As Debate Begins, GOP Seeks To Alter Financial Bill
MELISSA BLOCK, host:
Back here in Washington, the debate is on in the Senate over the financial regulation bill.
BLOCK: Republican senators ended a three-day filibuster yesterday, and they'll try to change the bill through the amendment process.
Joining me to talk about that is Republican Senator Mike Johanns of Nebraska. He's also a former agriculture secretary.
Welcome to the program, Senator Johanns.
Senator MIKE JOHANNS (Republican, Nebraska): Thank you. Good to be with you.
BLOCK: Now, you said earlier this week when you were supporting that filibuster that you didn't want to bring what you called a flawed partisan bill to the floor for debate. And that once it went up for debate, that it would be hard to change it, but that is, of course, exactly what's happened here.
How hopeful are you that you can get the changes that your party wants?
Sen. JOHANNS: I remain hopeful. There is a ways to go on this bill. Some positive steps were taken. My hope is we can have a process that is less partisan than the health care bill was and get to a piece of legislation that makes sense.
BLOCK: Well, let's talk about one provision that you've had some trouble with, and that's about derivatives. You said that provisions go too far. The Democrats want banks to have to spin off their derivative trading, they want to guarantee transparency, have derivatives traded on open exchanges.
What's wrong with that?
Sen. JOHANNS: Transparency is great. I think there should be 100 percent transparency. I think if somebody is dealing in a derivative, that should be absolutely transparent. I really don't see any exceptions to that, whatsoever.
Now, the other piece of this that I would mention that is very, very concerning to me in terms of derivatives. This word has tended to pick up a very, very negative connotation. But the reality is that's part of what keeps our interest rates low.
Let me give you a good example. Let's - had a very small Nebraska bank in my office just recently, a representative, and they used derivatives. How? They make a more long-term loan to a rancher. And they say to themselves, I can't tell you where interest rates will be three years from now, or four years from now, or five years from now. So what they do is they literally get in the marketplace to try to figure out how to keep themselves from being exposed to higher interest rates.
And so these are issues that I think many people look at and say, well, that doesn't affect me, but it really can have a significant impact.
BLOCK: Now, Senator Johanns, you're talking about a small bank and consumers. But among the people who are really opposed to this derivative language is the billionaire investor Warren Buffett. He's from your state. He wants changes to this language and you support those changes. You support the changes and so does your Democratic colleagues from Nebraska, Senator Ben Nelson.
Sen. JOHANNS: Yeah, this is...
BLOCK: And people are asking, are you basically carrying water for Berkshire Hathaway, protecting a huge home state interest?
Sen. JOHANNS: I don't think he's ever supported me. You know, his political views are different than mine, so I - literally. I don't think he has. But whether he has or not, here's the policy.
Let's say that we decided here in the Senate that the best way to solve the mortgage crisis was to say to everybody who has a mortgage out there: If your mortgage is greater than the value of your house, we're going to require you to post additional money. In other words, you've got to pay that mortgage company 10 percent more, 20 percent more, 25 percent more.
BLOCK: Collateral, you're talking about.
Sen. JOHANNS: Yeah, collateral - cash out of your pocket. Well, people would be outraged. They'd say, wait a minute. You can't change my contract after I've signed it. Well, that's what this derivatives bill attempts to do.
I think when you start interfering with existing contract rights, you're going to have some very, very serious constitutional problems. And that kind of thing can literally jeopardize the validity of the legislation and I don't think we should go there. And it, for one thing, it's that. But for another thing, it's just the wrong policy.
BLOCK: Senator, let me run by you some language that came from your Republican colleague, Senator Judd Gregg of New Hampshire. This week, he blasted the Democrats for what he called rampant pandering to populism. Do you see it that way? Or do you think that language could backfire?
Sen. JOHANNS: Oh...
BLOCK: Make the Republicans look really tone-deaf.
Sen. JOHANNS: I just think there're so many good things about this bill. Today there are so many policy problems though, but they're fixable. That's the encouraging thing about this. And I guess what I would say today is, look, I see this as very important, serious policy. And if we don't do this right, we can have a very negative impact on our economy and I don't think anybody wants that to happen.
BLOCK: Well, Senator Johanns, thanks for talking with us today.
Sen. JOHANNS: Absolutely.
BLOCK: That's Senator Mike Johanns, Republican of Nebraska.
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