This is a rush transcript from "Your World With Neil Cavuto," September 17, 2008. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: Now, Democrats today quick to blame President Bush for the financial mess on Wall Street.
With us now, Democratic Congressman Gregory Meeks, a member of the House Financial Services Committee.
So, this is all the president's fault, Congressman?
REP. GREGORY MEEKS, D-N.Y.: Well, what it is, is, I think, for the last two years, at least, when Democrats were in control, we were saying that there's a problem in the economy. And the response that we get back, on a consistent basis, is that the market will adjust itself, that everything is OK. Don't worry about it.
And, you know, the president has the responsibility of having the appropriate agencies who are overseeing, whether it's the feds or someone, to look at the stability in the market. That did not take place.
CAVUTO: Well, actually, Congressman...
MEEKS: And, so, we are where we are.
CAVUTO: No, actually, Congressman, this administration, years ago, prior to two years ago, had been talking about concerns it had about the free lending policies of Freddie and Fannie. And they were stymied.
Now, you're quite correct to say that Democrats and Republicans stymied it, but it's not as if to say they — they too weren't aware of potential problems, right?
MEEKS: Well, you know, if you would have just come to a few of the hearings that we had at the Financial Services, on the committee, where we had administration officials before us, and we would talk, whether it's — was Chairman Bernanke, or — or even before him, Chairman Greenspan, and we would ask questions about the stability of the economy, where we were, where we were headed, and the answer that we received back would be that the market was going to fix itself, that, you know, don't be concerned, that everything would be all right.
And now we find ourselves in the situation that we are in. Now we have to figure out, where do we go from here, how do we fix it...
CAVUTO: But, Congressman, you know...
MEEKS: ... so that we can make sure that we have the confidence of the American people?
CAVUTO: For the life of me — for the life of me, I watched some of those hearings. I don't remember you or any of your colleagues saying, we've got problems with Freddie and Fannie. I don't remember you or any of your colleagues saying, these banks could go bust. I don't remember you or any of your colleagues saying that all these brokers are on a house of cards, here.
What I'm saying, sir, is that...
MEEKS: If you can recall...
CAVUTO: No, no, wait. All I'm saying, sir, is that, if you are pleading ignorance here, if that is your excuse, that it's all the president's fault, the White House's fault, and you're pleading ignorance, that's a hell of a defense.
MEEKS: If you recall, doing even with Fannie — with Fannie Mae, that there was a shift in leadership because there was problems there. And we looked at it at that time. And we said that they had to be changed. They should be. And there were changes to look at how Fannie was doing, or people were getting money, or executives were making money. And it seemed as though something was going wrong. And we all talked about it at the time.
CAVUTO: No, no, no. I remember, you, yourself, and your committee was talking about the idea to aggressively push lending to minorities and those who normally wouldn't get loans.
MEEKS: The key...
CAVUTO: The goal — no, no, seriously, the goal was commendable. You wanted to expand lending. But, in the process, you expanded it to people who shouldn't have gotten loans, right?
CAVUTO: All I'm saying, Congressman, will you admit there is enough blame to go around?
MEEKS: The key was that we did not want Fannie Mae to lose its focus on what it's — what we believed its mission should be. And that's put more Americans into homes, to make sure there was money that was available.
However, the — what Fannie Mae and what other lending institutions and the markets, you know, what they have to do now — and we believe, now, we may have to have another regulator, whether it's the Fed or a new regulator to take place, is to look at the — the — whether or not these loans or the money is credible, whether it is something that should be.
I mean, we never said that Fannie Mae or anyone should not look at someone for their credit-worthiness, not look to see whether or not they are checked if they were making the money that they needed to qualify for these loans.
CAVUTO: Didn't you have — didn't you have oversight...
CAVUTO: No, wait a minute. Didn't you — let — didn't you have oversight of those institutions?
MEEKS: We have oversight. We bring those individuals in to talk to those who were running...
MEEKS: ... those regulations. And we spoke to them...
CAVUTO: So, you should know what the heck's going on.
CAVUTO: What you're doing is, you're casting blame — you're casting blame on some others. And you're right. Maybe they're part of the blame, but, you know, Congressman, you ought to look in the mirror. You're part of it, too.
MEEKS: You know what? You know what? When you have the — when you're the president of the United States...
CAVUTO: You're responsible, I guess, for everything, for everything.
MEEKS: The buck stops here. When you're the boss, the buck stops here.
CAVUTO: Well, you know, the buck might stop with him, Congressman.
CAVUTO: No, no, wait. The buck might stop with him, but it has a funny way of passing through you.
