'The Rachel Maddow Show' for Wednesday, July 28th, 2010

Guest host: Chris Hayes
Guests: Nina Perales, Nate Silver, Annie Lowrey, Rep. Barney Frank, Thomas
CHRIS HAYES, GUEST HOST:  Good evening, Lawrence.  Thanks for that.
And thank you for staying with us for the next hour.

The state of Arizona gets overruled.  The legions of unemployed people get organized, and the most qualified person to head the new consumer protection agency gets dissed by the banking set.
And a wackadoo right-wingers get a new and super arcane constitutional boost in their efforts of rid themselves of the current socialist, communist, Marxist, fascist administration.
That‘s all ahead—plus, a little more.
But we begin tonight with the United States of America versus the state of Arizona.  A dramatic legal showdown settled today between the federal government and its 48th state over the thorny issue of immigration.  Today, a federal judge in Arizona put a hold on parts of the state‘s new “papers, please” immigration law that was set to go into effect just six hours from right now.
At the stroke of midnight tonight in Arizona, police officers were to be required by state law to demand the immigration papers of anyone they stopped who they believed to be in the country illegally.
At the stroke of midnight tonight in Arizona, legal immigrants would be forced to carry their immigration papers on them at all times in order to prove their legal status.
No longer.  With a ruling handed down today at around 1:00 p.m.  Eastern Time, a federal judge in Arizona put a temporary hold on those parts of Arizona‘s new law—the judge essentially agreeing with the United States government that those provisions go too far.
In her 36-page ruling, U.S. District Court Judge Susan Bolton ordered a temporary court injunction against some of the most controversial provisions in Arizona Senate Bill 1070.  Specifically, a provision that requires police officers to check the immigration status of a person they arrest if there‘s a, quote, “reasonable suspicion” the person is in the country illegally; a provision in the law that makes it a crime to not have your immigration papers on you; a provision that would require anyone arrested to prove their residency before being released from jail.
All these provisions were essentially struck down today by this federal judge, at least temporarily—now, in some cases, because they infringe on the role of the federal government to control immigration policy and, in some cases, because what Arizona wants to do here is just too onerous.
In the case of checking the immigration status of everyone arrested, the judge wrote today, quote, “Requiring Arizona law enforcement officials and agencies to determine the immigration status of every person who is arrested burdens lawfully present aliens, because their liberty will be restricted while their status is checked.”
In the case of requiring illegal immigrants to carry their papers on them at all times, the judge ruled today, quote, “The United States asserts and the court agrees that the federal government has long rejected a system by which aliens‘ papers are routinely demanded and checked.  This requirement imposes an unacceptable burden on lawfully present aliens.”
Now, this judge didn‘t wipe out the entire “papers, please” law.  She actually upheld a number of different parts of Senate bill 1070 -- for instance, a provision that toughens state laws regarding human smuggling, a provision that makes it a crime to stop your car to pick up a day laborer, a provision that amends the crime of knowingly employing an unauthorized alien.  All of those provisions of Senate Bill 1070 will go into effect tomorrow as scheduled.
But the most controversial aspects of this bill met at least temporary defeat today at the hands of this federal judge.
On the losing end of this court battle: Arizona‘s Republican governor, Jan Brewer, who signed this bill into law back in April.  Governor Brewer was, not surprisingly, defiant today.
GOV. JAN BREWER ®, ARIZONA:  Obviously, it‘s a little bump in the road, I believe, and that, you know, until I get my whole arms around it, we don‘t really exactly know where we‘re going to go.  I think that it‘s important to remind everybody that today, they, absolutely—the federal government got relief from the courts to not to do their job.
HAYES:  All this is a short-term pause on the implementation of this law while its ultimate lawfulness is determined in federal court.  Today‘s ruling is not a permanent striking down of Arizona‘s law, but it is the first legal victory for this law‘s opponents.
Joining us now is Nina Perales, southwest regional council for MALDEF, the Mexican American Legal Defense and Education Fund.  MALDEF filed a suit raising similar claims, the ones ruled on today in federal court.  And Ms.  Perales argued that case in front of the same judge last Thursday.
Ms. Perales, thank you so much for your time tonight.
NINA PERALES, MALDEF:  Thank you for having me.
HAYES:  So, the lawsuit filed by the U.S. government raised, the same sorts of issues as the suit filed by MALDEF.  Do you see this ruling as a win for your group today?
PERALES:  Oh, absolutely.  On behalf of all the clients that we represented in Arizona, we‘re very pleased with the—with the injunction that the judge ordered today, halting the major key provisions of S.B.  1070.  This essentially blocks the state from implementing what is—what was going to be a state immigration system that created state immigration crimes and that forced local police officers to maximize their questioning on immigration and maximize enforcement on immigration.
HAYES:  Now, you—the judge essentially upheld some parts of—did uphold aspects of the law today, and some of which that your organization objected to in your legal briefings.  What about this decision do you disagree with?
PERALES:  Well, yes, it‘s true that the court did not adjoin certain parts of the statute.  Some parts of the statute had no teeth.  Some parts were not challenged by anybody.
