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We'll get just a former critic of Wall Street bailouts is now advocating on behalf of the big banks working to influence the still unfinished implementation of Dodd-Frank.
Tim Pawlenty financial services roundtable CEO and former governor of Minnesota is joining us to the Fox Business exclusive -- -- -- You know it's interesting governor a lot of people -- -- Really because he was very verbally negative on the banks and and some people like that because they felt that the banks had.
Really -- this country into at least part of the major financial crisis.
What -- to turn around to change your stance.
But a couple of things first about keep in mind the organization that I represent the financial services roundtable has some large banks but it also has a whole array of other financial institutions mid -- non bank Kennedys and some others as well.
This is a very important part of our economy when I made some comments that were critical of larger banks and Wall Street when I was running for president in 2011 I so they really should get out of the business seven of public subsidies and actually Dodd-Frank past and declared.
That is a matter of law there wouldn't be any further subsidies of these kinds of institutions that if there was a wind down in the future.
There'd be more capital requirements of course more oversight but if there was a wind down.
The charges relating to that would be borne by the industry itself so -- predictive and I was running in those statements actually came to be true.
Okay your phrase real little more cultural than that you said get your snout out of the trough is to be.
Specific sports center -- Atlanta -- artists is it shows a lot of airport that it -- after that but.
There are ways to subsidize and ways to -- there was direct way through TARP.
And of course most of that money was paid back but then there's some indirect -- some -- would say that if you really want to prevent the taxpayer from paying the cost.
Of some of these bad banking that's you cut off their access to the Federal Reserve -- because the more the Fed prints up money.
The more they provide cheap money to banks and other institutions the more they take the value of my money out of my pocket.
Well we need that we need to remember history and why the Fed they exist to begin with and -- -- it -- after the nineteen it exists Burke commercial banks not for financial institutions correct.
Well we've a history -- it relates to the stability of the financial system more broadly and deeply than just that so we need to make sure we understand these issues historically and from the complexity of what it means to the system overall but in terms of -- the so called bailout -- snout out of the trough comments that I made.
They -- reason that I think if there's good news on the horizon is Dodd-Frank took steps.
First of all that were in many ways appropriate more capital requirements more oversight.
Orderly wind down through living wills and if there isn't charger and the cost associate with the wind on the industry pays -- itself.
And so I think if people should.
Implement that in a way that is true to that intention but not over bacon so far that it deters.
The investment and lending that -- we need to get this economy -- and again.
The governor and I know you know this because you did have a sensitivity to that but the fact is that some of Dodd-Frank.
Was changed because lobbyists from the financial -- industry descended got worm their way inside the beltway.
Hundreds of millions of dollars these banks paid.
Just to kind of gum up the whole system that's really unacceptable for the average American who is trying to see what happened never happen again.
What are you doing about lobbyists do you tell these institutions especially the big -- guys need to back off.
Well the -- financial services roundtable which I represent has said look we we agree with much of Dodd-Frank direction only.
Again more capital more oversight orderly wind down Nomar.
Bailouts and but as the rules get written specifically as to the definitions of things like.
Speculation for example under the Volcker Rule we can all agree that depositor money shouldn't be used for speculation.
As you prohibit speculation we need to define what that is simply and easily and clearly.
So that it doesn't go so far as to chill or deter the type of lending activity your economic activity that we all need -- for gonna have the economy growing.
And end that -- financial institutions playing the role that they need to play the important role they play in the economy so.
It these are big complex matters it's important to cut measure twice and cut wants and that's a big part of the implementation of Dodd-Frank making sure it's clear.
Making sure -- we know the rules of the road.
And it's -- not so over -- that it deters economic growth.
All right let's talk about some other rules and tax rules because of course taxes are due to go up.
On January 1 we saw the first step towards some kind of at least.
Negotiation and a public forum by speaker Boehner yesterday and then Harry Reid -- it what do you think is gonna happen there are.
Are we going to have an increase in the top rate of taxes in the US.
Well this fiscal cliff looms large and it's no longer just a political -- -- philosophical debate it's a mathematical necessity the walls of of this fiscal -- the walls of reality are moving in such that they're going to have to -- and and and of course we all prefer that it be done in and timely and orderly.
Manner so it doesn't disrupt the economy as you know the nonpartisan.
CBO the Congressional Budget Office said if they don't address this.
The GDP could drop 3%.
So -- the negative territory in other words a recession.
Unemployment could go back up over 9% in a whole other series of cascading bad development so they must address this.
I hope I hope the -- as soon as possible but I've written a letter to the president and to the congress on behalf of -- organizations say.
Make a modest extensions they can buy yourself you time.
And then tackle this in a comprehensive and structural way including spending reform which is gonna have to include entitlement reform.
And including tax reform in a way that's pro growth and if need be need to lower the rates and broaden the base.
Governor Tim Pawlenty financial services roundtable CEO and former governor of Minnesota.
We hope you'll keep them in line thank -- so I haven't.
Thank you very.
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