All Eyes On Candidates For Reaction To Economy
SCOTT SIMON, Host:
This is Weekend Edition from NPR News. I'm Scott Simon. This week may have seen the biggest financial crisis in the United States since the 1930s. As we speak to you this weekend, Congressional leaders and the administration are busy trying to draw up a rescue plan. NPR's Senior News Analyst Dan Schorr joins us. Dan.
DAN SCHORR: Hi, Scott.
SIMON: Hello. And you know, last week we were on the air as the hurricane broke.
SIMON: Kind of the same this week, financial hurricane and maybe then some. As we mentioned, Congressional leaders, members of the administration are meeting through the weekend. What do we know about any plan as it exists now?
SCHORR: Well, the indication they've given is that there's going to be one tremendous buyout. They estimate it could be up to half a trillion dollars in taxpayer money, and they simply would take over all these very bad and soft debts. I think the model for this was Resolution Trust Corporation that was created after the savings and loan crisis in which the government moves in, takes over all of these debts and then hopes to dispose of them later on.
SIMON: As some people have pointed, though, with the Resolution Trust Corporation, the government was buying real estate which has actual value. There are a lot of people who will tell you that the root of this crisis is that there's a lot in the numbers that don't reflect any value at all.
SCHORR: That's right, but they still need some model to go by and so they are doing that. It's a question now of whom to blame for the whole thing. And I have here Time Magazine this weekend, How Wall Street Sold Out America. And I think we'll be hearing a lot more from this point on on who goofed.
SIMON: We have the distinct pleasure of being with, I think, perhaps the only working newsman in the United States now for whom the crash of 1929 was not just a historical analogy.
(SOUNDBITE OF LAUGHTER)
SIMON: You were around for that.
SCHORR: I was around then, yes, and in some ways I was a small scale in this way. What happened then was that there was a run on the banks. President Roosevelt closed the banks, declared a bank holiday and then conceded to move in very vigorously, creating the Securities and Exchange Commission, and somehow this seems to be much deeper, maybe because there is so much more money involved than what I remembered from the '30s.
SIMON: Of course we haven't, at least so far, knock wood, bread lines, large-scale unemployment as happened in the 1930s.
SCHORR: That's right. And that could still come. I mean, this thing is not over, from all I gather. The reason that they are rushing through this kind of a bailout package is that everyday that passes has a risk of this thing getting worse and worse, and at the end of the line there will be industries which will be discharging their workers. So we have not yet, I think, reached the bottom of this.
SIMON: Seems to me way back in the 1990s, all the talk about masters of the universe and Gordon Gecko, and in fact, the movie "Wall Street," there were people that were warning that there should be a limit to this. But in practical terms, did anyone foresee this coming?
SCHORR: I don't know. I mean, Senator John McCain says that he thinks that Chris Cox, the chairman of the SEC, Securities and Exchange Commission, should have and ought to be fired for not having done so. I that's rather oversimplistic. I think there had to be a grand conspiracy of Wall Street and bankers in order to make this come about. I would not be quick to assign individual blame.
SIMON: And of course, this crisis is occurring or is coming to a head less than seven weeks before the presidential election. You, of course, noted that Senator McCain, among other things, called for the dismissal of the chairman of the SEC.
SIMON: Senator Obama says he's going to wait before releasing details of his economic plan. He's sensitive to what effect that might have in the markets.
SCHORR: Well, I must say, and not everyone will agree with me, but I think any kind of financial crisis like this is worse for happening during an election year. I mean, the candidates, who don't know much more than we know about this, are forced to go and announce programs, announce fire this, let's do this, and let's do establish that. I don't think that politics with a financial crisis is necessarily very helpful.
SIMON: If these bailouts and accumulated aid programs are going to cost the taxpayers at least half a trillion dollars, how is it possible for anyone running for office to talk about the billions of dollars they want to spend on other government programs?
SCHORR: It becomes the increasingly difficult. It becomes more and more difficult for them to talk in their terms about something which doesn't lend itself to political talk.
SIMON: And of course, there are people who are concerned that if the government gets too involved, that's going to create an artificial economic environment and be worse than the problem.
SCHORR: That's right. They know there's a historic line here that when things go very bad, people cry for regulation, and then we get a period of time when people want deregulation and want the government out of things. And here we have a conservative government that's practically wedded to deregulation, forced now to engage in a big, big act of regulation. We may get out of this another new agency to police this whole thing, but that's the way it has been. And we had Teddy Roosevelt had to take action, then Franklin Roosevelt took action, then we had the savings and loan crisis. In each case there's an urge to go back to regulation, which the conservatives have tried to avoid.
SIMON: Dan, thanks very much.
SCHORR: Thank you, sir.