CNBC "Squawk on the Street" - Transcript

Interview

CNBC "Squawk on the Street"- Transcript

MR. HAINES: The Senate takes their whack at passing the $700 billion economic rescue plan. Tonight at 7 p.m., one of the biggest deal makers trying to get this deal done, Joint Economic Committee chairman and New York Senator Charles Schumer, joins us now.

Senator Schumer, good morning. Thanks for being with us.

SEN. SCHUMER: Good morning. Good morning.

MR. HAINES: I don't want to say I don't believe it, but I'm highly skeptical of this claim that I'm hearing that suddenly the phone calls and messages coming into members of Congress have turned in favor of this plan.

SEN. SCHUMER: I wouldn't say it turned in favor of the plan. Last week, it was overwhelmingly vote no. Now, it is, well, you may not like this plan, but do something. The tone has changed. The urgency, which was on the other side in terms of the phone calls defeated is now on the side of get something done with less specificity about what should get done, and I think also people have been, you know, some of the provisions that were added to the bill, not putting all $700 billion first, the warrants which protect the taxpayers, real oversight and some limits on executive compensation have made the public feel not good about this plan, but better than they did last week.

MR. HAINES: All right. Well, here is a climb out on a limb question in view of what happened to the leadership in the House on both sides, Republican and Democrat. Have you got the votes to pass it?

SEN. SCHUMER: Well, it seems, look, you never can predict on something like this until you have the votes, but on the Senate side, it seems there is broad bipartisan support, both Democratic and Republican senators probably would have voted for the last proposal. Who knows? But these new provisions have added it.

Don't underestimate. A lot of the little banks lobbied heavily against this proposal in the House and now in the Senate because they thought it protected the large banks and not them. They're very happy with the $250,000 increase in FDIC. At the same time, there are many, many members who felt very strongly about passing the tax breaks for alternative energy and what we call the extenders, the R&D credit and things like that, which have to be done to help business and now we're able to say that this package not only helps Wall Street, but helps Main Street business as well.

So it's a better package and if I had to guess, I think, it will pass both bodies; obviously, it's a tougher road in the House. Nancy Pelosi really did her job last time and I give her credit and --

MR. HAINES: Well, some people blame her for a partisan speech.

SEN. SCHUMER: I know. Right now, the Republicans are even backing off of that. They look foolish back at home by someone saying, well, they voted no because someone gave a partisan speech. Hello? That's like saying, oh, there's gambling, gambling here in Casablanca. Please.

MS. BURNETT: Senator Schumer, what is your sense from talking to the treasury secretary and the various people you've been negotiated with? Once this is passed, how quickly it would be able to start buying assets? I mean, that is the huge question, I mean, there's the pricing issue, but there's also -- how quickly this could be up and running. It's of utmost importance to the market.

SEN. SCHUMER: Right.

MS. BURNETT: What do you hear?

SEN. SCHUMER: Well, in our negotiations, one of things that Secretary Paulson kept stressing was the speed with which he needed to set up the market, the auction, and while we did put limitations, we tried to make those limitations not interfere with a quick ability to go.

So I think they're already planning and thinking right now and I think the auction, at least, the first auction would be set up rather quickly. Obviously, these are unchartered waters. This has never been done before. But I think they're doing everything they can to make it happen quickly.

MS. BURNETT: And when, Senator Schumer, do you believe this will get the formal House approval? And do you really believe this time they're going to get it done?

SEN. SCHUMER: Well, you know, you saw Congressman Boehner said publicly that he thought this would be of significant help. The House Democrats have some of their own ideas, and as I said, they were successful in delivering what they were supposed to deliver last time. And so I think, you know, I'd be optimistic. I think that this is a stronger package than the last one with broader support and add to that the fact that the tone of the public has turned around. It's not that they're wildly enthusiastic for this plan, but instead of last week, hey, this is a horrible plan, vote it down ten to one, what people are saying now is, look, I may not like the details, but get something done.

MS. BURNETT: All right, Senator Schumer. What do you think of this -- people are questioning the financial system. They're questioning the political system. So let's just change the rules everywhere, all right, I'm saying this half tongue in cheek, but you know what I'm talking about. It's here in The New York Post. It's everywhere. Mike Bloomberg wants to change the law and be able to run for a third term.

SEN. SCHUMER: Yeah, well, you know --

MS. BURNETT: Should we change the law?

SEN. SCHUMER: Well, I've always been against term limits. I thought they were an artificial limitation on democracy and my position hasn't changed. We should eliminate term limits. I'd go further. I wouldn't just eliminate them for one term; I'd eliminate them.

MR. FABER: Senator Schumer back to --

MR. HAINES: A man who obviously thinks he can get reelected. David Faber --

MR. FABER: Yes. Senator Schumer, I wanted to come back to the Senate bill and the House bill as well on the rescue package. The mark to market accounting has gotten a lot of attention and the SEC included a provision it would seem in the House bill. Is that also going to be part of the Senate version? Where do you stand on these changes that are being proposed potentially to FASB 157?

SEN. SCHUMER: Well, we need to change the mark to market rules, obviously, different financial institutions because of our gerry-built system of regulation that is outdated have different mark to market banks, investment banks, insurance companies, holding companies, every one of them has different rules. To do it quickly, I think, could be a mistake. Our markets are fragile. If you are stricter, you may help some places and hurt others. If you're looser, you may hurt some places and help others, and I think that's the kind of thing that has to be left for the broad regulatory reform, which will be job number one when the new Congress convenes.

I think to quickly impose a rule on a very complicated financial system with many different rules right now could create more problems than it solves.

MR. FABER: So can we assume that mark to market accounting changes will not be a part of the Senate version of this bill?

SEN. SCHUMER: I think that is a pretty good assumption. Yes.

MR. FABER: Okay. Thank you.

MR. HAINES: All right. Senator, thank you very much for your time.

SEN. SCHUMER: Nice to talk to you both.

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