Transcripts For KQED Moyers Company 20121029

Foundation. The john d. And catherine t. Macarthur foundation, committed to building a more just, verdant, and peaceful world. More information at macfound. Org. Anne gumowitz. The betsy and jesse fink foundation. The hkh foundation. Barbara g. Fleischman. And by our sole corporate sponsor, mutual of america, designing customized individual and Group Retirement products. Thats why were your retirement company. Welcome. Time now for some reality checks. Weve waited until all four debates were over so we could see them more holistically than we would one by one. So with a little more than a week before november 6th, ive asked two astute observers, widely recognized for casting a keen and discerning eye on what we journalists often miss, to sum up how they think the debates and the campaigns have served democracy or not. We wont rehash who won or lost. Ultimately each of you has to make that call. We want instead to ask what we did or did not learn about the pickle our countrys in, and how the candidates think we can get out. Kathleen Hall Jamieson is a regular and familiar participant on our broadcast. Expert on debates, media, and political rhetoric. Director of the Annenberg Public Policy Center at the university of pennsylvania, she has been a force behind two essential, nonpartisan websites, factcheck. Org and flackcheck. Org, each calling out the deception and confusion generated by parties and partisans. On the other side of the continent, her fellow annenberger marty kaplan is founder and head of the Norman Lear Center at the university of southern californias Annenberg School for communication and journalism. The center focuses on the bustling intersection of show business and politics. Hes been a producer and screenwriter as well as a speechwriter for then Vice President Walter Mondale and a colleague of the late u. S. Commissioner of education ernest boyer. Welcome to you both. Thank you. Thank you. Kathleen, the last time you were here you said all weve got left in the search for truth and knowledge is the debate. All right, are you satisfied now . No, we did not get an answer to the question that i wanted answered, which is what are the sacrifices youre going to ask of us . Where are you going to get the money that we need in a way that wont tank the economy, that will increase the likelihood of Economic Growth . And so, the problem now facing the country and the candidates is were going to elect a candidate who is going to govern by asking us to make choices that we havent anticipated. And as a result, were going to feel betrayed to some extent, even if we voted for that candidate. The debates were the most watched in a long time. Your field intersects politics and entertainment. Do you think entertainment values had something to do with this . Well, i think suspense was what was required down to the wire. And thats what we got. One won one, another won another. Then a couple of draws. What could be better for keeping people watching . Unfortunately, the lack of an answer to who sacrifices what is only the beginning of an endless list that, for me, is a reason to be disappointed, not just in the debates, but in the entire campaign. I want to find out about things that are important, about plutocracy taking over democracy, the widening gulf between the powerful and the powerless. Wall street, global warming, on and on. At most, they made a cameo appearance during the debate. And i think they were trivialized by the context. And usually, entirely absent. So i was disappointed overall in the complete lack of attention to some of the most important issues that the nation is facing. And one of the things that is problematic is when we dont talk about it, we sometimes dont address it as a result. The absence of a discussion about Climate Change is one of those categories. We spent a lot of time talking about where we were going to get energy. But we didnt talk about how we were going to regulate the uses of the energy and the getting of the energy. And we didnt talk about the effects of the ways we would get it on either the environment or, more broadly, on the globe. Nonetheless, did the debates matter . Do you think theyve had an impact on the campaign . Yes, and what we, what we saw across the debates is what we expected to see. We saw learning about those issues that were addressed. More accurate placement of candidates on the areas in which they differ. What we didnt see is more accurate placement on areas that theyre similar because the news never stresses areas in which theyre similar. But nonetheless, weve seen learning across the debates in our Annenberg Survey. But my sense is that when there is no penalty for lying or as Jonathan Swift says in the last part of gullivers, for saying the thing that is not so, that the things one learns about what people say are completely irrelevant. Governor romney has changed his position on just about everything throughout his entire career. And that, i believe, bedevils the Fact Checkers who will say, well, his official position is this, but then he did that. So its hard to know, but you cant really say, this is true because also thats true. If thats the context, if thats whats going on, then im not sure what can be learned at all about governor romney because the chances of him saying Something Different, doing Something Different once the election comes, based on his behavior during this campaign and while hes been running for president , are extremely high. Let me give you an example of what people have learned. People know that governor romney is going to increase spending for the military. And thats a consequential difference. They know that president obama is going to increase taxes, where, where governor romney is not if hes elected president. Thats an important issue distinction. Coming into the last debate, the Annenberg Survey showed that the public thought that governor romney was more likely to take the country into a war, than was president obama. But the public also believed that president obama had gone around the world apologizing. Now in the last debate, governor romney reassured that he was not as likely to take people into war as they had thought in that debate. And i think that was a calculated strategy on his part. Now, you could say, and it was illegitimate. You secretly know that he was more likely. But nonetheless, what we can measure is whether they get what he said he was going to do in the context. And i think that president obama responded to the apologizing around the world claim in a number of ways that were effective as well. And i think one of the things that we can say about debates