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| TIME | SPEAKER | TEXT |
|---|---|---|
| 00:01:14 |
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WHY WAS HE IN YOUR BOOK, A BOOK THAT WAS PUBLISHED BY THE AMERICAN ENTERPRISE INSTITUTE? |
| 00:01:20 |
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WELL, I ALWAYS LOOKED AT FANNIE MAE AND FREDDIE MAC AS KEY EXAMPLES, MAYBE THE POSTER CHILDREN OF... |
| 00:02:05 |
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WE STARTED A NUMBER OF WEEKS AGO TRYING TO GET YOU TO COME TALK TO US AND WE WERE ON VACATIONS AND... |
| 00:02:17 |
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OH, YES. THIS HAS BEEN QUITE A WEEK. |
| 00:02:20 |
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WHERE ARE YOU PERSONALLY COMING FROM? WHERE DO YOU RESIDE AND WHAT HAVE YOU DONE IN THE PAST? |
| 00:02:26 |
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WELL, I'VE BEEN IN THE GOVERNMENT A FAIR AMOUNT. I'VE NEVER RUN FOR OFF, BUT I'VE HELPED PEOPLE WHO... |
| 00:02:41 |
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HARVARD LAW. |
| 00:02:42 |
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HARVARD LAW SCHOOL. DURING THAT TIME I CAME IN AND OUT OF GOVERNMENT. I WAS A COUNCIL OF NELSON ROCKEFELLER.... |
| 00:03:24 |
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WHEN DID YOU START GETTING INTERESTED? |
| 00:03:27 |
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WHEN I WAS AT THE TREASURY DEPARTMENT. FANNIE MAE WAS A FAIRLY SIGNIFICANT COMPANY IN THE EARLY 1980'S... |
| 00:04:38 |
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THE STATEMENT BY RALPH NADER HAD THE WORDS -- THE LETTERS G.S.E. IN IT. I WANT TO RUN A VERY BRIEF... |
| 00:04:55 |
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THESE PREFERED STOCK PURCHASE AGREEMENTS WERE MADE NECESSARY BY THE AMBIGUITIES IN THE G.S.E. CONGRESSIONAL... |
| 00:05:44 |
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OK. BREAK IT DOWN. WHAT IS M.B.S.? |
| 00:05:50 |
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MORTGAGE-BACKED SECURITIES. |
| 00:05:51 |
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WHAT DOES THAT MEAN? |
| 00:05:52 |
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WELL, WHAT HAPPENS -- ONE OF THE WAYS THAT FANNIE AND FREDDIE OPERATE IS TO CREATE POOLS OF MORTGAGES.... |
| 00:06:05 |
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OK. LET ME STOP YOU FOR A SECOND. I BUY A HOUSE, I GO TO A BANK. THE REALTOR GETS ME A MORTGAGE. ... |
| 00:06:17 |
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UH-HUH. |
| 00:06:18 |
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WHAT HAPPENS TO THAT MORTGAGE? |
| 00:06:21 |
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WELL, IF THE MORTGAGE GETS TO FANNIE MAE OR FREDDIE MAC, IT'S PUT INTO A POOL WITH A LOT OF OTHER... |
| 00:07:34 |
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AS AN INDIVIDUAL, COULD I TURN RIGHT AROUND AND BUY |
| 00:07:40 |
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ABSOLUTELY. |
| 00:07:41 |
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PREFERED OR COMMON? AND WHAT'S THE DIFFERENCE. |
| 00:07:43 |
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NO. IT'S NOT THAT KIND OF SECURITY. IT'S CALLED A MORTGAGE-BACKED SECURITY. WHAT IT WOULD SAY IS THIS... |
| 00:08:10 |
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SO IF I HAD BOUGHT A SECURITY, AND WHERE WOULD I BUY THAT, THROUGH -- |
| 00:08:14 |
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THROUGH A BROKER. |
| 00:08:16 |
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AND I OWNED IT RIGHT NOW. |
| 00:08:17 |
