INTERVIEW TRANSCRIPT

C-SPAN’S “NEWSMAKERS”

Guest: Senator Chris Dodd (D-CT)

Reporters: David Herszenhorn, New York Times & Damian Paletta, Wall Street Journal

Moderator: C-SPAN

TAPE DATE: Wednesday, May 7, 2008

AIR DATE/TIME: SUNDAY, May 11, 2008 at 10 a.m. and 6 p.m. ET

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STEVE SCULLY, HOST: Joining us on C-SPAN’s Newsmakers program, Senator Christopher Dodd on Capitol Hill, as we focus on the housing industry and the credit card legislation.

And here in our studios, David Herszenhorn, New York Times congressional reporter, and Damian Paletta, reporter for the Wall Street Journal.

Thanks for much for being with us.

Senator, let’s begin with the housing legislation. And one of the essence of the bill would require taxpayers to insure potentially up to $300 billion in some of these refinance loans.

Why should taxpayers have that responsibility?

SEN. CHRISTOPHER DODD, D-CONNECTICUT, CHAIRMAN, SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE: Well, first of all, we’ve had this bill scored. And the maximum it would cost, according to the Office of Management and Budget, CBO, it’s about $1.7 billion. And so, the actual exposure here, potential exposure, is very, very limited.

But obviously, what we need to do here, first of all, is try and keep people in their homes wherever we can. We’re talking about owner occupied residences. We’re not talking about speculators. We’re not talking about people who never could have afforded under any circumstances the mortgage that they were sold or got into back a year or two ago, whenever it was.

So, we’re talking about the owner occupied. It’s a voluntary program.

And basically, it’s designed to make sure that we make it possible for people to stay in their homes. They have to pay the insurance. They have to pay something back into the government program as equity increases in their property.

But remember this. For every 7,000 to 8,000 foreclosures that are filed every day, there are 15,000 homes that live next door to that foreclosed property. And what we’re getting here is a spiraling down effect.

When you end up with one foreclosure on a one-eighth square mile – a city block in most cities – the property values of every other home in that city block, even though they’re all current in their mortgages, declines immediately by one percent. We’re told crime rates go up by two percent almost immediately, as well.

So, this is not only designed to deal with the homeowner who could lose their home, but also the properties adjacent in the neighborhood of that home, as well, to make sure that they don’t end up losing value, as many are today.

Lastly, and maybe most importantly, the problem today is, we don’t know where the bottom of any of this is. Capital has frozen up.

I use the analogy with my constituents back in Connecticut of saying, let me describe this problem to you in these terms. I own a grocery store, a small grocery store. And I want you to shop in my store. Ninety percent of my products that I want to sell you are terrific, the best food you’re ever going to eat in your life.

Unfortunately, 10 percent of my products in the store will kill you. I don’t know which one, 10 percent it is, but they’re there. And that’s what basically is going on here.

Most of the products that we’re talking about investing in are very secure, very solid. There are some out there that will do great damage to you, and people don’t know which ones they are or where the bottom is.

So, this program has two goals: keep people in their homes, and help to get to that bottom, that floor that is absolutely critical if you’re going to free up capital. And that’s the value of the program.

SCULLY: Let me just follow up quickly. How do you deal with the mechanics of the legislation, the differences that you have with the House version? And more importantly, you have the Treasury secretary and the White House this past week saying that your bill is an excessive risk to taxpayers and overly burdensome.

DODD: Well, I got a kick out of this White House. I mean, this is a White House that was willing to put $29 billion of American taxpayer on the table to make the deal sweet enough for JP Morgan Chase to merge with Bear Stearns. That never came for a vote up here at all. And they’re relying on Bear Stearns’ valuation of their assets that they hope to sell over the next few years.

So, with all due respect to the administration, they’ve already put taxpayer at great risk.

Now, I happen to have approved that merger on that Sunday night of March 16th. I think they did the right thing in the end.

But candidly, to find the administration saying we shouldn’t put taxpayer money at risk here, taxpayer money is at risk every single day with continuing foreclosures. We may have as many as another two million. Fifty million homes could lose their value.

Between 1925 and 1933, home values in the heighth of the Depression declined by 30 percent. We’re now being told by experts in this area that values may actually decline by a greater amount.