But one example of a place where we were seeking an injunction from the court and did not receive it was with respect to these two-day laborer provisions that you mentioned earlier, related to getting into a car in order to work and the court felt that at this point in the case, she was unable to enjoin them because of some other case law that‘s moving through the appeals system.  But we‘re confident that our First Amendment claims on those grounds will be victorious later in the case.
HAYES:  That aspect of the law struck me as one of the most impractical, in terms of figuring out when someone‘s getting into a van, what—exactly what purpose that is.  But this is just a temporary injunction.  And—walk us through what the next step forward is.  I mean, there‘s two lawsuits here.  There‘s the DOJ‘s lawsuit there, your organization‘s lawsuit, and there are differences between them.
What are the next steps here?
PERALES:  Well, the next steps are that the cases will move forward in the district court in front of Judge Bolton.  We still have most of the case to go, where the judge is going to hear evidence and argument and make a final decision about the challenge to S.B. 1070.
In the meantime, though, the state can decide, although I don‘t think we‘ve heard yet, that it wants to take an appeal immediately to the 9th Circuit and try to get the 9th Circuit to remove Judge Bolton‘s injunction.  And we just don‘t know what will happen yet with respect to that.
HAYES:  So, we might see that appeal—I should note that the in the opinion, in order to grant the injunction, the judge ruled today that there is a likelihood that MALDEF and the U.S. federal government would succeed on the merits.  So, that is promising.
Nina Perales, southwest regional council for MALDEF—thank you so much for your time tonight.
PERALES:  Thank you.
HAYES:  So, this country has been having this oscillating conversation about immigration over the past years.  And thanks to this new Arizona law and today‘s subsequent ruling on it, the immigration conversation has reached yet another peak.  It‘s back in the headlines and since 2010 is an election year, it‘s impossible to ignore the political implications of this protracted battle.
The politics of this issue of immigration broadly and this Arizona bill specifically are incredibly complicated, for both Democrats and Republicans.
And joining us now to help sort them out is Nate Silver, the founder of the political Web site FiveThirtyEight.com.
Nate, it‘s great to se you.
HAYES:  So, I guess, what‘s the top line question here?  What is the -
what do you see as the political fallout immediately of this decision based on the polling that you‘ve been looking at around the issue?

SILVER:  Sure.  Well, you have the short-term and the long-term.
HAYES:  Let‘s talk short-term.
SILVER:  Short-term, the Arizona law is popular.  The federal government‘s case against it was not especially popular—it had a plurality against it.  So, I think this plays more into Republican‘s hands in the short-term, where voters are concerned about the economy, and that, you know, I think, creates more concern, especially in border states, about immigration.
If you actually look at the numbers, illegal immigration is down.  People want to come here when we‘re prosperous.  We‘re the land of prosperity.  There are fewer illegal immigrants and illegal immigrants now, but because people have so much anxiety about their own economic security, you know, I think there‘s a tendency to take it out on immigrants and other disadvantaged groups.
HAYES:  Right.  So, what do you think the long-term—I mean, I sort of agree with that, although one of the things that you had mentioned earlier was that by getting the injunction, right, the Democrats forestall the possibility of a really egregious example of enforcement of a law to sort of shift public opinion further.
SILVER:  Inevitably, you would have some schoolteacher, you know, being arrested on her way coming home from 7-eleven or something like that.  And you‘d have cases like that that would show what this law actually can do to people.  Now that it‘s not going to go into effect, in this kind of pristine ideal thing, and the problems might not, you know, ever kind of reified for voters.  And so, in some ways, you know, it would have almost been better for Democrats, if it had gone into effect for a few years.
HAYES:  Right.  For Democrats, not for the people caught in the jaws of it, we should note.
SILVER:  Not for the people caught, absolutely, you know?  But to see kind of what it means in practice—it‘s an unusual law.  And maybe it would have gone the other way and it wouldn‘t have been as serious as people are claiming, right?  We have to—we don‘t know how police officers would have used their discretion to enforce it.
But, you know, in some ways, from an analytical standpoint—
HAYES:  Right.
SILVER:  -- it would have been more interesting to see how it would have been applied and how people reacted both in Arizona and nationally to it.
HAYES:  So, then, what do you think the long-term consequences are?  I mean, if this is an immediate bump for Republicans because of the popularity of this law as an obstruction in the symbol, I think, really—what do you think the long-term consequences are?
SILVER:  Well, you know, the Hispanic population is growing, as we all know, and becoming more of a factor than it was in 2008.  People, I think, sometimes make the mistake of assuming that that vote will always be won by Democrats forever and forever, you know?  It‘s not quite like the African-American vote, where it has bounced around some.  Bush was up to 43 percent, I think, in 2004.
If that vote starts to become more like the African-American vote, though, where they‘re getting—Democrats get 75 percent or 80 percent, then that really reshapes the map in 2016 and 2020.  I think it‘s a long-term thing.  But the moment that Texas, for example, becomes a swing state again, which it was way back in the 1960s.  I mean, that‘s a real game changer.
