MSNBC "Interview With Senator Charles Grassley" - Transcript
Interview
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MS. GUTHRIE: Joining me now is Republican Senator Chuck Grassley of Iowa, ranking member on the Finance Committee.
Senator, let's just start with the news. What do you make of the president's plan for regulatory reform of our financial system?
SEN. GRASSLEY: Well, what I agree with more than I disagree with, and the one main disagreement would be having the Fed be kind of a super regulatory agency. I think the Fed has a full-time job with monetary policy, keeping inflation down. And they ought to concentrate on that, and that we ought to keep the existing regulatory scheme in place.
But what I do agree with is all the changes that I would classify as in one word "more transparency" so we're able to keep track of a lot of things like, you know, the securitized mortgages, the derivatives, thing of that nature. They need more attention and more transparency.
Do they need more regulation? I think, you know, if we got transparency, then that decides whether or not you need more regulation. Right now, we don't have that transparency. For instance --
MS. GUTHRIE: What do you --
SEN. GRASSLEY: Go ahead.
MS. GUTHRIE: I'm sorry. Go ahead. No. Oh, I was just --
SEN. GRASSLEY: What --
MS. GUTHRIE: -- going to ask you, some people have suggested perhaps the president should streamline these agencies more. And, rather, we've added another federal agency today. Do you think it's the right approach to kind of fill in the gaps and augment what is working as opposed to kind of starting over from scratch and getting rid of some of these federal agencies?
SEN. GRASSLEY: I agree that we ought to streamline the present federal agencies. I believe chairman of the SEC is in the process of doing that right now with the existing authority. If she needs more, we ought to give it.
I'm not very anxious to move into the area of the federal government being involved in insurance because I think that we've had very, very good state regulation of insurance. There is -- what I started to say a little while ago is some good things about more transparency is to make sure -- I'll just give you one example, where a lender needs to keep 5 percent of a loan that they originate so that there's some skin in the game rather than right now, you know, shoving it off to the secondary market and you don't have any risk, or regulating the rating organizations -- they need to be regulated -- or keeping -- making sure that the people that are brokering the loans don't get paid their big lump sum of money right now and then not worry about whether or not the house is overpriced, just to get more money for the broker and for the realtor. Things of that nature I think are very, very good. And if they had been in place, we wouldn't have this housing crunch that we have right now.
MS. GUTHRIE: Bottom line, if you look at the array of these regulations, you see essentially banks are not going to be allowed to take as much risk, and maybe they're not going to make as much money. Would you agree with that? And are they in any position to protest after what we've all just been through?
SEN. GRASSLEY: Well, first of all, you know, a lot of greed is talked about here. Greed is human nature. We shouldn't blame greed any more than you'd blame gravity when a plane has an accident and goes down. So I look at it from this: Are banks too big to fail? Banks aren't too big to fail. They were too broke. And so monitoring the capitalization -- whether they make more money or less, they got to be profitable. They'll learn in the new regime. And maybe there wasn't enough known about the old regime that they took on the gambles that they did.
Less gambling, you know, more capital, more relationship of capital -- like, we'll say 13 to one instead of, in some instances, 30 or 40 to one that got us in the trouble we're in right now -- would be a better environment. And whether somebody's becoming a mega- millionaire overnight is not the point. Are we in a point where we have a predictable economy, people are making a profit, a fair profit? And I think we're going to have a more stable economy and a more profitable economy for everybody.
MS. GUTHRIE: Okay. Real quick. I got to let you go. Can it get done this year?
SEN. GRASSLEY: Oh, I think it's a big thing to get done this year, considering health care reform and the environmental issues we're working on, and we're getting into the appropriations season right now. And then, in the Senate, we got Justice Sotomayor.
MS. GUTHRIE: Yeah. (Laughs.) You got a full plate. That's for sure. No one will dispute that, Senator. Thank you so much.
SEN. GRASSLEY: Okay. Thank you.
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