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Dick Cheney Speaks Out; Road to Recovery
Aired March 16, 2009 - 15:08 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICK SANCHEZ, CNN ANCHOR: And there you have Robert Gibbs dealing with that contentious situation involving AIG.
I would like to welcome everybody to beautiful downtown Atlanta. We are at Georgia State University.
And here is what we have on tap for you.
(CHEERING AND APPLAUSE)
(BEGIN VIDEOTAPE)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I think that there's a good chance this recession will end later this year.
SANCHEZ (voice-over): The Fed chair says when recovery will begin, yes.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's hard to understand how derivative traders at AIG warranted any bonuses.
SANCHEZ: Bonuses for AIG guys who fueled the crisis with credit default swaps -- why you need to know what those are.
RICHARD B. CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: I don't think you can blame the Bush administration for the creation of those circumstances.
SANCHEZ: Cheney says economic crisis, not his fault. What do you say?
UNIDENTIFIED FEMALE: Pushing, cursing, really crazy. Pandemonium, actually.
SANCHEZ: And, with the economy as a top crisis, why so much interest in top model? Are enough Americans paying attention?
Live from the campus of Georgia State University in downtown Atlanta, your national conversation begins right here right now.
(END VIDEOTAPE)
(CHEERING AND APPLAUSE)
SANCHEZ: And hello again, everybody. We have got a happy group here. They're economic students at Georgia State University and political science students. We welcome them all. Thanks for being with us.
(AUDIO GAP) in a row? Is it possible that, for five days in a row, the market's up?
(CHEERING AND APPLAUSE)
SANCHEZ: Well, it's a start, anyway.
Susan Lisovicz, speaking of starts, she's going to get us started.
What's going on, on Wall Street, Susan?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, Rick, basically, it's the best win streak we have seen since Thanksgiving. We're in the final hour of trading, as you know.
And, so far, it is five for five for the Dow and the S&P 500. We will call it the Bernanke bounce, the chairman of the Federal Reserve saying last night on "60 Minutes" that the recession should end this year and that the Fed will do everything it can to stabilize the banking sector, which means no big financial banks will let -- they will let them fail, so bank stocks up big-time.
And since AIG is a big theme, let me mention AIG shares are up 68 percent. Having said that, they're still only 80 cents a share, which begins to give you an idea of the total collapse at AIG -- Rick.
SANCHEZ: Yes. In other words, we still have a little bit ways to go, and nobody's saying this is all panacea right now. By the way, how high was it at any point today? I don't know if you have said that, but I didn't catch it. Has it been going down in the last couple of hours, up or kind of staying flat?
(CROSSTALK)
LISOVICZ: Well, the Dow and S&P 500 have been up the whole session, but, having said that, we're starting to fade a little bit. We have had triple-digit gains most of the session, about 2 percent on the day. Right now, we're half of that.
SANCHEZ: All right. We're going to watching about. We have got, what, another -- well, about 50 minutes still. We will see if we end up in another positive territory, a fifth day in a row. It's probably not that significant, but, somehow, it makes some people sleep just a little bit better.
Let me introduce you to what we're going to be talking about and who we're going to be talking with. First of all, we have got Maru Gonzalez. She's going to be joining us. She's going to be talking to some of the students back here. She's a political activist who has been on our show before and a graduate of Georgia State University, we should add, which is one of the reasons that we're going to be using her.
(CHEERING AND APPLAUSE) SANCHEZ: We have one of the best forecasting minds in the country. You heard Bernanke last night on "60 Minutes" and, if not, we're going to play that for you, where he says we're going to start seeing a little bit of a recovery by the end of this year; maybe we will start getting even better out of the woods by next year.
Those are important words. They mean a lot to people. The gentleman next to me is a professor who is also a forecaster. He looks at the future. He tells us whether or not Mr. Bernanke is being maybe a little too positive in this case.
We're going to break that down with you.
But, before we do anything else, I want you to listen to this. This is the president of the United States about two hours ago, not at all happy with AIG executives. He doesn't seem to think that these guys who are going to get these bonuses should get these bonuses, and he said it really in no uncertain terms. Take a listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is a corporation that finds itself in financial distress due to recklessness and greed. Under these circumstances, it's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?
