MSNBC - Transcript

Interview

MSNBC - Transcript

MR. MATTHEWS: Joining us right now is Senator Chuck Schumer, Democrat from New York and member of the Finance Committee.

Senator Schumer, thank you for joining us.

SEN. SCHUMER: Morning, Tim (sic).

MR. MATTHEWS: You know Tim Geithner. Tell me about him as you know him, as long-time president of the New York Fed. What do you make of him?

SEN. SCHUMER: Well, I think he's terrific in the sense he knows the issues inside-out. He's thoughtful; he's a problem-solver; he's not an ideologue. He brings people together, but he's also forceful and has a direction.

He understands that we have a new financial system and we have to change regulation. He's been a leading advocate for, for instance, making what hedge funds do far more transparent and visible, for making sure when these derivatives are traded they're traded not just quietly, behind closed doors, between one company and another, but rather on an exchange or a clearinghouse.

I think he's just right for the job, and I think there's a broad consensus, Democrats and Republicans, that he's the right guy for the job -- you know, not just A right guy for the job but sort of THE right guy for the job.

MR. MATTHEWS: Well, I want to get to that in a minute, Senator, but what about this tax problem he's had, not paying $34,000 in taxes? To a lot of people, that's a big chunk -- if not representing their entire tax bill. Thirty-four thousand (dollars) by accident: He didn't file his Medicare and his Social Security payroll taxes when he was at the IMF because they didn't withhold. Is that a recognizable mistake, or is that somebody who's trimming?

SEN. SCHUMER: Well, I don't think he's trimming.

He came to the Finance Committee, met with the Democrats and Republicans, was very contrite. I mean, he really apologized directly and -- for doing that. There was no intent to do it. In fact, his tax preparer for a few of the years made the same mistake. Lots of employees in this position make that mistake.

And so, you know, what I'd say is this, Tim (sic): It was a mistake. He corrected it. He apologized for it.

But it's not close to the mistakes made by sort of the engineers on -- of our financial system or the regulators who regulated them. And the need to straighten that out before millions of people are hurt even worse is clear. And to go back to the drawing boards without a Treasury secretary -- and it will be hard to find someone of Tim's experience, intelligence, temperament, moderation -- would be a mistake, a bigger mistake.

MR. MATTHEWS: Senator, you're very fluent in these discussions of hedge funds and derivatives. But let me ask you to try to help us all. We have a stock market that dropped 330 points on the Dow yesterday. Apparently, that's a tradition on Inauguration Day. Even Lyndon Johnson suffered a big fall his first day as president back in '65 -- elected president.

But give me a sort of -- the -- is there a Fireside Chat moment you could give us that explains how a stimulus package of $800 billion will get banks to start lending money again, businesses to start investing again, people to start spending money at the level that will get the economy at least back away from the freefall it's in?

SEN. SCHUMER: Yeah. Well, the first issue is actually sort of a psychological one: confidence. And it relates to Tim Geithner. Just about everyone in the financial system -- these people who have to have confidence in the system so they'll start lending again -- has real confidence in Geithner. And that's conservatives, liberals, everybody in the middle. So that's number one.

Second, you have to find a bottom to the housing and other markets. The reason that banks aren't lending is they have this paper, and it used to be worth a dollar; now it's worth 40 cents. But they're worried it'll go down to 20 cents. And if it goes down to 20 cents, and they've made a loan, they're stuck, because they don't have the money. So they're holding on to whatever they have left for dear life.

And finding a bottom to the housing market and other markets is key. And when that happens -- and it should happen, I believe, in the next six months, a year at the outmost -- the markets are going to come back up, and people are going to start lending again.

So it's having a responsible person on the tiller. It's preventing some of these freefalls from ballooning into creating a depression. And it is then moving the economy forward. And I think that will happen. But there has been -- there was so much lending and so much borrowing. And this is not just -- it's not by any one segment of the economy, Tim (sic). As a nation, every sector borrowed too much, produced too little, imported too much, exported too little, saved not -- didn't save enough. And so we're suffering from that.

But the good news, in my judgment, is, when we find a bottom to that -- and that's why we need the best people, to prevent it from becoming freefall -- it'll then start bouncing up, and, I think, bouncing up at a pretty quick rate.

MR. MATTHEWS: Okay. Senator Chuck Schumer of New York, who sits on the Finance Committee as a ranking member.

Thank you, Senator, for joining us and giving us a heads-up on what to look for this morning.

END.

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