Democrats wouldn‘t have a single kind of major large state that they could, you know, count on as being safe anymore.  And that creates real problems electorally.
But, you know, the long-term is the long-term and the short-term there‘s a lot of anger out there and the Arizona law was popular.
HAYES:  Nate Silver, founder of FiveThirtyEight.com.  You can also check him out now at “The New York Times,” if I‘m not mistaken.
SILVER:  Starting in August, yes.
HAYES:  Starting in August.  Thanks a lot, Nate.
SILVER:  Thanks, Chris.
HAYES:  Great to see you.
A fact that often gets lost in the immigration debate is that President Obama is expected to deport 10 percent more people this year than President Bush deported in 2008.  Is less more politically or otherwise?  We‘ll get into that next.
And later, what would happen if the president appointed someone to head a government agency who actually had a history of making the right choices, you know, for a change?  Congressman Barney Frank will join me for that.
Stay with us.
HAYES:  File this under “headlines with double meaning.”  From “The Washington Post,” quote, “Oil in gulf is degrading, becoming harder to find, NOAA head says.”  Its intended meaning is that 100 days into BP‘s Deepwater Horizon disaster, much of the oil is at least off the surface of water, because a lot of the oil is deteriorating.
But the oil also is degrading in the sense of making things worse.  People in Michigan learned that up close this week when a pipeline spilled more than 800,000 gallons of it and degraded the Kalamazoo River.  Governor Jennifer Granholm says she‘s not happy with the response from Enbridge Energy, which sounds a lot like what people said about BP.
Oil, it turns out, really is degrading.  Whether it‘s becoming harder to find depends on if you‘re trying to profit from it or get it out of your local waterways.
HAYES:  The “papers, please” law in Arizona may be at the center of the national immigration debate, but there‘s another immigration story that you really need to know about.  It‘s sort of being obscured right now by all the screaming election year hyperbole surrounding this issue.  But it‘s both politically significant and frankly pretty shocking.  It‘s the story about the Obama administration and deportation.
The Obama administration is deporting substantially more people than the Bush administration did.  They‘re actually changing immigration enforcement policy so that they can kick more people out of the country.  As a matter of fact, President Obama is expected to deport 10 percent more people this year than President Bush deported in 2008.
Now, officially, the Obama deportation policy is focused not on undocumented immigrants who are otherwise law-abiding citizens, but on those who commit crimes while they‘re here.  But “The Washington Post” reports this week that President Obama has been presented with evidence that thousands of ordinary illegal immigrants continue to be targeted and deported often for minor violations.  And an advocate for day laborers tells “The Post” that the Obama policy has created, quote, “a huge drag net and it‘s structural.  Basically, it‘s anyone they can get their hands on.”
Now, the argument in favor of this “round ‘em up and kick ‘em out” approach is deceptively straight forward.  Hey, these people are breaking the law.  Deporting them is just enforcing the law.
The problem with that argument is that law enforcement isn‘t a black and white issue.  You don‘t just enforce it or not enforce it.  There are different ways to enforce the law.
Imagine if the federal government decided to attack the drug problem in this country by going after any and every pot smoker they could get their hands on on college campuses across the country.  You can sure bet you‘d be hearing about the sudden spike in arrests at every college and university across the land with the possible exception of BYU—because most people wouldn‘t find that to be a good use of federal law enforcement resources.
And the same should be true of the sudden spike in deportations.  It‘s not enough to simply call it law enforcement.  It‘s a policy choice.  It‘s a decision to enforce a law in a way that brings the maximum allowable punishment down on to families and people who aren‘t actually hurting anyone.
Deportation is the most heavy-handed way of dealing with the immigration problem in this country.  It has a massive potential for splitting up families and otherwise inflicting misery on people who don‘t have any good options in this world.  And it‘s a way of treating the symptoms of illegal immigration rather than the causes.  So, that‘s why it‘s bad policy.
But the politics are even worse.  Because no amount of deportation short of 100 percent will satisfy the people the president appears to be pandering to with this policy shift.  For one thing, most people vehemently opposed to current immigration levels haven‘t even noticed he‘s deporting more people than President Bush because they don‘t get their news from the so-called lame-stream media.
But even if they‘re aware of the change, they don‘t seem to be in a big hurry to admit it.  Guess what‘s the Republican talking point on President Obama‘s immigration policy is now that he‘s actually deporting more people than President Bush did?  I‘ll give you a hint: it does not in any way involve giving the president credit for all that old-fashioned law enforcement.
Steve—let me read here from the script—Steve King said of the president, the president doesn‘t want to enforce immigration law because he‘s vehemently opposed to those laws.  It goes on.
Now, here‘s the thing, not—not only is he alienating the people who are already—not only has the president decided to pander to people who are not going to support him anyway, but he‘s alienating the crucial bloc that won him the 2008 election.  It was Latino voters‘ swing towards President Obama in 2008 that provided the margin of victory in many swing states.