Now, I’ll give you that we actually started at a higher point than they were in the 1930s. But nonetheless, losing that much value is going to cost taxpayers dearly in the country. That homeowner is a taxpayer as well. So, I find it a little disingenuous here.

Remember, here’s the chairman of the Federal Reserve, the head of the FDIC, the head of the OTC – all of these federal agencies are basically saying, this idea is not only needed – it’s welcomed of, it’s needed.

When you end up having the American Enterprise Institute – again, a rather conservative think tank – suggest this is exactly the kind of formulation that could make a difference, and we’re getting to the bottom and the floor of this capital crisis.

DAMIAN PALETTA, REPORTER, “WALL STREET JOURNAL”: Senator, the White House is asking for more time for its programs, like FHA Secure and HOPE NOW to kick in. What are your thoughts on that?

DODD: Well, I’ve given it... You know, I had my first meeting with these people back in February of 2007. That was the first hearing I held. The first hearing I held was on credit cards in January, when I became chairman last year of the Banking Committee. We had 35 hearings last year, marked up 17 bills out of that committee.

I then brought together all the stakeholders beginning in March and said, look, let’s the market try to work here. You tell me that you can reach out, you can reach out and actually get these homeowners, the borrowers on board and reduce their costs and work this all out. We set up a whole bunch of principles that they agreed to back last spring.

What was the net effect? When Moody’s did their research on it, it was one to three percent.

The recent analysis of the FHA Secure program, I think there were 2,000 homes out of the 2.2 million. It hasn’t worked. It’s been a failure at this point.

And again, I’m not suggesting the idea that Barney Frank and I are promoting here is necessarily going to magical and work. I can’t tell you that.

It’s a voluntary program. I don’t know if it’s going to work or not. But you’ve got to try something like this, or you’re going to have a problem get far worse, and it’s going to cost people a lot more and be far more damaging to our economy.

DAVID HERSZENHORN, CONGRESSIONAL REPORTER, “WALL STREET JOURNAL”: Senator, it’s clear that the White House veto threat is aimed – the president doesn’t want to veto this bill. What they wanted to do was send a message to Senator Shelby, the senior Republican on your Banking Committee, to Senator McConnell, the minority leader, telling Republicans in the Senate, do not support this bill, do not send this bill to the president.

How much harder has this made it for you as you try to get Republican support? Do you think the Republicans will sign on? Will you be able to get a Senate version of this bill out of your committee with any Republican support?

DODD: Well, I don’t know. And we’re going to try and we’re working on it. We’ve been working on it all weekend, along with this and the GSE bill, which we’re trying to work out as well.

And you described it very, very well. Look, I could get a party line vote and get a bill out of committee. That’s not my preference here, because I’ve been around long enough to know that that could be the end of what you’re trying to do.

The Senate is very different from the House. I presume you know that, but a lot of people probably don’t. The rules of the Senate are designed specifically to protect minority interests, unlike the House, where they’re designed, of course, to protect majority interests. So, I’ve got to try and get some consensus here, and I’m working very hard at trying to do that.

And I believe that Senator Shelby and other members, the Republicans of that committee, while they listen to the White House, certainly – I understand that – but they’re going to make up their own minds. They’re going home, too, back to their states. And they’re hearing from their constituents, from their businesses and others about how much damage this problem is costing the economy.

We’re talking about housing today. Let me just share with you a couple of thoughts.

I spoke to the Commercial Mortgage-Backed Securities Association a few days ago. Give you an idea of what it’s cost them. Last year that business did $230 billion worth of business in this country – office buildings, shopping malls and the like. This year in the first six months they’ve done $5 billion worth of business – $230 billion to $5 billion.

Student loans – we’ve now lost $8 to $10 billion, because 15 lenders have walked away from the business. This problem is not confined to housing. It’s spreading to commercial activities, municipal finance, student loans, and it’s growing deeper and worse.

The administration has got to get out of its seat and understand, this problem is not going to go away. And I believe my colleagues here, senators, Democrats and Republicans, want to be a part of a solution.

Inaction is not an option. And my hope is, we could agree on something.

HERSZENHORN: But senator, clearly, something’s changed in the last few weeks. When Congress came back from the Easter break, there was a lot of enthusiasm, because people had – members had been hearing from their constituents …

DODD: Right.