making a difference is that, had there been debates in the Goldwater Johnson election, had there been debates in the Mcgovern Nixon election, i think we would not have had the blowout landslides that we had. What debates do is take the caricaturing of the challenger and give the challenger a chance to stand there and be who the challenger would like to be in front of that audience. I think for governor romney the benefit was he knocked down some of the caricature that had been built of him. And i think he reassured people, even who may vote against him, that he is not as extreme and reckless as some of the obama advertising and statements would make him out to be. See, i would say that he did not knock down the caricature. He deepened the caricature because his problem is that he will say and do anything, and there is zero accountability for it. So going into this debate, he had to prove that he was not the person that he was in the republican primaries. But simply by saying different things, doesnt make him genuinely be anything else different. Hes simply recalibrating what he thinks he needs to pander to undecided voters. What i learned is that governor romney is an abler and more intelligent public figure than he came across in the republican primaries in the spring. And that he had to dumb himself down so much back in the spring in order to appease rush limbaugh, ralph reed, grover norquist. You so let him off the hook. And i dont know why you do that. I feel as though thats what the medias frame for dealing with the primaries is. Well, we all know that you have to appeal to the partys base in the primaries, and then you have to move to the center because thats just something that people have to do. Why do we let people do that as though that dance was acceptable in a democratic society. Oh no, i dont think you have to move to the center. Im only saying he chose to go that route in order because he thought he could only get the nomination that way. But why didnt you hold him accountable, not for just realizing that he had to do it tactically, but that that is a really corrupt thing to do. Inappropriate and disqualifying for leadership, as opposed to its just what politicians have to be up to. Isnt it sad, hes a nice guy. Candidates do change positions. And the question is when is it consequential and when isnt it. And when does it become a behavioral pattern that means you cant draw an inference about what the person is going to do when the persons going to govern . One of the questions that the electorate has the opportunity to ask in debates is precisely that question because you have two different factors holding the candidate accountable. You have the questioning moderator and you have the other candidate. And in the head to head comparisons, if a candidate is vulnerable to the charge, if the candidate has changed positions a lot on consequential matters, youre going to have questions about it and youre going to have the opposing candidate make the argument. And then electorate then has to ask, what do i make of this . Who do i think the person is . What do i think the person is actually going to do . But they have more evidence than they would have in the absence of debates, and thats the value of debates. But look at the way it plays out. Romney will say, yes, i do have a deficit plan. Go look on my website. Its there. Its true. Which puts the burden on the audience. I wish they would go to your website because they wont find out the answer at mitt romneys website. But then we come to the second part of the process that protects. You heard in the debates candidates saying, thats not true. Check the record. Check the transcript, and an invitation essentially to go to the Fact Checkers and journalism. To the extent that this year weve had a lot of Fact Checking in national journalism, a lot more than weve had in previous years. And we know now after the first three debates. Last time i talked to you it was, it was only a hypothesis, that the people who said they went to the Fact Checking sites or went to journalism for Fact Checking on the web, were more likely to accurately be able to portray the candidates positions and those exchanges in which somebody was alleging deception. Romney, his plan largely doesnt add up. Obama did not apologize around the world, if by apologize you mean said, im sorry and i apologize. What we havent gotten to is a deeper understanding of what obama was doing in those moments. I think he was doing something extremely important that we have not talked about, which is recalibrating our relationship to the rest of the world so that we would work collegially with allies in order to increase the likelihood that we were all on the same page when we moved, sometimes militarily, sometimes with sanctions. The debates, as both of you know, are agreed to by the press on the terms set by the two parties through the president ial commission on debates. So, i think what were getting are staged press conferences. Not debates in the sense that you mean them when you wrote your first book about them in politics. These are not debates in that sense, are they . No, theyre not. And theyre i suspect that if we tried to go back to debates in that sense, we would have Trouble Holding public attention. In a world in which public Attention Span is being abbreviated daily, the likelihood i think that youd get people to watch an hour long presentation on one side with an hour long response is probably approaching zero. Yes, mr. Lincoln, you can go on your website and tell us what you think about slavery, right . But youve seen montage after montage of, for example, mitt romneys position on abortion. And when you see the montage, its so clear that he has many positions. And you can do a timeline along with it and, and make the relationship between his bid for Higher Office to it. Why cant a debate include the playing of such a clip and then say, mr. Romney, please respond to that, as opposed to the formality even of a conventional press conference in which someone is free to duck. You can duck a question. Its much harder to duck evidence and a video. But the parties and the candidates will not agree to that, unless you have it on their terms. Which is why i am more dispirited, i think, than kathleen is because what you do get, even from this limited, signed on kabuki does still have some value, despite its limitations. I completely agree. But on abortion, heres what i think we can reasonably say reading history. What candidates say they will do in the general election of a president ial campaign and what they repeatedly say theyre going to do does predict what theyre going to try to do, regardless of what