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UH-HUH. |
| 00:08:19 |
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AND THE GOVERNMENT JUST TOOK OVER FANNIE MAE AND FREDDIE MAC. DO I STILL HAVE THAT SECURITY BACKED?... |
| 00:08:23 |
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OH, SURE. SECURITY IS ABSOLUTELY SOLID. THAT'S ONE OF THE REASONS THE GOVERNMENT HAD TO TAKE OVER... |
| 00:08:38 |
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HOW MUCH OF THOSE SECURITIES DO THE CHINESE OWN? |
| 00:08:40 |
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OH, I DON'T KNOW THE NUMBER, BUT IT WOULD BE VERY LARGE. PROBABLY RUNNING INTO MAYBE THE HUNDREDS... |
| 00:08:47 |
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JAPANESE, SAME THING? |
| 00:08:49 |
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VERY LARGE. YEAH. MOST CENTRAL BANKS OWN THESE KINDS OF SECURITIES, NOT ONLY THE MORTGAGE-BACKED... |
| 00:09:53 |
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OK. WHAT IS A G.S.E.? A GOVERNMENT-SPONSORED ENTERPRISE? |
| 00:10:00 |
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GOVERNMENT-SPONSORED ENTERPRISE. |
| 00:10:02 |
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AND WHEN WAS THE FIRST ONE STARTED? |
| 00:10:06 |
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FANNIE MAE WAS CREATED IN 19 68 FROM AN EXISTING ORGANIZATION CALLED FANNIE MAE, WHICH WAS STARTED... |
| 00:10:24 |
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IN OUR GENERAL GOVERNMENT? |
| 00:10:27 |
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IN THE GENERAL GOVERNMENT. AND THE JOHNSON ADMINISTRATION REALIZED THAT THE WAY FANNIE MAE WAS GROWING,... |
| 00:12:06 |
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I WANT TO JUMP IN THIS PROCESS, BECAUSE I FOUND THIS ON THE WEB, AGAIN FROM RALPH NADER, AND HE WROTE... |
| 00:13:01 |
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YES, C.F.O. |
| 00:13:07 |
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JAMIE GORELICK, SHE WAS THE VICE CHAIRMAN OF FANNIE MAE, TOOK AWAY $26 MILLION IN THOSE YEARS, 1998... |
| 00:13:51 |
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RIGHT. |
| 00:13:53 |
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WOULD LET THIS KIND OF MONEY BE TAKEN OUT OF THIS ORGANIZATION? HOW DID THAT HAPPEN? |
| 00:13:58 |
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WELL, THEY ARE PRIVATE COMPANIES, AFTER ALL. IF THEY HAVE PRIVATE ZAIRE HOLDERS, THEIR OBLIGATION... |
| 00:15:01 |
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WAS THE -- WAS ON LINDEN JOHNSON'S PART CYNICAL? |
| 00:15:03 |
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IN WASHINGTON IT'S HARD TO TELL WHAT IS SIN CHASM THIS IS CALLED SMOKE IN MIRRORS, I THINK. THE IDEA... |
| 00:16:02 |
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WELL, AS YOU KNOW, AN AWFUL LOT OF POLITICAL PEOPLE IN THIS TOWN WERE PUT ON THE BOARDS OVER THE YEARS.... |
| 00:16:07 |
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UH-HUH. |
| 00:16:09 |
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BUT I FOUND THIS -- I'M GOING TO GO OVER A LIST IN ONE OF YOUR BOOKS. I FOUND A COUPLE PARAGRAPHS... |
| 00:17:16 |
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WE CALLED "FAIL," WHICH IS A LONG WAY OF SAYING A REGULATOR OF THIS. THEY'RE SUPPOSED TO BE A PRIVATE... |
| 00:17:41 |
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IS THAT RIGHT? |
| 00:17:42 |
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YEAH. I JUST BRING THAT UP, BECAUSE WHEN YOU WEIGH IN THIS, YOU LOOK AT THE FACT THAT HE WAS NOT AN... |
| 00:17:53 |
