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Sen. Sanders Blocking Vote to Confirm Obama Nominee Who Worked to Deregulate Credit Default Swaps

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We speak with Independent Senator Bernie Sanders of Vermont, who is attempting to block President Obama’s nominee to head the Commodity Futures Trading Commission, Gary Gensler, a former Goldman Sachs employee. “Gensler worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of A.I.G. and has resulted in the largest taxpayer bailout in U.S. history,” Sanders said. [includes rush transcript]

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StoryJan 28, 2009Sanders Votes No on Geithner: “[He’s] More of a Part of the Problem…Than the Solution”
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Independent Senator Bernie Sanders is attempting to block President Obama’s nominee to head the Commodity Futures Trading Commission, Gary Gensler, who is a former Goldman Sachs employee. Sanders said in a statement that Gensler worked to deregulate electronic energy trading and exempt from regulation credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history.

Senator Sanders joins us now from Washington, D.C., independent senator from Vermont, elected to the Senate in 2006 after serving sixteen years in the House, the longest-serving independent member of Congress in American history.

Welcome to Democracy Now!, Senator Sanders.

SEN. BERNIE SANDERS: Good to be with you, Amy.

AMY GOODMAN: Why don’t you want Gensler to be confirmed?

SEN. BERNIE SANDERS: Well, I don’t believe that we need more of the same old same old. The philosophy that Gensler espoused when he was working for Bill Clinton in the Treasury Department was strongly deregulation, was the Robin Rubin theory of economics. And in many respects, accentuated by eight years of George Bush, that type of deregulation activity, the repeal of Glass-Steagall, the putting derivatives under the radar screen, deregulating that and allowing these transactions to take place without public notice, these are the actions that took us to where we are right now.

I happen to be a very strong supporter of President Obama. I think he’s doing a great job in many, many respects. But I think, in terms of his financial advisers, he has people who have come from the Wall Street crowd who are looking at the world in a certain way, and I want to see some different points of view involved in this discussion.

AMY GOODMAN: Well, explain exactly what Gensler did, exactly what your concerns are around the issue of credit default swaps. And explain what these are, because I think why so much of this has happened is that regular people don’t understand what this is all about.

SEN. BERNIE SANDERS: Well, Amy, not only do regular people not understand; very few people understand. And that’s exactly what the problem has been.

We — during the Depression, what the government did is said, “Look, we’re going to have to regulate Wall Street, and we’re going to separate — have walls separating, for example, consumer banks, regular banks from investment banks, from insurance companies, because when you put all of these huge institutions together, when they fall, they cause systemic damage, and they can bring down the entire economy,” which is exactly what we’re seeing right now. And the legislation that was put into practice in the early 1930s was called Glass-Steagall, after two members of the Congress.

What people like Gary Gensler did, with Bob Rubin, with Phil Gramm, with Alan Greenspan, accentuated in the last eight years by George Bush, was to deregulate, deregulate, deregulate. And I used to have great debates with Alan Greenspan, who would come before the House Financial Institutions Committee and say, “Look,” in so many words, “greed is good. If you get government off the backs of Wall Street, if you let these guys do their magic and make all of these investments and don’t regulate them, somehow or another we’re going to have prosperity for all of the people in our country. That’s what we need to do.” I never believed that. So, what happened under Clinton, accentuated under Bush, was a massive effort at deregulation.

Just think for a minute that you had Bernie Madoff running a $60 billion Ponzi scheme, and Bush’s SEC couldn’t discover it. And the reason for that is that anything that Wall Street did, anything that corporate America did, was good, and you don’t want the government investigating or regulating.

And unfortunately, Gary Gensler was in the middle of that. Gensler, as part of the Treasury Department under Robert Rubin, pushed for the repeal of Glass-Steagall, the breakdown of those walls, which have led us precisely to where Citigroup is today, where AIG is today. So, essentially, this is a hard-working guy. He is a decent guy. I don’t have any animus against him personally. But I think President Obama has brought around him a lot of the Rubin mentality, which is not only deregulation, it’s unfettered free trade. And I think we need some more progressive-type thinking to advise the President.

AMY GOODMAN: I wanted to play for you an excerpt of the grilling of Timothy Geithner, the Treasury Secretary, by the LA Congress member Maxine Waters. She’s questioning him about why Goldman Sachs was at the AIG bailout meeting.

