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Sen. CLINTON: So there are some different roles here that have to be looked at.

CRAMER: Why was the government, the Federal government, the president, so slow to realize that we had a major cancerous problem on our hands with the economy and now with home mortgages, which then led to a vast wave or foreclosures, a big drop in home values, massive losses to financial insitutions at the same time that Ben Bernanke, Hank Paulson and President Bush all assured that the fundamentals were sound?

Sen. CLINTON: I know, because after every speech I made criticizing them, that's what I would hear that I was, you know, alarmist, and there was nothing wrong, you know, `We're fine.'

CRAMER: That was their rap. Anybody--I did it. They just told me, `Listen, you're an alarmist flake.' I don't know. Those who of us who did it turned out to be darn right.

Sen. CLINTON: That's right. Well, we were pretty prophetic. Look, I think, Jim, the problem was ideological, number one.

CRAMER: Right. They want laissez-faire.

Sen. CLINTON: A lot of people...

CRAMER: It's 1847 all over again.

Sen. CLINTON: It's laissez-faire, that's right. You know, we're just not going to interfere, let the market work its magic. Well, we haven't done that since the Great Depression. You know, we haven't done that since Teddy Roosevelt started busting trusts, and thank God we haven't. But now we're in a new world where we've got to have much more oversight and transparency in order to figure out how we're going to navigate these kind of choppy dangerous waters. So it was ideological. It was also, I think, a false sense of security that the existing processes understood what they were doing. But the fact is, as you know so well, nobody understands these new financial instruments. I mean, maybe there's three guys in a basement somewhere.

CRAMER: No, I've checked on those three guys. I know them. They're clueless, too.

Sen. CLINTON: They don't know. They don't have any clue.

CRAMER: Let me ask you. We set up Fannie Mae in this country, it wasn't a Democrat organization or a Republican, but we set it up so when we have a housing emergency, it's able to step in. Would you continue the administrative policy of keeping the jack boot...(unintelligible)...on Fannie Mae's neck, or would you let Fannie Mae play a role, even though they have bankrolled some not great loans?

Sen. CLINTON: Well, look, I think, again, it's an ideological aversion to anything that's quasi-governmental.

CRAMER: Yeah. It is.

Sen. CLINTON: And that's nuts in my view. So yeah, I would look for a more robust role, but I also would, you know, point some fingers at Fannie Mae, as you just did in what you said. You know, some of their financial mismanagement, the exorbitant salaries paid to people. Come on. I mean, it was practically a guaranteed program. That's not the kind of entrepreneurial energy that creates great wealth that should be rewarding managers...

CRAMER: Right.

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