In the last six months, AIG has received substantial sums from the U.S. Treasury. And I have asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
SANCHEZ: So, he's being hard on them. He's holding their feet to the fire.
Bob Lenzner is our econ guy. He is the editor of Forbes.com. And he's good enough to join us now to take us through this.
Look, Bob, we're talking about $165 million. That's a lot of money. But, at the same time, the CEO of this company and the guys themselves are saying: We had contracts. We have a contract that says we're supposed to be paid this money.
How do you keep them from getting the money?
ROBERT LENZNER, NATIONAL EDITOR, "FORBES": I'm Uncle Sam, and I own this company. I own 80 percent of this company. I'm the owner. And I think the owner should be allowed to change the terms of those contracts.
I don't think that those guys should have gotten a fixed bonus, no matter whether they did well or badly. This is a crazy way to be paying people. So, I think, in particular, this company has caused so much -- such great losses across the world, the way they were managing their affairs was in such a reckless manner, OK, that I think the government should be allowed to change the terms of those -- of that contract.
You have got a lot of other contracts being abrogated in the financial community right now. You have hedge funds refusing to give their investors back their money, putting up a gate against it. You have universities saying that they're not going to give the private equity firms the money that they contracted to give them because they need the money to run the universities. So...
(CROSSTALK)
SANCHEZ: Hey, Bob, what you're -- Bob, you're talking about breaking a contract. And you're saying, in these -- these particular circumstances, the government can do that. And the people who once owned this company are not the same people who own it now.
You know who owns it now? I hear you saying this, with 80 percent of the money, that's certainly more than 50 percent. Who owns AIG, guys?
AUDIENCE: We do.
SANCHEZ: Who owns AIG?
AUDIENCE: We do.
SANCHEZ: See, they're econ students. Even they get it, professor.
LENZNER: Right.
SANCHEZ: Do you agree with Mr. Lenzner when he says that we can break this one?
RAJEEV DHAWAN, DIRECTOR, GSU ECONOMIC FORECASTING CENTER: I think, if we try to come in break the contracts unilaterally, just because there's been a change of ownership, (INAUDIBLE) into the question of the property rights on which the capitalism is built.
If you cannot extract what you contributed to the company, then you have a problem. In other words, nobody else in future will value any contract. Nobody would want to enter a contract.
SANCHEZ: So, you can't break a contract because, then, in the future, you are not going to be able to get people to work for you?
(CROSSTALK)
DHAWAN: If you want to break it, if you want to break it, go challenge it in the court of law, not in the court of public opinion.
(CROSSTALK) SANCHEZ: But here's the point that Mr. Lenzner is making.
What these guys did was, they dealt in something called credit default swaps.
Anybody know what a credit default swap is?
Maru, go ahead. Help us out.
Raise your hand if you know what a credit default swap is. Credit default swaps, and while you get somebody for me, Maru, isn't credit, Bob, or, professor, credit default swap was like pouring gasoline on a fire. It was that dangerous and hurt the economy that much. Am I overstating that?
DHAWAN: No, not exactly. But credit default swaps got carried away. The idea wasn't bad. The execution.
SANCHEZ: But it was a shady deal. Wasn't it a shady deal?
DHAWAN: No, it was a legal deal.
It was just like little kid eating too much chocolate. You're going to have a stomach ache later on. And that's what happened.
(CROSSTALK)
SANCHEZ: Do you agree with that, Bob? Bob, do you agree with that?
LENZNER: What it was, was, they thought that, because of who they were, the great AIG, that they could just go and do a half-a- trillion dollars of these contracts without having any reserves against them, without themselves taking any insurance out in case something failed.
So, in effect, what had to happen here is that, when these contracts went bad, Uncle Sam had to bail out, not AIG, but had to bail out a whole bunch of European banks and a whole bunch of American banks and investment banks, who are -- now, I agree with the professor that, yes, we got property rights.