    REP. MAXINE WATERS: Was Goldman Sachs involved with the decision that was made that weekend before they came to the Congress —-


    REP. MAXINE WATERS: —- to ask for money on the sale of Bear Stearns?


    REP. MAXINE WATERS: Was anybody from Goldman Sachs involved in that discussion that weekend?

    TIMOTHY GEITHNER: Well, let me go back on this. At the time when Bear Stearns was on the brink of default and the Federal Reserve then acted to try to avoid default, there were a range of institutions that considered buying and assuming the obligations of Bear Stearns. And in that context —-

    REP. MAXINE WATERS: OK, I really wish I had time for you to go into it, but Goldman Sachs was involved in some way in that decision, based on whether or not -—

    TIMOTHY GEITHNER: No, not in the decision.

    REP. MAXINE WATERS: — they were considering the purchase themselves or they were advising about it. Is that correct?

    TIMOTHY GEITHNER: No, not in the decision. And certainly not advising us.

    REP. MAXINE WATERS: In some way.

    TIMOTHY GEITHNER: Certainly not advising us, no.

    REP. MAXINE WATERS: In some way, they were involved.

    TIMOTHY GEITHNER: Well, there were a whole range of institutions that Bear Stearns approached [inaudible] —-

    REP. MAXINE WATERS: Were they also involved in the decision to not support Lehman Brothers?


    REP. MAXINE WATERS: In no way?


    REP. MAXINE WATERS: Alright, that -—

    TIMOTHY GEITHNER: Those are decisions made by your government.

    REP. MAXINE WATERS: Just — I am just asking the questions, because the talk is, underneath, which you may not know about, is that this small group of decision makers at the center of it is Goldman Sachs, and that’s what’s causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made.

AMY GOODMAN: That’s LA Congress member Maxine Waters questioning Treasury Secretary Timothy Geithner. Senator Sanders?

SEN. BERNIE SANDERS: Well, I don’t know all of where Maxine is coming from in this, but I can tell you Gary Gensler was a partner at Goldman Sachs, as well, before he entered the Clinton administration.

AMY GOODMAN: So, what would his job be now, if he gets confirmed?

SEN. BERNIE SANDERS: He would be head of the Commodities Future Exchange Commission, which is a very important regulatory body. You may recall that when, among other things, the price of oil went up — the price of gas went up to $4 a gallon, there was a lot of belief on Congress and among the American people, and among the oil industry, I should tell you, that one of the reasons for this rapid increase in gas prices had to do with speculation coming from Wall Street. The Commodities Futures Exchange Commission under Bush was very, very weak in taking a look at that. And obviously we want somebody to be very strong and to look — looking at futures trading and excessive speculation. That would be, among other things, the job that Gensler would have.

AMY GOODMAN: Senator Sanders, what about the AIG bonuses? Where do you stand on this? The House passed the 90 percent tax on them.

SEN. BERNIE SANDERS: Well, I mean, you know, my phone is ringing off the hook, Amy. And I think what these bonuses is about is just another example of the incredible arrogance of Wall Street. And we need to understand what these people have done. You’re looking at a few dozen huge financial institutions who, through their greed, their recklessness, and I think through their illegal behavior, has the — impacted the lives of hundreds of millions of people around this world, caused massive job loss. People are losing their savings. They’re losing their homes. They’re losing their hope. The incredible greed and arrogance that we have seen on Wall Street is unprecedented, certainly since the early Depression and the people who took us into that depression. So, for those people to say, “Give us a bonus for this fine work that we have done in destroying the American economy,” is literally beyond comprehension.

One of the things that we are fighting for, Amy, is a major and thorough investigation as to how we got into this disaster, who the people are who are responsible for that. We need the Department of Justice to engage in criminal prosecution, because I think some of these people know a lot more than they are telling us. And I think there is probably illegal behavior at the very top of the pyramid on Wall Street.

But we need a new Wall Street. We need a Wall Street which is not based on pushing exotic financial instruments that nobody understands, where CEOs are making unbelievable amounts of money. We need a Wall Street where it gets back to important banking, which makes sure that the American people and small business and businesses, in general, which create jobs, can get the money that we need. So we need a revolution, I think, in the way we do financing in this country, and I hope that this disaster on Wall Street will wake the American people up to move us in that direction.

AMY GOODMAN: Is the Obama administration, is President Obama, just trying to restore the system? I mean, Timothy Geithner yesterday laying out the $1 trillion plan of what many are calling socializing the debt and privatizing the profit.