HERSZENHORN: … to get something done.

And more recently, for instance, Senator Martinez from Florida – the state really hard hit by foreclosures – who is very enthusiastic about an aggressive, you know, intervention by the government and seemed to be supporting what you and Barney Frank were trying to do, now seems to sound a lot like the White House. “Whoa, maybe we can do this administratively without new legislation.”

Do you think that maybe there was a missed opportunity that you could have held out, back right after the Easter break, when there was all this momentum and get this more ambitious package off the ground? And now, maybe that window is closed?

DODD: Well, of course, I tried. What do you think I was doing? Of course I tried. I mean, that was very much what I tried.

Listen, just so you know what went on that week, I called virtually Republican on the committee the week before we came back, and I think I reached most of my Democrats as well, and said, would you like to do anything? We were facing a cloture motion on that Tuesday we came back.

And four or five of the Republicans said, no, we’d like to do something. And as a result of that effort, Senator Reid, the majority leader, met with Mitch McConnell. They initiated that cloture vote, so we could move to something on a consensus package.

But believe me, I would have loved very much – I tried to include the Hope for Homeowners Act in that package. But it wasn’t one that I could get any consensus on.

So, what we dealt with in that package, what we dealt with were things like community development block grant assistance here, the mortgage revenue bonds, the counseling moneys and the like. There were some tax provisions that, candidly, I was not overly enthusiastic about.

But Senator Shelby and I had little or no say over the tax provisions involving some of these other issues as part of that package, but it was a step forward. And I would love to have included that piece in there.

But I think a lot of it had to do, because there was some work that went on during that two weeks we’re not here. And I think, being away from home for the last few weeks also makes people sort of forget, maybe, how serious this is.

They’re going to go home again at the end of this month, and if we don’t have something on the table again, I think people are going to hear.

We have resets occurring in July that are going to make the first wave of problems seem pale by comparison. And these senators are going to face an onslaught in their states of economic devastation, if we don’t do something.

So, I’m confident by next week we’ll maybe get some bipartisan support.

PALETTA: Senator, the Senate for years has failed to get legislation to reform oversight of the big mortgage finance companies, Fannie Mae and Freddie Mac, out to the president. What makes you think this year might be different? Is there a possible bipartisan deal with the Republicans on your committee?

DODD: I believe there is. And again, this is one where we need a strong regulator. And again, there were those who wanted to get rid of these GSEs, Fannie and Freddie, back a year or so ago. And if they didn’t exist today, this problem would be a lot worse than it is.

As a result of them being around, they’re now writing about 80 percent of the mortgages that are out there. They’re also at some risk, because a lot of their capital requirements have been at stake. And so, we’re trying to work on that.

My hope is that next week, as a part of this package on the Hope for Homeowners Act, we’ll also have a GSE reform package that’ll be a part of that, the two pieces of legislation. And again, our staffs have worked all weekend on this. They’re working as you and I are speaking here today, about this, trying to find those common principles to bring together. And my hope is – my goal is – to get consensus.

Last year, I would point out, on the 17 bills that we marked up out of the Banking Committee – eight of which became the law in the country – there were only four negative votes on all 17 bills, because we worked at it.

I could do it the old-fashioned way and just get a party line vote, or to try and build consensus. My sort of brand over the years is to try and get consensus when I can, because that’s how you get things done in the Senate.

PALETTA: And on the mortgage insurance program under FHA, clearly, some borrowers will be able to qualify, while others won’t.

Is it difficult to sort of draw the line to differentiate which homeowners would qualify and which homeowners wouldn’t?

DODD: Well, it’s a good point. And that’s sort of getting into the details of this. And again, we’re talking about distressed mortgages. And again, you’d want to be able to have some evaluation as to their capacity, based not on liar loans, as they call them, but getting real information in terms of income coming in, to determine whether or not they can meet those goals.

But the borrower has to be willing to pay a price. I don’t want this to be easy on the borrower. They get to stay in their homes. They get to get a fixed rate, one they can afford. But it’s going to be – it’s not going to be without a cost.

It can’t be so costly, however, that they say, “You know what? I think I’ll walk away from this altogether,” which we don’t want to have happen, either.