theyve done in their past or what theyve said in the past. I would predict that if governor romney is elected president , he would support, nominate justices who would be more likely to overturn roe v. Wade than would barack obama. I think that it is clear, however, that he would not do anything to outlaw abortion in cases of rape, incest or life of the mother being endangered. I think we know that from the exchanges to date. And so you can say hes had more positions across time, and his position you can mark different points in the calendar across his life. I do think that the public, by and large, perceives the fact that he has made more 180 degree turns than a whirling dervish. I read this comment online at the washington post, a reader who said that, romney has thrown limbaugh, rick perry, allen west and all the other Tea Party People under a Freight Train by essentially saying he would govern as president obama governs. Thats what he, in effect, he said this past last debate. What about that . Why would anyone believe that . Yes, he said that and yes he did it to convey the impression that the old mitt romney from the primaries was just something he had to do to appease his tea party base. Why should you now believe that, if he gets elected, he will not be a prisoner of the eric cantors and, and the John Boehners . And the right extreme right wing of his party that will force him to do stuff as president that he now says hes not going to do because hes in a general Election Campaign . A person who doesnt have a core, it strikes me, is susceptible to the same kind of pressure once in office, as when he was running to appeal to his base in the first place. But there is an underlying tendency here thats recognizable. Barack obama opposed a mandate in order to distinguish himself from hillary clinton. He has a mandate in his Affordable Care act. Theres always some Movement Toward the center in governance, as well as a move toward the center toward the general election because of the nature of the two party system and the nature of divided governance. Im not sure i would call what happened in the last couple of years a Movement Toward the center. I think of it as obama negotiating with himself with an intransigent right which used its power to hold the country hostage, rather than finding Common Ground. So, lets talk about what you did and didnt learn. Youve watched the four debates now. Do you have any idea of how governor romney would manage to cut income tax rates by 20 without increasing the deficit . Or which Tax Deductions he would eliminate . Or specifically, how hes going to create the 12 million jobs hes promised . Or what Barack Obamas going to do in his second term . Do you have any sense of that . Well, in the case of the 12 million jobs, as we know, you dont have to do anything and youll get 12 million jobs. Any number of economists and moodys analytics have predicted that simply by keeping present policies in place, 12 million jobs will be created over that period. So its not much of a boast. As for the tax policy, my guess is that he doesnt know and he is just saying things. He has said he wants to cut taxes rates by 20 . And i believe he does and would. But when you ask him why that wont be a 5 trillion increase in the deficit, he says and i love the third person, if mitt romney says there wont be an increase in the deficit, there wont be. Thats why and how. I know how he could, because some of the studies he cites make assumptions that would let him become revenue neutral. He could take the major deductions away from everyone making more than 100,000. That would effectively do it according to one of the studies. He could also eliminate the tax free status, the tax free municipal bonds. Now that would pose a real problem for municipalities. But he could. In other words, there are ways to get there. But not under the assumptions that he offers in his plan. I think involving hard choices and sacrifices, which youve talked about every time youve been on the show. But theres a second thing. Weve been distracted by the discussion, how would he get to revenue neutrality . And as a result, not asked, hows he going to address the deficit because he has no revenue on the table if he gets to revenue neutrality. All hes done is not increase the deficit more than we already have. We should be focusing on, how do we address the deficit we already have, not worrying about whether he gets to revenue neutrality. Obama wants us to worry about is he going to blow the deficit up even more. Kathleen, what were the big whoppers . Where did they cross the line . The incumbent always overestimates how much the incumbent has accomplished. And so, president obama wants to suggest that there have been more jobs created in net than there have actually been created because he wants us to feel better about the economy than the data would actually warrant. Governor romney wants to feature everything thats negative, without acknowledging anything thats positive about the economy. And if people feature one of those indictments without picking up the other compensatory body of information, they dont have the whole picture. The reality is the Economic Indicators right now are mixed. And you have a new obama ad on the air thats trying to feature the ones that are positive in order to increase the likelihood that you think about those as you ask whether or not the country is better off now than it wouldve been, had obama not been president. We were in a deep recession. And president obamas having the difficulty of having to make the argument that, things are better than they would have been, had i not done what i have done. But theyre still not what they ought to be. And thats a tough case for the incumbent. And governor romneys exploiting it every inch of the way. My favorite whopper was when paul ryan said that the reason that they dont want to say how they will change the loopholes is because theyll be attacked. People will say mean things about them. And that democrats and republicans wont be able to work together. Joe biden is partisan but i, paul ryan, know what real bipartisanship is all about. This from the most ruthless, relentless, disciplined right wing unified front that i believe the nation has ever seen. This is the person who is saying, bipartisanship is what were all about. And you democrats dont understand what that means. Yeah, but theres, theres one other thing. Sometimes you sin by omission. And when the candidates suggest that their plans are going to be sufficient to address the crisis that we are facing, the deficit debt crisis that were facing, in an environment which we cant afford to tank the economy, they