'Meet the Press' transcript for Sept. 21, 2008

MR. BROKAW:  Mr. Mayor, I can just see a viewer out there in Lubbock, Texas, for example, or Kearney, Nebraska, or Dahlonega, Georgia, or any small town in the Northeast saying, "Wait a minute.  I didn't do all of this.  This is Wall Street wildly out of control, big executives walking away with hundreds of millions of dollars in bonuses for failing, in effect.  Why am I paying it?"

MAYOR BLOOMBERG:  I do not, number one, I do not think that anybody should get paid for lousy performance.  I've said that for a long time.  And we don't do that in my company.  If you work hard and you do good, you get paid well. That's the answer.  And I was pleased to see when we bailed out Freddie and Fannie and AIG, the top management got fired, and the stockholders basically had all of their value wiped out.  Bear Stearns went out of business, so everybody lost everything.  Jobs as well as...

MR. BROKAW:  Do you think your old company, Lehman, should have gone out of business?

MAYOR BLOOMBERG:  I never worked at Lehman, but I think it's easy--you can make...

MR. BROKAW:  Oh, you were at Salomon.  Sorry.

MAYOR BLOOMBERG:  Yes, Salomon.  You can have a discussion as to whether, in the case of Lehman or Bear Stearns, the Treasury should have bailed out both, neither, or one or the other.  I think that just happens to be more the luck of the draw.  Bear Stearns was first, got bailed out.  Lehman came a little bit too late in the process.  But I do think that the government had no choice but to stand up and do the right thing and bail out Freddie, Fannie and AIG. Fannie and Freddie would have destroyed homes for people throughout this country.  The, the people in those small towns that you talked about, it's their homes that got financed through Freddie and Fannie.  And AIG could just have destabilized the whole system.  It's at a different level.  But sometimes it isn't that they're too big to fail, they're too important to fail.  And that's not true necessarily with individual brokerage firms.  It is true of these poorly constructed, poorly designed institutions like Freddie and Fannie where we socialize the losses and privatize the profits.  And it is also true of AIG, that has these enormous contracts on their books that probably nobody understands.

If we had better disclosure, then you could take a look and say, "Well, maybe we could let them go under." But without knowing--and that's the situation that the Treasury's in, they don't know the facts.  The facts are not discernible right now because we never put in the regulation that would let us be able to measure.  Why didn't we?  We all are guilty.  I come back to it. Our pension funds were getting better, our 401(k)s were getting better, we were getting mortgages at low interest rates.  Everybody was happy.  The trouble is it was something for nothing, and there's always--you know, there's the old story about you got to pay the piper.  In the end, the bill comes due.

And I think that you and I have to worry about the person that can't get through this, that really needs help.  And that's what we're trying to focus on in New York City.  We can't go pay off people's mortgages, but we're trying to do the best we can to help them when they get in trouble.  And we have a program in the city, incidentally, where we've made thousands of mortgages--housing program for people who are really starting up the economic ladder.  And I checked earlier this morning with the guy running it, Shaun Donovan, we've had only five defaults out of thousands of mortgages.  So if you act intelligently, if you work with people who want a mortgage, show them what kind of deposit they have to have and make them work hard until they get it and make them not overextend and say, "What happens if you lose your job?" you can have an intelligent housing policy.  We just have gotten carried away, and now we're getting the other end of it.

MR. BROKAW:  Let's talk politics for a moment.  John McCain began this campaign cycle as the man with the most experience, then he became an agent of change, now we saw in his advertisement here that he's back to experience again.  Here's what you had to say about McCain:  "McCain can say he's had more experience.  It's harder to argue that he would dramatically change where we have come from." He insists that he will.  The Democrats are going to make the case this is just a third term of George W. Bush.

MAYOR BLOOMBERG:  I think there's two separate things here.  You say one thing to get elected, and both candidates have to be very careful.  They have to explain complex problems and come up with solutions for basically insoluble problems that have been with us for a long time.  And the public demands that they do that in 30 seconds.  And I'm sympathetic to them.  They just cannot give you specifics on how they're going to do a lot of these things.

Number two, they're going to face different problems than we have today.  So, when I look at them, I don't have this litmus test issue on different things, "What are you going to do about A, B and C," because they are going to face D, E and F, whoever wins, when they're in office.  And I said to Barack Obama the other day on the phone, I said, "You know, you've got to start thinking about, for example, who we bail out." We can't spend our time talking about the bailouts in the past.  You've got an automobile industry that has--in Detroit they've cut employment from 500,000 people down to 250,000 people.  That's 250,000 Americans.  You know what a group of 250,000 people--it's a lot of people.  They've lost their jobs.  Today, if they have jobs, they probably don't have as good jobs.  Why?  What were we doing wrong?  I would argue that we tried to protect an industry where we should have been assisting people. We should have been working on training, we should have been working on regulation that would force them to come up with products that are good for the world so that they can sell them and keep their--keep jobs, good-paying jobs with benefits.  That's what we're trying to do in this country.  And where you let the free markets work, generally it does.  But free markets cannot work without some regulation.

MR. BROKAW:  Joe Biden, who is the vice presidential candidate on the Democratic ticket...

MAYOR BLOOMBERG:  I know who he is.

MR. BROKAW:  ...says it's patriotic for wealthy Americans to pay more taxes.

MAYOR BLOOMBERG:  Well, Joe Biden was in my office last year, and I don't remember him saying that.

MR. BROKAW:  Well, he said it this past week.