HERSZENHORN: Senator, it seems that what we have is a real clash over whether any help for homeowners is a bailout, that a lot of your Republican colleagues see any intervention here as a bailout for people who made bad decisions.

Is there a way that you think you can convince them that that isn’t so, without there being sort of an imminent disaster? I mean, I think that’s what I hear about Bear Stearns, that the collapse was imminent, so government intervention was OK.

But in this case they’re saying, you know, “How do I turn around and tell one constituent, I’m going to risk your tax dollars to help out your neighbor, who may have acted irresponsibly, bought a house they couldn’t afford, took out a home equity loan that they couldn’t afford to pay, to buy a new car or truck?”

DODD: Well, let me mention a couple of points.

First of all, according the “Wall Street Journal” – and I hesitate to mention the “Wall Street Journal” in the presence of the reporters that are questioning me here – but 61 percent of the people who got these subprime loans qualified for prime loans. And so, we had people who could have actually had far less costly loans, had we had people marketing products here that would have been less costly to them. And they didn’t do that.

Secondly, I would mention to you here that I’m not interested in bailing anyone out. I’m not interested in somehow sanctioning irresponsibility.

But the fact is that, if you end up with foreclosed properties, there is a domino effect. That neighbor next door who says, “You know what? I got the kind of loan I could afford. Why didn’t my neighbor do the same?” I just remind that person next door, I understand your feelings.

But if your neighbor next door has their property foreclosed and the value of your house begins to decline, then have you really gained? Haven’t you lost something as well?

So, this doesn’t just affect the foreclosed property. It actually affects you, as well. So, we need to think about it in those terms. And that’s the kind of argument we’ve got to make.

And again, we’re asking – here we’ll be requiring, in fact – that this homeowner not only pay the insurance on this, but also some of that equity goes back into the program, so it doesn’t cost that taxpayer.

We haven’t made a similar demand, I might add, of these investment banks when it comes to the $29 billion that could end up costing taxpayers.

PALETTA: Senator, the Federal Reserve recently proposed some strict new rules for credit card marketing and credit card practices. This is an issue you’ve been looking at for a long time. And I know legislation is starting to move a little bit in Congress.

Do you think the time is right this year? Or obviously, you guys are focused on the mortgage issue. Is credit cards maybe something that will have to wait legislatively?

DODD: Well, I’m smiling, only because I’ve been at this – I appreciate you mentioning it – about 20 years, and I’ve yet to win one on these issues.

And some of the proposals I made were so simplistic. You know, I try to make them as easy as possible.

One I offered back a few years ago said, if you do any one of the following three things – one, just prove that the person can pay, or two, that they’ll have someone co-sign who says they can pay, or thirdly, you’ll take an hour-long credit course – any one of those three is all I asked for. I think I got 30 votes for that radical idea.

I’m hopeful that it’s now a growing need about this. One of the things, being out on this presidential campaign for a year-and-a-half around the country is, when I would mention credit cards, I just had to mention credit cards, and people would come out of their seats. It was one of those subject matters that just had its own fuse.

And people are irate about it. They’re finding themselves, as we know here, just under water. If you have balances due, which many millions do in this country, the average balance due of revolving debt or credit card debt is almost $10,000. And people realize they’re never going to be able to pay this stuff off, so there’s a real appetite to reform the credit card rules.

And let me commend Ben Bernanke, the chairman of the Federal Reserve. This was unprecedented in the past for the Federal Reserve to take action in the credit card area, and I applaud him for doing so.

A lot of what he’s suggesting, we’re talking about in our legislation. We go a bit further in some areas. But I welcome tremendously the action by the Federal Reserve. This is really needed, and he’s to be applauded.

SCULLY: Senator, let me follow up on the credit card issue, because your legislation would, among other things, ban the interest that is charged on the debt that’s paid. How would that work? And also, change some of the transaction fees.

DODD: Yes. These are good. And let me just add a couple of things we do here that people understand, because sometimes the language gets a little confusing to people.

What you’re talking about is sort of the double cycle billing. To use an example, you owe $1,000. You pay off $900 of that $1,000. The next month you get a bill for $100. That’s fair. You understand that.

The problem is, you’re still being charged interest on the $1,000, not on the $100. That’s wrong. And that’s what Ben Bernanke tries to deal with. We do, as well.