are implying something thats fundamentally false, given what theyve told us. President obama is telling us how hes going to get some extra revenue by tax increases. But hes not going to get enough that way. And he hasnt specified the spending cuts. And governor romneys numbers dont work out either. So youve got both implying that my plan is sufficient, when in fact neither is sufficient. And thats the problem. When they translate that into governance, if they just do exactly what they promised theyre going do, we are in a real crisis. And long term, our countrys got serious and unresolved problems. The voter out there only has a choice, therefore, between two insufficient possibilities. But they do know that governor romney will cut more and obama will tax more. Thats a certain inference. On your point, i was surprised that when paul ryan said what he did to joe biden that, you know, we can work together. And when romney runs, romney has a new ad out saying he can work better with congress than obama has, that somebody didnt point out that this is an obstructionist republican majority in the house. I think thats because obama is in a trap. He has painted himself into a corner, which makes him vulnerable to the charge, which has been heard increasingly often, that you dont know what obamas going to do in his second term, that he doesnt have an agenda, that only the past hes willing to talk about, that was a failure. And he cant tell you because its not going to be good. I think the problem obama has is that he can tell part of the story, thanks to bill clinton, which is, they gave me a problem and i stopped what they were doing. Now you dont want to give it back to the people who caused the problem. But what he is not then able to do, which i wish he would do, is to say, and the reason it was so hard for me to do as much as i wanted, and the reason i need your help, america, going forward, is that these people are going to fight us tooth and nail every step of the way. And starting with dealing with this fiscal cliff in which theres this terrible sequester deal, those people are holding the country hostage. Im going to go to you, the country, and ask you to pressure your representatives, including the republicans, to make a deal, find Common Ground with us. And thats what its going be like in the future. Obama has not made a convincing case that the way in which the nonpart the way in which the bitter partisanship of the past would be different from the future. Why wouldnt Mitch Mcconnell and john boehner be even more vicious toward him in the future, and ferociously so than they have been in the past . President obama and Speaker Boehner came very close to a deal that had both revenue and cuts on the table. In the first debate, we had kind of an ironic moment in which governor romney was both confirming that he would not put new revenue on the table and saying that he was going to be bipartisan and get a solution. You cant sit down with the democrats and say, im going to be bipartisan, and not offer anything. What the republicans have to offer is revenue. And what the democrats have to offer is spending cuts. And in that grand bargain which fell apart because neither could appease their own base effectively, they had both cuts and revenue on the table. Thats where were going to have to go for a solution. My worry is the country doesnt know thats whats going to happen. Kathleen, how would your experience differ if you had watched on nbc, fox, pbs, cnn . Did it make a difference which network you were watching . Yes, the networks that held much of the debate in split screen invited you to see the debate through the reaction of the candidate who wasnt speaking. And you think thats significant . I think its significant because it minimizes the likelihood that youre hearing whats being said. And its trying to create an interpretive frame in which, if someone is effective nonverbally, they can undercut the position of the other person without ever engaging in a rebuttal. You also saw on cnn, a running commentary line indicating how men and women those squiggly lines . Yes. The worm. How men and women the worm. In some undefined space were reacting. And that invites you to say, why am i deviating so much from the women whose lines are being tracked . Why is it that men and women are diverging . And in the meantime, youre not hearing whats being said. If debates are our most powerful vehicle for learning and we create structures that distract from that, were not doing a service. And theres one more. People watching debates differently, theyre watching debates on social media about yeah, this was a big year for twitter. Its a huge year for social media, including twitter. And what that means is we had about twothirds of the electorate, two thirds of the Adult Population watching at least one debate. And about 20 of those watched while they were engaging in some form of social media. We have very tentative evidence that suggests that when you reported doing that, and we put all the controls in place, so education and age, all the things that might affect knowledge, your level of knowledge about the debates drops. That is, your ability to make accurate distinctions drops how do you explain that . Explain it because youre in fact being distracted. We all think we multitask well. And the best Research Says that we no longer. Actually dont. I dont. And so, to the extent that you are focusing on something first, that commentary stream is framing things for you. So youre now seeing through someone elses lens or youre trying to create your own lens if youre the one whos tweeting, instead of engaging in the content. But secondly, youre being distracted from the content. So as youre reacting, youre not processing useful information. We have fundamentally, in this new social media environment, changed the way in which a discernible part of the population is absorbing content. And theyre not getting as much out of the debates, we suspect, as they might otherwise. What are they learning . Big bird, binders and bayonets. One, two, three. But consider the possibility that through social media, they are actually getting useful additional information. For example, during the fourth debate when mitt romney demonstrated that there was no difference between him and president obama on any issue, bill maher tweeted, the same as the other guy, only im white, as a summary for what mitt romneys position is. And it struck me as a brilliant, concise description of how race is an undertone in this election. And that going to romney is a safer choice for people who, at some level, have been made uncomfortable by this president. That would never have been an element of the onscreen debate. Arguably, its, its an irrelevancy to what was going on. But i would contend that its entirely relevant to the conduct of the entire campaign. What do you think have been their main strengths and weaknesses . Romneys main strength in the debates has been that he has appeared in the debates with a consistency of message and demeanor that suggests that the person who would be the commander in chief does not appear temperamentally to be the reckless person that the Obama Campaign would make him out to be. And i think as a result, the strength in governor romney was dispatching the caricature that was created very effectively by the democratic ads. And also, undercutting to some extent, the democratic inference that he was more likely to take the country into war. What do you think is his major strength . Hell say anything. So whatever the situation, he will be delighted to give an answer which gets him through that moment and appeals to whatever group hes talking to. At best, the 47 comment was an attempt to pander to that audience and not revealing behind closed doors who he really is. And what were obamas weaknesses throughout the debates . That he was unable to talk about how he would deal with what torpedoed him in his first term, which was the bitter partisanship. Which meant that no matter what he put forward, how good, how useful, how popular even with the country, that it would never go anywhere because that was the policy of the opposition, to stop everything dead in his track, to turn the filibuster into a day to day procedure of the senate, as opposed to the kind of things where you, you know, you break the glass during an emergency. Obama has the advantage that al gore ultimately had in 2000 on the complex issue of what are the implications of reducing the marginal tax rates by 20 and closing undisclosed loopholes. Throughout the three major president debates, obama has driven the argument, you cant do it. First you have to tell us what the secret plan is. If it were desirable, youd be disclosing it. So its probably not so desirable. But secondly, you cant accomplish what youre proposing on the assumptions that youre offering without exploding the deficit or hurting the middle class. If on election day people ask, does that really add up . The vote is far more likely to be a vote for obama. Kathleen Hall Jamieson, marty kaplan, lets continue this conversation online. Thanks for being with me. Thank you, bill. Youre welcome. And now for another reality check a far cry from the humbug and rhetorical static afflicting our Election Campaigns. Lets talk about something president obama and governor romney barely mentioned in their debates banking reform. Its four years since the economic meltdown knocked america and the world to our knees, four years since that massive taxpayer bailout. But if you listened to the candidates, the enormity and severity of this continuing crisis hardly merit notice. Barack obama pledges change but touts doddfrank, a bulky, watereddown version of financial reform that scarcely makes a ripple in the vast sea of corruption and abuse. Mitt romney campaigns as the bankers pal and says hell make dodd frank disappear altogether. If youre appalled by this, so is the man who held the thankless job of special Inspector General in charge of policing tarp, the bailouts troubled asset relief plan. Before he signed on, Neil Barofsky was a federal prosecutor in new york chasing whitecollar criminals and drug lords. He busted 50 members of a columbian Guerrilla Group deeply involved in narcotics trafficking. At tarp, he was assigned to ferret out waste, fraud and abuse. The banks didnt make it easy, and neither did the u. S. Government. Neil barofsky tells this story in his book, bailout an inside account of how washington abandoned main street while rescuing wall street. He is now a senior fellow and adjunct professor at the New York University school of law. Neil barofsky, welcome. Thank you. When you were a kid, did you say, mom, dad, i want to grow up and be an Inspector General . No, i said i wanted to be a lawyer, though. You did . It must be some sort of major genetic flaw i have. But my mom keeps a Fortune Cookie that said, you will be a great lawyer one day. And i signed it and dated it. I think i was 12 years old. So there was Something Weird about me that i wanted to be a lawyer. I wanted to be a prosecutor. I mean, that was sort of what i wanted to do. Maybe its from watching tv shows, perry mason, as a kid or Something Like that. But i was always drawn to the law. And so i think i did have this drive for public service. But certainly never did think that id be an Inspector General one day. I didnt really even know what that was until i actually got the job, to be honest with you. When you took the job, i read about you. And i thought, why is someone like that, with that record of prosecution going to take on this job at this in the depth of this crisis . Part of it was because this new office, this office of the special Inspector General for tarp, with the worst acronym in washington. It really is. Sigtarp, was to have two focuses. One was the oversight function and doing reports and audits and keeping an eye on treasury and making recommendations. But what i was more focused on in the beginning and what i thought my job would be is we also created a brandnew Law Enforcement agency, completely from scratch, whose job was to police the tarp program. And with 700 billion going out the door, the idea was that, inevitably, there were going to be criminal flies drawn to that honey. And our job was to catch them, do the investigations, and then get the department of justice to prosecute them. So i really looked at this job going in as a Law Enforcement job. And i was thrilled with the opportunity to build one from scratch. But once i got down there early 2008, wasnt it . 