FOX News "Your World" - Transcript

Interview

MR. CAVUTO: Now big questions over what exactly they approved. Lawmakers second-guessing that $700 billion financial rescue and trashing the guy who came up with it.

REP. WATERS: (From videotape.) The fact that you, Mr. Paulson, took it upon yourself to absolutely ignore the authority and the direction that this Congress had given you just amazes me.

SEC. HENRY PAULSON: (From videotape.) We did not buy illiquid assets for a very good reason. We are going to continue to evaluate and look for programs that that protect the taxpayer and are effective.

MR. CAVUTO: All right. The lady doing that drilling and grilling today on Capitol Hill, Democratic Congresswoman Maxine Waters of California.

Congresswoman, it was kinda rough stuff there. He did this because, he said, times and conditions changed. Would you have rather him, you know, keep digging a hole and doing the wrong thing?

REP. WATERS: No. I would have rather him simply tell us why, from the time we gave the authorization to do the loan modifications on Americans who are losing their homes, why he did not begin a process to do it.

I don't know whether he never intended to do it or whether there was a change of strategy or thinking somewhere along the line. But the fact of the matter is the legislation was drawn up around the Treasury buying up all of these toxic mortgages and bad paper so that we could stabilize this economy because of the subprime meltdown that has taken place.

MR. CAVUTO: So you voted for this. And you say you voted for something that didn't turn out to be the case.

REP. WATERS: That's absolutely true. And not only did I vote for it, I worked very hard and went around to the Democratic caucus, to the Latino caucus, the black caucus, convincing them that we had to vote for this bailout, even if we didn't like the idea that some of it could be used to bail out business. But we had to vote for it because the centerpiece of it was the loan modification and help homeowners with these foreclosures that are sweeping this country.

MR. CAVUTO: But aren't the changes that were enacted now closer to what you wanted in the first place, ma'am? In other words, he is now saying, if I understand it correctly, that this is geared toward the very kind of homeowner protections you wanted in the first place.

REP. WATERS: No, no, that's not what he's saying. He's saying that it was important to stabilize the economy by investing, that is, get an equity position, in the banks because they wanted to unfreeze the credit crunch. They felt that if they put money into the banks, the banks would be able to lend money to buy cars and for student loans and other kinds of things. He did not talk about the foreclosures.

MR. CAVUTO: And if he had done that, you would have rejected this package, right?

REP. WATERS: If he had done what?

MR. CAVUTO: If he had done that, you would have rejected this.

REP. WATERS: If he had done that, I would have said to him that the only reason that many of us would vote for the bill is that they include in the package -- we're not against other people getting some bailouts, but we're for homeowners. We're for people who were pursuing the American dream, who were solicited with many of these exotic products, who were told, you can get in for a low down payment, you can get in on an interest-only loan.

MR. CAVUTO: But not everyone's a victim, right? Some people are just stupid, right, and they signed up to something.

REP. WATERS: No, no, no.

MR. CAVUTO: I mean, it's easy to say, yeah, all right, someone coerced me.

REP. WATERS: Let me tell you, I know lawyers and members of Congress and other professionals who were solicited and got loans that they didn't understand. They didn't understand adjustable rate mortgage. They didn't understand the mortgage.

MR. CAVUTO: But Congresswoman, then why is it a taxpayer's responsibility then, for whatever reason -- smart people were snookered or whatever you want to say happen -- that if you don't read your loan documentation, if you don't know adjustable rates go up as well as down, why should we as taxpayers as part of this rescue package or any rescue package be rescuing them?

REP. WATERS: Why would you want to rescue the big boys on Wall Street who are supposed to be smart but have driven this economy into the ground?

MR. CAVUTO: Well, I say don't rescue anyone. But I think what you guys did --

(Cross talk.)

But Congresswoman, I'm just saying you gook the genie out of the bottle, right? Now you're rescuing everyone. I'm against it from the beginning.

REP. WATERS: No, we're not rescuing everyone. We're rescuing those Americans who sought the American dream, who simply want a home and was told they could get a home with this kind of mortgage that they were afforded. It was bad mortgages.

MR. CAVUTO: But Congresswoman, you are very smart, and you're very savvy.

REP. WATERS: Yes, yes, I am.

MR. CAVUTO: Now, come on, you can't tell me that someone knows, jeez, I got a mortgage and I really can't afford this, but I got, you know, into this on a lark, and I'm going to go with this. And when real estate prices were going up, it looked like a brilliant move. When it turned around, it didn't. Why should we, as taxpayers, bail out people who ended up making a stupid move?

REP. WATERS: Why should you bail out the biggest banks in America that are supposed to have the smartest people?

MR. CAVUTO: Congresswoman, you're echoing my point. Don't bail out anyone. A slippery slope has been undone here, and that's why.

REP. WATERS: I come from a different point of view. My point of view is this. We have Americans who work every day, who have families, who want the American dream, who want to own a house. We've taught them that. That's how people have been socialized, to want that home.

MR. CAVUTO: Congresswoman, we have Americans who are paying their bills, who are dutifully meeting their obligations --

REP. WATERS: Of course.

Of course, they are.

MR. CAVUTO: -- who did read their mortgage paperwork, and they're pissed as hell now when they realize that a lot of people who didn't or were snookered or were victims or whatever you want to say are now going to be rescued or given a hand. And they're saying, what the heck?

REP. WATERS: No, they're not.

MR. CAVUTO: Yeah, they are.

REP. WATERS: No, they're not. As a matter of fact --

MR. CAVUTO: Yeah, yeah, Congresswoman, they are.

REP. WATERS: No, they're not. That is more being said by people in the media. Yes, people want equal treatment. But I think Americans tend to sympathize with the fact that this administration took all the regulations off. They threw regulations out of the window. And instead of FDIC and SEC and OCC and all of these regulatory agencies stopping these exotic products from coming on the market and saying no, something is wrong with that, you shouldn't do that --

MR. CAVUTO: Well, Congresswoman, there's a lot of blame to go around.

REP. WATERS: Yes.

MR. CAVUTO: But let's be fair, ma'am. A lot of the aggressive lending practices were done under Democrat and Republican administrations.

REP. WATERS: No regulations.

MR. CAVUTO: Come on, come one.

REP. WATERS: No regulations.

MR. CAVUTO: I think you're big enough to admit that there was fault on both sides. I'm just saying, is the answer then just bailing people out, just rescuing them?

REP. WATERS: You're not just bailing people out. People wish you were just bailing them out. Do you know that the average homeowner that's in trouble cannot call the loan servicer or the bank and get any help? That's wrong. As a matter of fact, I have been working these personally. I have been calling servicers. I've been calling CEOs of banks to help me to do these work outs.

MR. CAVUTO: Let me ask you this, Congresswoman. One of the pieces of legislation being looked at has a requirement that if you're 90 days or more late on your mortgage, you're going to get help. What's to stop an average Joe or Joanne, who's dutifully paying his or her mortgage, from not paying it for 3 months just so that he or she can get that help?

REP. WATERS: Oh, I think that's just hype. The average American is not looking for a way to game the system.

MR. CAVUTO: It's not hype. It's reality. Yeah, I'd want in on that gravy train.

REP. WATERS: They're not looking for a way to game the system. What you have is you have people who work every day, who got into a loan for one rate. And they were paying their $2,000 a month. Then when this loan reset with a margin on top of the existing interest rate, the mortgage doubled. Those are the people in trouble, and those are the ones we should help because they did not know about adjustable rate mortgages, how they work.

MR. CAVUTO: Well, Congresswoman, we all make our own bed.

REP. WATERS: No, no, no, no, no.

MR. CAVUTO: Actually, I never did. As a kid, I never did. You're right about that.

REP. WATERS: Well, you probably didn't, but a lot of us did make our own bed. (Laughs.) But the fact of the matter is we need to help the American taxpayer who's struggling to keep their family in that house.

MR. CAVUTO: Congresswoman, all right. It is always a pleasure, ma'am, regardless.

REP. WATERS: Thank you.

MR. CAVUTO: Thank you very much, Congresswoman.

REP. WATERS: Certainly.

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