'Meet the Press' transcript for Feb. 22, 2009

MR. GREGORY:  You hear about subprime loans, Alt-A loans, which are known as liar's loans.

Michele, the White House position is what's wrong with Santelli's argument is doing nothing is not a good option.

MS.  MICHELE NORRIS:  And, and it goes to what Al was saying earlier.  If my--if I've paid my mortgage on time, made great sacrifices to do so, took on an extra job, sold a car, I played by the rules, why does this person down the street get this federal funding?

MR. GREGORY:  Right.

MS.  NORRIS:  Well, if their house goes into foreclosure, it affects the value of my house and every other house on the block.  That's the argument that they make.  The, the, the reality is, though, when the economy turns sour, usually we turn to jobs and that's the sort of indicator of the strength or the weakness of the economy.  Right now the housing market is the beating heart of the economy.  And if they don't fix the housing market, everything else will just continue to tumble south.  I mean, you know, in talking about the people who maybe misrepresented themselves on the loan, the other big question is the lenders.

MS.  QUICK:  Right.

MS.  NORRIS:  You know, they will be receiving federal money also.  Will lenders who wrote bad loans, knowingly wrote loans to people that they knew would be unable to make these payments once the balloon hit two, three years out, will they get federal funding?

MR. GREGORY:  Mm-hmm.

MS.  NORRIS:  The--Gibbs' reaction this week was an indicator of just how sensitive they are right now to the fact that they have got to make a major sales job right now.

MR. GREGORY:  Right.

MS.  NORRIS:  The fact that the spent so much time at that briefing...

MR. GREGORY:  And it's...

MS.  NORRIS:  ...talking about this rant on cable television shows.

MR. GREGORY:  Right.

MS.  NORRIS:  That they know that they're...

MR. GREGORY:  And it's not just housing, it is saving the banking industry generally.

But, Mr. Hunt, you made some news this week in your interview with the chairman of the Senate Banking Committee, Chris Dodd.  This was a portion of your interview.

(Videotape, Friday)

MR. HUNT:  Mr. Chairman, as you know, Alan Greenspan and Lindsey Graham have recently said that it may be necessary to nationalize some banks.  Do you think as a short-term measure that some nationalization of a few banks may be very likely?

SEN. CHRIS DODD (D-CT):  I don't welcome that at all, but I can see how it's, it's possible it may happen.  I'm concerned that we may end up having to do that, at least for a short time.

(End videotape)

MR. GREGORY:  And here's how the markets reacted as captured by this headline in The Washington Post:  "Bank Shares Topple on Talk Of Possible U.S. Takeover." Our banking industry is so fragile as it is, and the government has been a bit opaque about whether it's going to go in and nationalize the banks.

MR. HUNT:  David, I think what this story really suggests--I'd love to say it suggests my brilliant question, which really is able to...

MR. GREGORY:  That's what I thought it indicated.

MR. HUNT:  Exactly, yeah.  My wife disabused me of that notion.

I think what it suggests is the fear and the fragility in market, that pervades markets.  What Chris Dodd said was relatively benign.  It's what Ben Bernanke, what Alan Greenspan...

MS.  QUICK:  Mm-hmm.

MR. HUNT:  ...what Lindsey Graham had said before.  And it's quite simple. If we, if we decide, as I think there's a consensus, that some banks are too big to fail, that it would be far more injurious, far more cascading than the Lehman effect last September; and if we're going to get a stress test, a solvency test--and most experts say a number of them can't pass it--what are the options?  Well, one of the options is some kind of government temporary takeover.  Now, if they want to consider that option, David, I think what we've learned is they better come up with another word.  Nationalization is a word that just scares people.

MR. GREGORY:  It's about--well, and Becky, there's a larger point here, which is, first of all, the more these--the, the shares of these bank, these banks gets talked down...

MS.  QUICK:  Hm.

MR. GREGORY:  ...the closer you get to wiping out the shareholder completely. And it's, it's not clear to me that everybody understands that the investor in this country, who is not just a fat cat, the investor is us.

MS.  QUICK:  Yeah.

MR. GREGORY:  It is the taxpayer, it's the teacher, it's someone who's invested in a 401(k).  The investors on the sidelines, scared to death about taking any risk.  And unless that changes, this economy really can't turn around.

MS.  QUICK:  And what you hear from investors is they don't necessarily hate everything or fear everything.  What they fear is not knowing the, the rules of the game.  They're getting changed all the time.  Which is why, when you asked Dodd about that and he says, "Maybe we'll nationalize," and then you hear from the White House saying, "Well, we're still going to have a private banking system," OK, but that doesn't really answer the question.  Are you nationalizing some banks, are you taking over some banks?  What does it mean if you nationalize a bank?  There's just a lot of confusion.

MR. GREGORY:  Right.  And what does it mean?

MS.  QUICK:  Well, if the, if they take over--I think you can look at AIG right now and say that AIG is nationalized.

MR. HUNT:  Yeah.

MS.  QUICK:  They own the majority of that company.  They own the voting rights.

MR. GREGORY:  Got $160 billion from the government.

MS.  QUICK:  They're going to have to do anything the company tells them.  You could also look at somebody like a Citigroup or a Bank of America, though, and say, "Hey, they're going to be basically--the government may not actually own those banks outright, but you can bet they're not going to be doing anything, the management there, that they don't run past the government." If the government doesn't like it, they're not going to be doing it anyway.

MR. GREGORY:  And, Michele, does the government want to be in the business of running the major banks?

