MSNBC "Morning Joe" - Transcript
Interview
MSNBC "Morning Joe" - Transcript
MSNBC "MORNING JOE" INTERVIEW WITH SENATOR CHARLES SCHUMER (D-NY)
SUBJECT: FOREIGN AFFAIRS, ECONOMIC REGULATION
INTERVIEWERS: JOE SCARBOROUGH, MIKA BRZEZINSKI, MARK HALPERIN, WILLIE GEIST
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MS. BRZEZINSKI: Okay, here with us now, the Democratic senator from New York and vice chairman of the Joint Economic Committee, Senator Charles Schumer, on the set with us this morning.
Thanks for coming back.
SEN. SCHUMER: Good morning. It's good to be here.
MR. SCARBOROUGH: Senator, great to have you.
(To staff) Hey, Chris, do we have the Gingrich clip from this weekend?
MS. BRZEZINSKI: We should play that. That would be good, pertaining to North Korea.
STAFF: Yup, we're going to get that.
MR. SCARBOROUGH: Yeah, get that. I want to run that -- for Senator Schumer.
Senator, so what do we do with North Korea?
SEN. SCHUMER: Well, there's only one answer to North Korea; that is an economic squeeze, and it has to be led by China.
China's the only country that has real leverage over North Korea, given its isolation, given its leadership.
And you may remember about three, four years ago, the North Koreans were doing something bad and China cut off the oil a little bit.
MR. : Right.
SEN. SCHUMER: Whoa, North Korea hopped to. So there's got to be --
The only way to get something done here is a three-way ricochet -- us to China, China to North Korea. Only way.
MR. SCARBOROUGH: Let's watch Newt Gingrich this weekend talking about the failure of U.S. policy since 1994.
(Video clip begins.)
NEWT GINGRICH: We have been talking about this since the Clinton administration. And they have been building nuclear weapons and building better and better missiles, while we keep talking.
And one morning, just like 9/11, there's going to be a disaster and people are going to look around say gosh, why didn't anyone think of that?
Well, I'm telling you, the time to think about it's before the disaster, not afterwards.
(Video clip ends.)
MR. SCARBOROUGH: Senator, have you spoken to any general, any military leader, any military thinker in Washington, D.C., that believes that military -- a military response to North Korea is a possibility?
SEN. SCHUMER: Well, it's -- a possibility meaning feasible, yes. It's a little (easier ?). But it's --
(Cross talk.)
MR. SCARBOROUGH: But what are the results of that? What does China do?
SEN. SCHUMER: It makes -- right now, it doesn't make sense. Their missile was a failure. They -- to deliver.
Now, they sell this stuff, so that's the danger too. They don't just keep it for themselves.
But the ability to craft a nuclear warhead that can actually be launched in a missile is a lot different than having enough uranium or plutonium to make a bomb. And so we're years and years away, and there are easier steps.
And the easiest step -- talking to them, I don't agree with Gingrich. There's nothing wrong with talking to them. You don't lose anything. You can make it a loss if you set up a big wall and say I'm not going to tear it down.
But the only way you're going to get results when there's something right there, don't launch that missile, is an economic squeeze. That's the only thing the North Koreans'll understand.
MR. SCARBOROUGH: What does China -- how does China benefit by this continued instability? Because they could stop it if they wanted to.
SEN. SCHUMER: I think China plays every card, and they are -- they're looking out for China, number one, number two, number three.
MS. BRZEZINSKI: What if they don't want to --
SEN. SCHUMER: And so we have to make it worth their while. There are a hundred things China wants from us, and if the president thinks the trade is worthwhile --probably we'll never know about it -- the trade is can be made.
MR. SCARBOROUGH: So they get the pit bull on the leash and they let it out a little bit towards --
SEN. SCHUMER: Exactly.
MR. SCARBOROUGH: They like us to pull the -- so that's -- okay. Wow.
SEN. SCHUMER: You got it. That's how China plays on economics; that's how they play on foreign affairs. They play it that way every way.
MR. SCARBOROUGH: Mark Halperin.
SEN. SCHUMER: Hi, Mark.
MR. HALPERIN: Senator, I want ask you about the economic situation.
SEN. SCHUMER: Yeah.
MR. HALPERIN: You're quoted in this Bloomberg story as saying that when it's a conflict between Wall Street and Main Street, you side with Main Street.
SEN. SCHUMER: Always have.
MR. HALPERIN: But -- and Wall Street, of course, you represent Wall Street as one of our senators from here.
