Time to Point the Finger at Democrats for the Economy?

This is a rush transcript from "Hannity," March 16, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: And tonight in "Your America," as Republicans tried to regulate Fannie Mae and Freddie Mac the Democrats stomped their feet and woefully obstructed their efforts which begs the question — is it time to look into the role that congressional Democrats played in purposely ignoring the signs of impending economic crisis?

Joining me now to discuss this question is former Oklahoma Congressman J.C. Watts.

Congressman, how are you?

J.C. WATTS, FORMER OKLAHOMA CONGRESSMAN: Sean, I'm doing well. How are you tonight?

HANNITY: It's good to see you as always. Thank you for being with us.

Look, is it a problem.

WATTS: Thank you. Thanks for having me.

HANNITY: Is it a problem to you that in 2004 that Maxine Waters, for example, under the excellent leadership of Franklin Raines who made $90 million in six years, that she's working, her husband is serving on the board of directors, they've owned $250,00 in stock in a bank that ends up getting — I'm sorry, $12 million in TARP funds? Is that a problem?

WATTS: Well, Sean, if — I don't think that's Maxine Water's problem. I think if the bank, One United is the bank you're referring to, if they got money and they didn't qualify for it, I think it's — that's the Treasury Department's — that's their problem.

I think when you look at Fannie and Freddie, I think there's — you and I have had this discussion on your radio show. I think there's enough credit to go around or enough finger pointing to go around on the part of Republicans and Democrats who I think we saw collective neglect when it came to Fannie and Freddie, and they had no oversight, and we are dealing with what we're dealing with today.

HANNITY: Yes, all right, I guess — you know what, Congressman, everybody I know is angry. You know look at the situation with AIG, I was just discussing with Dick Morris earlier in the program here. They're angry. We're talking about billions and ultimately trillions of dollars that we're going to try and use to get out of this economic mess.

Then we find out that, you know, Franklin Raines made 90 million bucks in six years, headed Fannie Mae and you know, he's quoted in The New York Times in September 1999, you know, saying, hey, we want to lower the standards and give loans to people that can't afford them.

And I'm wondering why aren't people more angry with that?

WATTS: Well, Sean, when you look at the Clinton administration, when they came in, housing was the cornerstone of the initiative they wanted to launch. The Bush administration came in, the same thing, Fannie and Freddie both were kind of centerpieces of both of those administrations' initiatives.

And I think there are Republicans and Democrats who wanted to do something about Fannie and Freddie, said they need to be reined in, they were outside of the federal charter. They were undercapitalized, and instead, for six or seven years I led a charge to get a reform and saying that if ever there's a blip from the housing market they would destabilize the economy.

And here we are today, you know, fighting the battle where we're spending trillions and trillions of dollars trying to save these very institutions that they were the problem to start with.

HANNITY: All right. That's a good point, but here's what Franklin Raines said. This is the guy, he made $90 million in six years if I haven't said that enough. But he said yet there remain too many borrowers in 1999 whose credit is just below the notch where underwriting has required and has been regulated for the subprime market.

So, in other words, they forced these banks and said they'd buy up these loans, and he's benefiting, and the American taxpayer, the people that pay their mortgages, they're on the hook for it, and you know what, I think people have a right at this point to be pretty angry, Congressman. I'm sure you're probably angry.

WATTS: You bet, I am angry, Sean, and if it would help, I would cry knowing where we are today when we didn't have to be here, and there were many alarms going off, you know, over the last 12 to 15 years, and I was kind of chiming the alarms over the last six or seven years, and nobody wanted to pay any attention to it, even press sources said no, no, no, no, we don't want — you know, if members of Congress aren't going to be concerned about this, why should we write about it? Why should we talk about it?

No, you're right, the American people should be hostile over it, they should be disillusioned in the process because, again, we should not have to be where we are today had there just been appropriate oversight. We were not asking for more regulation, we just wanted to oversight agency, OFHEO, to have some teeth.

HANNITY: All right.

WATTS: ... to rein them in.

HANNITY: Last question. Who is to blame the most for this now that the American taxpayer is going to foot the bill?

WATTS: Well, I — you know, it's easy to point fingers, and as I said, we are where we are, and what's done can't be undone. We just have to make sure that we don't do this again. I think Fannie and Freddie stand to be stronger coming out of this thing because they were a part of the problem and they've gotten over $200 billion, Sean, of taxpayers' money when they were kind of the cornerstone of what we see happening in the economy today.

But, again, as I said earlier, I think there — I think it was collective neglect on the part of Republicans and Democrats. I don't think it was just Republicans or Democrats. I think it was both.

HANNITY: I would — look, I don't want to be partisan here because the American taxpayers are footing the bill. But the Republicans did warn in those hearings in 2004. The Democrats told us everything was fine. That's Barney Frank and Maxine Waters.

WATTS: Right.

HANNITY: All right. J.C., are you running for governor?

(LAUGHTER)

WATTS: I'll call you tomorrow.

HANNITY: All right, good to see you, my friend.

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