RENEE MONTAGNE, host:
On this side of the Atlantic, the Bush administration is forging ahead with its financial-rescue plan. And we took this opportunity to check in with Kevin Phillips. The former Republican strategist is now an economic commentator known for his scathing criticisms of Republican policy. He says Wall Street doesn't need just a rescue; it needs a parole officer. Those were his words. And he says it should not be Treasury Secretary Henry Paulson.
Mr. KEVIN PHILLIPS (Political and Economic Commentator): Hank Paulson is a fellow who's got a sort of watermelon-sized understanding of what makes Wall Street tick, but a sense of politics that could fit in a midsized raisin. His approach to all of this, I think, has been extremely inefficient. He's been more concerned with bailing out Wall Street than solving the problem, because part of the solution to the problem had to be putting Wall Street through a wringer, and he wasn't up for that.
And his first proposal for the bailout was a three-page - basically, think of it as a memorandum that Paulson should be made the economic Caesar of the United States. It was a bit of an ego trip. So his three-page thing got shot down like a, you know, World War II German plane in 1945, and I would not think he would be a parole officer. I would not think that he's really qualified to be the regulator, either.
MONTAGNE: There are those who have suggested, though, in these last days, that Hank Paulson - that Henry Paulson should or might be a good person to stay on in the next administration, whichever administration that would be. What would you say to that?
Mr. PHILLIPS: If I were a Democratic president coming in, and I was talking about George W. Bush as the second Hoover, the last thing in the world you want to do is take the people who were his chief economic lieutenants and say, hey, here we are. Let's wrap around these people. And you lose your explanation of why you're going to do better than the people who screwed it up.
MONTAGNE: You have written about the expansion of the financial industry. In a nutshell, tell us how, in particular, this expansion led to this financial crisis.
Mr. PHILLIPS: What we're seeing now is the result of a very dangerous but little analyzed and even less well-understood coming together of forces in the 1990s and this decade, in which finance has moved ahead of manufacturing and become vastly bigger than anything else in the private economy. And the ability of major Frankenstein financial institutions to do all these new things and the experiments and derivatives and all these things that the average American - now they know the terms, but they don't know what they mean. Just think of it as more ways to sell the same stuff, and you're not too far off. And there's no real reform of them being undertaken. They're just getting transfusions and bailouts. And I think that's a problem.
MONTAGNE: When you talk about reform, are you talking about much more regulation than currently exists or at least than is being used?
Mr. PHILLIPS: Well, I would say much more regulation than currently exists or can be implemented with any clarity. Power has to be shifted in Washington so we have a strong regulatory body that isn't tied to the financial sector, as the Federal Reserve Board is. They're virtually a creature of the banking system. I actually have somebody that I think could run that sort of organization. I don't have him, but his name comes rapidly to mind: Warren Buffett.
Because when Franklin D. Roosevelt came in in 1933, and he had the Securities Exchange Commission, a new agency, set up to police Wall Street, he didn't take some professor out of a college who lacked experience with the real world. He took Joe Kennedy, the father of John F. Kennedy, who'd been a Wall Street buccaneer. And Joe Kennedy had made enough money that he could relax, and he could turn reformer. And he policed them. Buffett would be a marvelous man to administer that. And frankly, I think that the big Wall Street firms would be scared - uh - speechless, let me say speechless.
MONTAGNE: Kevin, thanks very much.
Mr. PHILLIPS: Thank you.
MONTAGNE: Kevin Phillips' most recent book is called "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism."