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Facetime September 24, 2008, 4:47PM EST

Bill Clinton on the Banking Crisis, McCain, and Hillary

(page 2 of 2)

Greenspan and Clinton at the 1999 signing of the bank deregulation act Khue Bui/AP Photo

Bob Rubin is now a high officer of Citigroup and is advising Senator Obama. Should the senator be listening to someone who works for a firm that is deeply involved in the subprime mess?
First, he was clearly one of the two or three finest Secretaries of the Treasury this country ever had. And his policies and advice, not only as my Treasury Secretary but as the first head of my National Economic Council, were responsible for eight years in which median income went up $7,500, as opposed to a $2,000 decline in this eight-year period, and where you had 22.7 million new jobs [created] as opposed to this period, which will be at most 5 million and probably less. So I think Bob Rubin's credentials speak for themselves.

Should the government be there if financial-services firms fail and take on too much risk?
I think in this case, the [government] had no choice. And I think the longer you wait, ironically, the more you have to do and the more money you have to spend. So, in a funny way, the people who are most against market intervention wind up having to preside over the biggest market intervention that costs the most money because we all know that markets without disclosure, without capital requirements, without market requirements tend to unsustainable extremes.

But where do you stop? Should the feds have bailed out Lehman? Should they be bailing out Morgan Stanley (MS)?
I think the Bear Stearns thing was necessary. And it worked. It just didn't stem the tide because of the underlying massive amount of unsustainable debt in the real estate market, both residential and commercial. I think Fannie Mae (FNM) and Freddie Mac (FRE) had to be done because, frankly, it was never an ideal structure. They were government operations—but not. I think it looked bizarre that you [bail out] Bear Stearns, Fannie Mae, Freddie Mac, and then say no to Lehman Brothers and yes to AIG (AIG). What does that mean? Does that mean there was no principle involved? Probably. My instinct would have been to offer Lehman Brothers a line of credit at least. Something like what was offered to AIG. It's not as big. The consequences to the economy are not as great. But psychologically, it was unsettling.

Why is John McCain making the opening remarks at the Clinton Global Initiative?
Well, I've always invited President Bush, and one year Condi Rice came, and one year Laura Bush came. Last year, Secretary Paulson came. He's [chuckle] otherwise occupied right now. So I've always made this bipartisan. And I have invited Senator McCain every single year for one simple reason: He was, as far as I could tell, the first Republican senator to say global warming was real and we needed a comprehensive response to it.

If McCain wins, will Hillary be back in four years?
I don't know. I think that her focus will now be on what she can do to help deal with all those things that threw her into the Presidential race in the first place. For example, today she gave the most detailed position I've seen on what we ought to do on the finance crisis. She said we ought to follow not the Resolution Trust Corp. model for dealing with these homes and commercial properties. We ought to go back to the Home Owners' Loan Corp. that was a product of the Depression. That actually made a profit for the American people by stabilizing a disastrous run on the market for financing homes. She's out there working hard for Senator Obama. But no matter who wins, we've got to shelve the politics for a while and work on the substance.

Maria Bartiromo is the anchor of CNBC's Closing Bell .

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