And if you‘re the White House right now looking at polling data about approval data for the president, you‘re very scared.  Just months ago, the president‘s approval rating among Latinos was coming in at 79 percent.  It‘s now down to 55 percent.
When the midterms come this fall and the Latinos decide to stay home because they‘re seeing people deported every day, the White House is going to have no one to punish but themselves.
HAYES:  We‘re back.  And hopefully you are, too.
All right.  For every available job in this country right now, as we speak, there are five or six people looking for a job.  Almost half of all unemployed people have been employed for at least six months.  That‘s double what it was last year.
And then there are people who have been unemployed for so long -- 99 weeks or more.  Their benefits have run out.  There are about 1.5 million such Americans, enough to warrant their very own name—the “99ers.”
Now, the unemployed are not a natural political constituency.  For one thing, we‘re talking about a transient group.  Once you get a job, you are, by definition, no longer unemployed.
For those suffering long-term unemployment, there‘s always been the specter of shame.  No one wants to scream at the top of their lungs about something they find humiliating.
But now, with this recession, you just have so many people unemployed for so very long, which makes it a more stable group.  Also, very importantly, you have the Internet.
A man in Rochester, New York, started “Layoff List” two years ago.  He writes about unemployment news, links to state unemployment offices and relevant government Web site.  He posts legislators‘ contact information so people can advocate for more and better unemployment benefits.
The AFL-CIO set up an unemployment lifeline.  You can organize, learn about your rights and benefits and find resources available to you and your community.
Another union also set up its own network called UCubed.  It organizes groups of unemployed people by region.  The theory being that there is political strength by numbers.
Now, Karl Rove set out to win the 2004 presidential election by increasing the number of evangelical voters by 4 million.  There are about 15 million unemployed people in this country.  If just a fraction of them were well-organized and politically active, imagine how the 2010 midterm election might go for the parties whose members have referred to out-of-work Americans as, quote, “hobos,” “on the dole,” “spoiled,” and “lazy.”
Joining us now is Annie Lowrey, reporter for “The Washington Independent.”
Annie, great to see you.
ANNIE LOWREY, THE WASHINGTON INDEPENDENT:  Great to be here.  Thanks for having me.
HAYES:  I read your piece today and I said, darn, I wish I had written that.  It was really excellent.
LOWREY:  Thank you.
HAYES:  How effective—I guess that‘s the first question, right?  It‘s like how effective are these online efforts to organize unemployed people?
LOWREY:  Well, you know, that‘s why they‘ve just started.  This is a nascent movement.  It‘s about—it‘s been about six months or a year that this thing called—that I called the “unemployed netroots” has even been in existence, since the unemployment rate really started tracking up precipitously.  And now—these people—that the unemployment benefits extension battle in Congress is over, you know, all these people are still online and they‘re looking to the midterms and they‘re recognizing that they have a lot of political power and they‘re starting to wield it.
So, you know, we don‘t know.  This is going to be a question going forward.  But, all of a sudden, they‘re sort of realized that they‘re a political constituency and they‘re starting to demand things from people who are running for office or who are representing them.
HAYES:  When you say—when they say—when you say they start to wield it, are there actual instances of the thing, the activities that are going on online translating into actual sort of political effectiveness on Capitol Hill?
LOWREY:  So, you know, it‘s just starting to, is the really interesting thing.  So when legislators go home for the August recess, unemployed people are going to go to their campaign rallies and ask them questions about this—and they‘re doing it with union backing.
So, the AFL-CIO‘s Working America and UCubed are organizing people online and saying, hey, let‘s go to some rallies.  You know, they‘re sort of taking a page out of the tea partier‘s book, of all things, and they‘re sort of demanding answers from these people.  They‘ve also been very successful at deluging offices with calls and faxes and e-mails, and they‘ve been very successful in that.
And, you know, it‘s just this big question moving forward.  If all of these millions of people are connecting online, what kind of effect they might have?
HAYES:  I thought it was really interesting, there was one guy o you talked to in the article, who said he had been a lifelong Republican and was sort of—this was his kind of radicalizing moment.  And, you know, I think I know people who I‘ve interviewed who are unemployed.  You know, this is not—it‘s not a demographic of people that you can sort of easily make generalizations about, but there‘s a lot of people who are used to being politically effective, who are used to a certain professional lifestyle, who have credentials, and they‘re used to having a certain amount of say over their lives and they‘ve had this kind of radicalizing effect.
I wonder how much that‘s driving the organizing you‘re seeing.
LOWREY:  Yes, I think it absolutely is.  You know, so there was an eight-month battle for the unemployment extensions in Congress, and specifically in the Senate, and you had, you know, senators like Jim Bunning standing up saying, “I, this single senator, am going to stop this from moving forward.”
And I think the unemployed really didn‘t understand.  You know, it was just weeks ago, last week even, that congressional inaction led to 2.6 million people losing extended unemployment benefits that they had expected to get.