(CROSSTALK)
LENZNER: We have to respect contracts that are written. I don't think we should just go blatantly and break the contracts.
But these guys produced some of the biggest losses -- the biggest loss in American history by a profit-making corporation, $60 billion. We should go and bring them into the room and say, you know what? You don't deserve this -- this contract. You want to continue to be employed by us, we think you should take a haircut on your bonus.
SANCHEZ: Well, that's what the president was saying today. And he -- again, he said it in no uncertain terms.
Maru, you have got somebody. Go ahead. Explain to us what one of these default swaps is.
MARU GONZALEZ, POLITICAL ACTIVIST: And this is Kyle (ph). He's an accounting and finance major.
UNIDENTIFIED MALE: Well, a credit default swap, let's say you go out and you buy a bond from a company, and the bond is basically a debt instrument.
A credit default swap is an insurance instrument used to insure that debt. So, if you buy a bond from a company and you want to insure yourself against that bond, then -- against the default of that bond, then, basically, what you do is buy a credit default swap, and the issuing company insures the bond for the face value of the bond.
SANCHEZ: And they kept doing it over and over and over again, until somebody called the loans and said, you know what? There's no money there. And suddenly you're sitting on billions of dollars in these credit default swaps, and, uh-oh, that's where the real catastrophe began.
We're going to continue this conversation. When we come back, you heard what I said earlier. Ben Bernanke, possibly the most important man in the country right now, the Fed chair, went on "60 Minutes" last night. Now, this is a guy who doesn't do a lot of interviews.
As a matter of fact, he doesn't like television cameras. But he felt like he had to talk to the American people, and he started talking about some things that were very personal. And then he said about what his projection is for when we're going to get out of this mess. You will hear his words when we come back and reaction from all these folks here and the professor and Bob Lenzner at Georgia State University.
(CHEERING AND APPLAUSE)
(BEGIN AUDIO CLIP)
HEATHER, LOS ANGELES: Hey, Rick. This is Heather from Los Angeles.
And I would like to know, how come nobody is talking more about these AIG employees? And how come we can't reshape their contracts, just like we reshaped the auto industry's contracts? What's the difference between AIG employees and UAW employees?
(END AUDIO CLIP)
(COMMERCIAL BREAK)
SANCHEZ: And we welcome you back to Georgia State University. We are taking our show on the road. "The Road to Rescue," by the way, is what we're calling it this week.
I want you to listen to Ben Bernanke. He went on "60 Minutes" last night. And this is interesting, because he's not a guy who likes cameras. But he has a very personal story to tell. He talks about how affected he was by the whole AIG -- in fact, he talks about getting angry at AIG. He talks about slamming the phone down.
And then most importantly to all of us in here, he also talks about when we're going to get out of this mess. Here it is.
(BEGIN VIDEO CLIP, "60 MINUTES")
BERNANKE: It makes me angry. I, you know, I -- I slammed the phone more than a few times on discussing AIG. It's -- it's just absolutely -- I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy.
(END VIDEO CLIP)
SANCHEZ: Rajeev Dhawan, is he right when he says that we're probably going to be able to get out of this by the end of next year or at least start to see something by the end of this year and really see something cooking by next year?
DHAWAN: When he uses the word-modifier probably, that's really important. He didn't say, we will get out of it.
And that's why -- things are very uncertain. First, the banking system has to come back to normal. And he talked about one condition which will make it happen, when the private money comes in to buy bank shares.
SANCHEZ: That's the sign that you're looking -- I mean, you're a forecaster. You do this for a living. You look at markets and say, I think it's going in this direction or I think it's going in that direction.
And you're saying here the most important key that you're looking for and that he seems to be looking for is people having confidence in the banks enough to, what, invest in them?
DHAWAN: Right, because once the money comes into the banking system as private capital, that's when the bank knows that if I need to make loans and something goes wrong, I have money in reserves.
SANCHEZ: Are you surprised the market's been up five days? Does that -- is that news to you? Do you see it as something significant, or is that like -- to a guy like you, does that not mean that much?