SEN. BERNIE SANDERS: Again, I — in this, I am a supporter of Barack Obama. I think, for example, the stimulus package that we worked with him on is the most important piece of legislation that we have passed in many, many decades, not only creating millions of good jobs, but in fact changing the national priorities of this country, in terms of energy, in terms of paying attention to our kids, in terms of rebuilding our crumbling infrastructure. So I think, in many ways, what Barack Obama has inherited from the disaster of eight years of Bush is just an extraordinary set of problems, and I think he’s doing a really good job.

I think, again, in terms of how you deal with Wall Street and their power and their arrogance — and the fear that many of us have is that these guys are willing to bring down everything in order to protect their positions of power. It ain’t easy to deal with. It really is not. But I — all I would repeat is that I would like to see some new and progressive voices, people who don’t come from Wall Street, who look at the world a little bit different, help the President address this very, very difficult crisis.

AMY GOODMAN: Senator Sanders, you’re the independent senator from Vermont. For years, you called yourself a socialist. You hear the Republicans saying we’re not going to socialize this, for example, healthcare, etc. What is socialism? And where do you think it applies today?

SEN. BERNIE SANDERS: Well, I think if people take a good look at what has gone on in Scandinavia, in Finland, Norway, Denmark, Sweden, some other European countries, what they will find is that the people in those countries have good quality healthcare which is virtually free. Workers have, in some cases, thirty, forty days paid vacation. A college education in many of these countries is either free or virtually free. At a time when our country has an 18 percent rate of childhood poverty, which leads to so many people ending up in jail, in many of these countries the poverty rate for kids, and poverty in general, is three, four, five percent. Workers are more likely to be members of unions and have more power on their jobs to protect their own interests. People’s interest in politics and the political process is greater. So I think what you have seen is governments which are more responsive to the needs of working people and the middle class than certainly is in this country, where, among other things, we have by far the highest rate of inequality, in terms of distribution of wealth and income, of any major country on earth.

So what democratic socialism means to me is having a government which represents the middle class and working people, which guarantees the basic necessities of life for all of our people. Healthcare, obviously, has got to be a right, not a privilege. We need to make sure that our kids get off to a good start in life, not seeing so many kids living in poverty, childcare being the disastrous disaster that it is right now with so many working families unable to find quality affordable childcare. In other words, a government which works to protect all of the people, rather than, as we have right now, governments for so many years which have protected the needs of the very wealthy and the powerful large corporations.

AMY GOODMAN: Do you consider yourself a socialist today?

SEN. BERNIE SANDERS: Democratic socialist, yes.

AMY GOODMAN: Are you for single payer.


AMY GOODMAN: And you have a major historic development that is happening in Vermont now. The state senate just voted for gay marriage. It looks like the House is about to do that. It would mean the first time that a state, if it became law, would legalize same-sex marriage without being forced to do so by the courts. That’s if the Republican governor signs off on this. Do you support same-sex marriage?


AMY GOODMAN: And what about the significance of this for Vermont? Do you think the governor will sign off?

SEN. BERNIE SANDERS: I have no idea. I think right now, Amy, here —- and I also voted against DOMA, and I think that is an issue that states around this country are going to have to deal with. Right here -—

AMY GOODMAN: The Defense of Marriage Act.

SEN. BERNIE SANDERS: Yeah. Well, right here in Washington now, the issue that people are calling me about from Vermont and, in fact, from all over this country is the disastrous state of our economy and the need to stop this contraction, to figure out a way we deal with Wall Street, to figure out a way that — how we can provide healthcare to every man, woman and child. I respect President Obama, by the way, for taking these very difficult issues of healthcare, education, energy, the national debt, which is going higher and higher, placing them on the table and demanding that we, as a country, not sweep this stuff under the rug, but we begin to address that. Now, in terms of —

AMY GOODMAN: Senator Sanders, we just have ten seconds, but I wanted to ask you about Afghanistan. Do you support the surge? Do you support the expansion of war in Afghanistan?

SEN. BERNIE SANDERS: Well, I don’t know that I could fully answer that in ten seconds, but I have concerns about some of what the President is saying.

AMY GOODMAN: You have concerns, you said?


AMY GOODMAN: Well, Senator Sanders, I want to thank you very much for being with us. Senator Bernie Sanders, independent senator of Vermont.

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