'Meet the Press' transcript for March 23, 2008

MR. TIM RUSSERT:  Our issues this Sunday:  The Federal Reserve cuts interest rates again.  But Wall Street and Main Street are still nervous about talk of recession, bankruptcy, bailouts and more.  What now?  With us, the anchor of CNBC's "Closing Bell," Maria Bartiromo and the anchor of CNBC's "Street Signs," Erin Burnett.

Then, the candidates talk about race, gender, Iraq and delegates.  Insights and analysis from the editor of Newsweek magazine, Jon Meacham; columnist for The Wall Street Journal Peggy Noonan; columnist for The Washington Post Eugene Robinson; and political director of NBC News Chuck Todd.

But first, investors and consumers hold their breath as our economy continues on a very rocky ride.  What is the biggest worry, the biggest challenge we face?  Here to put it all in perspective in a meaningful and understandable way, Maria Bartiromo and Erin Burnett, both from CNBC.

Ladies, welcome both.

MS. MARIA BARTIROMO:  Hi there, Tim.

MR. RUSSERT:  Maria, let me start with you.  What is our biggest challenge economically?

MS. BARTIROMO:  Well, our biggest challenge economically right now is the tight credit environment.  From an individual standpoint, it is very tough to get a mortgage, it is very tough to borrow money anymore.  From a business standpoint, the same thing.  I would say one of the key representations of what's happening right now is what happened at Carlyle Capital.  Very simple stuff, Tim.  They had $600 million in assets, they borrowed $22 billion. Doesn't work out.  The math just doesn't work.  And that's exactly what's happening.  People have overextended themselves, businesses as well as consumers, and now we're paying the price.  So the most important issue right now is not a recession, it is the fact that we have an extremely tight credit environment.

MR. RUSSERT:  Is it going to loosen up in the foreseeable future?

MS. ERIN BURNETT:  Well, that is, of course, the--well, let's call it the $14 trillion question, since that's the size of the U.S. economy.  I think, to Maria's point, not immediately.  It's going to be a long, tough road.  And that's why the Fed has pulled out all the stops.  And one of the analogies that I came up with was think about the credit problem like a tumor.  It--and they--right now they are throwing everything at it.  They're doing chemotherapy, they're doing medicines that have never been tried, they're trying the holistic approach.  They're just figuring just throw the kitchen sink at it and hope that that will make things get better, interest rates go down, people start borrowing and lending again.  But it's going to take time, because what you're dealing with here is a huge erosion of trust.  Banks don't trust the people who are borrowing, borrowers don't trust the banks.  And without that key ingredient, you're not going to start having people lend again.

MR. RUSSERT:  Many people watching, Maria, saw Bear Stearns, a venerable institution, practically go under.  Should consumers be worried about other banks, other houses being in financial trouble?

MS. BARTIROMO:  I think the strain on financial services right now is very significant.  I would be hard-pressed to sit here and say we won't see another failure.  Look, Bear Stearns went for such a low valuation because it literally was going out of business.  The, the, the, the alternative was bankruptcy or having this acquisition at such a low valuation.  Yes, banks right now are teetering.  Some of them are certainly teetering.  That's why the Federal Reserve is doing all of these extraordinary actions.  Last week, you cannot underline enough, important enough what the Fed did by opening up the so-called discount window to investment banks.  Typically, that window is only available to commercial banks who have an enormous asset base.  You know, when you're an investment bank and you don't have that asset base, that permanence of funding is very difficult.  You are relying on the markets in terms of funding.  That's why opening the discount window was really critical. I do think that this is cyclical, this too will pass.  We have several more months of probably upset ahead of us in terms of writedowns and losses from the banks.  But, at some point, you are going to see a loosening up of this, given all of the stimulus that's coming out of, out of the Fed and, and the government.

MR. RUSSERT:  Here's the latest NBC News/Wall Street Journal poll.  "Compared to four years ago, are you better off or are you worse off?" Forty-three percent of Americans say they're worse off, that's the highest since 1992. Here's the cover of BusinessWeek magazine, "Reluctant Revolutionary:  Where is Bernanke Taking Us?"

On the street, Erin, what are people saying about the Federal Reserve chairman?  Is he doing enough?  Is he up to the task?

MS. BURNETT:  We asked that question to a lot of people and, and the answers that you get on and off the record actually pretty consistent right now.  Most people say, "I wouldn't want that job for any amount of money." I mean, Ben Bernanke is in an incredibly difficult situation.  However, I think most CEOs would say he's, he's now doing the right thing.  He has come out, basically, like I said, "I'm going throw the kitchen sink at this problem.  We, we want to try to get through this crisis." Now, I think one thing that we need to watch for very carefully, and this is why he's stuck between a rock and a hard place, is he's throwing the kitchen sink at the credit problem, but what that's doing is flooding the economy with money.  And maybe you don't see that money now, because we keep talking about the vise that's on the lending problem, but over the next six months or twelve months, that money is going to flood into the system.  And that's where you might start to see a big inflation problem, and some people are critical of Ben Bernanke, because they think that's what he's creating, a big inflation cycle.  That's a big question mark out there, and that might be the demon that we're dealing with in a year.

MS. BARTIROMO:  I really don't think you can blame Ben Bernanke for this, Tim.  You know, I think that he is, as Erin said, throwing the kitchen sink, doing a lot at this point.  And remember, he--he's a new chairman.  You know, so what was put in place before he was actually in the--in, in this role has, has set us up for this.  I actually think he's doing a good job.  And sure, you know, maybe they needed to watch to see how steep things really got before they actually got very aggressive.  But they're certainly aggressive now.

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