Congress Tries To Find Financial Culprit

Copyright © 2009 National Public Radio®. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ALEX CHADWICK, host:

From the studios of NPR West, this is Day to Day. I'm Alex Chadwick.

ALEX COHEN, host:

And I'm Alex Cohen. Hello wardrobe, something really big has come up, and I don't have a thing to wear. Just ahead, Governor Palin's makeover and what the women of Slate's XX Factor have to say about it.

CHADWICK: First, we're going to begin with a baseball moment from last night's Game One of the World Series. The playback play announcers got the cameras to focus on a quote that Tampa Bay Rays Manager Joe Madden had posted in the clubhouse. Here it is. Rules cannot take the place of character.

COHEN: That quote from the former chairman of the Federal Reserve Board, Alan Greenspan. He said much the same again today when speaking to the House Oversight Committee.

Mr. ALAN GREENSPAN (Former Chairman, Federal Reserve Board): As I wrote last March, those of us who have looked to the self interest of lending institutions to protect shareholder's equity, myself especially, are in a state of shocked disbelief.

CHADWICK: The Chairman of the Committee, Democrat Henry Waxman, asked Mr. Greenspan about his record of advocating fewer rules, less regulation of the financial industry.

Representative HENRY WAXMAN (Democrat, California): Do you feel that your ideology pushed you to make decisions that you wish you had not made?

Mr. GREENSPAN: Well, remember that what an ideology is is a conceptual framework with the way people deal with reality. Everyone has one. You have to - to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact. But, if I may, may I just finish, in answer to the question previously...

Rep. WAXMAN: You found a flaw in the reality...

Mr. GREENSPAN: A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

COHEN: Alan Greenspan called the current financial crisis a once in a century credit tsunami, but he also said the $700 billion rescue plan should be enough to deal with the credit crisis.

CHADWICK: While he spoke, the Treasury Department official who is managing the Troubled Asset Relief Program, or TARP, he was over in front of the Senate Banking & Housing Committee. He is Treasury Interim Assistant Secretary Neel Kashkari.

Mr. NEEL KASHKARI (Interim Assistant Secretary of the Treasury for Financial Stability, Troubled Asset Relief Program): We have accomplished a great deal in a short period of time, but our work is only beginning. A program as large and complex as this would normally take months or even years to establish. But we don't have months or years. Hence, we are moving to implement the TARP as quickly as possible while working to ensure high quality execution.

COHEN: The top Republican on the committee, Senator Richard Shelby of Alabama, asked why the Treasury Department didn't simply require that the banks actually lend out their billions of federal dollars and not use it for any other purposes. Here is Kashkari's answer.

Mr. KASHKARI: We also didn't want to be in a position of micromanaging our banks. We wanted to create a program where thousands of institutions across our country would volunteer to participate, and if we came with very specific guidelines on, you must do this, you must do that, we were afraid that we would discourage firms, discourage healthy institutions from participating.

COHEN: We now go to those institutions that will be playing a key role in the government's rescue plan.

Copyright ©2009 National Public Radio®. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to National Public Radio. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.