The universal default is another one. It’s similar in a way. You don’t pay your utility bill, your phone bill. For some reason you’re late getting to it.

The credit card company obviously gets access to that information. They use that, even though you’re current on your credit card obligations, they use the failure that you were late on the phone bill as a justification for jacking up your fees or the interest rates, as well. That’s called universal default.

One of the pieces that really annoys me is some of these credit card companies say that you have to make your payments on May 7th of 2008. And so, at the end of business today at four o’clock, you wire whatever your monthly obligations are. Those companies set the time at 10 a.m. on May 7. So, 4:00 p.m. or 5:00 p.m. on May 7th is considered a late filing of that fee, or that charge, and they raise your rates and charges for it.

There are all these gimmicks. Seventeen billion dollars worth of fees and charges have been added on in the last 10 years by the credit card industry. It’s outrageous.

But $35 billion in fees on the interchange fees here, which is a very legitimate issue as well in terms of small businesses that pay exorbitant fees to the credit card companies. Now, they have to pay something, in my view, because obviously, there’s a cost of processing this. But those fees I think are exorbitant.

HERSZENHORN: Senator, back on the housing issue, the House of Representatives is going to start debating their version of their bill today. It’ll probably get approved today or tomorrow.

How long – can you talk politically about this issue? How long should the Senate keep waiting for compromise?

Or do you think maybe there’s value in Senator Reid bringing it straight – the House version – straight to calling it up on the floor, forcing the vote, have the presidential candidates come back and show – all of whom are members of the Senate – come back and show how they feel about this issue?

Where do you think we’re headed on the political front?

DODD: Well, my plan is to mark up that bill next Tuesday. We were going to mark it up yesterday, but I was requested to delay a little bit, to allow the staffs to work, to try and work out a compromise. And I agreed to do that.

And then, of course, the flood insurance bill is up on the floor now, which Senator Shelby and I are managing, which will take probably the next two days to do so. But our staffs are meeting on the GSE bill and the Hope for Homeowners Act, as well.

But come next Tuesday, we’re going to mark that bill up. And that’s the way it ought to happen. I don’t think these matters ought to be brought up, except under extreme circumstances where you bypass the entire process.

There’s a reason for having a committee structure. We had all these hearings. We’ve done a lot of work on this. It’s the proper way to do it. I think our colleagues feel better informed.

And if we’re able to work out some compromises that make some sense, because we’ve taken the time to do so, you end up with a better product, and one they’re going to be more likely to support anyway.

PALETTA: Can you see this housing issue dragging into the November elections? In other words, do you see this having an impact on the way Americans vote in November?

DODD: Oh, I think so. I mean – you know, with all due respect this morning with the president, what was the point of that statement? Here we’re beginning a process to deal with housing. And the president says, “I’m going to veto this bill,” even before it had a chance to work on it.

You know, why not say, “Listen, I want to see what you’re going to do. We’d like to cooperate. Hope you’re being in touch with my secretary of the Treasury and others to know what our concerns are here. We want to do something.”

Well, in fact we’re trying to do things. We’ve got our FHA Secure bill and other ideas out here. At least sound as though you’re trying to work on this.

This idea, “I’m going to veto this bill no matter what you do” – you know, that’s just infuriating to people out there, who are struggling every day to keep their families together.

Two hundred eighty thousand people have lost their jobs. Consumer confidence is a 25 year low. The fiscal condition of the country is a mess. The dollar sinks every day. Oil is $120 a barrel.

And the president’s going to veto a bill where you’re trying to keep someone in their homes. Now, what kind of leadership is that?

PALETTA: Senator, one other question about the Bear Stearns episode.

I think some people fear that that sent a signal to other financial institutions that they can take a lot of risks and get into trouble, and the government will sort of step in and set up a rescue.

What do you think can be done to prevent that sort of what they call “moral hazard” from happening in the future?

You know, people raise questions now about other big financial companies with big risks on their balance sheets. Does the government need to send a signal? Or is this a one-time thing?

DODD: I have kind of a different read on it than that. I thought this was sort of an execution in a way.

I think there’s an argument to be made that Bear Stearns – you know, Bear Stearns did not have a solvency problem, it had a liquidity problem.