SEN. SCHUMER: That's right.
MR. HALPERIN: What are the conflicts, as you see them today, between Wall Street and Main Street? Where are their interests not lining up?
SEN. SCHUMER: Well, they line up more than people think, because as much as people are angry at Wall Street, if we don't have lending, our economy is going to fail.
I'll tell you one quick story. A kid I interviewed for a job, his father owns a home heating oil business in southwestern Connecticut -- 75 people, 10 trucks.
How's your father's business doing? Terribly. Why? The line of credit from a major New York bank had been pulled. He gets 4 million bucks from that bank the first of the month. He pays it back over the course of the month when the customers pay for their oil.
Can't get it. Went to six and seven other banks, can't get a loan. He's ready to go under. That's 75 people who would lose their job from a profitable business.
So unless we get lending out there, nothing much else is going to matter. Lending puts much more money into the government than the government -- I mean, puts much more money into the economy than the government does.
That means that we need to make sure that these banks get rid of their bad assets -- we'll see if the Geithner plan works -- have the capital, and then start lending. And --
MR. HALPERIN: What's going on -- with those stress tests that the administration was doing?
SEN. SCHUMER: Well, I think that's a pretty smart idea, because not one size fits all. In other words, there are a few banks that are in really bad shape, but there are others that are not in such bad shape and could really benefit from the new program that Geithner put together.
One good thing, the housing part of this program is really beginning to work. In other words, you're seeing a lot of loan modifications starting to occur.
The people who service the mortgages have now been sort of the blessing: If you modify the loans and avoid foreclosure, you won't be sued by that errant investor or sued successfully.
If we can find a bottom to the housing market in the next three or four months, then the banks will feel much better about lending, because they'll have that asset on the book. They say, well, it's -- we bought it at 100 (thousand dollars), we have it listed at 80 (thousand dollars). Oh, it's not going to go down to 50 (thousand dollars). It only will go down to 65 (thousand dollars)? We'll lend.
So the housing part is sort of the unsung key nub here, and that may well be working. The early indications from Secretary Geithner, Secretary Donovan, are it really is beginning to work. And I think Wall Street ought to pay attention to that.
MR. SCARBOROUGH: Senator, as you know, Willie Geist and I are big policy wonks. (Laughter.) And we spend our weekends -- We DVR C- SPAN and --
(Cross talk.)
SEN. SCHUMER: Fun, fun, fun!
MR. SCARBOROUGH: -- weekends together, smoking cigarettes, watching House Banking Committees -- (cross talk) -- and just laughing.
And we've been laughing around the table also about the fact that the same House Banking Committee members that sat by while a lot of bad things were happening over the past decade, and the same ones that take money from these banks and from Fannie and Freddie have suddenly become self-righteous and indignant.
How could you bankers -- how -- Wall Street, how could you have let -- you should be ashamed of yourself. It's terrible. And, of course, they're still taking money from the same bankers.
SEN. SCHUMER: Yeah.
MR. SCARBOROUGH: Talk about the hypocrisy of that.
SEN. SCHUMER: Well, here's what I want to say --
MR. SCARBOROUGH: It's -- (inaudible).
SEN. SCHUMER: Yes, but it's easy, Joe. Everyone was to blame in this whole deal.
MR. SCARBOROUGH: Everyone.
SEN. SCHUMER: Everybody.
MR. SCARBOROUGH: Right.
SEN. SCHUMER: Everyone had this short-term, let's -- there's no responsibility. So as a country, consumers, businesses, Wall Street, government, we all took in more than we put out.
MR. SCARBOROUGH: Washington, Wall Street, us. Everybody. Amen, brother. Amen.
SEN. SCHUMER: You bet. And you know, in all fairness, I didn't see all the commentators complaining. No one did.
MS. BRZEZINSKI: Yeah.
MR. SCARBOROUGH: Everyone -- (inaudible).
SEN. SCHUMER: So I think we're far more productive at figuring out the solutions than looking back.
It's good to look -- it's --
(Cross talk.)
MR. SCARBOROUGH: So why are they being self-righteous though?
SEN. SCHUMER: Well, fair enough.
MR. SCARBOROUGH: Telling these poor guys, like this guy that's working for a dollar at AIG -- and I've been bashing AIG as much as anybody -- gets paid a dollar. His family's being threatened with being hung by piano wire, and they're still yelling at the Committee members.
