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In all of that.
Now the president has announced his plans to transform the financial regulatory system.
Targeting the right areas will this plan plug the holes that we saw became so -- My system.
Joining us for a Fox Business explicit we're pleased to welcome back senator Kent Conrad Democrat -- -- and chairman.
Of the Budget Committee welcomes senator thanks for coming on.
Good to be with you list does it fill the holes that ripped open and the flood of blood came out on Wall Street back in September does -- do that.
You know I think we'll have to wait and see what the judgments are of the market.
But we hope that this is moving in the right direction.
Well senator let me talk about some of the direction there we'll have to be less leverage according to the president.
That these banks take on they -- over leveraged in so many cases that if something went wrong and the unwinding would begin which we saw on September.
They couldn't stop up the mistakes there.
The derivatives issues we'll have to be -- seen that these fancy financial products not to mention there will always be now the threat if this goes through.
That government entities and I believe it's going to be the Fed here would be able to chop up banks that become too powerful in financial entities because you know wasn't a bank it was AIG that got us into trouble.
What more needs to be -- what should we be pulling back on from where -- -- Well first of all.
Have to move through a transparent process we've got to know what's happening in the derivatives market we can't have.
Hundreds of billions of dollars of these instruments floating around the world nobody knows what the risk factors are and where the risk is located.
One of the big problems that we've had here was certainly at AIG.
And think about the entire global system being brought to the brink of collapse.
Because decisions made by a handful of people.
Representing that company and in effect offering insurance policies where they didn't have the capital to come through with a guarantee.
It reminds me a little of remember when he had that earthquake out -- Cisco during the World Series yeah and we saw.
You know the stadium shaking.
Well one clever guy out there started to sell earthquake insurance.
And as earthquake insurance was that he'd be there and fifteen minutes to picking up your your family your business.
Executives up in a helicopter within fifteen minutes of there's another earthquake.
Then somebody decided to check to find out if the guy had any helicopters.
And -- course he did.
And that's a little like what was happening with these derivative deals where they were.
Against risk where they didn't have the capital to cover the downside danger.
We now know.
All of that and we know that it was not backed up by anything that would be able to cover any kind of problems but what the president announced today what I'm trying to get -- here.
Is it enough and will then as the hearings begin that it be embraced.
I think this is a step absolutely in the right direction.
Just having seen that the president's remarks -- then take a little time to fully understand all of the elements here.
But I think the president's got us going in the right direction.
How do you feel that the banks are going to be started embracing this or at least trying to absorb it -- we we haven't seen.
Big drop offs and some of these banks -- names in there the market hasn't experienced an earthquake to use your analogy today but.
Looking at at that you don't -- -- on the Budget Committee tell me what you think.
Have you talked to any of these people over.
Yeah absolutely I think a lot of this is already been priced -- I think there's been an understanding for some months that this was coming.
And that that this was gonna have to be sweeping and there are many in the financial community who think frankly that it's overdue.
Obviously there are others who disagree.
This is gonna take some time to absorb but I I think in terms of financial institutions.
A lot of this is already been priced them.
All right but let's move on to health care because you have been.
Somebody who's backing this idea of cooperative state investment at my co anchor has been very interested in in how all of this is developing because it looks like you could very well get support from both sides of the -- All of these so called -- -- put up on the screen some of the concepts of the health co ops but.
Are you hearing anything positive from the president about this idea that would entail.
Nonprofit groups coming together with ideas that would follow the same rules to other plans.
And then uniform definitions of co ops along with standards to ensure that it would be consumer focused.
Absolutely I'm hearing a lot as you couldn't have been from a lot of different circles the president just did an interview.
In which he said we have to be open to new ideas like Kent Conrad -- coop idea and he wanted to you know.
Further information about it but he said it was important to be open to creative ideas like this one.
The strength of the cooperative ideas that these are.
Business models that have been around for more than ninety years they're very successful across abroad -- a range of industries.
-- the Associated Press is a cooperative.
Land O'Lakes is a nine billion dollar cooperative and it's one ace hardware is a cooperative and they're all working working well.
-- group health in Washington is a cooperative.
People so this is a model that works we know how it works we know how they function.
It's not for profit it provides additional competition to the for profit insurance companies.
On the other hand it is not government run not government controlled it's membership run and membership controlled.
And that's why it's appealing to some of the Republican side.
Well then let me add to that and bring on this question.
If up privately run sort of nonprofit type of co -- would be so good.
And the president's willing to consider it.
Why do we need the government to get involved do you think that there is still the potential and possibility.
To remove the government from universal health care or is it -- such a big monster that we have to bring in the government.
Well remember already in the health care system the government.
Is funding about half of all health care in the country now Medicare Medicaid veterans' health care and the rest so.
Government is already involved the question is with the reform.
How much more do we want government involved and what we're trying to do with the cooperative plan is yes provide additional competition in many states there's really.
Only one dominant -- so there is no competition.
Are virtually -- On the other hand not to have -- -- government controlled government run there will need to be some government resources for startup purposes but after that.
A complete separation so that it is not.
-- government entity and all that it is membership control.
Senator Kent Conrad Democrat from North Dakota we know that you've been fiscally conservative watch the price tag for us and we'll be watching you welcome thank you so much for joining us.
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