DHAWAN: I think, at this point, I'm a little bit puzzled, because I don't see too many things that have changed in the last five days for it to be up so much.
(CROSSTALK)
SANCHEZ: So, why would it be up? DHAWAN: It could be a dead cat bounce. It could be anything.
SANCHEZ: A five day dead cat bounce?
DHAWAN: Yes. The market was down 52 percent, 55 percent. It goes up another 5 percent, it doesn't make a big deal.
SANCHEZ: I want you to listen to something. This is Geithner today. Mr. Geithner goes on to scold the banks for not lending money to small businesses, OK? I'm sorry?
Oh, we have got a second, but, no, we already talked about that one, Chris. Let's talk about what's going on with Geithner. I think we have -- do we have that one? This is Geithner today. He has this -- oh, we don't have that.
Let me tell you what's going on. Geithner went on today to talk about what's going on with the Small Business Administration. And he said that there's no question that these banks need to start giving money. They need to. He all but scolded, that they need to give the money to these small businesses in the United States.
Is he right to be scolding them in that way?
DHAWAN: I think he is criticizing a little bit too much.
SANCHEZ: Politicizing?
DHAWAN: Yes.
SANCHEZ: He's grandstanding?
DHAWAN: You can call that word, too.
But the thing is this. People need help. It doesn't mean that they have viable ideas and programs and everything. That's one issue. The demand for loans may not be there that much. At the same time, the banks have clammed up. You know why? Because credit is like the lifeblood of the economy. It's not flowing properly right now. It's poison.
The liver which is supposed to clean it up is not functioning properly. And we are waiting for something else to come and clean it up. In that kind of a situation, you don't ask the patient to go run a walk -- I mean, just go run a big race or something. You just want him to take it easy.
And at this point, trying to say to the patient, no, get up and start running...
(CROSSTALK)
SANCHEZ: So, if credit is the blood in our bodies...
DHAWAN: Right.
SANCHEZ: ... comparatively speaking, and if your blood is not working right, you can't go run a marathon.
DHAWAN: Right.
SANCHEZ: So, you're saying, right now, the economy is like a very sick patient.
DHAWAN: Yes.
SANCHEZ: And when will you see the blood start to flow in his or her body again, speaking figuratively?
(CROSSTALK)
DHAWAN: Well, when the color comes back on the cheeks.
(CROSSTALK)
SANCHEZ: And when do you know when the color's in the cheeks?
(LAUGHTER)
DHAWAN: When somebody is across the table saying, would you like this plate of food? And you say, yes, I want to eat it.
SANCHEZ: Well, how does that work in terms of banks? What is the sign? Give me a sign, professor.
DHAWAN: The banks need something different from the liver to clean up the blood. Somebody takes out the blood, cleans it up, and puts it back in. You need external intervention. And once that I.V. drip is off, you know that you have recovered.
SANCHEZ: We want to talk to you about what confidence you have that this system, this correction, this rescue or bailout or whatever word you want to use, is actually going to have an effect on this sick patient. We are going to talk to you about that when we come back.
And we're also -- I'm going to read you an e-mail from one of the viewers who scolded me. And, as you know, I have got my Twitter board right now. In fact, we can share one right now.
Look at this one. J. Hodges wrote to us just a little while ago. They're angry about AIG. "It is infuriating to think of AIG handing out bonuses when they have failed in every possible way. Just stupid, really."
You guys agree with that?
AUDIENCE: Yes.
SANCHEZ: I had a feeling you might.
There's a viewer who told me that sometimes we as members of the media need to focus a little bit more on what's going on and have people like the professor to take us through this. He all but scolded me. Well, to be totally transparent, I'm going to let you hear what he wrote to me when we come back.
Stay right there.
(BEGIN AUDIO CLIP)
KEVIN, TORONTO: Hey, Rick. Kevin calling you on Twitter here, calling from Toronto.
AIG bonuses, completely, completely, completely outrageous. I don't care about abrogating contracts. Something needs to be done there. And they should not be paying bonuses to retain the people who got us into this mess.