This is the time to say hey, guys, calm down and stop -- (cross talk).
SEN. SCHUMER: Yeah. If Liddy -- you are right about that. If Liddy is not doing a good job, he should go. But he is not the one who caused the problem. He sort of came in as an act of trying to be helpful in something not good for him. He'd had a successful career.
MR. SCARBOROUGH: Was it Greenberg who said not my fault? Was it Greenberg's fault?
SEN. SCHUMER: Well, Greenberg's a different story. Greenberg was at the top when this whole financial unit went crazy. Now he says, I would have been able to rein them in, had I stayed.
Your guess is as good as mine.
MR. GEIST: Senator Schumer, we're throwing so much money to stop the bleeding of the problem in this economy right now, but what can you tell people to assure them that the system is being changed, that the rules of the game are now different so this won't happen again?
SEN. SCHUMER: Well, yeah. We are working on major financial reform. The president talked about it overseas. You're going to find a different system of regulation.
The real problem, and this is government's fault -- Joe was certainly right about this -- when the financial world changed, the system of regulation didn't. So take AIG, a classic.
They had -- the insurance parts of it were regulated by the New York state insurance regulator, who was interested in making sure people got paid on their policies. But the holding company which did all this had no regulation -- not federal, not state -- and they could just do whatever they wanted.
That will change, and there will be a strong, quiet, hopefully, more unified federal regulator. I've been talking about this for a year. And he's going to be tough -- or she -- but they're going to be quiet.
So like when Bear Stearns began to run into trouble, they're going to call the heads of Bear Stearns in and -- all right, fellas. You're getting rid of that -- those two hedge funds. You're going to raise more capital, even if it means you have lower profitability. And we're not going to tell anyone you're doing this, but you do it or we're going to take sanctions against you.
That's the kind of thing that has to work here. You need --
MR. SCARBOROUGH: Is it true that --
SEN. SCHUMER: You don't need a lot of voices yelling, because that just weakens the institution.
You need a tough, strong regulator -- unified, no holes in the system -- that goes in and says -- who sees the problem ahead of time, so they have complete transparency. They know exactly what's going on in Bear Stearns. And they come in and say, straighten up, even if your bottom line, even if your profitability is lower and your stock has to go down.
MR. SCARBOROUGH: And you do it in a way that doesn't cost Americans a lot of jobs, like Sarbanes-Oxley?
SEN. SCHUMER: Yes. You can. You can.
MR. SCARBOROUGH: All right. You can thread that needle.
SEN. SCHUMER: In fact, I would argue something here. I've been thinking about this.
There's going to be -- during the go-go days, money flowed out of America --
MR. SCARBOROUGH: Right.
SEN. SCHUMER: I was worried about this -- to the lowest common denominator. London had a lower common denominator, and AIG's company there was in London.
But now that everyone sees the consequences of no regulation, money is going to flow to the safest, strongest place. So if we have a strong system of regulation -- not overbearing, but really strong, much tougher than now -- money's going to start flowing here.
Look, with all this mess, where is money going? To the dollar. To the dollar, not to the E.U. --
MR. SCARBOROUGH: Security. Yeah.
SEN. SCHUMER: -- not to the euro, not to the -- whatever the Chinese currency, the yuan. It's coming here.
We can do the same with money to the whole of -- all of America. People believe in America still, around the world, more than any other place, with all our problems. And, frankly -- (inaudible).
MR. SCARBOROUGH: You know, we heard so many people panicking about how Sarbanes-Oxley was costing America business, and it was going to London. You look back and go, well, maybe we should have had more business like that going to London.
(Cross talk.)
SEN. SCHUMER: By the way, no place is immune, you know what I mean?
MR. SCARBOROUGH: Yeah. Exactly.
SEN. SCHUMER: When something happens here, it spreads there.
(Cross talk.)
MR. SCARBOROUGH: Senator, I understand that you're going to be in the district, in the state, next week also.
SEN. SCHUMER: Oh, yeah. All this week and next week.
MR. SCARBOROUGH: We'd love to have you come back.
SEN. SCHUMER: Yup. I'm all over New York state. I love New York.
(Laughter.)
MS. BRZEZINSKI: Senator Schumer, thank you very much.
SEN. SCHUMER: I really do.
MR. SCARBOROUGH: You do, I know and they love you in upstate.
(Laughter.)
MS. BRZEZINSKI: It has the added value of being true. That's good.
MR. SCARBOROUGH: Thank you, Senator.
END.
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