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Special Report

All-Star Panel: Reaction to push to relax mortgage rules

This is a rush transcript from "Special Report," May 14, 2014. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JACK LEW, U.S. TREASURY SECRETARY: Access to mortgage credit remains unnecessarily tight for all but the most pristine borrowers. Lack of available credit is one factor holding back the housing recovery and preventing the economy from operating at its full potential.

TIMOTHY GEITHNER, FORMER U.S. TREASURY SECRETARY: If people are worried about are we going to go recreate or preserve the same system that helped contribute to the crisis, that's a very valid concern. We shouldn't do that. We shouldn't do that. But again, what they're trying to do is balance that need for reform in the long run with the reality that we have an economy where it would be good if we had a little stronger growth for a while. It's a difficult balance.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: The current treasury secretary and the former treasury reacting to news that the Obama administration is looking at moving to loosen borrowing standards for mortgages in an effort to boost the housing measuring and the economy. Take a look at two new polls out from Fox. The condition of economy, still in recession, 49 percent, recovery under way, 48 percent. And then more detail on this, you can see the breakdown, excellent, good, only fair, and poor, as compared to October 2013.

Let's bring in our panel, Steve Hayes, senior writer for The Weekly Standard, Kirsten Powers, USA Today columnist, and syndicated columnist Charles Krauthammer. You heard the concerns. It was in a front page Wall Street Journal article today, Charles. What about this move?

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, we should have concerns. We know what caused the collapse. It was easy move. It was huge amounts of mortgages given out to many people who had no business buying a house in the first place.

And if this administration is worried about the worst recovery since the Second World War, as it should be, and it has to find a place that it wants to fine tune, instead of risking here going on the side of having this thing blow up in the future again, having a bubble and a collapse, how about doing something that is not risky, Keystone, a deregulating or at least stopping the suffocating regulation of energy where we can get huge amounts of economic expansion, instead of fine tuning a mortgage system, which if anything, after the worst recession since the Second World War, what we want to have, if you are going to err on the side of being strict and not on the side of loosening the regulations which could allow a repeat of the bubble.

BAIER: Kirsten?

KIRSTEN POWERS, COLUMNIST, USA TODAY: So they loosening up credit for affordable housing so it would be low income housing. A lot of what happened prior to the collapse of the economy was middle class people, frankly, overextending themselves. It wasn't just affordable housing.

So I think that -- I don't think it's a good idea for any standards to be loosened, but I don't know that this is necessarily loosening standards as much as it is just making this credit available and then the banks will decide whether or not the lenders meet the standards. And so we want to avoid what we had last time around which was a free-for-all. You could get any kind of loan you wanted with no income. We need to make sure that that doesn't happen again.

BAIER: They are suggesting, I guess, that they have these safeguards in place and that is it is a different animal this time around.

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: Well, I think, as with so many of these things, the devil will be in the details. I think there was an interesting USA Today piece about the lack of affordable housing and the fact in most markets around the country housing has become less affordable. It seems to me the wrong way to go about making housing more affordable, whether it's for middle income or low income potential home buyers, is to relax the standards.

If that's in fact, what they are going to do, it sets us on the path to the kind of crisis that we saw. Look, if you go back, there was bipartisan urging back in the 90s and in the Bush administration to loosen those standards. I think eventually one -- sort of the Democrats didn't come back off of that. They didn't get it right, didn't learn the lessons. Republicans I think have tried. But it looks like now we're going to see yet another partisan split on this issue.

BAIER: What did you make of the interview with Tim Geithner?

HAYES: Well, it was absolutely fascinating. To read the accounts of Geithner's book, and I have not read all of the book, but to read the accounts of Geithner's book, one of things that he says most forcefully is that he really didn't like Washington. He didn't like the way Washington operated. He didn't like the politics of Washington.

But just watching your interview, what really struck me is that he seems to almost have become a creature of Washington, a political operative rather than the sort of fiscal policy wonk that he once was, or monetary policy wonk that he once was. When you ask him about the exchange with Glenn Hubbard, the Romney adviser who in his book Geithner says was open to raising taxes, acknowledged that taxes had to be raised –

(CROSSTALK)

HAYES: -- couldn't say it, couldn't say it. And Hubbard has responded saying that's absolutely made up -- didn't happen. And Geithner says, no, no, my memory is on that crystal clear. And then you ask him about the Dan Pfeiffer exchange in which Geithner writes quite clearly, that the White House told him to mislead the public on the effect of Social Security on the deficits. And he says, no, no, the White House despite what I might have written, the White House never told me to mislead. Well, he wrote that the White House told him to mislead. And it just feels like somebody who tried to avoid being sort of captured of Washington and all of the problems with Washington, at least in that instance, in that interview sounded to me like he was captive of Washington.

BAIER: Kirsten?

POWERS: It's possible that in one case he got it wrong, you know, and in another case he didn't, I guess. It's possible that he doesn't remember this incident correctly, though based on what we know about this White House I'd probably put my money on the fact that the original story is the true story. And I think it was so specific when you say that it was a dog whistle. I mean, there's no dog whistle, if there's no story. If you are saying well, actually, know, they weren't telling me to say something that's not true then where did the dog whistle come from. So it is too bad that he doesn't own it, because I don't think he was a creature of Washington. He clearly was uncomfortable with this, and you see it in his stories about pushing back against Stephanie Cutter, saying I'm not going to fan outrage against the banks.

KRAUTHAMMER: In the interview he comes across as a very reasonable, low key, moderate guy who sees the two sides of every argument. But when you came up to him on the Pfeiffer issue, he simply couldn't answer the question because what he wrote was pretty unequivocal, and he danced around it. But I would go with what he actually writes in a book rather than going with the dancing in your interview. It reminds me Charles Barkley was once asked about a quote in his autobiography and he objected and said I was misquoted. So this is essentially Geithner saying the same thing to you. You know, it's obvious what had happened. And it's like the White House is in all things. The lie was unnecessary. You can just easily have said we're not going to raid Social Security without adding a fact that was simply not true. And to his credit, Geithner wouldn't say it on the air.

BAIER: I read the book. It was an interesting read, detailed in the defense of the administration moves and a lot of kind of interesting emotion about some of those big moments, like that first press conference he essentially says was painful as the Dow dropped 400 points as he started talking. Thank you, Secretary Geithner, for coming on.

Next up, new emails in the IRS targeting scandal that seemed to bring the controversy right here to Washington.

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