MAYOR BLOOMBERG:  I do remember reading that.  You know, I think--I've always been a believer that one of the real differences between America and other countries is that we do pay our taxes.  There are very few people here that don't pay their taxes.  We have lots of arguments over what those taxes should be, and there are tax shelters and sometimes there are abuses, and we have to work on that.

MR. BROKAW:  Should capital gains tax go up from 15 percent?

MAYOR BLOOMBERG:  I think you can make--economists will make the argument that capital gains taxes going up will dissuade people to invest.  People will make the argument that it's not fair that some people make their money in capital gains form rather than an ordinary income.  I'll leave that for the economists and the tax policy writers to debate.  But I think everybody understands we like to have lower taxes.  But if we want services, we're going to have to pay for them.  And the worst thing we're doing is to do the worst--take the services but not have us pay for them.  That's the situation where we're going to lead--leave a terrible world for our children and grandchildren.

MR. BROKAW:  Finally, Mr. Mayor, are you going to endorse in the presidential race before the election?

MAYOR BLOOMBERG:  Well, I've listened to both candidates and I want to make sure that, for as long as I can, I have a good dialogue with both, that I can give them my views and the perspective of New York.  I represent 8.3 million people in New York, and it's important that these two candidates understand what's in the interest of those people, and so I want to make sure that I have a good dialogue with both.  The future of this country is great, but it's--it's better than anyplace else, but it is going to require great judgment and leadership on the part of whoever wins.  And their main job is going to be to lead Congress to work together and to give us the kind of regulation, the kind of tax policy, the kind of financial world, and investments that in tough times we've got to make that this country needs.

MR. BROKAW:  Mr. Mayor, thanks very much for being with us.

MAYOR BLOOMBERG:  Tom, my pleasure.

MR. BROKAW:  Thank you.

Coming up next, insights and analysis from our economic and political roundtable.  Erin Burnett, Steve Liesman and Steven Pearlstein, all here, only on MEET THE PRESS.

(Announcements)

MR. BROKAW:  We're back, and our roundtable today are all experts in the dark and arcane world of economic reporting:  Erin Burnett from CNBC, Steve Liesman from CNBC, and Steven Pearlstein from The Washington Post.  Steven Pearlstein and Steven Liesman both have won Pulitzers for their writing in this area.

Erin, let's begin with you.  I know that you've been talking to a lot of people on the Hill.  Are they going to get this done this week?

MS. ERIN BURNETT:  They say yes, talking to, to various members of leadership, both in the House and Senate yesterday.  They're going to get it done by Friday, Tom.  Right now, what we have is a very rudimentary plan, and there's a lot of argument, especially among Democrats.  Hank Paulson, as you know, wants to have as much flexibility as he can for the money he needs to get this job done.  Democrats would like to put in some--maybe a stimulus package of $100 billion.  Some are fighting for that, and some are also fighting to say, "Look, banks, if you participate, we want to put a limit on CEO compensation." So that's a big part of it.  But, Tom, the big question is, last time we went through this, it took six months from the day we signed legislation to the day the RTC was up and running, and some might argue this time we do not have that window of time.  It needs to happen much more quickly that.

MR. BROKAW:  Steve Liesman, you wrote a lot about the RTC, which bailed out the savings and loan industry.  It was $150 billion.  It was chump change compared to what we're playing with here.

MR. STEVE LIESMAN:  Yeah, what we're talking about in terms of layout by the government is they're saying there's $700 billion.  What's interesting is they are going to buy and sell this stuff, so, ultimately, we may end up having owned and/or sold trillions of dollars worth of mortgages.  There's one upside, though.  In this case, Tom, it doesn't appear as if the government is actually going to own real estate.  They're going to own the packages or complicated derivatives that own the real estate at the end.  The government last time was selling real estate, it was setting up auctions and stuff like that.  This time they have to sell security, so it will be a little easier. And to Erin's point about setting up shop, I think that's going to be easier, too.  What we're hearing, Tom, is they're going to--and this is probably politically controversial--they're going to engage Wall Street to solve Wall Street mess.  They're going, they're going to be taking portfolio managers and give them...

MS. BURNETT:  Right.

MR. LIESMAN:  ...what we hear, $50 billion portfolios and say, "You run it on behalf of the government." The number of conflict of interest stories that Steven and Erin and I are going to be talking about in the several months is going to keep us in business for awhile.

MR. BROKAW:  Doesn't Warren Buffet have a good idea in naming somebody like Mike Bloomberg to be the czar of this kind of an agency and creating a separate entity altogether?

MR. LIESMAN:  The trouble with the separate entity is it goes against what Erin was talking about, was the idea of speed.  If you use existing infrastructure and then go and create--use portfolio managers--look, in the, in the RTC the people they hired were the S and L guys who ran the banks to the ground because they knew where the bodies were buried and how to exhume them.

MR. BROKAW:  Steve Pearlstein, let me share with our audience something that you had to say in The Washington Post this week in your analysis of what's going on.  "What we are witnessing may be the greatest destruction of financial wealth the world has ever seen--paper losses measured in the trillions of dollars.  Corporate wealth.  Oil wealth.  Real estate wealth. Bank wealth.  Private-equity wealth.  Hedge fund wealth.  Pension wealth. It's a painful reminder that, when you strip away all the complexity and the trappings from that magnificent new global infrastructure, finance is still a confidence game, and once the confidence game goes, there's no telling when the selling will stop." Is anyone going to be help responsible for this, truly?

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