As for Dick Cheney, you have got to wonder when this guy's going to shut up and go away. Not soon enough for my liking.
(END AUDIO CLIP)
(COMMERCIAL BREAK)
SANCHEZ: We're getting a lot of comments on My space, on Facebook, on Twitter. Welcome back. I'm Rick Sanchez. We are live today at Georgia State University in beautiful downtown Atlanta, although maybe not so beautiful today. We've had a lot of rain the last couple days, right?
The question that many of our viewers are tussling with and the question that we as journalists are tussling with, that's the reason we decided this week to dedicate the whole week to what's going on in the market. We are calling our programming "Road to Rescue" because this is certainly something that affects every single one of us in this country, is how much of our time on the news do we devote to doing these types of stories, to getting you to understand really the I's that are dotted and the Ts that are crossed or sometimes do you look at us and say oh, my god, I'm overwhelmed by it.
Friday, for example, we did a newscast and had a lot of stuff in it that wasn't necessarily political or economically driven. I got called out by one of my viewers. You know I'm constantly talking to our viewers. This is a fellow named Ed Walter, he lives in Montana. He finally sent me this note. I want to read it to you. I want to see if you agree with Ed about this. You ready? Let's put it up.
He says to me Rick, "None of us have the platform that you have to try and deliver the news and the important things that people need to be aware of. You do. And I know you are in a business model where if you don't make ratings, you lose that platform. So here is something to think about. Look at the ratings of "The Daily Show" during that exchange with Cramer. Look how every network covered the event. That was not because it was a smack down. It's because Stewart actually called Cramer out and confronted him with facts and said to his face that this is not a game for most people, it is their life. Sorry I got so rude, and he did, but I'm scared, he goes on to say. I'm scared for my kids. It is very serious for me. Now, I'm off to my weekend job because I'm not making ends meet right now, and my job is getting outsourced and I may lose my house. And I've worked hard my entire life. Never taken charity, never collected unemployment. Always paid my bills. It's not right. That is not the promise of America." That's from Ed Walter. One of our loyal viewers in Montana.
It's an important point and one that's certainly not lost on us at CNN. It's why we share those opinions. It's why we're transparent. It's why we come to places like Georgia State University and it's why we talk to the experts and try to ask them the tough questions. My commitment is I get it, Ed. We'll continue to do so. By the way, when we come back, let's pick up on this theme. What are we all as Americans doing? Are we stuck on "American Idol" or are we caring about what happens in our economy? It goes both ways, folks. We'll be right back.
(BEGIN VIDEO CLIP)
REBECCA: Hey Rick, Rebecca from Tennessee. AIG says they have a contract to receive these bonuses. Shouldn't that contract only be valid if they make money for the company? Not lose billions and then ask the American people to bail them out? Aren't you supposed to get fired for not doing your job? Not get rewarded? Nice example, guys.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
SANCHEZ: Nothing like getting a bunch of college students to come out and talk to you while you're doing the news because these guys behind me, they're political science majors and they're economics majors and students of both of those classes, so we're giving it up for you guys. Thanks for being with us today.
Hey, let me ask you guys a question. How many people here watch "American Idol?" You can be honest. How many watch, what is that show called? "America's Next Top Model?" You like that? I want you to listen to what Charles Barkley said recently. It goes right to Ed Walter's point from Montana that maybe we all aren't paying enough attention. Listen to Barkley.
(BEGIN VIDEO CLIP)
CHARLES BARKLEY, TNT NBA ANALYST: What's good for taking you away from reality? That's why I love sports. Think about it. If it wasn't for sports, we got the war in Iraq, we got the war in Afghanistan, we got the recession, that's what we would watch.
(END VIDEO CLIP)
SANCHEZ: The question is do we really want to be taken away from reality? Given the situation we're in right now, shouldn't we be paying attention to the reality, Mr. Barkley? This is not to take a shot at Charles Barkley. Take a look at what happened in New York this weekend. This is interesting. This video is incredible. Let me take you through it. This is a casting call Saturday for something called "America's Next Top Model." Look at that. You guys see that? You see that? They're going crazy, thousands show up. They're waiting in line at a New York hotel. Somehow reports that a car overheats, it starts making some kind of hissing sound, then some bozo decides to yell there's a bomb. It sets off a panic. People get trampled, six people are hurt, three people arrested for disorderly conduct.