MEEKS: The bucks stops there. You know, when — what should have happen at that particular time, in my estimation, we should have found ways to work together. And that's what needs to take place in Washington. As opposed to fighting one another and not listening to one another...
CAVUTO: Well, would have, should have, could have.
CAVUTO: You know, I will tell you, Congressman, would have, should have, could have.
CAVUTO: I should have had the salad. And I didn't.
All right, Congressman...
MEEKS: And I'm hoping that we'll be able to do that in the future.
CAVUTO: All right. All right.
We'll have a president that we can work, and we'll work together collectively to get things done for the American people.
CAVUTO: Right. Right. Right.
Congressman, thank you very much. All right.
All right, you know we're the number-crunchers here at FOX. So, we thought we'd crunch some of these numbers.
Here's where they stand: $29 billion for Bear Stearns, $200 billion Freddie Mac, Fannie Mae, now $85 billion to bail out AIG. And, in the president's $168 billion stimulus package, and another proposed $50 billion stimulus package, we are talking more than a half-trillion dollars.
Now, can taxpayers afford it?
Former presidential candidate Ron Paul has a one-word answer: No.
Congressman, not convinced, huh?
REP. RON PAUL, R-TEXAS: Oh, no. I think your numbers are low.
PAUL: Let's hope it's only half-a-trillion.
My numbers are much higher. They're unknown, because we — with that legislation to bail out Fannie Mae and Freddie Mac, it was unlimited; let the Treasury decide. So, it's going to go up and up. And, every day, you hear of another emergency.
CAVUTO: So, what would you have done, Congressman, when — let's say — I guess Fannie and Freddie are the biggest. I know we have talked about Bear Stearns that was rescued, Lehman that wasn't, AIG that was.
CAVUTO: Freddie and Fannie seemed to be like the penultimate, that they had to be rescued. Did they?
PAUL: No, I don't — I don't think so. They should have looked at what I was saying five years ago. Somebody put a speech on the Internet this morning, which I sort of forgot about, but, five years ago, before the committee, I said, this line of credit to the Treasury is artificial.
It's adding fuel to the fire. The Fed's at fault, but you add fuel to the fire with lines of credit, community investments acts, you know, and HUD and all this affirmative action, this causes malinvestment, overbuilding, and it was a bubble forming.
And my proposal back then was to remove the line of credit because a bubble was forming and was going to lead to a lot of trouble. And that's exactly where we are. But you can't solve this problem by saying, it's all the Republicans', it's all the Democrats' fault. It has to do with monetary policies.
CAVUTO: Congressman, I hear you on that.
And here's — now we got this pickle, right, and now I'm worried that fears cascade upon fears and take out the good with the bad. And that appears to be happening now, when big-name brokerage houses like Goldman and Morgan, that are not nearly as tainted by any of this mortgage stuff, get dragged down.
Where — where do you see this going?
PAUL: It has a long way to go.
I think what you're seeing is the unwinding of trillions of dollars of derivatives. Nobody knows about it. When a guy like Warren Buffett admits he doesn't understand them and it's a big mess, you know it's a big mess.
So, it's the derivatives. Everybody's involved. AIG, I thought, they talk about assets and they were OK, and, "Oh, don't worry that much." It turns out that assets had to do with derivatives. And this is all a fiction. It's a — it's an expansion. It's part of the bubble that is started by the Federal Reserve. And then everybody speculates.
I mean, they buy derivatives on derivatives on derivatives. It has to unwind. You can't build on a weak foundation. And that's what everybody's trying to do.
And, unless you recognize the problem and say, it's an unsound monetary system, you're going to see the destruction of dollar. I mean, don't — won't people get — wondering about going — and going to something of real value? I mean, what — what happened to gold today? Finally, people think, "Hey, maybe this system is unsound."
CAVUTO: I hear, Congressman. But when both of the premier presidential candidates talked about more bailouts or more rescue money or — or re-regulating that will cost a great deal of money, what do you say?
PAUL: I say they're completely wrong. I mean, they're going to compound the problem because that's going to weaken the dollar.
I mean, all this money that we use for bailing out is the creation of money out of credit. Where did they get this $85 billion? Did it come out of your pocket or my pocket?
No. Did it come from an appropriation? No. It's just the Federal Reserve over there guaranteeing credits, expanding.
CAVUTO: All right.
PAUL: And that is destructive to the dollar. This is very, very destructive to the dollar. And, when you destroy the dollar, you're going to destroy homes for a lot of people and medical care for everybody else, because you're going to see skyrocketing inflation.
All right, Ron Paul, always good having you.
PAUL: Thank you.
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