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JOHN HOCKENBERRY : The Congressional Oversight Panel, which is supposed to look at the financial bailout, the Toxic Asset Relief Program, the TARP fund, to see where all that money goes. Also the stress tests on banks are going to be released by the Treasury. Everyone will be watching. And call it a buzzword, a central principle, but let’s get one thing straight on this whole bank bailout business.
Recording of President Barack Obama: Transparency. Transparency. Transparency.
JOHN HOCKENBERRY : Did you get that right? The Obama administration, whether we agree with the trillions of dollars being spent on the bailouts of the banks or not, we’re all supposed to be able to watch that tax money and printed greenbacks drain from the Treasury and the Fed and land like a Niagara Falls on the financial sector. But unlike the falls, the TARP program is not a tourist attraction with a neat viewing stand. Joining us now is Elizabeth Warren, the Chairwoman of the Congressional Oversight Panel. Elizabeth Warren, thanks so much for joining us.
Elizabeth Warren: Oh, thanks for having me.
JOHN HOCKENBERRY: So in your oversight role, and this is a huge thing to be monitoring it seems to me, if we were to think of the Treasury as a profligate spender, who needs maybe some roping in, as you look at the TARP program and the other sort of ancillary programs in the Treasury, how well is that huge consumer doing in controlling his or her spending?
ELIZABETH WARREN: Better. Better than before. And that’s always a good way to start it. Remember, $350 billion went out the door in commitments in the first couple weeks when Henry Paulson was still Secretary of the Treasury. And it went out on terms that said, “Take our money, please.” No restrictions. No limitation on how to spend it. Just we’re going to give it to the financial institutions and trust you to do what you think is the right thing with it. Basically our panel, did the metaphoric jumped up and down, pulled our hair out, screamed, and threw things and kept talking about transparency, accountability and clarity in the government program. And, by golly, we get what I think of as Treasury 2. Secretary Geithner comes in, and let’s face it, he starts in a deep hole as a consequence of this financially and kind of in terms of confidence, and, look, they’re more transparent than they were before. The programs are in line. They’ve explained more of them. There’s somewhat more accountability, more restrictions on how the money is going to be spent. He divided it up into different programs. He’s still holding $110 billion in reserves. And there’s a little more clarity, a little more, around what the pieces are. So if what we’re doing is measuring.
JOHN HOCKENBERRY: So you’re feeling a little better?
ELIZABETH WARREN: I’m feeling better. And that’s the answer, it’s definitely better.
JOHN HOCKENBERRY: Let’s talk a little bit about where the money is going. Certainly there was a lot of concern about the money being spent on bonuses for executives at some of these institutions. How much of your oversight is other than that, let’s put the bonuses aside for a minute. What other oversight issues are you really measuring?
ELIZABETH WARREN: Let me put it this way: Our real job, think about the overall design. Congress said, “Here’s $700 billion to Treasury,” because Secretary Paulson had said, “give us $700 billion or the economy dies.” So Congress says, “Here’s the money.” But they realize this is an emergency. You don’t stand behind the fire fighter and say, “And so much water should be directed here. And so much here. And so much here.” So they design this oversight panel to stand on the outside. And we actually have very little description of what we’re supposed to do, other than how we’re supposed to think about the central ideas behind what Treasury’s supposed to be doing.
JOHN HOCKENBERRY: But that’s a little sad. In a sense it’s like your mission is to stand here, Elizabeth, and watch this car wreck that’s going to happen in a few minutes.
ELIZABETH WARREN: And keep screaming warnings.
JOHN HOCKENBERRY: Yeah.
ELIZABETH WARREN: So that’s, in a sense that is our job. So I keep standing out there saying, “Hey guys, you’ve got to be clearer about this. We’ve got to see what’s going on. We’ve got to believe these numbers. You’ve got to show us things that are true and accurate.” So I keep pounding on the table about that. You’ve got to make these guys accountable on a regular basis. You can’t just give money away and hope that it goes in the directions we thought. You really got to explain more about the programs. You’ve got to explain and put in some metrics in place so that we can see if you’re making it from point A to point B to point Z. So we stand out there and, frankly, the job is we keep pushing. And if we push them a foot, then I just move forward a foot and try to push them further. That’s What I see as my job.
FARAI CHIDEYA: Are you really a “we” though? And I ask that in the sense that there has been some pushback from the Republican members of the panel. And there is a bit of a fracture about how you go about your business. What do you think the fundamental difference is of opinion and have you been able to work it out over time?