And when I asked the question of the Federal Reserve about a week before March 13th, whether or not they’d consider opening the discount window to broker-dealers, to investment banks, they said, “Absolutely not.” They did it once before. They had the power to do it. But the reaction was a very overwhelming no.

Then, of course, a week later we found out that they were offering to do that just with Bear Stearns on that Thursday night, and then, of course, by Sunday night opened it up to everybody.

I think, had they done that – requiring, by the way, advanced collateral, regulatory controls over these institutions, as well – that you might have very well saved Bear Stearns from that fate over (ph) that 96 hours.

But I think they decided – someone decided – that they wanted to have some blood on the street, to remind these other banks that they were going to have to get their acts together. So, in a way, I think it probably had that desired effect. I’m not anticipating another major collapse of another investment bank at this point.

SCULLY: Senator, let me ask you about the political dynamics of this, and you talked about it earlier. But the “Wall Street Journal” and the “New York Times,” writing about Norm Coleman up for a tough reelection in Minnesota, John Sununu in New Hampshire – both Republicans.

Does this help in your effort to try to move this legislation through the Senate, to have these potential Republican supporters?

DODD: Well, it does. I mean, I think it – first of all, I mean, some of the people – Judd Gregg of New Hampshire has been terrific on the Hope for Homeowners Act. He’s not co-sponsored the bill yet, but he’s offered some very solid ideas, as others have, as well.

This is a practical solution. It ought not to be an ideological one.

And I think that those members who look as though and act as though they’re trying to do something about this and work in a constructive way – putting aside the merits for a minute, just politics – I think you’re going to be a lot better shape going back home this summer and fall and talking about these issues.

These problems are not going to disappear by November 5th, I promise you. And if you’re seen as being a negative vote, against doing anything, and I’m running against you, believe me, you’re going to hear about this issue every single day until November 5th.

HERSZENHORN: Senator, tell us what you’re hearing at home in Connecticut. Obviously, it’s known as a wealthy state, but it has some very poor cities – New Haven, Hartford, where folks could certainly be struggling.

Do you hear – are you hearing from constituents?

DODD: Oh, yes, sure. I was in Bridgeport twice over the last two weeks. And Bridgeport, Connecticut, has about 5,000 to 6,000 subprime loans. Got a new mayor there, Bill Finch, who is a terrific young mayor.

And in fact, last Sunday we had – excuse me, Monday – I met with a group of a faith-based initiative here, and 350 churches in Connecticut that are reaching out to their parishioners.

Because one of the problems we face – and maybe we should have talked about this in the interview, as well – let me say that there are a lot of these institutions that are trying to reach their borrowers. And it is difficult. It’s very hard to get people to stand up and say, “You know, I’m behind the eight ball. I’m in trouble.”

Too often, they wait until they’re almost – there’s nothing you can do to help them. And so, we’re going to use our churches in Connecticut as a way to try to reach people in their congregations about stepping up. They have a confidence level with that pastor that they might not have with their banker. And so, we’re looking forward to that as a way to make a difference.

I’ve had about 14,000 foreclosures in Connecticut. And you’re right. Overall, I think the state is in fairly good shape. My community bankers engaged in none of the subprime lending at all in the state. So, I’m not anticipating a large problem statewide. I am in some of my urban areas, where I mentioned Bridgeport, particularly, has got a large number of subprime mortgages.

SCULLY: Senator Christopher Dodd, Democrat of Connecticut, and the chairman of the Senate Banking, Housing and Urban Affairs Committee, thank you for joining us on C-SPAN’s “Newsmakers” program.

DODD: Thank you. Thank you very much.

SCULLY: And we continue the discussion with David Herszenhorn of the “New York Times,” and Damian Paletta of the “Wall Street Journal.”

The subtext behind all of this election year politics, presidential and congressional – what’s going to happen?

PALETTA: I think it’s really interesting. I think the Democrats and the Republicans both have a decision to make. The White House is sort of trying to embolden congressional Republicans to stand up against this legislation, particularly in the Senate.

The Democrats have to decide whether they’re going to try to send a signal and really push this legislation through, or maybe cut a deal so they can look like, you know, by the time the November elections come around, they’ve gotten something done on the economy.

