You talked earlier about Steve Gobie, the prostitute you were with who claimed that you knew about an escort service he was running out of your apartment. Was there any point after he made those allegations when you thought you would have to resign?
Never resign. The reason is I knew that what Gobie had said was mostly untrue, and I wanted the House Ethics Committee to investigate it and show that it was untrue, which it did. But I was ready not to run again, if I thought it would cost the Democrats the seat. It was only after I had a poll taken that showed I could win that I decided to run again.
When you look at subsequent scandals—
I won’t compare myself to anybody else.
Not comparing yourself to anyone else, but with Anthony Weiner, for instance, part of his problem was he didn’t come clean at the beginning. Would your advice to politicians caught in one of these scandals be, “Get it out on the table”?
Let me see if I get this—not comparing yourself to somebody else, would you compare yourself to Anthony Weiner? What do you think the answer is to that? No. Don’t try to play games. I told you I’m not going to compare myself to anybody else. You can’t rephrase it and make me do it.
If John Kerry had been elected president in 2004, most people thought you’d run for his Senate seat and win. Do you have any regrets about not serving in the Senate?
Oh, it was the luckiest thing that ever happened to me, because I wouldn’t have been able to do the financial-reform bill. Look, there are some things I’m very bad at, but this thing is one where my peculiar combination of strengths is very helpful, and my weaknesses are not relevant.
Um, I have a short attention span.
But it seems like someone with a short attention span would not be authoring Dodd-Frank.
But Dodd-Frank, there’s a lot of pieces of it. Yes, I had to do some studying, but I rarely had more than an hour to spend on any one thing, or two. I can get focused on really important things, but I can’t sit and ponder for a week about one topic.
Dodd-Frank gets kicked around a lot by both liberals and conservatives. Are you happy with the way it turned out?
Oh, absolutely. The conservative critics are just right-wingers who don’t want any regulation. And if you listen to the liberals, much of the criticism is uninformed, and I believe among the people who know what we’ve done there’s great support.
No legislation can be perfect, but is there an ideal version of the bill that exists in your head?
The biggest thing I would have changed was how you paid for it—that $20 billion that’s now on the taxpayers, not the banks. But we needed those Republican votes. I would also have toughened up the derivatives stuff a little bit. If I could just wave a magic wand, I would have merged the Securities and Exchange Commission and the Commodity Futures Trading Commission. But there’s just never any chance of doing that, because they represent the farmers versus the financial markets.
Looking back to Freddie and Fannie, in 2003 you famously said that they were “not facing any kind of financial crisis.” Do you accept the criticism that you were wrong about them?
No! Yes, I was wrong in 2003, but I wasn’t in charge. This is the most intellectually dishonest argument from Republicans. Remember, I was in the minority from 1995 to 2006. They were in charge. Their argument appears to be that I stopped Tom Delay from doing something. But this is all on their watch. Now, in 2005, I tried to work with Mike Oxley to get some reform. It became an internal Republican fight. Oxley said the problem was that George Bush gave him the one-finger salute, and that’s what killed it.
I became chairman of the committee in 2007. The first thing we did was pass tough legislation restricting Fannie and Freddie. It’s as a result of that legislation that they were put into a conservatorship and haven’t lost any money [on new business] since 2008. Now, the Republicans have been in power in the House since January of 2011. They have not even moved a bill to a full committee decision. They talk about Fannie and Freddie when they’re out of power. When they’re in power, they do nothing.
But whether or not your opinion was consequential in 2003, did you learn anything from being wrong?
Here’s the deal. The lesson we learned—and not just from Fannie and Freddie—was about what economists call “tail risk”: the idea that something terrible can happen that’s very unlikely. My mistake was not to see that this could happen. Just because you think something is highly unlikely doesn’t mean you shouldn’t deal with it. All right?