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YES, ABSOLUTELY. I WAS FOR THIS, FOR A NUMBER OF THE THINGS THE PRESIDENT WAS PROPOSING AND STILL... |
| 00:19:59 |
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AGAIN, HELP US UNDERSTAND HOW THE LEFT AND THE RIGHT COME TOGETHER ON BOTH ENDS OF THIS, FOR AND AGAINST... |
| 00:20:49 |
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UH-HUH. WELL, YEAH. FANNIE MAE AND FREDDIE MAC ARE GENEROUS IN THIS RESPECT, AND THAT IS IT WAS ALWAYS... |
| 00:21:44 |
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WELL, WHAT ABOUT BAILING OUT BEAR STEARNS? |
| 00:21:46 |
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WELL, ALL OF THESE THINGS HAVE THEIR REASONS, WHICH ARE SOMEWHAT DIFFERENT. THE BEAR STEARNS ISSUE... |
| 00:23:28 |
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DO PEOPLE RUNNING THESE INSTITUTION EVER PAY A PRICE? THEY WALK OUT WITH THESE TREMENDOUS SEVERANCES.... |
| 00:23:40 |
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THIS IS UNFORTUNATELY IS PART OF THE PROCESS OF RECRUITING EXECUTIVES VERY FREQUENTLY. THEY GET CONTRACTS.... |
| 00:24:40 |
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I SEE AT "THE WASHINGTON POST" THIS MORNING, A PIECE OF THE SEVERANCE PACKAGES COULD BE WORTH AS MUCH... |
| 00:25:17 |
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YEAH. WELL, I THINK FROM THE STANDPOINT OF THE BOARD'S OF DIRECTORS -- LET'S ASSUME THE PRESIDENT... |
| 00:25:57 |
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LET ME SHOW YOU A PIECE OF PAPER. THIS IS NOT VERY FANCY GRAPHICS, BUT THERE ARE 70 MEMBERS OF THE... |
| 00:26:24 |
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THAT'S RIGHT. |
| 00:26:25 |
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FROM FANNIE MAE, AND OF COURSE MONEY FROM FREDDIE MAC, BUT WE CAN ADD TO THAT, NOT ONLY DO THEY GET... |
| 00:26:37 |
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RIGHT. |
| 00:26:39 |
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AND THEN YOU HAVE THE FOUNDATION, WHICH WAS SHUT DUNN LAST YEERK WHICH I WANT TO ASK YOU ABOUT. AND... |
| 00:26:54 |
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VERY GOOD QUESTION. AND IN FACT UNTIL THEY RAN INTO THEIR FINANCIAL DIFFICULTIES, THERE WERE MANY... |
| 00:28:34 |
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BY THE WAY, IN 2005, TOTAL LOBBYING EXPENDITURES -- FREDDIE MAC -- THIS IS NOT EVEN FANNIE MAE. $12,565,000.... |
| 00:28:49 |
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IT SURPRISES ME IT'S THAT LOW. |
| 00:28:53 |
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IT WAS CLOSE TO 16, 17. |
| 00:28:54 |
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THEY HIRED JUST ABOUT EVERY LOBBYING FIRM IN WASHINGTON, D.C. |
| 00:28:58 |
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AT ONE POINT, 42 OUTSIDE LOBBYISTS. |
| 00:29:00 |
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ONE OF THE REASONS THEY DID THAT IS NOT THAT THEY NEEDED 42 OUTSIDE LOBBYISTS,. THEY JUST WANTED TO... |
| 00:29:48 |
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WHERE WAS THAT? |
| 00:29:51 |
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I WAS A DIRECTOR OF THE MORTGAGE GUARANTEE INSURANCE CORPORATION, WHICH IS A MORTGAGE INSURER, AND... |
| 00:29:58 |
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AND IN WHAT WAY? HOW WOULD YOU DEAL WITH FANNIE MAE? |
| 00:30:02 |
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WELL, THEY GUARANTEE -- THEY INSURE MORTGAGES THAT FANNIE MAE MAKES -- FANNIE MAE MAKES A MORTGAGE... |
| 00:31:25 |
