Media Clips
CNN “Glenn Beck” (Excerpt)
September 9, 2008
Obama Ad Accuses McCain-Palin of Lying; Fallout from Fannie and Freddie Bailout; Will Congress Finally Act on Energy?
Aired September 9, 2008 - 19:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BECK: Coming up, dirty tactics and vicious attacks have been part of our American political scene forever. But the way our media has treated Sarah Palin is unprecedented. Tonight no more lies, no more rumors. "The Real Story" on Sarah Palin, coming up.
But first, if your doctor came to you and said, "You need a quadruple bypass, you know what I mean, otherwise you`re going to die," at that point you really don`t have much of a choice. You better go and get the surgery.
Then afterwards you realize, you know what, that 20,000-calorie, you know, Michael Phelps diet doesn`t really work so well for me, because I don`t swim. You know, so then you have to make a choice: am I going to die or am I going to start exercising and eating right? Me, I pull the "die" option.
Well, the recent bailout of Fannie and Freddie by our government is the same thing. You know, I hate to say it, but at this point, survival of our entire financial system is on the line. We really didn`t have any choice.
But now that the operation is over, are we going to smarten up, change our ways and set an example by putting those people responsible -- oh, I don`t know -- maybe in front of a jury? Or are we just going to give more taxpayer money to the automakers and the airlines and the energy companies, and then act shocked -- what? -- when they all have to be nationalized in the next five years?
Jonathan Koppell, he is a professor at the Yale School of Management.
Jon, George Soros` partner said yesterday that we are now more communist than China is. Agree or disagree?
JONATHAN KOPPELL, PROFESSOR, YALE SCHOOL OF MANAGEMENT: Hi, Glenn. Thank you for having me.
BECK: Sure.
KOPPELL: I think that might be a little bit hysterical as a reaction to the Fannie and Freddie story.
BECK: Well, here`s the thing, Jon. I mean, and it`s not because of the Fannie and Freddie, but it`s, when is this going to stop? I mean, it`s almost like we`re on the -- you know, on the verge of saying, "I don`t know. fascism seems pretty good."
KOPPELL: Well, fascism, I don`t know if we`re talking about that. But what we`re definitely talking about is some socialization of risk. And I think that the Fannie and Freddie situation is -- is unique. These are unique companies and there are special connections between them and the federal government.
But if you look at the Bear Stearns situation -- and now people are talking about Lehman Brothers in the same way -- those are private companies that made some bad choices. And the idea that they`re, quote unquote, "too big to fail" doesn`t seem consistent with the way that the market is supposed to work, at least how I understood it.
BECK: Well, wait a minute. I mean, can`t we make the case for Ben and Jerry`s, that in the hot summer months, you know, ice cream is too important to melt? Why not pay for the refrigeration for Ben and Jerry`s in the summer months?
I mean, everything could be too big, or too important, or now is too critical at a time. How do we -- how do we turn this corner to not start nationalizing our airlines? Not taking on the big three autoworkers -- auto plants?
KOPPELL: I think what you just were getting at is right. Everything is -- everything is too something. So the question is, are we willing to - - are we willing to bite the bullet and let these big companies die? And the answer -- the answer thus far seems to be no.
And it`s interesting, if you think about it, why? Because nobody wants to be the treasury secretary or the Fed chairman when the economy, you know, goes into an Armageddon, right? So everybody talks a good game. But then when -- when they`re the one facing Russian roulette, they say, "Oh, we`ve got to bail them out."
BECK: OK. But doesn`t this make -- I mean, look, if I -- you know, in some ways painkillers are bad for you, because they`re covering the pain. And if you don`t know what the problem is, you need to have the pain. Right now we`re covering the pain.
We`re not letting any -- you show me the hearings that are happening with the people at Fannie and Freddie. You show me the people who are responsible for this. There`s no Enron action happening here. The only way we`re going to fix this is if people feel pain, and that is either through financial pain, or through jail pain.
KOPPELL: Yes.
BECK: We`re not getting either of those.
KOPPELL: It`s actually -- I actually argue it`s worse than that, which is it`s not only that we`re not feeling the pain. It`s that by making sure that we won`t feel the pain, we`re actually encouraging them to do the very same things that got them into trouble this time.
All right, well, we`ve got a problem of moral hazard, which is if I say, "Don`t worry, buddy. No matter what you do, we`re going to bail you out," I`m basically encouraging you to take more and more risks. And that`s what we`re doing. That`s what we`re saying: take more risks.
BECK: Let me ask you this. This is the old-boy network. This is a golden -- Fannie and Freddie are golden parachutes for the government. All -- they`re all cronies who have been in former administrations and friends of congressmen and everything else. This is all the old-boy network.
The other side of that is, a lot of foreign governments were holding some of this money. And we couldn`t let them -- we couldn`t let these things fail because then those foreign governments would look at us as -- as a bad risk.
I mean, this is the kind of change America is looking for, to stop this kind of bull crap. How do we do it?
KOPPELL: Well, first of all, you`re 100 percent right, which is why Fannie and Freddie are so special. If we were to let them fail, it would be not only an economic crisis but an international political crisis for the reasons you just said.
And so looking forward to the future, one has to say, look, no matter what we do, we can`t have this kind of ambiguity regarding these institutions. Are they government? Are they private? That`s the -- that`s the real source of the problem here.
BECK: And -- and they haven`t solved this time.
KOPPELL: No.
BECK: They`re waiting for the next Congress and the next president to solve it, right?
KOPPELL: Well, I think that`s -- I think that`s right. And one might argue that maybe they should. But clearly, the current -- the current, you know, fix is not a long-term fix. We`ve got to figure out how we`re going to deal with this.
BECK: Jonathan, thank you very much.