MSNBC "The Ed Show" - Transcript

Interview

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SCHULTZ: Tomorrow, President Obama is expected to announce a plan to recoup some of the taxpayers" TARP funds by imposing a tax on more than 20 of Wall Street"s too-big-to-fail banks. My next guest is a long-time supporter of this kind of fee. Democratic Congressman Gary Peters of Michigan joins us tonight here on THE ED SHOW.

Congressman, did you hear what you wanted to hear today from these bank CEOs?

REP. GARY PETERS (D), MICHIGAN: Well, I think it is pretty clear, these very large financial institutions, not only the large banks, but other large institutions, hedge funds that contributed--all of them played a part in contributing to this financial mess that has impacted the whole country and, particularly, my home state of Michigan, that has been devastated as a result of greed run wild on Wall Street.

SCHULTZ: The chairman of this commission, Phil Angelides, out of California, they had this exchange with one of the CEOs today. Here it is.

(BEGIN VIDEO CLIP)

REP. PHIL ANGELIDES (D), CALIFORNIA: What I"m trying to drive to is whether there"s a clear recognition that, despite all of the risk models, on a fundamental basis, excessive risk was being taken.

LLOYD BLANKFEIN, GOLDMAN SACHS CEO: How would you look at the risk of a hurricane? The season after we had four hurricanes on the East Coast, which is absolutely extraordinary, versus the year before, rates got very low for risk premium.

ANGELIDES: Having sat on the board of the California Earthquake Authority, acts of god will exempt. These were acts of men and women.

(END VIDEO CLIP)

SCHULTZ: Congressman, it almost looked as if Mr. Blankfein was looking for any kind of excuse he could find to justify their activities on Capitol Hill and on Wall Street. So--and they have lobbied the Congress big time. So what"s the next step? We know what these guys did. We know how they did it. We don"t want to blame the employees. But they are still operating by giving out record bonuses with taxpayer dollars. What"s the remedy, congressman?

PETERS: Well, we do know that these large institutions just took enormous risk. They had these computer models that they thought were fail safe. We certainly found out exactly that they were not.

And they also just took incredible leverage, leverage that was simply not prudent. When you saw their models start to shake a little bit, the house of cards started to tumble.

So we need to be very aggressive in regulating those financial institutions. As you know, we passed a very comprehensive package to do that. In the short run, one thing that I"ve been advocating, and the president is going to talk about tomorrow, is making sure that these Tarp funds, the money that went in to bail out these banks, to make sure the banks and those financial institutions are the ones that pay it back. It should not be the taxpayers. It needs to be those institutions that brought this incredible risk to us, and are responsible for the financial troubles that we are in and the whole country is in right now.

SCHULTZ: What kind of tax would you go along with? At what rate, how much, and what would be the level?

PETERS: Well, in fact, I had an amendment that passed part of the regulatory reform bill, that put an assessment on the largest 120 institutions in this country. And the assessment would be based on the amount of systemic risk that those institutions had. For example, if you had a bank taking very high leverage, that was putting the whole economy at risk, they would put a much higher fee than somebody who is not taking that kind of risk.

SCHULTZ: Gary, what about a transaction tax? I know that there -- labor out there has suggested that every transaction that takes place at a certain level into the thousands--and most Americans don"t deal at that level of activity, but many of these houses do, dealing in high volume. What about a tax, a transaction tax?

PETERS: Well, transaction tax is something to take a look at. And certainly it is something that is being discussed, not just here in the United States, but broadly around the world. And for that to be effective, we certainly have got to be in conversations with the other major trading markets around the world, so that it is taken care of on a global basis, so you don"t have people leaving from one jurisdiction to another.

SCHULTZ: And the only thing that Congress can do about these bonuses without governing risk taking is to go in there, get in their back pocket, and tax those bonuses, because right now the government can"t go in and say, this is how you"re going to run your business.

PETERS: Well, and that"s why I think a good step is the approach that I"ve taken with this assessment on these companies, to make sure that they are paying back the Tarp money. I believe that the president is going to be outlining a similar proposal tomorrow, which I think is a very important first step, is to make sure that we"re recovering those Tarp funds. And it"s coming from those institutions. That certainly has an impact on bonuses being paid to executives as well, if we"re collecting that money back, to make sure that the taxpayers are made whole.

We can"t turn the page on Tarp and say, let"s forget about that; let"s move forward. We have got to make sure that those institutions responsible for this mess are the ones that are going to pay it back, so we can put it back in the Treasury and reduce the deficit, and make sure it"s not the taxpayers that are paying. That"s certainly going to impact those bonuses being paid to these individuals as well.

SCHULTZ: Congressman, good to have you with us tonight. Appreciate it you so much.

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