This is all for a television show. It makes you wonder, is this what America cares about and if so, are they maybe caring a little too much? Maybe we can -- what do you guys think is wrong with people who are watching too much of that and not knowing enough about what's going on in the real world? Raise your hand.
(UNIDENTIFIED FEMALE): I'm actually here with Andrew. He's I think the sole history major in this crowd. I'm wondering what you think. Less distraction, more reality, more reality, less distraction? What's your take?
ANDREW: I think if the distractions become too big, they become the reality and we can never focus on the problems at hand. So we have to be really careful with all these "American Idol" distractions that we still focus on the problems we have and to find good solutions that will help everybody.
SANCHEZ: You're the professor for these guys, aren't you?
(UNIDENTIFIED MALE): Yes.
SANCHEZ: You're their teacher?
(UNIDENTIFIED MALE): Yes.
SANCHEZ: You're doing good. That was a smart response. When we come back, Dick Cheney does his very first interview and chooses CNN as his venue. He spoke to John King and said the problems with the economy, not my fault. We'll be right back.
(BEGIN VIDEO CLIP)
MARY ANN: Mary Ann, from Surfside, Florida. I think CNN could use the air time for a lot better people than Dick Cheney. Nobody wants to hear that old windbag.
(COMMERCIAL BREAK)
SANCHEZ: Here we go. Checking our twitter, My space and Face book got a lot of comments coming in. We will share those with you. We are live today to do this newscast from Georgia State University in beautiful downtown Atlanta. We would like to thank you all for having us here. We're starting now with Dick Cheney, former vice president decided to do his very first interview since leaving office, his first television interview, chose CNN as his venue to do so.
He was on "State of the Union" with John King, answering questions about whether the George Bush/Dick Cheney administration had something to do with the tough economic times we're going through right now. Here's his response.
(BEGIN VIDEO CLIP)
JOHN KING, CNN HOST: The president says well, we got a lot to do but it's not my fault. I inherited a mess. Did you leave him a mess?
DICK CHENEY, FMR. VICE PRESIDENT OF THE U.S: I don't think you can blame the Bush administration for the creation of those circumstances. It's a global financial problem. We had in fact tried to deal with the Fannie Mae and Freddie Mac problem some years before with major reforms, and were blocked by Democrats on the hill, Barney Frank, Chris Dodd. I think the notion that you can sort of throw it off on the prior administration, that's interesting rhetoric but I don't think anybody really cares a lot about that. What they care about is what's going to work and how we're going to get out of these difficulties.
(END VIDEO CLIP)
SANCHEZ: Interesting rhetoric. Well, the White House had a response as you might imagine. Here's what Robert Gibbs had to say about that today.
(BEGIN VIDEO CLIP)
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think not taking economic advice from Dick Cheney would be maybe the best possible outcome of yesterday's interview. I guess Rush Limbaugh was busy. So they trotted out the next most popular member of the Republican cabal.
(END VIDEO CLIP)
SANCHEZ: Did he just say taking advice from Dick Cheney's like taking advice from Rush Limbaugh? Wow. Ding-ding both ways. Amy Holmes is our CNN contributor she is good enough to join us with this. What do you make of this Amy Holmes? Is the vice president correct to say look, it wasn't really our fault?
AMY HOLMES, CNN POLITICAL CONTRIBUTOR: Well, you know, I think this is as much a distraction as "American Idol" and we can sit and point fingers and talk about inherited crises and what did Cheney have to say about it. Well we have a crisis right now that we have to confront. I have to say as an economics major, I am so gratified by the people you're with today and your focus all week --
SANCHEZ: All right. You guys are getting a shout-out from Amy Holmes.