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THERE WAS A REPORT IN SEPTEMBER -- ACTUALLY IT WAS IN JULY BY NATIONAL PUBLIC RADIO. THEY JUST HAD... |
| 00:31:39 |
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YES. |
| 00:31:41 |
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I MEAN, YOU HAVE PEOPLE COMING OUT OF THE REAGAN ADMINISTRATION -- YOU WORKED IN THE REAGAN ADMINISTRATION.... |
| 00:32:00 |
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RIGHT. |
| 00:32:02 |
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WHAT -- HOW DOES THIS HAPPEN? WHERE ARE THE MORALS OF PEOPLE WHO HAVE BEEN IN THE GOVERNMENT? THEY... |
| 00:32:17 |
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IT'S VERY SAD. IT'S VERY SAD THAT PEOPLE ARE WILLING TO DO THIS. BUT THE TROUBLE IS THAT THIS WAS... |
| 00:33:22 |
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LET ME GO THERE -- I DON'T MEAN TO BE ACCUSATORY OF ANY INDIVIDUAL, BUT JUST TAKE SECRETARY OF THE... |
| 00:33:36 |
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YEP. |
| 00:33:38 |
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WICK PEEDYA SITE SAYS HE'S WORTH $700 MILLION. HE SERVED ON THE FINANCIAL FORUM, "TIME" MAGAZINE CALLED... |
| 00:34:17 |
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ALTHOUGH I CERTAINLY WOULDN'T BLAME HEREN ALLISON -- HERB HALL SON YET. |
| 00:34:29 |
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YOU DO NEED TO HAVE KNOWLEDGE OF THE FINANCIAL MARKETS IN ORDER TO FUNCTION IN THE FINANCIAL MARKETS.... |
| 00:34:55 |
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COULD I, THOUGH, SUGGEST THIS, AND JUST SEE WHAT YOUR REACTION IS. DON'T YOU REALLY HAVE TO HAVE ... |
| 00:35:01 |
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TO THE LEADERSHIP. AND MORE IMPORTANTLY, JUST ASK QUESTIONS? |
| 00:35:05 |
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YES, ABSOLUTELY. AND THE FACT THAT THEY BROUGHT IN PEOPLE FROM WASHINGTON FOR THESE BOARDS WAS A TERRIBLE... |
| 00:36:00 |
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OK. WE'VE ESTABLISHED THAT THEY SPEND A TRM AMOUNT OF MONEY ON ADVERTISING. THEY SPEND A TREMENDOUS... |
| 00:36:16 |
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YEP. |
| 00:36:19 |
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THEY HAD THIS KIND OF QUASI BACKING -- NOT FULL BACKING OF THE UNITED STATES GOVERNMENT. AND THEN... |
| 00:36:24 |
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YES. THIS IS A VERY INTERESTING THING, BECAUSE, OF COURSE, WE TEND TO THING OF FOUNDATIONS AS CHARITABLE... |
| 00:36:43 |
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LET ME PUT ON THE SCREEN SOME INFORMATION FROM THE FANNIE MAE ADMINISTRATION. FUNDED BY $650 MILLION... |
| 00:37:05 |
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MISS STUART WENT TO WORK INSIDE FANNIE MAE, AND THEN IN A STATEMENT MADE BY DIRECTOR JIM LOCKHART,... |
| 00:37:50 |
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WELL, IT SERVED THEIR POLITICAL PURPOSES, LIKE EVERYTHING ELSE AT FANNIE. THE BOARDS OF DIRECTORS... |
| 00:38:39 |
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DO YOU HAVE ANY IDEA WHY THEY SHUT IT DOWN? |
| 00:38:41 |
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YEAH. BECAUSE I THINK THEY RECOGNIZED THAT THIS WAS THE PURPOSE, THAT WHAT THEY WERE DOING -- EVERY... |
| 00:39:28 |
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BY THE WAY, DAN MUDD IS THE SON OF ROGER MUDD. |
| 00:39:32 |
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YES. BUT FRANKLY THIS IS JUST ANOTHER PART OF THE SCANDALOUS PROCESS THAT WAS GOING ON HERE. THIS... |
| 00:40:49 |
