This is a rush transcript from “Hannity,” May 7, 2009. This copy may not be in its final form and may be updated.
SEAN HANNITY, HOST: All right, the long-awaited results of the administration’s stress test on banks are in. And guess what? It’s going to cost you a lot more money. And that is our headline this Thursday night. “Obama’s Stressful Economy.”
Now, apparently, the billions of dollars in bailout money that we have already spent to save some of the biggest banks in the country, no, that’s not enough. The administration is requiring some of them to raise more.
Now anybody want to guess where that money is going to end up coming from?
Now, Bank of America has been told it needs to raise a whopping $34 billion. Wells Fargo needs to raise somewhere between $13 and $15 billion. GMAC, they need to raise $11.5 billion. Citigroup needs to raise another $5 billion. Morgan Stanley needs to raise $1.5 billion.
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Now that noise in the background? Well, that’s the printing press of the U.S. Mint going into overdrive. And the stock market — oh that’s right, dropping over 100 points again today.
Now meanwhile the administration is bragging about cutting oh $17 billion from the fiscal year 2010 budget. Of course, Obama’s list of budget cuts, well, it’s not as impressive as his predecessor, you know, the much-maligned George W. Bush who had proposed $34 billion in budget cuts only to have many of them shot down by congressional Democrats?
So more money to the banks. The market falls once again. And wishful thinking when it comes to controlling spending. Just another day in Obama’s socialist utopia.
And joining us tonight is Rebecca Diamond from the FOX Business Network and broker associate Connie De Groot is with us.
Guys, good to see you. Thank you for being here. All right. First of all, $75 billion, they are going to need. Another $75 billion.
REBECCA DIAMOND, FOX BUSINESS NETWORK: Total, the banks.
HANNITY: Total. The banks. For now. For now.
DIAMOND: Well, a couple of things about your intro. The market is up more than 30 percent since the lows that it hit in March. And after- hours trading when all the results were released, the markets actually went a little bit higher, but then they did go about flat.
The interesting thing about this, there’s a lot of questions about the credibility of these stress tests. The parameters, the criteria that they used, whether they were stressed enough. And whether the regulators really were manipulated by the banks and whether, you know, what they showed them on the books.
HANNITY: Thank you.
(CROSSTALK)
HANNITY: First of all, you know.
DIAMOND: So a lot of questions still.
HANNITY: If — our household budgets this way, if we ran our businesses this way, what would happen? We would go bankrupt.
CONNIE DE GROOT, REAL ESTATE AGENT/BROKER: Right. Right.
HANNITY: So why should the taxpayer, another $75 billion, they’re going to be on the hook for, maybe more after that. A lot of strings attached. The government wants control, no?
DE GROOT: Right. Well, hopefully they’re not going to get it. I’m not for big government. I don’t want them to run the banks. I’m not for the bailouts of Chrysler or any other company.
You know, they are not efficient. They cost too much. It’s not the way to go. I mean have you ever gone to a city office or the government? You wait in line. Finally it’s your turn. They put a sign up closed because they are going to lunch. You know, while I don’t have breakfast, lunch, or dinner because I have to work. I have to — like accomplish something.
DIAMOND: This would be a test if the capital markets — the capitalist system will indeed work because the banks are not turning to the government for money. They are going to try to raise capital in the private markets and hopefully not rely on us taxpayers anymore.
DE GROOT: Right.
HANNITY: But.
DIAMOND: And the last offering that a couple of these banks did, they were able to sell their debt.
HANNITY: But it’s interesting some of the TARP money, though. They want to give it back and they weren’t allowed to give it back.
DE GROOT: Right. Because they don’t want the government involved.
HANNITY: They don’t want — they don’t.
DE GROOT: And that’s good. I don’t, you don’t. That’s super.
DIAMOND: That’s great. Yes. Absolutely.
DE GROOT: But if we do — this is what I’m concerned about. And I’m a realtor. So I’m concerned that the housing market, we’re seeing some signs of recovery. And the banks, it’s really hard to get a loan that’s not backed by the government. What if they need this money? And I mean I think that maybe.
HANNITY: But there is a case to be made that they actually manipulated this whole thing. There was a “Forbes” article that says, you know, these are stall tactics to buy time for the economy to recover and that they artificially are literally — by the guaranteeing debt the banks sell to help their funding — to help fund their lending operations that they officially help the banks here. And that this is smoke and mirrors, this is profit taking and not necessarily real.
DIAMOND: Sure. You can — that’s definitely a valid point. You can see it that way. On the other hand, you know, I say it’s about time the regulators are doing what they are supposed to be doing.
DE GROOT: Right.
DIAMOND: You know they were asleep at the wheel the past several years. And now they’re saying.
DE GROOT: Right.
HANNITY: You mean Tim Geithner? Wasn’t he involved in…
DIAMOND: He was asleep at the wheel. Yes, absolutely.
HANNITY: Our new treasury secretary.
DIAMOND: Yes.
HANNITY: Let me ask you this because — all right. Now Barack Obama has been saying we’re going to create or save. I don’t understand the save three million new jobs things.
DIAMOND: Save.
HANNITY: But since the last stimulus, we lost 1.25 million new jobs. So now we’re up to 4.5 million new jobs that he wants to meet that number. But more importantly, the thing that concerns me and a lot of Americans now is the long-term debt.
DE GROOT: Yes.
HANNITY: The $10 trillion 10 years from now. The $806 billion on interest on the debt. That’s where we start getting into, OK, is Obama destroying the free market capitalist economy?
DE GROOT: Right.
HANNITY: I’m not letting — I did not address that to her.
DIAMOND: I know.
DE GROOT: Can I say something?
DIAMOND: I — OK. Go ahead.
DE GROOT: You know what, I think, I have this discussion. I live in California where there’s a lot of people that do not think like you. And I have this discussion with people every day. And I don’t think people get it.
I don’t think that they understand what — how that’s going to affect them. And unless we start breaking it down, how is this going to affect you and your life?
HANNITY: Right.
DE GROOT: How much money are you going to have to contribute to this? Nobody cares. Everybody feels like it’s going to affect the rich. They think that only 5 percent of the people are.
HANNITY: All of our kids are going to be paying this. Now let me go over Bernanke’s numbers. He said — all right, he thinks that contracting may be slowing, all right, which is all good news. I hope that’s the case.
But he also says he sees further sizable job losses. We expect close to 9 percent, right, and higher. And the economy could perform well below its potential for many, many years to come.
So that means that debt issue that we’re talking about is even bigger than where we think it is now.
DIAMOND: Well, it’s one of those things. When you’re in a crisis, you try to fix it immediately. And then, you know, short term. Right now the government is thinking just short term since the private markets aren’t working and the private money is not there and these banks were near collapse.
They said let’s funnel this money, whether it’s right or wrong, let’s funnel this money. And they’re thinking short term. Consequences we’ll have to pay later on will be inflation.
HANNITY: All right. Well, inflation, obviously, because we’re printing all that money. Go ahead.
DE GROOT: Investments, tax credits. I mean, you know, we’re already seeing with the first-time homebuyer credit over half the buyers are first-time buyers.
DIAMOND: That’s when it doesn’t work though if you’re laying off and people aren’t buying your product, you know, you could have as many tax credits and breaks. But if somebody is not coming in to your store, it’s not going to do any good.
DE GROOT: Twenty-one percent of GDP is due to housing or housing related services. To fix the demand by making — allowing all — anybody to buy the home to get a tax credit is a starting point.
HANNITY: Let me get the last point in here.
DIAMOND: I want tax credit.
HANNITY: Two other factors that we’re not talking about here. The president is trying to create the impression that he’s fiscally conservative and responsible. It’s 1/2 of 1 percent of his, you know, massive $3.6 trillion budget, OK, that they’re talking about cutting.
Between that which is a quadrupling of the debt and oil prices creeping up and no energy policy. We’re not going to drill anywhere.
DIAMOND: The problem is, you know, all this piecemeal cutting. One, the lawmakers, it won’t pass in Congress any of the stuff. You mentioned that the Bush administration went through the same thing. The Obama administration is going to go through the same thing.
HANNITY: Wait a minute.
DIAMOND: The Republicans and Democrats in Congress will not allow them to cut anything.
HANNITY: They own the government. They own the government.
DIAMOND: And the only way that they’re going to make something substantial in spending cuts is Social Security, Medicare, and Medicaid.
HANNITY: Entitlements.
DIAMOND: So if the people at home…
HANNITY: Yes.
DIAMOND: … want to forego some of those benefits, then we can see the deficit down a bit.
HANNITY: Well, remember they were supposed to put that money in a lockbox. That’s why I don’t understand why people have faith and hope and trust in this.
DIAMOND: Yes, how many administrations ago, we’re still not…
HANNITY: That’s true.
(CROSSTALK)
HANNITY: Last word.
DE GROOT: I think we’re going to have fewer services because we have to somehow pay this debt.
HANNITY: Yes
DE GROOT: We’re going to get less.
(CROSSTALK)
DIAMOND: So people have to live with less. And if people are willing to do that, then we can have a valid budget.
HANNITY: Then taxes have to go higher.
DIAMOND: No. No.
HANNITY: Somebody has got to pay for it.
DIAMOND: Stop spending.
DE GROOT: They’re going the wrong direction.
HANNITY: All right, guys.
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