Lawmakers Unhappy With $700 Billion Bailout Plan

This is a rush transcript from "Your World With Neil Cavuto," November 18, 2008. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All right, well, don't look now, but they are back, apparently because they have never, ever die. I am talking about the bailout zombies, banks and brokerage houses, and, today auto companies.

Oh, sure, these guys might look like night of the living dead, but this is Washington, where rescues never die, and it seems the cash to keep them alive never ends.

All right, welcome, everybody. I am Neil Cavuto. And this is your eerie world.

And this ain't a bad B-movie, my friends. It is right now a horror show, top auto execs' dash for cash today turning into a deadly game of, do it or we die, and maybe you do, too.

We have got a Republican who is for it and one who is dead-set against.

But, first, well, they approved it — now big questions over what exactly they approved — lawmakers second-guessing that $700 billion financial rescue and trashing the guy who came up with it.

(BEGIN VIDEO CLIP)

REP. MAXINE WATERS (D), CALIFORNIA: WATERS: The fact that you, Mr. Paulson, took it upon yourself to absolutely ignore the authority and the direction that this Congress had given you just amazes me.

• Video: Watch Neil's interview with Maxine Waters

HENRY PAULSON, U.S. TREASURY SECRETARY: We did not buy illiquid assets for a — for a very good reason. We are going to continue to evaluate and look for programs that Will protect the taxpayer and are effective.

(END VIDEO CLIP)

CAVUTO: All right, the lady doing that drilling and grilling today on Capitol Hill, Democratic Congresswoman Maxine Waters of California.

Congresswoman...

WATERS: Yes?

CAVUTO: ... it was kind of rough stuff there. He — he did this because, he said, times and conditions changed.

Would you have rather him, you know, keep digging a hole and doing the wrong thing?

WATERS: No, I would rather him simply tell us why, from the time we gave him the authorization to do the loan modifications on Americans who are losing their homes, why he did not begin a process to do it.

I don't know whether he never intended to do it or whether there was a change of strategy or thinking somewhere along the line. But the fact of the matter is, the legislation was drawn up around the Treasury buying up all of these toxic mortgages and bad paper, so that we could stabilize this economy because of the subprime meltdown that has taken place.

CAVUTO: So, you voted for this, and you say you voted for something that didn't turn out to be the case?

WATERS: That's absolutely true. And not only did I vote for it. I worked very hard and went around to the Democratic Caucus, to the Latino Caucus, the Black Caucus, convincing them that we had to vote for this bailout even if we didn't like the idea that some of it could be used to bail out business, but we had to vote for it because the centerpiece of it was the loan modification and helping homeowners with these foreclosures that are sweeping this country.

CAVUTO: But isn't The — aren't the changes that were enacted now closer to what you wanted in the first place, ma'am?

WATERS: No.

CAVUTO: In other words, he is now saying, if I understand it correctly, that — that this is geared toward the very kind of homeowner protections you wanted in the first place.

WATERS: No. No. That's not what he's saying.

He's saying that it was important to stabilize the economy by investing — that is, get an equity position in the banks — because they wanted to unfreeze the credit crunch.

CAVUTO: Right.

WATERS: They felt that, if they put money into the banks, the banks would be able to lend money to buy cars and for student loans and other kinds of things. He did not talk about the foreclosure problem.

CAVUTO: And, if he had done that, you would have rejected this package, right?

WATERS: If he had done what?

CAVUTO: If he had done, that you would have rejected this?

WATERS: If he had done that, I would have said to him that the only reason that many of us would — would vote for the bill...

CAVUTO: Right.

WATERS: ... is that they include in the package — we're not against other people getting some bailouts, but we're for homeowners.

We are for people who were pursuing the American dream, who were solicited with many of these exotic products, who were told, you can get in for a low down payment, you can get in on an interest-only loan, yes.

CAVUTO: Well, but not everyone's a — not everyone's a victim, right? Some people are just stupid, right, and they signed up to something...

WATERS: No, no, no, but they're...

CAVUTO: I mean, it's easy to say, yes, all right, someone coerced you.

WATERS: No, that's not true.

CAVUTO: But...

WATERS: Let me tell you, I know lawyers and members of Congress and other professionals who were solicited and got loans that they didn't understand. They didn't understand the adjustable rate mortgage. They didn't under the margin, yes.

CAVUTO: But, Congresswoman, then, why is a taxpayer's responsibility then, for whatever reason, smart people were snookered or whatever you want to say happened...

WATERS: Yes. Yes.

CAVUTO: ... that, if you don't read your loan documentation, if you don't know adjustable rates go up as well as down...

WATERS: Yes.

CAVUTO: ... why should we, as taxpayers, who are part of this rescue package or any rescue package, be rescuing them?

WATERS: Why would you want to rescue the big boys on Wall Street, who are supposed to be smart, but have driven this economy into the ground?

CAVUTO: Well, I say don't rescue anyone.

WATERS: Why — why is that any better?

CAVUTO: But I think what you guys on — did...

WATERS: Why is that any better than rescuing the homeowner?

