During his time at ABC News, Cuomo served as the chief law and justice correspondent. When it came to the ins and outs of the Dodd–Frank Wall Street Reform and Consumer Protection Act, Cuomo said that he witnessed clueless legislators in Congress lack even basic information about how the 2007 crash happened.
“One of those categories has to be what happened coming out of 2008,” Cuomo began. “I covered that financial mess very closely when I was at ABC News. The banks were out of control. You had no idea how they were using leverage. They were making bets they couldn’t cover and the American taxpayers paid the price and they mostly got off scot-free. So, you put in these controls and restrictions to make sure the banks can sustain their own risk. Now you want to roll them back. Why?”
Hensarling explained that small-town banks can’t lend money under the current regulations. He argued that it was mostly a real estate problem that caused the crash of 2007, former Rep. Barney Frank (D-NJ) told them to “roll the dice” and “Americans lost big time.”
“Jeb, people had no idea what they were doing,” Cuomo cut in about the regulatory bill. “I covered the meetings where (Treasury Secretary Henry) Paulson tried to explain to you guys what was happening with derivatives. You’d never even heard of them.”
“Okay, well, frankly I do know what a derivative is,” Hensarling retorted.
“Now you do!” Cuomo clapped back.
“No, frankly, knew at the time,” he claimed.
“You know a lot of people didn’t. They didn’t know what was happening,” Cuomo said.
“But the answer is not federal micro-management,” Hensarling said of regulations. “It is more capital. That’s what we put in our House bill.”
He went on to comment about small banks who shouldn’t have to abide by regulations of larger banks, who were responsible for the crash in 2007.
“That may be a fair point, but you’re letting a lot of big banks get away from regulation with what you’re proposing right now,” Cuomo argued. “Because you are reducing the risk that they need to show financial sufficiency and health under the stress test.”
Hensarling claimed the Senate bill that came out of committee didn’t give anything to big banks.
“Listen, you don’t have to play a game,” Cuomo said. “What’s in the language is pretty clear. If you reduce the requirements for my financial stress test, they’re going to benefit from it.”
Cuomo said he understands the necessity to care for small banks and community lenders.
“But there are ways to address that that don’t let the big banks play with other people’s money again,” Cuomo said. “It’s not about making them enemies. It’s about keeping the rules fair.”
Watch the full clip below: