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FARAI CHIDEYA, host:

Now, we've got more on how this financial crisis is affecting you. First of all, where's your money? If you hear your bank has collapsed, what does that really mean for your finances? Dr. Julianne Malveaux is here to give us some insight. She's an economist and the president of Bennett College. Hi, how you doing?

Dr. JULIANNE MALVEAUX (Economist: President, Bennett College): Hi. How are you, Farai?

CHIDEYA: Quite well. So, if your bank technically fails like Washington Mutual or Wachovia, does that mean that you're got a zero balance all of a sudden?

Dr. MALVEAUX: No. If you have less than $100,000 - up to $100,000 in an account, it's insured by the FDIC. So, while the - you know, Wachovia's been taken over by Wells Fargo, while WaMu has also been taken over, your deposits are good. So people who have less than $100,000 should not be concerned.

Now, if you have over $100,000, technically you may have a problem. And this is a wake-up call for everyone else who may have more than $100,000 in one account. It's now time to think about diversifying your accounts, because the FDIC covers deposits up to $100,000.

CHIDEYA: So, with these bigger banks, people who have their ATMs can walk up and still withdraw money just like they did before. But what if you are part of a smaller bank or a credit union, even if the money is guaranteed, could you hit a snag if the bank has problems, and is it possible for a bank to say to you or a credit union to say to you, we're going to give you your money, but just not right now.

Dr. MALVEAUX: That's - we're way down the line on that, Farai. That's not likely to happen anytime in the next month or so. So, people should not - people should not panic. People really should not panic. Certainly that - it's within the realm of possibility that such a thing would happen, but it's not going to happen right away.

First of all, Congress is so attuned to the consumer in this, and any notion that there will be a run on a bank will be immediately addressed by Congress, but secondly, that's just not where we are. Frankly, my position is that while I think that this is an important moment, I think that Mr. Paulson our Treasury Secretary has way overplayed his hand, which is why as Ron was reporting, there is some reluctance.

This is not the kind of emergency that's an emergency. It's not a tomorrow thing. And so, because I think that there's a lot of politics involved here, lot of other things involved, and inquiring minds and that's what our Congress is supposed to be, are raising all kinds of questions.

But we're not going to have a situation in the next 30 days where banks are going to say, we can't pay you.

CHIDEYA: All right. This plan does not...

Ms. MALVEAUX: Now stock is another story. Let me say something else, stock is another story.

CHIDEYA: OK.

Ms. MALVEAUX: Stock in a bank - if you have WaMu stock, if you have Wachovia stock, be careful. Look at that. Look at what's going on there. This is not a time necessarily to bail out, but people who have stock in Merrill Lynch are - you know, lost about 70 percent of their value.

CHIDEYA: Well, what about homeowners, because there was some talk of finding ways to help homeowners directly who are in trouble. What happened to that?

Ms. MALVEAUX: There will be - we've got to keep our eyes on what's going on, and what kind of negotiations are taking place. There should be something for homeowners, and if you're going to help banks, you have to help homeowners.

And I think that Barney Frank, Congressman Frank from Massachusetts, have done a really great job of injecting some populist, (unintelligible) mean into something that could have simply been a bailout for banks. We're not going to see the results of that. Again, you know, 60 to 90 days is the timeline on this.

CHIDEYA: Yeah, and Barney Frank is head of the House Finance Committee or Financial Services Committee. Anyway, let's turn to a Republican. Former House speaker, Newt Gingrich, talking on "This Week" with George Stephanopoulos.

Mr. NEWT GINGRICH (Republican, Former House Speaker): You have the former chairman of Goldman Sachs asking for $700 billion. And, in his initial request asking for it at such an un-American way...

Mr. GEORGE STEPHANOPOULOS (Chief Washington Correspondent, ABC News; Anchor, ABC's Sunday Morning Political Affairs Program): No review.

Mr. GINGRICH: Then I think he should - I think he should have resigned. I think Paulson has terminally misunderstood the nature of the American system. Not just no review. No judicial review, no congressional accountability. Give me $700 billion. $700 billion, I'll be glad to spend it for you. That's a centralization of power that is totally un-American.

CHIDEYA: All right, so you mentioned Secretary Paulson before. Explain what kind of power he has, and what do you think about Newt Gingrich's statements? Obviously, very passionate statements about this.

Dr. MALVEAUX: You know, Farai, I never thought in my lifetime that Newt Gingrich and I would ever be on the same page. But in this case, we are. I mean, I think that Mr. Paulson has been irresponsible. I think that his initial proposal was way out of line and that's why we do have a process that allows the Congress and others to weigh in. The Democrats, Congresswoman Pelosi, the Majority leader, Congressman Frank have really been exceptional in this process because what Paulson asked, he asked for $700 billion. Just give me $700 billion. Excuse me.

You know, give me one percent of that for my college I'd be over the moon. But he just asked for it without any kind of strings. His initial proposal was really not good. What the Congress has done is slowed him down and said that 'you know, moneys will be essentially dispersed but on a time line and with congressional approval and with more details about who they're going to go to and why. So what we have here is clearly a situation where the confidence and the entirety of our monetary system - is about confidence. If people don't believe it works, then it's not going to work.

So to assure enough confidence by saying that the Feds will be the guarantor of last resort. What the Democrats have done is said but the Feds will be paid back first. So this is not a gift, it's a loan. And that's really important for the American people who have not had any gift. Gingrich is right here. Paulson has been irresponsible and probably should step down. But then again, my position is that there are a whole lot of people who might step down and they might start at 1600 Pennsylvania Avenue.

CHIDEYA: All right. Very quickly, when you think of homeowners, what should they be looking for next from the political system - this political debate?

Dr. MALVEAUX: Homeowners should be looking at interest rates. They should be looking at the context of interest rates to see what's going on. Right now, money is very tight. It's going to loosen up. If you're in negotiations right now, you might want to slow those down. If your trying to buy a home in the next 30, 60 days. You might want to slow down and just make sure that you get a good interest rate. People who are about to be in foreclosure should be aggressive about dealing with their banks and waiting to see what kind of opportunities they'll have because opportunities will arise. Do not do anything in the next 30, 60 days and so it pushes you - you know, find an attorney, find help. There are people out there - ACORN and others who will help you get through this. People should really be aggressive about taking care of their needs.

CHIDEYA: All right. Dr. Malveaux, thank you.

Dr. MALVEAUX: Thank you.

CHIDEYA: Dr. Julianne Malveaux is an author, economist and president of Bennett College. Just ahead, she's been spoofed on "Saturday Night Live." He's been called a victim of self-inflicted foot in mouth disease. The VP candidates, Sarah Palin and Joe Biden, go head to head this week. And our bloggers are getting us ready for the big debate.

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