HOLMES: It's tough going into the beginning. You need to understand --
SANCHEZ: But, hold on, hold on. Are we moving the conversation? If he's asked a simple question, did you have something to do with the problems that we are now dealing with during your eight years in office, why couldn't he say yea or nay or I'm not going to answer that question? He made it sound like enough.
HOLMES: Well, I think he did answer. He answered from his point of view and unfortunately, today, Robert Gibbs went into more partisanship. Barack Obama said he was going to rise above this pettiness. Let's look at the name of his budget. It's called the new era of responsibility. OK. Let's turn the page and face these problems. We have a $1.75 trillion deficit this year that the Obama administration is projecting.
They have laid out a budget of $3.6 trillion more and the students behind you, they know that in order to pay for this, you either have to print money or borrow it. You know what the "New York Times" just reported? China is worried about lending us more money because they think the value of those investments are going down and we're asking them to help fund this deficit spending. You know, we can spend all afternoon about Dick Cheney but that's not what's important right now.
SANCHEZ: I get it. You're right. When China starts calling in your loans, you know you're in a little bit of trouble, given the fact we have borrowed an awful lot from China, vis a vis Mr. Cheney to fight a war in Iraq. Before we go, Dick Cheney says it's a global problem. Did it begin as a global problem or did it start in the United States and get to the global issues?
RAJEEV DHAWAN, DIR. GSU ECONOMIC FORECASTING CTR: It was a global greed for making money and it started over here and then it went all over the world.
SANCHEZ: So it started over here?
DHAWAN: Technically.
SANCHEZ: Not because of the Republicans or the Democrats but because of everything that was going on from 1998 with Bill Clinton on through?
(UNIDENTIFIED MALE): Yes.
SANCHEZ: Amy Holmes always great to have you. Thanks so much. We'll be back in just a moment. We'll talk about what you're going to be saying as well.
Then, back to the problem of these default swaps. What are they, why do we need to know what they are and how do we make sure we don't deal with them again in the future? We'll be right back.
(BEGIN VIDEO CLIP)
(UNIDENTIFIED MALE): Hi Rick. Just wanted to say I thought Cheney's interview this weekend was hilarious. Can't think of anybody that I trust less to tell me what's really going on in the country.
(END VIDEO CLIP)
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SANCHEZ: And we welcome you back, I'm Rick Sanchez, here we are, Georgia State University talking about the road to rescue and we all have our fingers crossed while we talk about this. But here's the question, because I think Americans are angry and you know they have a right to be angry, don't they? Here's the simple question, professor, where were the regulators? What were the auditors, where were the politicians, there were the regulations that were supposed to protect us from this stuff?
DHAWAN: This is a case of a human greed over --
SANCHEZ: After World War II, after the great depression, this country put the Glass-Steagall Act to make sure that we were protected. Between 1998 and 2008, $5 billion was given to politicians all over the United States to essentially do away with most of these regulations, isn't that the real reason we're in this situation now?
DHAWAN: It's a little bit more. It's the everybody wants to get a piece of the pie without paying for it.
SANCHEZ: Uh-huh.
DHAWAN: So we have covered the three years, multiple re-fi, cheaper housing financing.
SANCHEZ: But it happened without regulation. Do you guys think the government should be involved in regulating the banks? Or we should just leave them alone and do their own thing? First, do you believe the government should be involved in regulating the banks?
(UNIDENTIFIED MALE): Yes.
SANCHEZ: Does anybody think the other way? Everybody's on board?
DHAWAN: I'm also saying the same thing, regulate. But the moment you put up some regulations, a smart mind will find a way around it. To every strategy, there's a counter strategy.
SANCHEZ: Even if they're not illegal, you still have to look in the mirror at yourself, and you know what you're doing isn't right. How do we stop that?
DHAWAN: It's a moral question; I don't have any answer for that. Ask the people who did that.
SANCHEZ: These mathematicians that work for AIG. These guys who want this $165 million bonus right now, isn't that what they were doing, they were coming up with a scheme that may be legal, but they knew that they were selling trash.
DHAWAN: They were making the chocolate and the buyer was buying and buying and eating and eating and now they have a tummy ache. So the issues go ways, not just the one who painted it, but the one who bought it. Who were the people who were buying it? Were they that dumb? Did they not read the fine print?