SCULLY: Did you learn anything?

HERSZENHORN: I think it’s clear that Senator Dodd is really struggling to generate Republican support for this in the Senate. And we’ve seen time and time again, the majority that the Democrats have is so slim, without 60 votes, this isn’t going anywhere, and it’s going to be very, very tough.

And the question then becomes a political one. You know, how hard do they want to work? Or do they want to draw the line in the sand and just say, either you’re for this or you’re against this, and potentially you’ll pay a price in November?

There is a sentiment, though, among some very key Republican lawmakers – I think Senator Shelby from Alabama, who is the senior Republican on the Banking Committee is one of them – that, in fact, public sentiment out there runs overwhelmingly against the idea of a bailout.

And it’ll be interesting to see if the Democrats can articulate this in a way that convinces folks that nobody – you know, Uncle Sam is not writing a check to pay off anybody’s mortgage, that in fact, anybody who participates in this program, if they default, even after paying insurance, the government would get that property and have to turn around and sell it. You know, there wouldn’t be a total loss.

But it really may become a political fight out there in terms of what folks believe. The vast, overwhelming majority of American homeowners with mortgages are paying on time. And are they sympathetic to the argument you heard Senator Dodd make, that in fact, if the next door neighbor is being foreclosed on, that hurts me, too; we’d better step in and do something?

SCULLY: Can either of you explain this window of opportunity that you brought up around Easter and a possible missed opportunity by Senator Dodd, or others in the Senate, who were trying to push this bill?

PALETTA: Well, I think it’s interesting. After the New Year, we saw the lawmakers come back and rush to put out a stimulus package very quickly, and we saw a lot of bipartisanship.

They go away for Easter break, and when they came back the Senate moved a bill through quickly that I think both sides weren’t really that happy with. And that sort of a sense of urgency now is gone, and both sides have really dug in.

So, I think we’re going to see, really in the next couple of weeks, what’s going to happen. Because I think as time drags on this year and people get more consumed with the election, it’s going to get harder for them to get a really complex piece of legislation through.

HERSZENHORN: You know, it’s really interesting. That bill that the Senate pushed through was called the Foreclosure Prevention Act. But Senator Dodd at the time conceded that it did not in any way live up to its name, and he himself said it fell far short of where he wanted to be.

Now, Senate Republicans, of course, can claim, look. We came back from Easter break. We heard what our constituents said. We approved a compromise bill. We pushed it through.

There’s an interesting question for the White House, because the White House wasn’t in favor of that bill, either. The tax provisions in there are objectionable to the White House, as well.

So, obviously, the president’s advantage here is that he is not running again. And so, we may see an interesting divide between Senate Republicans who are up for reelection in November and the White House, which can take a very principled stand and potentially not pay a political price.

SCULLY: And finally, he brought up the point that over a 10 year period, from 1996 to 2006, $17 billion – a $10 billion increase in the charges put forth by the credit card industry.

My question is, what kind of lobbying effort does the credit card industry have that would keep these charges in place?

PALETTA: Credit cards – lawmakers hear from constituents all the time, you know, Republicans and Democrats, people outraged with credit card fees, right. And the credit card companies have tried to improve their disclosure and say, that’s enough.

It’s a really, really hard issue to legislate. And I think Senator Dodd said he’s been working on this for 20 years. They’re going to lobby. They are lobbying.

I think right now, they sort of have – the credit card companies have the advantage, because, especially with the obsession right now with the mortgage issue, it’s going to be hard to sort of focus on that, too.

SCULLY: But why?

HERSZENHORN: Well, you know, in a big election year, sound fiscal policy often runs contrary to saying things that voters want to hear.

I’m not sure that Americans want to be told over and over again that they’re charging too much on their credit cards, that they’re not saving enough.

Some of the things that are just fiscal realities. So, it becomes a really tough case to make, especially when the economy is struggling and you don’t want to see consumer spending drop off precipitously to try and rein all this in and turn that faucet off. It becomes a perilous proposition.

SCULLY: Thanks for joining us, David Herszenhorn of the “New York Times,” and Damian Paletta of the “Wall Street Journal.” Thanks for joining us on C-SPAN’s “Newsmakers.”

PALETTA: Thank you.

HERSZENHORN: Thank you.

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