ELIZABETH WARREN: You know, this is really interesting to me. I’m a total Washington outsider. The last elected office I held I think was sometime back in 7th grade, so I’m not part of that world. But I’ll say this: When we’ve gone through our work for each of these monthly reports, we reach out to experts all around the country, indeed sometimes all around the globe. We talk to people, politically speaking, are on the left and on the right. We talk to people and try to gather data from every source and try to analyze it anyway we can. So just to pick an example, our regulatory reform report, we had a lot of consensus from a lot of different points of view. Our work doesn’t fracture along ordinary left/right lines. I mean, come on, talking about accountability and transparency, these are not left/right issues. On the other hand, yeah, we’ve got folks on our panel who have belonged to different political parties and they think that’s a significant part of the mix. I just don’t see it that way.
JOHN HOCKENBERRY: Let me test the transparency issue right here.
ELIZABETH WARREN: Sure.
JOHN HOCKENBERRY: Can you call Timothy Geithner today, get him on the phone, and ask him point blank, “How much of the money that you’ve given out, Secretary Geithner, has come from the TARP, and how much exactly in a dollar amount has come from the Federal Reserve”, which are two different spigots and you’re supposed to be watching both of them?
ELIZABETH WARREN: Yes.
JOHN HOCKENBERRY: And his answer would be? And has been?
ELIZABETH WARREN: His answer has been to lay the dollars out.
JOHN HOCKENBERRY: And how much is it?
ELIZABETH WARREN: Well this is it, we do have some disputes back and forth. We push back. Let’s face it, even accounting has some creativity to it, so there have been some disputes. Basically what we have so far is about $590 billion has come out of TARP, which is the amount that Congress can give.
JOHN HOCKENBERRY: Congressionally authorized fund.
ELIZABETH WARREN: Fed, remember…
JOHN HOCKENBERRY: That’s the magic money.
ELIZABETH WARREN: Fed is the magic money.
JOHN HOCKENBERRY: That’s the printing money.
ELIZABETH WARREN: And we think we’re in the neighborhood of about $4.2 trillion.
JOHN HOCKENBERRY: Whoa! Wait a minute! The hairs just…That’s a headline!
ELIZABETH WARREN: No, no. I don’t mean to do n
Elizabeth Warren headlines. I’m trying to do, these are numbers, I think unless I got them wrong, these are numbers that came from [Neil] Barofsky and you’re now scaring me when you’re making this face.
JOHN HOCKENBERRY: I don’t think that’s not widely known. And I think possibly it’s because of the media coverage and possibly because of the way this information comes out, but that’s really important.
ELIZABETH WARREN: And let me say it this way: This is one of the things that people have worried a lot about. On the Fed end of it…That’s taking the biggest version of the number. On the Fed end of it, that’s a lot of guarantees. It’s not just money that’s been spent, money that’s been infused in programs. A lot of the Fed is total commitment money. Now, what the Fed defenders would say, if the bad things don’t happen, then you never have to pay off on the guarantee. So the amount of money that actually leaves the Fed is different from the amount of money that we may have done a back stock, we may have committed if it is there. So that may be part of the reason we get very different numbers on how much Fed money is in here, because it depends on whether you want to add up guarantees or you want to talk about real dollars that have already gone out the door. TARP is a lot easier to watch in that sense because we’re watching real dollars go out the door.
FARAI CHIDEYA: Just quickly, a lot of folks have criticized the way the federal government has put incredible scrutiny on the car companies and has, in some ways, forced the car companies to be accountable for every cent. And TARP, as we’re talking about, there is a large fuzziness about what the government is demanding for these trillions of dollars for TARP and for these other programs. Why do you think it is that there’s this disjunction between the ways the federal government operates in terms of oversight? And is it either unfair to the car companies or too lenient on the banks or both?
ELIZABETH WARREN: I want to say that you just asked me the question that I asked Timothy Geithner when the Congressional oversight panel held a hearing with Secretary Geithner, I think it was about two weeks ago. That was my opening question.
JOHN HOCKENBERRY: And he said?
ELIZABETH WARREN: I want to understand the difference between the two.
JOHN HOCKENBERRY: Hemmed and hawed.
ELIZABETH WARREN: We’d have to do a replay. I don’t think I could fairly characterize his answer.
JOHN HOCKENBERRY: And it would probably take longer than the 32 seconds to even replay his answer. Elizabeth Warren, a lot to talk about there. Very staggering. It seems like the printing presses have rolled at the very least at the Fed, but the big question is, what does a credit crisis mean for consumers? And let’s talk about that a little bit later.
ELIZABETH WARREN: Alright.