And so, yes, the guy I spoke with in the article, he doesn‘t want to vote for Harry Reid, but he will because Sharron Angle called him spoiled and said that his benefits needed to be cut and that was why he was unemployed.  And, you know, that doesn‘t ring true for him and that doesn‘t ring true for millions of Americans who are in the same, you know, circumstance.
And notably, you know, there‘s about 14.5 million people who are currently unemployed.  But over the course of the recession, there‘s been about 30 million Americans who have experienced a period of joblessness.
HAYES:  I wonder also, ultimately, if the Republican Party has sort of misjudged this constituency as well.  I mean, I wonder—or lack of constituency in the past.  I mean, it seems like it‘s—you know, there‘s been the Reagan dumping on the “welfare queens” and this idea that you can sort of safely attack people on the dole.  But when those people are brothers-in-law and uncles and, you know, your substitute teacher you remember from the neighborhood, you know, it becomes much more politically dangerous.
LOWREY:  Yes, absolutely.  And another place where you‘re seeing this is—you know, it‘s yesterday, a national federation of states said that local governments are going to lay off maybe 500,000 public employees.  And we‘re talking police officers and teachers and firefighters.
HAYES:  Right.
LOWREY:  And you know, it‘s again because of congressional inaction.  So, you know, joblessness is so spread throughout the economy and is such a present problem but - you know, and like you mentioned, with five job seekers looking for every job, you know, in states like Michigan or Nevada, something like 10 or 20 job seekers looking for every job, it‘s hard to describe these people as lazy, spoiled, you know, people on the dole. 
HAYES:  Annie Lowrey, reporter for “The Washington Independent,” thank you so much for joining us tonight.  I really enjoyed it. 
LOWREY:  Thank you for having me. 
HAYES:  Wouldn‘t it be nice if President Obama appointed someone to head the new Consumer Bureau of Financial Protection who was actually interested in protecting consumers‘ finances?  Someone like Elizabeth Warren.  I‘ll discuss this with Congressman Barney Frank who joins me, next.  Stay with us.
BARACK OBAMA, UNITED STATES PRESIDENT:  These reforms represent the strongest consumer financial protections in history.  And these protections will be enforced by a new consumer watchdog with just one job - looking out for people, not big banks, not lenders, not investment houses, looking out for people as they interact with the financial system. 
HAYES:  One of the real genuine accomplishments the financial regulation bill signed by President Obama is the creation of the Consumer Financial Protection Bureau.  As we watch what happened at the SEC during the financial crisis, and at the Minerals Management Service in the years leading up to the Deepwater Horizon oil spill, we learned that it‘s not enough to have a regulatory agency. 
One of the most problematic trends we have seen is the cozy relationship between government agencies and the industries they‘re supposed to regulate.  What matters over and above the existence of a regulatory agency is the culture, its sense of mission and ethos. 
And that‘s why the stakes are so high over who is going to head this new bureau.  In the past, we‘ve seen people running agencies who have come from the industry they‘re supposed to regulate.  And then they pass through the revolving door back into that industry. 
The most natural and qualified person for this agency, the Consumer Financial Protection Bureau, is someone who has been looking out for consumers and writing about consumer finance for a long time, Harvard Law professor and chair of the Congressional Oversight Panel for the TARP Bailout Funds, Elizabeth Warren. 
In the summer of 2007, Professor Warren wrote, quote, “Clearly, it is time for a new model of financial regulation, one focused primarily on consumer safety rather than corporate profitability.  Financial projects should be subject to the same routine safety screening that now governs the sale of every toaster, washing machine, and child‘s car seat sold on the American market.  So why not create a financial product safety commission?” 
Professor Warren went on to describe the responsibilities of an agency to evaluate financial products and get rid of the tricks and traps for consumers. 
Now, contrast that with Ben Bernanke, who was totally wrong about the subprime housing crisis and awarded with an appointment to run the fed.  And Larry Summers who was wrong - on the wrong side of deregulating derivatives markets and became the president‘s chief economic adviser. 
People in the establishment tend to fail upward.  But here, we have the rare instance of someone who actually got it right, the rare situation with the person who came up with the idea could run the agency and imbue it with a consumer-first perspective it needs to be effective. 
So just for a change, how about this?  Rather than putting someone as a head of an agency who was wrong, we put somebody in charge who was right. 
Joining us now is one of the authors of the Dodd-Frank Wall Street Reform and Consumer Protection Act, chairman of the House Financial Services Committee, Congressman Barney Frank of Massachusetts.  Chairman Frank, thanks so much for being here. 
COMMITTEE:  Thank you. 
HAYES:  OK.  So why do you think Elizabeth Warren should be appointed to head up the new Consumer Financial Protection Bureau? 
FRANK:  Well, for the reasons you stated plus another one.  She‘s a very savvy political operator.  We have this unfortunate view that if you are passionately idealistic and committed to a set of views, then you somehow must be unrealistic. 
And if you are someone who‘s hardheaded and understands how to work the political process, then you must be someone without values.  That‘s a terrible division. 
