JUDY WOODRUFF: And now we take a look at the broader bill proposed by Democratic Senate Banking Committee Chairman Chris Dodd yesterday. We spoke with him last night.
Tonight, we get the view of Republican Richard Shelby of Alabama. He's the ranking member on the Banking Committee, and he joins us from Capitol Hill.
Senator Shelby, thank you for being with us.
You have said that you and Senator Dodd are conceptually in agreement on, I think, 85 to 90 percent of the bill, you said. So, do you think you will eventually be able to sign on completely?
SEN. RICHARD SHELBY, R-Ala.: I hope we will, Judy.
Of course, when I say we're conceptually 85, 90 percent, that doesn't mean that we have agreed on every word or every phrase. It has to be worked out. But we continue to talk. I think, from too big to fail, to derivatives, even a consumer finance products agency, I don't believe we're that far apart.
We have got to tweak a few things and we can do this. I believe, if the Democrats and Senator Dodd really want a bill, we will more than meet them halfway.
JUDY WOODRUFF: Well, what are the main things that are keeping you from agreement right now?
SEN. RICHARD SHELBY: Well, a lot of things are just basically -- have not been worked out, like we're still negotiating the language of derivatives. We're still looking at some of the language that's been proposed by Senator Dodd on too big to fail, because we want to make sure that nothing is too big to fail in this country.
We don't want to go through the horror stories that we went through just a -- just a year-and-a-half ago. And there are other things, but the consumer finance product -- product finance agency, we have talked to Democrats, Senator Dodd, about creating it, housing it, giving it rule-making authority.
But we believe that it ought to have some kind of coordination with the safety and soundness regulator, because, sometimes, they could be at cross-purposes.
But we're all consumers. We don't want anybody exploited in this country. Some -- the states regulate a lot of things today. Will the federal government regulate them in the future? We're not sure yet. But the main thing is to create a level playing field for all consumers.
JUDY WOODRUFF: Well, let me ask you about that consumer financial protection agency. As you know, Senator Dodd is proposing to put it under the umbrella of the Federal Reserve Bank. And you had previously said you had a problem with that. And I think that's what you're still saying is the case now.
You believe it should be regulated by agencies that regulate the banks. But, as you know, consumer advocates say that's a conflict of interests. For the same agencies that regulate the banks to also be looking -- overseeing the interests of consumers just doesn't fly. How do you answer that?
SEN. RICHARD SHELBY: Well, Judy, first of all, that's not true.
The agency that regulates a bank, or for safety and soundness, I believe, should have some input into what a freestanding or a separate entity dealing with consumer issues would have, because both of them would have an impact on the well-being of this bank.
I believe that a safety and soundness issue, that is, the creditworthiness of this bank, is important to all of us. We have lost several hundred banks. We're probably going to lose -- I hope we don't lose any, but 300 or 400 this year. Safety and soundness is important to all consumers, but the other issues are important, too. So, I think you have to have a balance. And that is what we're trying to do.
JUDY WOODRUFF: Well, how do you explain, then, the vigorous opposition of these consumer advocates, who I think would argue that you're -- you're arguing more in favor of the banks; they're arguing for consumers?
SEN. RICHARD SHELBY: Well, I represent no banks. I own no stock in any financial institution. I am not beholden to anybody dealing with this.
But I think you have got to have a balance between sound banking regulations and sound banks, banks that are going to be here for the consumer, and what a freestanding or an independent agency would put on them. I think you have got to have a balance. And that's all we want. I think that's -- that's a fair proposition.
JUDY WOODRUFF: Let me ask you about the story we just heard reported by Ray Suarez. And that is, Senator Dodd proposes to extend federal scrutiny to these so-called payday lenders, putting them under federal regulation, as well as under the scrutiny of some states.
Where do you come down on this?
SEN. RICHARD SHELBY: Well, I haven't argued about the scope of the consumer finance protection agency.
I think what we need to do is decide where it's going to be housed. Is it going to be at the Fed? Is it going to be at the FDIC? It is going to be on Treasury -- wherever it is -- secondly, that it should have some kind of coordination with the safety and soundness regulator. That's what's important.
JUDY WOODRUFF: And how does that connect to these payday lenders?
SEN. RICHARD SHELBY: Well, I think it connects to everybody. If you have got bad actors, and if you have got people that are being exploited anywhere in America, we should have a level playing field. We shouldn't put up that with that.
JUDY WOODRUFF: So, federal regulators for the payday lenders?
SEN. RICHARD SHELBY: Well, if that's part of the scope, if that is what happens at the end of the game, you know, that's the way it will work.
JUDY WOODRUFF: Senator, another -- another part of this is, this plan would instruct the federal regulators to study and then enforce the so-called Volcker rule.
This is the proposal by the former chairman of the Federal Reserve that would basically put a ban on deposit-taking banks from trading for their own account. What is your view of that?
SEN. RICHARD SHELBY: Well, I like the spirit of the Volcker rule. I was at the hearing. I have a great respect for Dr. Volcker. I was the only Republican that voted against the repeal of the Glass-Steagall law on the Banking Committee. And, so, I know a little about it.
I have asked the question on the Banking Committee, do the regulators today have the power to enforce that, in other words, to do anything that they have to do with a bank that will keep it safe and sound? Some people believe it is. But, if they don't have that power, we ought to give it to them.
JUDY WOODRUFF: So, where are you right now?
SEN. RICHARD SHELBY: I just said that. I said, if we don't have -- if it's deemed that the regulators don't have the power, and need the power, we ought to give the regulator every tool in the world to make sure that the banks are safe and sound and are run well, managed well, and are still around.
JUDY WOODRUFF: In general, Senator, you know, there's a debate about whether this bill that Senator Dodd has proposed is too tough or not tough enough on the banks. What do you think at this point?
SEN. RICHARD SHELBY: Well, I think that it depends. We can legislate all day, but, ultimately, it's going to be in the hands of the regulator to regulate the banks. And they have got to be diligent.
You know, I haven't been a big fan of the job that the Fed did in regulating the holding companies or the FDIC or the comptroller of the currency. They all had shortcomings. The question is, as we accentuate, that we don't want to go down that road of failure again. We don't want to hit the taxpayers again on too big to fail.
The regulators are going to have to step up and do the job. I have never known any financial institution that was well-capitalized, well-managed, and well-regulated that failed, Judy.
JUDY WOODRUFF: Senator, finally, how urgent is it, do you believe, that Congress address this whole question of financial reform? Senator Dodd, I believe, said today that he -- that Congress shouldn't be allowed to adjourn this year without dealing with this question.
SEN. RICHARD SHELBY: Well, I hope we can do this.
I would like to see us pass a substantive, good deal, far-reaching, to deal with derivatives, too big to fail, the consumer protection agency, and so forth. If we do this together, we can do it. If we fight and leave blood on the floor, it might not happen.
But we're close to getting together. I hope we will.
JUDY WOODRUFF: Senator Richard Shelby from the Banking Committee, thank you very much.
SEN. RICHARD SHELBY: Thank you.