Transcript: 'This Week' Economic Debate

DONOHUE: Well, I believe that the TARP thing had a very important value, and that is, it put liquidity in the banks that let them meet their requirements. Otherwise, they would have to be put out of business. And they're holding that money. They haven't spent it. They're waiting to find out where the floor is.

And when they get to the floor, then we'll be able -- on the economy, then we'll be able to figure out how to put more money back in the economy.

STEPHANOPOULOS: Is it practical to talk about closing down big banks?

DONOHUE: It's not practical to talk about closing a bank that is integrated throughout the whole global economy. It is practical to talk about buying some of those assets away from those banks and holding them in an institution that would have both public and private money, but it's not practical...

MCCASKILL: And as a matter of confidence, I think it's important for us to point out that there's two kinds of banks that we're talking about here. The -- the commercial banks, the small, local banks, they're fine, and people need to realize that. Your local bank is loaning money; it is operating as it always had.

It may be suffering in its stock prices because of what's going on in the stock market, but they are doing a great job. In fact, most of the commercial banks, the local banks, have loaned more money in the fourth quarter of last year than they had the fourth quarter the previous year.

STEPHANOPOULOS: But what do you do with these big banks, these few big banks that are in big trouble?

MCCASKILL: Well, I think -- I think a plan has been laid out. I think -- and now they're -- what they're doing is they're doing this evaluation to look at the strength and the weaknesses of each of these banks so we know what's there, and then they're going to have those capital asset funds available to help them stay liquid, the big banks.

But I think this is a matter of continuing to look aggressively at how we can help without wasting taxpayer money.

BAYH: George, the real problem here is this whole concept of too big to fail. Some of these institutions -- and you can put some of the big three automotive companies in the same category -- if they were to go down, the problem is, it's not just them. They take -- it's called, you know, collateral damage, a whole lot, hundreds of thousands of blue-collar working men and women, other smaller financial institutions who were not involved in these bad decision- makings, they'd all pay the price, too.

STEPHANOPOULOS: So you can't close down the big banks?

BAYH: Well, what we have to do is stabilize them for the time being to avoid the collateral damage, put into effect regulation to make sure that this does not happen again, and if institutions are going to get, quote, "too big to fail" so that the taxpayers will have to come in, maybe they have to operate under a different set of rules.

STEPHANOPOULOS: And what -- go ahead.

SHELBY: George, subsidization of anything for very long never works. You don't stop. The automobile business, those companies, Chrysler, Ford, and General Motors, they're in deep trouble. We know that. I've suggested they go into Chapter 11. That's where they belong. And they could reorganize. We could get, you know, money in place for them. We could do it if they did it and did it right. Short of that, the UAW will run those companies and run them into the ground.

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