2008 . I arrived in december 15, 2008. And the money started going out the door in late october of 2008. And what i saw was that there were tremendous opportunities for abuse. There were no conditions, no Strings Attached and conflicts of interest being baked into some of the programs. So i, doing what my job was as a former fraud prosecutor started pointing these out and making suggestions, recommendations to try to close these loopholes and make it less vulnerable to losses. And the response i got was remarkably eyeopening to me. I was told that maybe my concerns were valid. But i didnt need to worry about it, because these were banks. And these banks would never, i remember this quote, risk their reputation by putting their own profits over the public purpose behind these programs. And to be very clear, this was told to me by paulson people under the Bush Administration and the same exact words were told to me by the geithner people under the Obama Administration. But it was a remarkable thing to hear. Because who could really believe that other than people who had come from these institutions. And my response, of course, is where have you been for the last couple of years . What rock have you been under, that you havent seen that these guys would sell their soul for a few basis points of profit . That ideas like they wouldnt risk their reputations or wouldnt embarrass themselves again, as bill dudley, the president of the new york fed said to me when i complained about relying too heavily on creditrating agencies. This was the core ideology and approach of how they viewed the financial crisis. It wasnt the banks fault. And if we could just trust them, well be in a good place again. And yet, there havent been prosecutions have there, of these the people culpable for this crash . No, i mean, what our office did was to detect, prosecute, investigate, and refer for prosecution those who tried to steal from the program. So we were blocked out of any activities that occurred before tarp. Because we were our jurisdiction was limited to tarp. And we had great success. I think close to a hundred people, so far, have been charged for trying to rip off this program. We saved more than 500,000,000 of tarp money in just one investigation alone. And the ceo who committed a multibillion dollar accounting fraud is now sitting in jail for 30 years. But we never had the opportunity, really, to dig into the financial crisis cases that led to the cause of the crisis. But there you are absolutely correct. No Senior Executive has been held accountable under the criminal laws. Why . Theres no easy answer. And it depends on who you ask. So if you were to talk to someone from the department of justice or wall street they would tell you these are very complex issues. The president has mentioned that a lot of times it might be caused by greed or stupidity or avarice but not necessarily by criminal conduct. If you were to talk to people on the other side, they would say we just have a hopelessly corrupt criminal justice system. I think the truth is a little bit more nuanced and a little bit in between. What i saw personally was a real timidity on behalf of the department of justice. And a lack of sophistication and expertise, when looking at the complex accounting fraud cases that i was doing. And i think its safe to presume that that also applied over there to the crisisrelated cases. But you also have to look into the reality behind what those cases would mean. We just spent trillions of dollars of treasure, taxpayer money, an unbelievable amount of effort to save these Financial Institutions, save them from failure, because we believed that the failure of any one of those would bring down the entire Economic System with it. They were too big to fail in 2008. They were too big to jail in 2009. I thought, at the time, this was an incestuous orgy going on there, between inside players at washington and inside players at wall street. Is that too strong . Its probably not too strong. Its the fact that their ideology matches up. And look, one of the reasons why their ideology matches up is they all come from the same small handful of institutions. And the people i was dealing with on a daily basis came from the same Financial Institutions that helped cause the financial crisis and were the most generous recipients of bailouts, goldman sachs, bear sterns, which, of course, had been adopted by j. P. Morgan chase. Goldman sachs, goldman sachs, it seemed like every time i turned around, i bumped into someone from goldman sachs. Which is not to single them out. But they all bring that ideology with them, when they come to washington. Its not like somebody hits them in the head with a magic wand and they give back everything that theyve learned and believed in their years of wall street. And they bring that ideology with them. And even those who dont come from a specific bank, when you surround yourself, create an echo chamber of likeminded people, its not terribly surprising that the government policy looks a lot like what the wall street institutions themselves would have most desired. And i think the other side effect of that is that people who are outside of that bubble, people who dont have that background, people like myself as a federal prosecutor or elizabeth warren, who was the chair of the Congressional Oversight Panel and before that a harvard professor, that our views, our criticisms, our contrary positions were discounted, mocked, ridiculed, insulted, cursed at, at times. Because there was no we didnt have the pedigree in their world to have a meaningful contribution. So what happens is that theres no new ideas that creep in. And you get this very uniform, very nondiverse approach to the problems of finance. It was puzzling to outsiders like me that you had tarp money being used to concentrate further the size of these banks. And the granddaddy of all those transactions, bank of america acquiring merrill lynch. And the important thing to remember here is this is not banks gone wild, banks taking the money and saying, party time, were going to consolidate. They did this with the encouragement of the government. And in bank of america, a little bit with a gun to the head to complete that transaction. This was the government policy created by the architects, ben bernanke who is chair of Federal Reserve, tim geithner, who was then the president of the new york fed before becoming treasury secretary, and hank paulson. Their solution originally was to further concentrate the industry, to make the too big to fail banks bigger. The theory was you take a healthier bank and mix it up with a failing bank and you get something somewhere in between, which is better overall for the system. Which may have had some validity in the very, very short term, but has put us on a path, i believe, to being even more dangerous. Because you have institutions now that are just monstrous in size, over 2 trillion in assets by certain measures, close to 4 trillion by other measures. Terrifying. The idea that any of these institutions could ever be allowed to fail is pure fantasy, at this point. Are you suggesting that we could have another crash . I think its inevitable. I mean, i dont think how you can look at all the incentives that were in place going up to 2008 and see that in many ways theyve only gotten worse and come to any other conclusion. What do you mean incentives in place . So in a normal functioning capitalist utopia, where, you