Erin Burnett: Wall Street's troubles and the federal rescue plan on the front burner for Senator Hillary Clinton. She just wrapped up a meeting with New York Federal Reserve President Timothy Geithner. And she joins us now live from just outside the New York federal offices. Senator Clinton, thank you so much. It's a great pleasure to have you with us. I know you have been in a meeting for much of the day with the New York Fed President. What did you talk about?
Senator Hillary Clinton: Well, I wanted to review with the New York Fed some of the particulars about what's happening in New York , as well as the broader national and global implications. Obviously this is unprecedented, what we're having to do here. and as a Senator from New York I not only have the obvious concerns about our financial markets, but also the impact on employment here in New York, and everything that I can do to try to make sure we stabilize this situation, save jobs, and get our markets moving again, get them unclogged, is what I'm focused on.
Burnett: Do you think that the Fed President, of the New York Fed, Timothy Geithner would be the right person to be, in essence be the czar of the pool of assets? Did you talk to him about what his role might be?
Clinton: No, not at all. That's not something that we discussed. What I did talk about was a proposal that I have been making for about a year, that what we needed was something similar to what we had during the Great Depression, the Homeowner's Loan Corporation, which worked very effectively to buy up mortgages - about 1 million homes were saved. Over time, those mortgages were sold and, frankly, the Treasury made money on it. I think it's imperative that we start considering such an entity like this.
I have spoken several times with Secretary Paulson, and obviously others who are crafting this proposal. In the immediate short run, to have Treasury run it may be the only choice. But that is not a good long-term decision. So, I have spoken with Chairman Frank. He shares my view that we need some kind of an entity like the old HOLC, the Homeowners Loan Corporation. To be prepared we should start working on the legislation now to try to get something like that up and going so we can have one place in the government to do these mortgage modifications and try to replicate the success that we had 70 years ago.
Burnett: Do you think we have the time, though? It seems like in some sense, maybe I'm too far ahead here, but that the train may have already left the station in terms of this plan being actually structured very differently than the HOLC was, as you referred to, or do you think we can take more time if that's what it takes, and structure this pool very differently?
Clinton : Well, I think it can be sequential, Erin . There's no doubt that we have to get this infusion of cash into our markets and begin to buy up these illiquid assets as soon as possible. But I think we need a commitment from the Administration that we will begin working on something like this, because otherwise you have an ad hoc arrangement, working out of the Treasury. I don't think that is the best way to go about this.
That can be handled immediately after we get through this immediate crisis. I do believe, however, that part of what needs to go into the proposal is the authority for mortgage modifications - that that has to be part of the opportunity that the treasury would have shared with the FDIC, which as you know is trying to work out some of the mortgages from Indymac.
There are opportunities for Treasury to get that kind of authority. It's being given broad discretion under the plan as proposed.
I think that we do have to address some of that to set the framework in place in this proposal this week, if at all possible. But then I'm advocating that the Congress come back, after the election, and we be prepared with the work from our two banking committees and their Chairmen, Chairman Frank and Chairman Dodd, so that we're prepared to act on whatever authority is additionally needed. The third part of this is the regulatory framework that has to be put in place. We can never go through this again, it's too dangerous. We've got to regulate in a responsible way.
I'm fundamentally confident and optimistic that we'll weather this once we start work on the problem and everybody understands that it's a priority for our country.
Burnett: Just a couple of more questions. One of them, you mentioned Congressman Frank. I had spoken to him this weekend, on Saturday, actually, and he expressed his passion for including limits on CEO compensation for banks that would participate in this pool. My understanding is the Treasury Department is very adamantly against that, because they want to get the problem dealt with. Maybe eventually we'll deal with CEO compensation but not part of this package. Are you going to support having CEO compensation limits as part of the deal this week?
Clinton : I share Chairman Frank's view, that this is something that would be fair to the American taxpayer and would also, put in at least some accountability. If we can't get it this week then I want a commitment we're going to address it very shortly, as soon as possible, as part of a broader look at what we need to do. Really what we're doing now is trying to stop the bleeding. But the patient is not well. This is not just a financial crisis. This is an economic crisis. So there is more work to be done and I think the whole question of executive compensation has to be rolled in to who what we look at going forward.
Burnett: Senator Clinton, final question. I know you're tight on time. A picture in the New York Post caught my attention this morning of Sarah Palin reaching out to a giant tube of lipstick, sort of a life sized tube of lipstick. I have to admit, it's funny. I have been fascinated, as every woman in the country has, both with you and with the phenomenon of Sarah Palin. But do you believe that lipstick as a metaphor for being a woman or for female power is insulting in this election?
Clinton : I want to keep my focus on the real challenges, issues, and even crises that we face as a country. Being able to smile and laugh from time to time helps break the seriousness of what we're dealing with. Obviously I think we cannot afford four more years of the failed policies that we've had for the last eight years. I'm not suggesting that we could have avoided all of the problems but I surely believe if we had had people awake and on the job in the existing regulatory agencies, we could have limited the damage and could have ameliorated it.
I don't think there's any doubt that we need Democratic leadership in the White House starting in January.
I'm all for lipstick - I wear it myself - but at the end of the day, let's stabilize our financial markets and I think the best people to do that are not the party that helped get us into the mess we're in right now.
Burnett: Alright, Senator Clinton, fair point on the lipstick. Thank you so much.
Don't ya just LOVE the way Hillary kept the focus where it belongs...? ON the economy rather than some BS about LIPSTICK?
This was CNBC for cryin' out loud and they want to talk lipstick with a sitting US Senator who's putting out the only serious and workable plan to fix this mess?
Hillary did what I wish the rest of them were doing. Keeping the focus on the economy and watching out for those of us out on Main Street.
THAT my friend is real leadership.
