Fox News Channel Interview - Transcript

Interview

FOX NEWS CHANNEL INTERVIEW WITH REP. BRAD SHERMAN (D-CA)

SUBJECT: BANKRUPTCIES VERSUS RECEIVERSHIPS

INTERVIEWERS: TRACE GALLAGHER, MARTHA MACCALLUM

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MR. GALLAGHER: Congressman Sherman joins us now live.

And, Congressman, it's a good question. I mean, the transparency that we were promised seems to not be as promised.

REP. SHERMAN: Well, there'll be transparence about a lot of things, but not about executive compensation. The ball was hidden --

MR. GALLAGHER: Well, what about the bill? What about the budget? What about the TARP? We really haven't seen the transparency. Remember, it was supposed to be online for five days before we passed it, and instead these things are being passed in the dead of night and Americans didn't get a chance to go through this, and that's why we got the AIG bonuses and so forth. So, really, I mean, has it been as transparent as you thought it was going to be three months ago?

REP. SHERMAN: Well, we got a lot of transparency on the first $252 billion that we gave Wall Street. We got an analysis from Professor Warren, who heads the oversight panel. She quantified how much we got shafted by, namely 31 percent on average. And so one of the disadvantages of this next Wall Street bailout is it'll be much more difficult to quickly calculate how much we're getting screwed by.

MS. MACCALLUM: Congressman, you know, but doesn't it make you wonder if all of this makes any sense at all? I mean, rather than going further and having more programs and having more oversight over executive compensation, don't you want to, you know, kind of back away from all of this and let some of these companies even perhaps fail in order to let the market forces kick in here?

REP. SHERMAN: We ought to protect capitalism from Wall Street rather than protecting Wall Street from capitalism. Under capitalism, an insolvent financial institution goes into receivership and the creditors, as well as the shareholders, lose money. That's what we do all the time with all the other financial institutions.

MS. MACCALLUM: But why not let the bankruptcy courts handle it? Why not let some of this go into bankruptcy situation? I mean, do you, as a government, want to take on all of these receivership and all these conservatorships? How are -- how are you guys going to find time to do all of this?

REP. SHERMAN: A receivership and a bankruptcy reorganization are almost identical. The advantage of a receivership is that you have specialists in financial institutions acting as the bankruptcy judge rather than someone acting under the supervision of a bankruptcy judge who's a generalist. Frankly, I don't think it's -- I think it six of one, half a dozen of the other. So I'm agreeing with you.

MR. GALLAGHER: Congressman, you said next bailout. And the first one barely got through. How do you sell the second one?

REP. SHERMAN: Well, the key thing is to figure out how to avoid democracy. How can you transfer trillions of dollars to Wall Street without having another vote here in Congress?

They figured out a way to take $100 billion that was approved last year, 100 billion (dollars) of TARP funds, and turn it into a trillion (dollars). How do they do that? They have Bernanke and the Federal Reserve put up $9 for every dollar that Congress has approved.

Now, Bernanke was testifying that his actions are also authorized by Congress. That was the Congress of 1935, that unfortunately passed a statute that allows the Fed to do almost anything.

MR. GALLAGHER: Congressman Sherman, thank you, sir.

REP. SHERMAN: Thank you.

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