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YOU CAN GO ON GOOGLE AND GO LOOKING FOR THE FOUNDATION AND SOME OF THE INFORMATION IS STILL THERE.... |
| 00:42:31 |
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SURE. |
| 00:42:33 |
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IT'S JUST AN IDEA, AND THERE ARE THOUSANDS OF THEM ON HERE. |
| 00:42:35 |
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SURE. AND THAT BOUGHT THEM VERY SUBSTANTIAL POLITICAL SUPPORT. SEE, ORDINARY CORPORATIONS, OF COURSE,... |
| 00:43:51 |
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NOW, YOU WERE A LAWYER IN GIBSON CRUTCHER -- ISN'T THAT A POLITICAL -- |
| 00:43:55 |
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NO. |
| 00:43:56 |
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AREN'T THERE A LOT OF POLITICAL LAWYERS IN THERE? TED IS THERE ? |
| 00:44:01 |
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YES, TED IS -- I'M PROUD TO SAY, I WAS A PARTNER OF TED OLSON. YES. BUT THIS IS -- IT'S ABOUT 850... |
| 00:44:19 |
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SO YOU DIDN'T LOBBY ? |
| 00:44:23 |
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I NEVER LOBBIED, BUTIC WE HAD ONE OR TWO -- BUT I THINK WE HAD ONE OR TWO LAWYERS IN A 150-LAWYER... |
| 00:44:33 |
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I MEAN, THE REASON I'M BRINGING THIS UP, FANNIE MAE AND FREDDIE MAC ARE NOT THE ONLY AMERICAN INSTITUTIONS... |
| 00:45:37 |
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WHEN I READ THAT I SAID, IRAQ WAR. THAT WAS THE SAME THING. I WANT TO READ SOME MORE. GET MR. DODD... |
| 00:46:26 |
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THERE'S A PERSON WHO IS ATTEMPTING TO FOOL EVERYBODY. I THINK HE UNDERSTOOD WHAT WAS HAPPENING HERE.... |
| 00:49:52 |
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LET ME SHOW YOU AND THE AUDIENCE PLACES YOU'VE SEEN. WE HAVE VIDEO OF BOTH FANNIE MAE AND FREDDIE... |
| 00:51:02 |
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I WOULD SAY THERE ISN'T ANY SUBSTANTIAL DIFFERENCE AT ALL BETWEEN THEM. FANNIE IS THE LARGER, THE... |
| 00:51:19 |
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WHY DO WE NEED TWO? |
| 00:51:22 |
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WELL, I THINK IT WAS GOOD TO HAVE TWO BECAUSE THEY WERE IN SOME COMPETITION. IF WE ONLY HAD ONE, THAT... |
| 00:51:49 |
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ANOTHER ARTICLE THIS MORNING FROM "THE WALL STREET JOURNAL." HOME LOAN BANKS DRAW FOCUS AMID RESCUE... |
| 00:52:08 |
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YOU KNOW, A GENERALIST, I AM A GENERALIST, DROWNS IN ALL THIS LANGUAGE. YOU GET ON, THERE ARE 12 OF... |
| 00:52:20 |
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YEP. |
| 00:52:22 |
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G.S.E.'S? |
| 00:52:24 |
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YES, OF COURSE. |
| 00:52:26 |
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GOVERNMENT-SPONSORED ENTERPRISES. |
| 00:52:28 |
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RIGHT. |
| 00:52:30 |
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AND YOU ADD -- |
| 00:52:33 |
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THAT'S NOT A GOVERNMENT SPONSORED ENTERPRISE. |
| 00:52:36 |
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THAT REPLACED WHAT IT WAS IN |
| 00:52:37 |
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RIGHT. |
| 00:52:38 |
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UNDER HUD. |
| 00:52:39 |
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RIGHT. |
| 00:52:43 |
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WHAT ABOUT THESE FEDERAL -- I MEAN -- |