SANCHEZ: It seems that what you are saying is that this is the way the business model works. I just wonder, the youthful exuberance of this crowd here, do you guys buy that? Look, it's an opportunity -- go talk to that young man over there and see what he's saying, are you a conservative?
(UNIDENTIFIED MALE): No.
SANCHEZ: But you think the market should rule?
(UNIDENTIFIED MALE): I absolutely do. But I think that individual liberty is a lot more important than just like giving out money to people and doing whatnot like we have been doing.
SANCHEZ: So no rules, no regulations? You trust them to do the right thing?
(UNIDENTIFIED MALE): They should have no rules obviously, but as few rules as possible, I think?
SANCHEZ: People here, do you disagree with what he just said? How much do you disagree?
(UNIDENTIFIED MALE): A lot.
SANCHEZ: They say they still love you and you're a smart guy. Let's talk about Glass-Steagall in 1998, they do away with something that essentially says there's the Jimmy Stewart type of banks and then there is the non derivative type of banks where people go and put their money. Now everybody seems to be that kind of bank. Was that a mistake to get rid of that?
DHAWAN: I'm glad you brought up the Jimmy Stewart bank. How did he bail it out? He put his own balance sheet behind it. He took his own honeymoon money and bailed out the bank. Banks are fundamentally part of the equilibrium. It will always happen no matter what and the issue is are you prepared and when you help them out, there should be penalty against the shareholders, executives.
SANCHEZ: At way down the line?
DHAWAN: All the way down.
SANCHEZ: We thank you, professor. He's good, isn't he guys? He's standing his ground. And we're going to be back with more of this conversation and where we are going next. We are at Georgia State University.
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BRENDA: Hey, Rick, this is Brenda from West Virginia. My opinion on the economy is that it's not good. And we're getting into deeper and deeper trouble. And unless they quit bailing people out that are getting these big bonuses, we're going to keep getting in trouble.
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SANCHEZ: OK, take it away. You have got a couple of sound offs for us before we close.
(UNIDENTIFIED FEMALE): Yes, Malcolm, what are you thoughts on Dick Cheney?
MALCOM: Somebody needs to confess, we need to find out how this happened in order to better solve it.
(UNIDENTIFIED FEMALE): So there's plenty of blame to go around. Over here, Alex.
ALEX: In regards to regulation, I think the banks should be given enough rope to hang themselves but not enough rope to hang the whole country.
(UNIDENTIFIED FEMALE): All right, Tiffany.
TIFFANY: I just know that right now, we're in a really hard, tough, economic times and it's really sad that AIG feels like they can give out these bonuses to everybody when people can't even feed their children and people are homeless right now that never thought be homeless.
(UNIDENTIFIED FEMALE): There are some smart, good looking kids here at Georgia State.
SANCHEZ: We told you at this beginning of this newscast that we would be checking on Wall Street to see if it's possible that we could end up on a positive note five days in a row. We're getting to the witching hour. So let's go back to Susan Lisovicz and see what's going on.
Susan you there?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well Rick, it's going to be touch and go, the Dow has been up the entire session until your hour. The witching hour.
SANCHEZ: Oh, no!
LISOVICZ: But Rick, I'm going to say this, the market is very well behaved because it's down just slightly and given all the gains the Dow has gained about 600 points going into today. The fact that it hasn't been crushed is a good thing. It's handled this environment pretty well. Is this the beginning of a bottom? Well, I'm not going to go there, but its pretty --
SANCHEZ: Are you surprised, Susan, you watch this every single day and you saw how miserable it was five days previous to this. Did this catch you by surprise, this bounce?
LISOVICZ: The key is the banking sector. As the professor was talking about, as Bernanke is talking about, we got some good news from the banking sector and you saw four days of gains, Rick, back to you.
SANCHEZ: Touch and go, indeed, Susan Lisovicz my thanks to you and my thanks to Georgia State University. Let's take it over to Wolf Blitzer and "The Situation Room" Wolf, take it away.
