Transcript: The Great American Debates: 'There's Too Much Government In My Life'


The answer is not that if you're too big -- what we have said is this, if you fail that's okay, because that's your money as long as it's not the taxpayers' money. That's what we have done is to say that if you fail, you're out of business. We may pay some of the debts, but it comes from other financial institutions.

REICH: This is a terrific example of where so-called liberals and conservatives actually are not on polarized opposites. I mean, I happen to think we should cap the size of big banks. Big banks are bigger today than they were before the Wall Street bailout. I think that we ought to use the antitrust laws to make sure that banks don't get too big. RYAN: And bankruptcy laws.

REICH: And bankruptcy laws as well.

So where is the liberal? Where is the conservative position? We are in the habit, all of us, on being exactly opposite sides. But when you actually look underneath the surface, there is much more in common.

AMANPOUR: Congressman Ryan.

RYAN: That's altogether partly right. But here's our problem with this approach. We are amplifying too big to fail. We are saying that if the government deems you systemically risky, you're the one that's going to get bailed out. And so what's going to happen as a result --

FRANK: No, that's not true.


RYAN: So what are we saying? We are saying to the big banks, you're going to get the capital that's cheaper. We're going to have seven Fannie Maes and Freddie Macs instead of two. And the small banks are going to be left on the outside looking in. We're stacking the deck in favor of the big banks instead of the smaller banks.

FRANK: That's entirely inaccurate.

RYAN: I totally disagree with that, Barney.

FRANK: Let me make a point--

RYAN: Because you just said a couple of things. Government gets to pick and choose. We are putting more power in the hands of discretionary bureaucrats so that they can decide how to run these big companies. And the markets know that if things go down, we'll bail them out.

FRANK: That is simply -- you haven't read the bill.

RYAN: No, I read the bill three times.

FRANK: Here's what the bill says. Here is what -- in the first place, you say break them up. No one has told me to what size. And you do have an international competitive aspect. I don't want there to be no American financial institution that's capable of competing with all the international ones.

Secondly, what we have said is this, we'll be regulating them. The regulators are empowered to make them divest if they think in a particular case they're too big. There are caps on the amount of deposits they can take. But finally, if all that fails and they have to have more capital, more capital for the big banks and the small ones. But if that fails, they are put out of business. They are not too big to fail. We then will pick and choose to see what debts we may pay, but the bank is done. The shareholders are wiped out. Everybody is fired. There's no moral hazard. There is no more institution.

RYAN: You just made our case.


AMANPOUR: All right. On that note, then, in the next segment --

FRANK: Well, what then, if there's no institution, who's too big to fail?

RYAN: And the only people who can hire the legion of lawyers and compliance officers to deal with all of this are the big businesses, not the small businesses.

FRANK: Nonsense. They're put out of business.

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