| 00:52:46 |
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LOOK, RONALD REAGAN SAID, THE CLOSEST WE'LL EVER COME TO IMMORTALITY IN THE LIFE IS A GOVERNMENT AGENCY,... |
| 00:53:26 |
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DO YOU HAVE ANY IDEA HOW MUCH MONEY THESE INDIVIDUAL BOARD MEMBERS MAKE ON THESE BANKS AND ON THIS... |
| 00:53:31 |
|
NO. |
| 00:53:33 |
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ON THIS FANNIE MAE. DO THEY GET PAID? |
| 00:53:36 |
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I'M SURE IN FANNIE AND FREDDIE THEY GET PAID, AND IT'S TRUE ALSO IN THE FEDERAL HOME LOAN BANKS. I... |
| 00:53:45 |
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WHEN THE STOCK HAS FALLEN AT FREDDIE MAC AND FANNIE MAE TO $70 DOWN TO BELOW $1 IN LESS THAN A YEAR,... |
| 00:53:53 |
|
I HAVE NO IDEA. BUT IF THEY -- I DON'T KNOW WHETHER THEY GOT STOCK COMPOSITION. I DON'T KNOW WHETHER... |
| 00:54:03 |
|
BUT WOULD YOU PROTECT YOURSELF TO MAKE SURE THAT IF ALL THAT'S GOING ON RIGHT NOW HAPPENED, THAT YOU... |
| 00:54:10 |
|
IF THEY WERE GIVEN STOCK OR HAD BOUGHT STOCK WHEN THEY BECAME DIRECTORS, THEY PROBABLY SHOULD NOT... |
| 00:54:34 |
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YOU'VE BEEN AROUND THIS TOWN FOR A LONG TIME. HOW MUCH TIME YOU SPEND IN THE TOWN NOW? |
| 00:54:38 |
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ABOUT HALF THE YEAR. |
| 00:54:44 |
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WHAT DO YOU DO FOR A.E.I.? |
| 00:54:45 |
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I WRITE. I ORGANIZE CONFERENCES. I SPEAK FROM TIME TO TIME. WHEN I SAY HALF THE YEAR, I'M HERE HALF... |
| 00:55:02 |
|
NOW, PEOPLE ON THE OTHER SIDE OF POLITICS WOULD SAY A.E.I. IS FUNDED BY AMERICAN INDUSTRY, HAS |
| 00:55:09 |
|
NOT QUITE. IT'S GOT A THIRD OF ITS FUNDING COMING FROM CORPORATION, A THIRD FROM INDIVIDUALSEN AND... |
| 00:55:36 |
|
HOW WOULD YOU EXPLAIN TO PEOPLE LOOKING IN FROM THE OUTSIDE TO WASHINGTON, D.C. RIGHT NOW SEEING THESE... |
| 00:55:44 |
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RIGHT. |
| 00:55:45 |
|
ONE WORD YOU COULD APPLY TO SOME OF THIS IS GREED. |
| 00:55:48 |
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UH-HUH. |
| 00:55:49 |
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WHERE IS IT COMING FROM IN THIS SOCIETY? WHY IS THIS HAPPENING IN THIS TOWN NOW? |
| 00:55:54 |
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WELL, I'M NOT SURE IT'S ONLY NOW, BUT IT'S CERTAINLY BECOME MORE PROMINENT NOW. I'VE NEVER UNDERSTOOD... |
| 00:56:49 |
|
WHY HASN'T THE CONGRESS DONE MORE THAN IT HAS? |
| 00:56:51 |
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BECAUSE THE CONGRESS IS PART OF THE PROBLEM RATHER THAN PART OF THE SOLUTION. |
| 00:56:55 |
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LET ME READ THE LAST PARAGRAPH OF TODAY'S EDITORIAL IN "THE WALL STREET JOURNAL." |
| 00:57:28 |
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THAT'S POWERFUL LANGUAGE. |
| 00:57:30 |
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NOT TO SINGLE OUT BARNEY FRANK ON IN. HE'S HAD MANY HOURS ON THIS NETWORK, SO HE'S HAD HIS TIME TO... |
| 00:57:39 |
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YES, AND IT'S TRUE. THIS COULD NOT HAVE HAPPENED IF BOTH PARTIES WEREN'T IMPLICATED. AND I THINK THAT... |
| 00:59:27 |
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PETER WALLISON, THANK YOU VERY MUCH FOR YOUR TIME. |
| 00:59:31 |
|
THANK YOU. [CAPTIONING MADE POSSIBLE BY WISN-TV] FOR A D.V.D. COPY OF THIS PROGRAM, CALL THE NUMBER.... |
NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.
