Eric Cantor Still Claiming Wall Street Is Over-Regulated

Is it asking too much that if you're a cable news host and you bring someone on specifically to answer a question, that you try to get them to actuall

Is it asking too much that if you're a cable news host and you bring someone on specifically to answer a question, that you try to get them to actually answer it before they leave the set? Rick Sanchez frames this interview as Cantor being willing to respond Sanchez's comments about the repeal of Glass-Steagall and passing the Commodity Futures Modernization Act which prevented the derivatives market from being regulated. Of course Cantor is never willing to say whether it was a bad idea to get rid of Glass-Steagall or deregulate derivatives even though he admits financial institutions should have never been leveraged the way they were.

He obviously thinks we need less regulation when he's still singing the praises of the "entrepreneurial spirit" and "free markets". I guess he thinks they should be free to take down the world's economy again when we have another bubble because they still haven't been regulated. As our commenter spicegal pointed out, Cantor's got some conflicts of interest with his wife as well. It would be nice if someone in the media would ask him about her business dealings but I'm not holding my breath for that to happen any time soon either. I'm quite sure Cantor's just one more name on a very long list of Congressmen with similar scenarios.

SANCHEZ: We have spoken on this show so many times about some of the things that went wrong that put us in the situation that we are in now with this crisis with Wall Street and our economy, the repeal of Glass-Steagall which eventually allowed investment banks to act and get in cahoots with regular banks. We talked about the Commodity Futures Modernization Act, which essentially allowed those default-tax swaps which were really schemes, they were -- they were selling nothing but - well, certainly nothing for the American people, and a lot for themselves on Wall Street.

And we have also talked about regulators who never got anything done because they were too busy looking the other way while people were doing things, because they wanted a job on Wall Street one day. That is what has been told to us from people on the inside, by regulators who were there, by experts, by economists.

So with that on the table, yesterday I get this tweet from GOP Whip Eric Cantor, and he suggests in the tweet, and that is why I wanted to have him on, that not Washington overregulation. Overregulation? And I am just sitting here thinking, and I think a lot of you all are as well, overregulation, isn't the problem underregulation?

So I asked him on the air and we called him today if he'd be kind and come here and join us and take us through this, and he has. So allow me to introduce now the GOP whip, Congressman Eric Cantor, who I said yesterday was a good guy and would come on, and by golly, here he is.

Congressman, thanks for being with us.

REP. ERIC CANTOR: Very good to be with you.

SANCHEZ: Can take us through this? Because I think the basic thinking out there is they didn't do enough regulating and let these scoundrels on Wall Street do all of this stuff to us, and you are suggesting that we are overregulating them?

CANTOR: Listen, Rick, everyone knows what the problem was that produced this great recession of '08. It was easy money. It was perverse government incentives. It was irresponsible government spending combined with too much leverage on Wall Street and ill- conceived lending and borrowing on Main Street. I mean, that is what got us to where we are. And so we've got to go back...

(CROSSTALK)

SANCHEZ: But it wasn't -- but hold up, wait, hold on, you're saying the guys on Wall Street who did these default tax swaps where they were -- they came up with a scheme where they were essentially taking their loans and then divvying them out and selling them in groups of other banks and investment groups around the world, that we should have let them do that? Somebody should have regulated that, right?

CANTOR: Listen, it was way too much leverage on Wall Street, and not enough...

(CROSSTALK)

SANCHEZ: What does that mean? I don't speak Wall Street talk. What does way too much leverage mean?

CANTOR: No, I mean, because you know that the SEC, we saw some of these financial institutions leverage over 40-to-1. Nobody can do that and expect there not to be consequences.

SANCHEZ: So the SEC was asleep...

(CROSSTALK)

SANCHEZ: But the SEC was asleep, right?

CANTOR: Oh, no question. There was perverse government incentives involved in what happened in '08. So we've got...

(CROSSTALK)

SANCHEZ: And the SEC is supposed to -- and the SEC -- well, hold on, hold on. But the SEC is supposed to regulate, right?

CANTOR: Rick, Rick, you wanted to ask about risk. Let me tell you about risk. I will give it to you. I will give it to you the regulators didn't do their job, Congress had some perverse incentives in place, there was a lot of irresponsible government spending, plenty of blame to go around.

SANCHEZ: Right.

CANTOR: All right? But at the end of the day, we know what makes America prosperous, and that is the entrepreneurial spirit. You have got to have the ability to take risk and allow for the possibility of failure in order for there to be success. That is the capitalist system. We believe in free markets, that is how America has always been the land that provides more opportunity than anywhere else in the world.

That is why coupled with their transparent judiciary we can attract global capital here. We are not going to be able to compete if somehow we are going to put Washington in charge to tell everyone the proper way to take risk. You can't do that and have a free market system.

SANCHEZ: But, are you suggesting that risk should be unbridled? That there should be no regulation of these guys?

CANTOR: Rick. Rick, did I say that? Come on.

SANCHEZ: No, you didn't. But you seem -- pardon me, but it seems like you are suggesting that maybe we have had too much, that we shouldn't be watchdogs over these guys. And I am thinking that we should be looking at them with a magnifying glass every day, because I don't trust them.

CANTOR: Right now what you have got is you've got overreaction on the part of a lot of auditors working with the regulators on the streets, on the streets of our communities, of the banks, the community banks saying to banks, look, we don't want you to take any risk. You know, that will never get back to a growth-oriented posture in the country. We have got to be more prudent about this.

We can't overreact right now, we have got to right the ship. And the way we do that is not by cranking up government spending, which seems to be the only plan coming out of the Obama White House and the Pelosi-Reid majorities here in Congress.

We have got to make sure that we empower investors to go about their normal calculation of risk, to go ahead and put capital to work so we can see jobs again for the American people.

SANCHEZ: But for the record, before you leave us, you are also for regulation. Do you believe that some of the regulations, like Glass-Steagall, and the Commodities Modernization Act ended up hurting us, and causing the situation we were in, as most economists have said on this show?

CANTOR: I am for smarter regulation. We have got very sophisticated players in the global financial arena. And when you see Congress passing the type of bill that was passed in the House of Representatives last week, this consumer financial protection agency, along with the other elements of that package coming out of Barney Frank's committee, that's a clear signal to entrepreneurs and investors that America will not be open for business and we won't see jobs created again if that's how we're going to treat risk-based investment.

SANCHEZ: You know what I respect? I respect that you have a point of view, and we asked you to come on and explain it, and you've been darn good about doing so. Let's do this again. Congressman...

CANTOR: Thank you, Rick. We'll be back.

SANCHEZ: ... thanks for being with us, we appreciate it.

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