On Senate Banking Committee Chair Christopher Dodds, D-Conn., and his slow movement on Obama banking re-regulation: "He is retiring. That's why he is talking the truth."
What went wrong?: "Number one was leverage," borrowing too much and letting customers borrow too much. "Number two, was that you know we had a very easy monetary policy. The Fed kept the interest rates too low.
"Number three was the Democratic Congress, as well as many Republicans, pushed home ownership. They said let's keep pushing it until we crash. Let's find out when we will crash. And so when the homeownership hit 69 percent the market crashed.
"Another one is that we had derivatives. We were allowing banks to be creating derivatives, insurance companies to be creating derivatives, and there were no regulation and no controls over it.
On the bank-limiting reforms pushed by ex-Fed chair Paul Volcker: "Let's address the root causes. And not to be talking about whether banks should be allowed to own hedge funds. Banks should be allowed to own private equity firms. I don't know of any bank that got into trouble because they own hedge funds. I don't know any bank that got into trouble because of private equity (or) because they were too big...
"What is the business of banking? The raw material of banks is gathering deposits, paying a fair rate for it to process it and put it to work.... It is a good business. And now we shouldn't have just unnecessary controls over it....We have to got fix the problem. And the problem is like what I said it was lack of appropriate regulation. Lack of coordination between monetary policy, fiscal policy, and (an) ideology of 'it is great to have homeownershi'', and a lack of control over derivatives...
"The whole problem with the global economy is too much leverage. We've seen the consumer deleverage. We're seeing corporations deleverage. But nobody is talking about the sovereign nations need to delever, too. I mean look at the debt in the United States.
"We are going to be in trouble in the United States. That's where we should be addressing our major problems and not talking about more and more unnecessary stupid regulations for banks... Just because it is a popular thing it is not a nice thing to do."