In fact, if you are idealistic, then you, it seems to me, are morally obligated to be pragmatic, because otherwise, your ideals will never get to help anybody, and Elizabeth Warren is an example of that. 
I had a wonderful experience working with her.  I met her when we started out on this.  I was glad to be her ally in getting this established.  And throughout the process, she was sensible and thoughtful and effective.  We worked very closely together. 
So the notion that somehow because she cares so much, she couldn‘t do this effectively is exactly wrong.  And I was glad, by the way, you mentioned subprime, because this is not simply to protect consumers, although that‘s very important.  It‘s also to protect the economy. 
One of the fights we had - and ironically, the Republicans try to blame our advocacy for lower income people for the crisis. 
Exactly the opposite is the truth.  Beginning in 2004, Democrats on the committee I now chair, but we were then the minority, tried to restrict (UNINTELLIGIBLE) the subprime loans that should not have been granted to people who should not have gotten them on the terms they couldn‘t pay for it. 
Finally, in this bill, we do create the laws because we finally got the ability with the Democratic Congress and the president to do it.  And this bureau will administer those laws. 
So when the bureau steps in, I hope under Elizabeth Warren, and protects consumers from being put in the loans that are just going to ruin their lives, that will also be helping protect the economy. 
And you know, I was just going over some quotes from the Republicans and “The Wall Street Journal,” “Oh, the market will do it.  Stop blocking the dream of home ownership.”  And of course, that was their argument for not going forward. 
But Elizabeth Warren, in addition to everything you‘ve said, is a very able operator.  And that‘s going to be important, because there will be obstacles put in her way.  And she is smart and tough as well as idealistic. 
HAYES:  Let‘s talk about the obstacles.  I mean, there are sort of - sort of these somewhat nebulous news reports.  There was a report that Timothy Geithner was not terribly enthused about her, and then he had nice things to say about her. 
Robert Gibbs had, it seemed, very complimentary things to say about her.  Do you sense that there is a desire in the White House to name her to this post?  And how much opposition do you expect from the banks to her being so named? 
FRANK:  Well, I have spoken to people in the White House staff.  And I‘ve expressed my views in ways I know the president has seen.  And some are enthusiastic and others may have some questions. 
One of the issues there as well, it might be hard to get her confirmed in the Senate.  My first response - the way the Senate operates, he says, “I don‘t think I would be for anyone who would easily be confirmed in the Senate.  That‘s not (UNINTELLIGIBLE).”
But secondly, the filibuster is bad enough when it‘s invoked.  To cave into the threat of a nonexistent filibuster is a very bad idea. 
And I‘ve seen and Sen. Dodd, whom I admire enormously and is a great partner, and he‘s one of the ones who could say, “Well, she could be tough to get confirmed.”  And my answer to him is, “Well, all the more reason to try.  You can‘t allow that kind of (UNINTELLIGIBLE).” 
As to the banks, one of the things I want to make a point of pride here, because you were talking with your previous guest about mobilizing the unemployed.  People, especially rebels, tend to over-believe the view that only big money counts. 
In fact, when the public gets mobilized, and my colleagues here and their constituents - it makes a difference.  The proof of that is, in the bill that we just passed, the big banks and the large investment houses did very badly. 
It was the small banks that did affect the independent community bankers.  The association of smaller banks took out an ad today in some of the Washington papers, thanking Congress because we respected their role and they weren‘t the ones who caused this problem.  And we put them in a better footing than the large banks. 
So, yes, I do think some of the large institutions will be upset.  By the way, one of the things that I hope will happen is this.  I hope the large banks will be making less money from credit card fees and from overdrafts and from other things, because I would like to get them back into lending money. 
That‘s what we have banks for.  To the extent that they can increase their profits in other ways, they have a diminished incentive to lend. 
HAYES:  “The Washington Post” reported this afternoon, and this goes to the sort of confirmability question, that two Republican appointees of the Congressional oversight panel who worked with Elizabeth Warren, praised her work on the panel saying she was, quote, “collegiate and professional.”  And they found quite willing to modify her views if presented with well-reasoned, cogent arguments. 
That sounds like exactly the sort of pragmatism you‘ve been describe.  And I wonder if you can imagine a universe in which there would be Republicans aboard for her? 
FRANK:  Absolutely.  And there‘ll be political pressure to do it.  It‘s interesting you mentioned earlier some of the tea party people.  Look, there are people who are angry.  In many ways, they are angry for good reasons.  They express it, I think, in ways that would make things worse rather than better. 
Elizabeth Warren has been a consistent critic of any bias in the system against the average citizen.  And I think if you look at her record and look at where she‘s been, you will find people who would otherwise identify on more conservative spectrum - part of the spectrum who will be supportive. 
Yes, I think that there are a number of Republicans who will be voting for her if she‘s nominated, and maybe a few moderate Democrats who don‘t.  Again, I think as people get to know her, they will be impressed as I was. 
There were a couple of times, frankly, the Obama administration sent us a draft of the consumer agency which had some things in it that I thought were politically unwise, would generate a lot of opposition, and wouldn‘t be very practical. 
And that‘s when I first began to work with Elizabeth Warren.  And I approached her and said, “Gee, you know, you weather it.”  She said, “Oh, no.  I think they‘re bad ideas.”  I was just delighted that she had that ability to focus on what‘s important and what isn‘t. 
So, no, I don‘t - let me say this about the president, in defense of him in general.  It‘s not his fault that we didn‘t get a public option.  We just couldn‘t have gotten the votes.  Many of us try very hard. 
The stimulus bill was smaller than it should have been.  That was not his fault.  Republicans in the Senate blocked him.  There have been other things where he‘s been on our side and we‘ve been on the same side and he hasn‘t been able to do it. 
But with regards to this appointment, there‘ll be nobody but him who will be making that decision.  So this will be, I think, a very good task.  And I believe he‘s going to pass it. 
I think that this is not - to allow a filibuster threatened to block something that makes so much sense would be a very bad idea. 
HAYES:  Chairman Barney Frank, Democrat of Massachusetts, laying it on the president‘s doorstep.  Thank you so much for being here. 
FRANK:  You‘re welcome. 
HAYES:  Coming up exclusively on “COUNTDOWN,” an EPA whistle-blower says his own agency is playing dumb about dispersants and deliberately downplaying the threat of the gulf oil disaster. 
And coming up on this show, we‘ve had birthers, truthers, and tenthers.  And now the latest anti-Obama movement, bringing back the hidden 13th Amendment.  I‘ll explain it a bit.  Stick around. 
HAYES:  Does President Obama‘s acceptance of the Nobel Peace Prize mean he‘s unqualified to be president anymore?  It does if you subscribe to the thinking behind the latest anti-Obama effort.  This one‘s actually impressive in its attention to historical detail.  We‘ll have the details, next. 
HAYES:  Good news for lovers of conspiracy theories and wing-nuttery in general.  If you love the birthers, the truthers, and the tenthers, you‘re going to love the thirteenth-ers. 
The Iowa Republican Party joined their ranks this summer when they voted on a new platform.  It included this plank, little noted at the time, quote, “We call for the reintroduction and ratification of the original 13th Amendment, not the 13th Amendment in today‘s Constitution.”
Now, if you paid attention in civics class, you know the 13th Amendment abolished slavery.  But hold up, hold up.  Don‘t jump to conclusions.  Iowa Republicans are not calling for the reinstatement of slavery. 
What they do want is more complicated to tell but equally awesome in its nuttiness.  Iowa Republicans are calling for the ratification of the original 13th Amendment, the one that passed both houses of Congress in 1810, but was never ratified by three quarters of the states. 
It said, quote, “If any citizen of the United States shall accept, claim, receive, or retain any title of nobility or honor or shall without the consent of Congress accept and retain any present pension, office, or emolument of any kind whatever from any emperor, king, prince, or foreign power, such person shall cease to be a citizen of the United States and shall be incapable of holding any office of trust or profit under them.”
So the idea was to keep foreigners from influencing us over here by dangling their fancy earldoms and duchesse and baronetcy.  In fact, we already had a similar provision in the Constitution, but this amendment made the punishment much harsher, i.e. loss of citizenship. 
OK.  But you may wonder why is the Iowa Republican party taking up this cause 200 years later?  Why nestled among the other platform planks like “life begins at conception” and quote, “we support the definition that manure is a natural fertilizer,” are Iowa Republicans taking up this largely-forgotten lost amendment? 
“Newsweek‘s” Jerry Adler got the answer from the Iowa GOP that the plank was, quote, “meant to make a statement about the delegates‘ opinion about Mr. Obama receiving the Nobel Prize.” 
OK.  So you have to give the Iowa Republicans props for using obscure Constitutional history to smack down President Obama for being treated like a rock star in Europe. 
But of course, as soon as you apply the logic to - the whole thing evaporates.  For instance, Nobel Prize committee is not a foreign power.  So done.  End of argument. 
OK.  But say that somehow you could argue that accepting a Nobel Prize is taking an emolument from a foreign power.  Does the Iowa Republican Party really want to strip citizenship from American scientists, economists and writers who accepted their Nobel Prizes?
Is the Iowa Republican Party suggesting John Nash should have been stripped of his citizenship for accepting his Nobel Prize in Economics?  Dude, that guy was just featured in a Ron Howard movie.  There is nothing more American.  I rest my case.
REPRESENTATIVES:  Fidel Castro is a totalitarian communist.  I don‘t believe that President Obama, in any way, is like Fidel Castro. 
But I do believe he is exactly in the tradition of the French socialists or the Italian socialists or the German socialists.  I think he would have been very comfortable in the social democratic party in Germany.  I think he would have been very comfortable in pre-Tony Blair labor party government in Great Britain. 
SEN. JIM BUNNING (R-KY):  This massive bailout is not a solution.  It is a financial socialism and it is un-American. 
UNIDENTIFIED MALE:  This is a move towards socialism, more like a socialized Europe.
UNIDENTIFIED MALE:  European socialism doesn‘t work. 