CAVUTO: But, Congresswoman, I'm just saying, you — you — you took the genie out of the bottle, right? Now you're rescuing everyone. I'm against it from the beginning, the banks, the brokerage house...

WATERS: No, we're not rescuing everyone.

We're rescuing those Americans who sought the American dream, who simply want a home, and was told they could get a home with this kind of mortgage that they were afforded.

CAVUTO: But, come on, Congresswoman, you are...

WATERS: It was bad mortgage, yes.

CAVUTO: ... you are very smart, and you're very savvy.

WATERS: Yes. Yes, I am.

CAVUTO: You can't tell me — now, come on, you can't tell me that someone knows, "Geez, I got a mortgage and I really can't afford this, but I got, you know, into this on a lark, and I'm going to go with this."

And when the real...

WATERS: No.

CAVUTO: Well, wait.

When real estate prices were going up, it looked like a brilliant move. When it turned around, it didn't.

Why should we, as taxpayers, bail out people who ended up making a stupid move?

WATERS: Why should you bail out the biggest banks in America that were supposed to have the smartest people?

CAVUTO: Congresswoman, you're echoing my point: Don't bail out anyone. A slippery slope has been undone here.

And — and that's why.

WATERS: Well, no, I come from a different point of view.

My point of view is this. We have Americans who work every day, who have families, who want the American dream, who want to own a house. We've taught them that. That's how people have been socialized, to want that home.

And, so — but what we did not do...

CAVUTO: Yes, but, Congresswoman, we have Americans...

WATERS: Yes?

CAVUTO: ... who are paying their bills...

WATERS: Of course.

CAVUTO: ... who are dutifully meeting their obligations...

WATERS: Of course. They are. They are.

CAVUTO: ... who did read their mortgage paperwork, and they're pissed as hell now when they realize that a lot of people who didn't or were snookered or were victims or whatever you want to say are now going to be rescued or given a hand. And they're saying, what the heck?

WATERS: No, they're not.

CAVUTO: Yes, they are.

WATERS: As a matter of fact...

CAVUTO: Yes, yes, Congresswoman, they are.

WATERS: ... no, they're not. No, they're not. That is more being said by people in the media.

Yes, people want equal treatment, but I think Americans tend to sympathize with the fact that this administration took all the regulations off. They threw regulations out of the window. And instead of FDIC and SEC and OCC and all of these regulatory agencies stopping these exotic products from coming on the market...

CAVUTO: Congresswoman...

WATERS: ... and saying, no, something's wrong with that.

CAVUTO: ... there's a lot of blame...

WATERS: You shouldn't do that.

CAVUTO: Congresswoman...

WATERS: Yes?

CAVUTO: ... there's a lot of blame to go around, but let's be fair, ma'am.

WATERS: Yes.

CAVUTO: A lot of the aggressive lending practices were done under Democrat and Republican administrations. I'm not doing...

WATERS: No regulations.

CAVUTO: Come on. Come on. I think you're...

WATERS: No regulations.

CAVUTO: ... you're big enough to admit that there was fault on both sides. I'm just saying, is the answer then just bailing people out, just rescuing them?

WATERS: You're not just bailing people out. People wish you were just bailing them out.

Do you know that the average homeowner that's in trouble cannot call the loan servicer or the bank and get any help? That's wrong. As a matter of fact, I have been working these personally. I have been calling servicers. I have been calling CEOs of banks. I have been helping to do these workouts.

CAVUTO: Then let me ask you this, Congresswoman...

WATERS: Yes?

CAVUTO: ... one of the pieces of legislation being looked at has a requirement that if you're 90 days or more late on your mortgage you're going to get help.

What's to stop an average Joe or Joanne, who's dutifully paying his or her mortgage, from not paying it for three months just so that he or she can get that help?

WATERS: Oh, I think that's just hype. The average American is not looking for a way to game the system.

CAVUTO: It's not hype, it's reality. I would want in on that gravy train.

WATERS: They're not looking for a way to game the system.

What you have is, you have people who work every day, who got into a loan for one rate, and they were paying their $2,000 a month. Then, when this loan reset with the margin on top of the existing interest rate, the loan — the mortgaged quadrupled or doubled.

CAVUTO: All right.

WATERS: Those are the people in trouble. And those are the ones we should help, because they did not know about adjustable-rate mortgages, how they work. And those — those realtors — those...

CAVUTO: Well, I don't know. Congresswoman, we all make — we all make our own bed. We all make our own bed.

WATERS: No, no, no, no, no. It's not — it's not...

CAVUTO: Actually, I never did. As a kid, I never did. You're right about that. I never did...

(CROSSTALK)

WATERS: Well, you probably didn't, but a lot of us did make our own bed.

CAVUTO: Congresswoman...

WATERS: But the fact of the matter is, we need to help the American taxpayer...

CAVUTO: Gotcha. All right.

WATERS: ... who's struggling to kept their family in that house.

CAVUTO: All right. It is always a pleasure, ma'am, regardless.

WATERS: Thank you.

CAVUTO: Thank you very much, Congresswoman.

WATERS: Certainly.

CAVUTO: All right.

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