know, most markets are that dont have this too big to fail, this presumption of government bailout if a firm like a citigroup amasses massive amounts of risk. And in so doing, they keep razorthin capital to absorb potential losses, which basically means theyre just borrowing tons and tons of money. And not have a lot of their own money at stake, but its mostly borrowed money. And it is very opaque. Its not very transparent about how theyre running their business. You would expect that creditors, people lending them money, counterparties, those on the other sides of their transactions would either stay away or really exact a premium. But the presumption of bailout changes that on its head and actually makes it go in the other direction. So it removes the incentive of the other Market Participants to impose whats known as market discipline. Because thats ideally in a capitalist society what happens is that the lenders and creditors and counterparties say, hey, were not going to do business with you unless you clean house, slim down, be more transparent. But when theres a presumption of bailout, that disappears. Because all those other Market Players can feel safe in the presumption that if anything goes bad at citigroup, uncle sam is going to come in and make their bets whole. Then you have the very real incentive for the executives at that institution to then pile on risk. Because they know that if the bets go well in the short term, they get paid. And they get paid very richly. But if it blows up and the risks go bad, no worry, the taxpayers going to be on the other side of that bill. Thats what happened to fannie mae and freddie mac, before they collapsed. Thats what happened to our biggest banks and global banks before they collapsed. And if you maintain that system, it is foolhardy to think that those incentives and pressures are not once again going to carry the day. At a conference a week or so ago, here in new york, you said playing ball for wall street has become a normal way of life, despite the panic of 2008. What does it mean, playing ball for wall street . Well, what i saw when i was in washington was this real pressure on myself, on other regulators to essentially keep their tone down. And i was told point blank by assistant secretary of the treasury that, this is about in 2010. And he said to me, he said, neil, youre a smart guy. Youre a young guy. Youre a talented guy. You got your whole future in front of you. Youve got a young family thats starting out. But youre doing yourself real harm. And the reason why youre doing yourself real harm is the harsh tone that i had towards the government as well as to wall street, based on what i was seeing down in washington. And he told me that if i wanted to get a job out on the street afterwards, it was going to really be hard for me. You mean on wall street . Yes, and i explained to him that i wasnt really interested in that. And he said, well, maybe a judgeship. Maybe an appointment from the Obama Administration for a federal judgeship. And i said, well, again, that would be great. But i dont really think thats going to happen with my criticisms. And he said it didnt have to be that way. If all you do is soften your tone, be a little bit more upbeat, all this stuff can happen for you. And thats what i meant by playing ball. I was essentially told, play ball, soften your tone, and all of these good things can happen to you. But if you stay harsh that was going to cause me real harm, in those words. What made you able to say no to the temptation . Well, i think part of it is the only job i ever wanted was to be a federal prosecutor. Send bad guys to jail . It doesnt get much better than that. Really interesting, complicated work, and wear the white hat. So i didnt have those incentives that i think that were presented. And i think, look, you know, being trained in the u. S. Attorneys office for the Southern District of new york, i was trained to be a Government Employee and to take my oath of office very seriously. But i wasnt really interested in their reindeer games. And i felt a real obligation and sense of duty to fulfill the oath that i took in secretary paulsons office on december 15, 2008, to do the job that i was sent down there to do. But i wasnt really tempted with a big job on wall street. And frankly, if it meant getting a judgeship, compromising the job that i needed to do and was supposed to do, it just wasnt interesting to me. But look, let me be very clear. I also have the fallback of i was a trial lawyer. I prosecuted a lot of big cases. And i knew that whatever happened, i could always go back and get a good job in new york, working at a law firm or doing legal work. So it gave me a degree of Financial Freedom even though i basically spent most of my career as a Government Employee and i didnt have money. I didnt necessarily need to please anyone to be able to go back and still be able to feed my family. What happens to a political society, to a democracy, when we stifle or bribe or shoot the sheriff . When i had my incident with the assistant secretary that my deputy, who had come down from whos another former federal prosecutor, who did narcotics work, said to me, kevin puvalowski. And he said to me, neil, you were just offered the bullet or the bribe, the gold or the lead. And what he was referring to was a society just like that, which was colombia, back in the day when Pablo Escobar and the drug kingpins really controlled society. And what he was referring to is that basically to corrupt society escobar would go to a magistrate or a police officer, police chief, a politician, and say, you have two choices. You can either take this giant pile of money and do my bidding. Or you can get the lead, a bullet in your head. And kevin was joking that i just received the washington white collar equivalent of the gold or the lead. And it was funny, at the time, but thats kind of what happens in a society where the rewards and incentives are, again, nobodys getting shot in the head thank goodness. But its a breakdown of the system. And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact theyre not. And what youre going to see and what we are seeing is itll be a breakdown of those governmental institutions. And youll see governments that continue to have policies that feed the interests of and i dont want to get cliched, but the one percent or the. 1 to the detriment of everyone else. You make it clear in the book that the Obama Administration fought against cutting down the size of these banks. And yet, in the second debate with mitt romney the president said, we passed the toughest wall street reform since the Great Depression. As i hear