UNIDENTIFIED MALE:  You get this done and we are on the road to European socialism.  We are on the road to a different kind of America. 
BILL O‘REILLY, HOST, “THE O‘REILLY FACTOR”:  So he has taken a western European model, France, Sweden, the Netherlands.  And he says, “I like that,” the nanny state, cradle-to-grave entitlements.  Everybody gets something so nobody is destitute.  I‘m Barack Obama.  I like that.  Do we really want to change America into Sweden?
UNIDENTIFIED MALE:  Where are we going to lead the country?  In two years, if we take all of these steps, we will have made a dramatic move in the direction of, indeed, turning America into Western Europe. 
Western Europe - no!  The horror!  The horror!  Well, that old canard has been given new life as the rallying cry for the right-wing against everything President Obama has tried to do.  Health care - it‘s European socialism.  Regulate the banks - European socialism.  Lose the Bush tax cuts - European socialism.
Just what is it about European socialism that is so bad?  Brace yourselves.  According to Thomas Geoghegan in his new book, “Were You Born on the Wrong Continent?” - actually not much.  In fact, if you got to know European socialism, you just might like it. 
Tom Geoghegan joins me now from Chicago.  Thanks so much for being here, Tom.
Hey, Chris, thanks for inviting me. 
HAYES:  OK.  So give me your elevator pitch for your European socialism.  Why is it not so bad?  Why was I born on the wrong continent?
GEOGHEGAN:  Give the elevator pitch in August, Chris.  You know, this is the time of year we should be sitting around a lake drinking a few Beck‘s beers.  If you like that kind of life and think your employer should pay for it, check out European socialism. 
HAYES:  That would be the reference to the six or seven weeks‘ paid vacation, right, that is standard in the social democracies of Europe? 
GEOGHEGAN:  Chris, in Germany and France, the average work time per year is about 1,500 hours.  In the U.S., it is closer to 2,000.  That leaves 500 hours of extra free time for Europeans.  I mean, you only have one life to live. 
HAYES:  You know, an economics professor once said to me very wise words I‘ve kept with me ever since, which is that time is the one resource we are never making any more of. 
But you know, the response from the right when you bring up vacation like that is that, “But look, they are an economic basket case, right?  Yes, they get this vacation but, you know, they don‘t produce very much and they have high unemployment and the whole thing is going to, you know, go bankrupt soon.” 
GEOGHEGAN:    But Chris, the reason I wrote the book is I wanted to explore why is it that Germany is the most competitive country in the world.  We are the world‘s biggest debtor.  They are the world‘s - one of the world‘s biggest creditors. 
Since 2003, Germany has either been tied with China or the leading exporter in the world.  And Germany and France together just wallop China in terms of export sales.  So they do it through, actually, unions, high wages, worker control of - or more worker control than we ever dream of here, of the corporations and a commitment to manufacturing that has completely disappeared in this country. 
HAYES:  Yes.  You talk a lot about the German model.  There‘s two elements I find interesting.  One is this sort of focus of kind of very capital-intensive, but very sort of high-tech and expertise-driven manufacturing, and also that there is this union participation in corporate boards.  How does that model work?  It certainly sounds radical over here.  But you make a very convincing case for it in the book. 
GEOGHEGAN:  What makes it work is that the fact that the Germans have intense worker involvement.  In fact, it‘s probably got the most worker control of any economy in the world, and that includes China. 
It helps keep skills together.  It‘s a way - it encourages people to invest in themselves.  It holds together, if I may use a clunky economic term, human capital, high skills, in a way that flexible labor markets don‘t. 
I don‘t want to get into economic speak, but I really am convinced that giving working people a kind of role in running the corporations that they work for, albeit limited, putting them on corporate boards, putting high school graduates on the boards of big global corporate organizations precisely because they are high school graduates, you know, is one of the reasons that Germany has kept a commitment to manufacturing and being competitive while we‘ve turned into a casino-type capitalist society. 
HAYES:  Last and very quickly - do you think this is just a difference in preferences.  I mean, I think the - you know, the Bill O‘Reillies of the world would say, well, look, we really - we just like the way we have things here.  And we‘re never going to be - we‘re never going to be Europe.  Do you think it‘s just the American spirit is different than the German or French? 
GEOGHEGAN:  Hey, do Americans want to retire rich even if they are middle class?  Do they want to get out of debt?  You know, the German system, the European social democracy was modeled on American social democracy. 
HAYES:  Tom Geoghegan - his new book is “Were You Born on the Wrong Continent?”  His first book is “Which Side are You On?”  It is, by far, one of my favorite books ever of all time.  You should get that one, too.  Tom, thank you so much for your time tonight.
GEOGHEGAN:  Thanks, Chris. 
HAYES:  All right.  That does it for us tonight.  I have survived. 
I‘m Chris Hayes, in for Rachel.  You can read more of my work at
“TheNation.com” or follow me on Twitter, user name chrislhayes.  “COUNTDOWN WITH KEITH OLBERMANN” starts now.  Good night.
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