MS.  NORRIS:  Well, that's, that's the question is we know what the government--I mean, Barack Obama has assembled a whip-smart team of economic advisers.  But if they take over there are so many questions, detailed questions about liquidity in the markets, what kind of loans they could make. I mean, it goes well beyond these big questions about CEO salaries if they're actually taking over and running the hearts and the guts of the national banking system.

MR. HUNT:  Can I pick up with something Michele said a minute ago?

MR. GREGORY:  Yeah.

MR. HUNT:  Because I think she's absolutely right.  This--you know, right now we have a, a incredible fear, a psychological fear.  I think the economy is going to--and most experts, more importantly, say that the economy's going to be lousy for the next year.  You're not going to see any effects of the stimulus bill for, you know, at least a year.  And you're not going to see it until jobs and housing start to rebound.  Which is why I think, in all due respect, Mr. Santelli's comments were so sophomoric.  Until you address that, you're not going to address the question of confidence, you're not going to get credit flowing again and you're not going to resolve the banks.  I don't know when that's going to happen, but I know it's not going to happen till jobs and housing get up.

MS.  QUICK:  But do you believe it's got to be done in terms of writing down the principle on mortgages?  Do you think that that has to be a part of it? And where does it stop?

MR. HUNT:  I haven't heard, I haven't heard a better plan.  There may be one.

MS.  QUICK:  Yeah.

MR. HUNT:  But I think the idea of ranting about, you know, some people are going to--who, who made mistakes--a lot of these people made very innocent mistakes.  They were duped.  And, and I think to say that they shouldn't be helped is really quite unfair.

MR. GREGORY:  Let, let, let me just move on to the budget, which'll be a big issue this week.  The, the first federal budget under the Obama administration.  In a really difficult economic environment and a huge deficit environment, the president will aim to cut the deficit in half by the end of his first term.  He's also going to allow the Bush tax cuts to expire in 2010 for those making over $250,000.  There was a thought that he would do that immediately, now they're just going to--he doesn't want to raise taxes in, in the course of--in this economic environment.  It'll have to expire first.

MS.  NORRIS:  He wants to keep that campaign promise.

MR. GREGORY:  Right.

MS.  NORRIS:  But they can obviously argue that the parameters have changed, that the economy has gone south and that changes things.

The thing that is surprising, actually astonishing to me, is their talk about deficit reduction.  I mean, in reducing the deficit, you know, by that amount, I mean, it would be difficult if you take--if you just separate the troubles in the economy.  It would have been difficult because of the wars in Iraq and Afghanistan, it would have been difficult because the baby boomers that are now marching into their sunset years and the stress on Social Security.  And so to talk about this kind of deficit reduction in a short period of time, wow.  I mean, that's the kind of thing that could really boomerang and come back to haunt him, come back to bite him...

MR. GREGORY:  Hm.

MS.  QUICK:  Especially when you're doing it without cheating...

MS.  NORRIS:  ...in 2012.

MS.  QUICK:  ...when you're counting in the cost of the war...

MR. HUNT:  Exactly.

MS.  QUICK:  ...a bunch of other things that have been taken out before.

MR. GREGORY:  Is this overly ambitious to think you can cut it in half?

MR. HUNT:  It's certainly ambitious, David, and I think the key here is health care.  The key here is what, what you can do to both reform health care, to get more health insurance to people and try to save some money at the same time.  That is a very, very dicey trick to pull off.

MR. GREGORY:  Let me...

MR. HUNT:  But that's essential, I think, to all these arguments.

MR. GREGORY:  Let me move on to one of the spicier topics of this year, and that is Illinois politics.  The president might have thought filling his vacant Senate seat would have been a little bit easier than this, but now Senator Roland Burris is caught up in changing stories about whether or not he tried to raise funds for Governor Blagojevich before he was appointed by Blagojevich, who is of course under investigation and has been charged with corruption for trying to sell, allegedly, Obama's Senate seat.  All of this happening, Senator Burris indicating he may make a decision in the near future to step down; and again, Press Secretary Gibbs at the White House appeared to be nudging him a little bit on Friday.  Let's listen.

(Videotape, Friday)

MR. GIBBS:  The appointment of Senator Burris was--and his taking the Senate seat was based largely on the representations that he'd made.  Some of those stories seem to be at variance with what's happened, that the president is supportive of an investigation that would get some full story out.  And I think it might be important for Senator Burris to take some time this weekend to either correct what has been said and, and certainly think of what lays in his future.

(End videotape)

MR. GREGORY:  You get the impression that every word of that statement was thought through very, very carefully.  Of course, Governor Blagojevich has been impeached.  Governor Quinn now in Illinois has called on Senator Burris to resign.

Michele, what's going on here?

MS.  NORRIS:  Well, Senator Burris spent part of his weekend speaking to FBI agents and, you know, perhaps thinking about this.  What was interesting is Robert Gibbs said, "stories at variance with what happened." That was a very artful way...

MR. GREGORY:  Right.

MS.  NORRIS:  ...to suggest that he may not have been telling the truth.  One key person who has not called for Senator Burris to step down at this point is Mayor Daley.  At this point he said he's not willing to do that.  Because of the, the way the Chicago political machinery works, if that were to happen, I think that would really spell bad news for Roland Burris.  That has not happened yet.

MR. GREGORY:  And yet, Al, for Senate Democrats this would come full circle to where they wanted to start anyway, which was to have a freer hand in choosing who they wanted.

MR. HUNT:  Mm-hmm.  What they now think is the position they should have kept.  They--Harry Reid caved on this.  Robert Gibbs' message was, "Adios, Roland." I mean, out, gone.  And he is a dead man walking.  The only question is when does he do it, sooner or does he wait, does he wait longer?  But certainly both the Obama administration and the Senate Democratic leadership would like this long nightmare to be over.

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