you, it wasnt all that tough. Well, thats a literally true statement. Because when you think of but its a very low bar to clear. I mean, all of the Regulatory Reform since the Great Depression has been peeling back on those regulations. With really the big death knell happening in the end of the Clinton Administration with, you know, a couple of bills, one that removed the last vestiges of the separation between commercial and investment banks. Glasssteagall act . Glasssteagall. It took down the wall between those two . The last part of it. And then the second part by passing a bill that made it, essentially made derivatives out of bounds for regulation. So saying that its the toughest is literally true. The problem is it hasnt been tough enough in where it most matters. And again, you dont really have to take my word for it. You just look what the market has done. Based on the presumption of bailout, the banks get higher ratings from the Credit Rating agencies which means they can borrow money for less, because their debt is viewed by the Credit Rating agencies as being less risky. And they get these higher ratings on explicit presumption that the government will bail them out and make good on their debt. So it didnt deliver the goods where it matters the most. Again, not saying that it doesnt have some good positive things for our system and for people. But it didnt deliver the most important thing that we need if we want to address the causes of the last crisis and help prevent the next one. What will it take to prevent the next one . Got to break them up. I mean, it is not a simple thing to accomplish, necessarily. But its a very simple solution. And what you see, i think, kind of amazingly, is how many more people have come to this view over the last year or so. It used to be a lonely perch that we sat on. Former special Inspector Generals, a couple of academics. But now you have people like sandy weill, the architect of citigroup. And sure, too little too late, after he made all of his money off creating these frankenstein monsters. But even he now recognizes that we have to break up the banks. You have senior officials at the Federal Reserve recently coming out in favor of this, the vice chair of the fdic, a very strong advocate for breaking up the banks. And you hear it a lot more in members of congress that are supporting this notion. So to me, on the one hand, its absolutely essential. If we really want to get to the point where we dont have to bailout a bank, we have to make it so that no bank is so systemically significant and large that its failure could bring down the system. Are they up to their old tricks . The banks . Sure. I mean, you know, so we had this Regulatory Reform of doddfrank in 2010, which, you know, left them intact and inside. But it had all of these rules and all of these regulations that needed to follow. And right now it is hand to hand, trench warfare, combat with those lobbyists spending all that money on campaign contributions, on, you know, flooding the Decision Makers and the regulators with comment letters and endless meetings. And pressuring members of congress to put pressure on the regulators, to water down the rules, to basically get as much back to the good old days where they would have free reign to print money, take advantage of their too big to fail status, bully and push out the little guys, take advantage of consumers. And thats what all of these efforts area about are to preserve these very, very core profit streams that they had before. And thats right now is where the battle is being waged. Not on tv, you know, not necessarily out in front, but behind the scenes where the next set of rules are being forged on what theyre going to be able to do and how theyre going to be able to do it. What are you hearing in the campaign about all this . Well, theres sort of two levels, right . Theres the campaign rhetoric, which i think you just have to ignore. I mean, president obama, for example, campaigned on this whole policy of no lobbyists. That he was going to take on these lobbyists when he came into office. That was in 2008. In january 2009, do you know who they made as the chief of staff for Treasury Department . Former chief lobbyist for goldman sachs, mark patterson. So like, so youve got to look beyond what theyre saying. And what theyre saying is things like theyre both, 100 , totally convinced that they would never bailout a bank ever again. And Barack Obama Says he wont do it because the doddfrank mechanisms would work. Mitt romney is a little bit more mysterious. He says he would remove the Regulatory Reform and replace it with something else. But that he too would never bail out the banks again. Which again, sounds great, and im sure if you were to ask president bush any time up until september of 2008, he would just as passionately tell you that he would never dream of bailing out the banks either. But thats not realistic. If were in a crisis, theyre going to do exactly what they did in 2008. So you look to what are their policies . How are they going to accomplish that goal . And neither one really offers anything. Romney literally doesnt offer anything. We have no idea what his policies are. We dont know what that replacement is. But we do know, we hear him from interviews and some of his chief advisors, you know, say things like, against breaking up the banks through bringing back some of those depression era laws or again one of his advisors recently said that hes against having size caps, which is another way of breaking up the banks. By the way, two policies that are absolutely 100 identical with those of president obama and his advisors. So neither one really has a very clear path forward to achieve that goal of making it so that its not necessary to bailout banks once again. Is it too late to reverse course . No, its not too late. My sincere hope is that we get it done before the next financial crisis, because i think that the next one, given how big the banks have become and frankly how much less room we have because of the fiscal crisis, of dealing with the giant financial, that itll be more devastating. I hope we can do it before then. But frankly, the end game for real reform has to unfortunately be in the aftermath of the next crisis. In the meantime, i hope everyone reads bailout an inside account of how washington abandoned main street while rescuing wall street. Neil barofsky, thank you very much for being with me. Thank you for having me. Thats all for this week. At our website, billmoyers. Com, both conversations continue, with kathleen Hall Jamieson and marty kaplan and with Neil Barofsky. 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