don't see how that's logical.

REP. SHERMAN: Well, it's not logical in a democracy whether -- even if it did work better. It's still not logical in a democracy. I don't think it did. The SEC was not effective and the Fed made some huge mistakes that got us to where we are now, but the fact is that you can't have banking regulation done by entities that are selected by the bankers themselves.

MS. BREWER: So the way the president has presented these proposals today, are you inclined to support them when it comes time for your vote?

REP. SHERMAN: I look forward to modifying them and improving them and offering legislation that goes beyond where the president has gone, particularly with regard to credit rating agencies and derivatives, two areas where I think we have to go far beyond what the president is suggesting.

MS. BREWER: Yeah, I know, there are people on the Senate side who feel the same way.

I've got to ask you before I let you go about California. We were just talking about economic tough times for Los Angeles, California, the state -- $24 billion in the hole. Do you think that there is the political will in your home state to do what's necessary to fix the budget, come up with some agreement so that the state doesn't declare bankruptcy by the end of July?

REP. SHERMAN: I think there may be the political will. We've been through this before, although not on this scale. I would expect that there will be some vendors and some employees who are not paid until finally a resolution is reached and every possible direction we go in is very painful.

I think that we ought to see some -- California and other states' debt being guaranteed by the federal government as the best way to stimulate our economy. It shouldn't cost the federal government anything when all is said and done and it will help keep teachers and cops employed.

MS. BREWER: Well, given that the federal government already said no to a bailout for California, were you disappointed by that decision?

REP. SHERMAN: Well, I don't think that's a final decision. I don't see a bailout in the sense of a gift to the state, but I do think that guaranteeing state debt is an excellent way to stimulate this economy because you get lots of -- (inaudible) -- you have shovel-ready projects, the teachers are already employed, you're just not firing them.

MS. BREWER: Well, we'll have to see in what ways the administration revisits that given they just said no this week.

Congressman Sherman, good to have you. Thank you.

REP. SHERMAN: Good to be with you.

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