Does the House bill that was passed in December—the one in which the CFPA is a stand-alone agency—go far enough in the area of consumer protection?
BF: With the bill we have, there's only one weakness, and that is the total exemption for auto dealers. I regretted that. Auto dealer financing is totally exempted. I thought that was a mistake; I lost that vote. Otherwise, the Consumer [Financial] Protection Agency is fully operational with enforcement powers.
Do you expect financial regulation to get support from Republicans?
BF: In the House? No. Why would they change their minds? They voted against it. I think there are individual Republicans who would like to be supportive, but they are basically dominated by the Republican Study Committee, by the right wing. And as far as the Senate is concerned, I think the Republicans are starting to feel the heat there. One thing has changed: When we debated our bill, it was overshadowed by healthcare, so the public wasn't really weighing in that much. Now this is going be the No. 1 issue when the Senate does it, and the public is going to weigh in. And I think that's going to help us toughen the bill.
Will the momentum from passing healthcare help with financial regulation?
BF: A little bit, yes. But mostly it's the absence of healthcare as a blocking issue that's going to help us here.
What would a financial reform bill need to look like in order to get bipartisan support?
Spencer Bachus: We would need to address "too big to fail." That is critically important. And I don't think we're there yet. At the press conference at the White House, both Senator Dodd and Chairman Frank said they had ended too big to fail, but then they provide a bailout fund of $50 billion, which is a reduction from what the House had proposed, but it's still a bailout fund. … Could we have a repeat of AIG? And once you have a bailout fund, you can always increase that. It may start at $50 billion, but you have a tax in place. So we would not want a bailout fund. And we really want to end too big to fail. I think too big to fail undermines our sense of fairness and of equal opportunity or equality. America is built around the freedom to succeed or to fail. And I think it not only undermines market discipline—and there's been a lot of talk that "too big to fail" undermines market discipline, which it does—but it also contributes to a perception on the part of the public that there's no justice or fairness. And I think it undermines our entire faith in government. I think you see that in the Tea Party movement.
Are you concerned that the Democrats will push through a bill in a party-line vote?
SB: What I do fear the Democrats will do is they'll … try to make a bill so onerous that they don't get Republican support, and then they [will say] that Republicans did not want financial regulatory reform, which we very much want. We simply don't want it done badly. If we get a bipartisan bill, it shows us that they seriously want regulatory reform. If we get a bill that has no Republican support, I think that's just a political ploy on their part to try to shift attention away from their failures with healthcare, where they did nothing to bring down the cost, or with energy legislation, where they refused to go with nuclear power and some other things that would help solve our dependency.
How would you go about handling Fannie Mae and Freddie Mac?
SB: I would start reducing a percentage each year of the home mortgages that they hold. They hold $5 trillion worth of mortgages right now—a tremendous number or mortgages. Right now, taxpayers own 80 percent of Fannie and Freddie. And we've explicitly guaranteed—and I'm not for backing out of that—$5 trillion in mortgages that they've purchased. And that would be my first thing. I would start reducing that by a certain percentage each year. ... Over the last 40 years, we've crowded out the private market. And America's about competition.