>> coming up on espnews, number four in minnesota. brett favre begins his viking adventure. the a.l. wildcard race heats up instrumental in working with the architect of this new china during your time in the carter white house. what do you think is the big mistake the next administration might make the? >> guest: i couldn't say it better than brandt just did, i agree with what he said. i think we should not jump to the convenience self-destructive conclusion the rise of china is

necessarily a threat. i think if that rises coincidental the greater chinese involvement in the international community it's in our interest. >> host: do you have confidence times gross richer and larger first we will relax the controls over its people so that it will become i don't want to say more of a democracy but it will become more of a humane place than it is do you think that will happen and should it bother us if it doesn't? >> guest: i had dinner with the former president of china just a few months ago and i said mr. president but is the biggest problem you face in china and successor faces and time and just like that he responded to many chinese and then he reminded me that he once said that you can't move rapidly towards a democracy in a country

1.5 billion almost people. i think he's right. that is a practical matter. he is right. still today china is vastly different politically from china 20 years ago and is changing. there is the beginnings of a system of law. it is very important, there is massive access to the internet, there is a young girl chinese generation. hundreds of thousands i think might even millions of chinese travel abroad. you go to france today you see these massive groups of people from england as tourists all of that is transforming the country and i think it is in our interest china be accommodated in to the international system. and they shouldn't be made to feel that we are somehow or other an obstacle on their way to success. ..

>> after world war ii the united states really established open international organizations, regimes.

we encourage but the germans back and and encourage the japanese back and. and i think that is the best defense against an assertive china that it will have to break its way into the system. if we treat china like the enemy we can make an enemy. what you say, may have been. its may have been. i don't think the current regime has that in mind at all. but going out of their way to show peaceful they did not even like that because of the word rise. it is more careful diplomacy and understanding of who they are and what is going on.

>> host: it has occurred in our conversations that with this book is the word openness the remember again and again in america and the world how you talk about the need to keep our systems come a channels open for communication could you drop day should draw that the mount a little more scanning back a little further and looking up the range of challenges that we face? what does it mean to be open and adaptive in this environment? >> many things the least of which is the need for an informed american society one of the major obstacles is inhibiting the intelligent posture of america in the world is the lack of understanding for the american

people. it is easy to blame our leaders and i have my share of blaming leaders but it is easier in a democracy when you have the public that is very uneducated about the world for an informed about basic facts, history, geography, the next president has an enormous educational role to play. he has to convey to american-built the notion the specific problems of russia, china, ga., are interrelated with the reality of a consequence at all of humanity experiences and then on top of it global prominence involving issues of survival, climate, environment and all of these are interactive and if america it is to be responsive and intelligent not only to work

with others but america itself has to understand these interactions and unless a president really undertakes the massive job of education, we will be tempted of pounding our chest and saying how wonderful we are and how evil everybody else is and becoming more isolated. >> host: what would you add to that? >> i would add very little because that says it well. the notion that the world is made up of good and evil from the outset, we have to get over that different cultures, different perspectives, we encourage things that we think are beneficial to this open society. be tolerant of people.

what they do not see exactly our way. it is not right or wrong necessarily. it is different. i think if we can do that, we can restore our position as leader in the world, not dictator to the world. not follow me zero or stand aside, but gathered together the peoples of the world in pursuit of a better world for everybody. that is what we are about. >> host: is it a more humble ameritech? 51 and a way. we have tended to think that we have all the answers and we are a democracy we have salted if everybody is just like us. everybody will that be like us and we are not perfect either. tolerance of different points

of view as long as it is not a stalinist way for a fascist way to remake the world. >> host: you said more responsible? >> guest: i would say more responsible rather than humble. you can be proud if we have something to be proud of if we are responsible we have more to be proud of but i have a sense there is a resistance in our society with the assumption of real global responsibility that goes back to what apprentice said at the outset rapid-- recognition of complexity recognition of the need to share decisions and work with others and the sharing of the burdens more responsibility for a state of the world which means more understanding of that world. i think our public understands the world is too easily reduced with particular

simplistic dichotomy and not enough recognition. the world that needs a leader but the leader that mobilizes, inspires and engages others and that is the tax for the next president. >> host: strategic listening is a phrase and is useful. let me ask you to close briefly again as practitioners of foreign policy. many people think the machinery that you ran in the national security council or system is broken. and it needs to be fixed to adapt to these challenges you described in the book. i would ask briefly how would you fix that machinery? >> i think the right people could make bad machinery work. good machinery helps good people do a better job. the world has changed so

dramatically most of our institutions were built from the cold war or the national security act even before the cold war. >> the national security act of 194071 yes. the world is so different, the nature of conflict is different. >> borders are porous. it is different and we need to look and see if we cannot do some things from government, the intelligence committee for example, as having great difficulty because the world is so different. and warfare will be very different. and afghanistan we're fighting a war over here and in dealing with an almost failed state here, we're trying to reconstruct or build the economy here and nobody is in charge. >> host: any architectural fix that you would make?

>> guest: yes. first essentials for appointments nobody has a monopoly on intelligence or knowledge. bipartisanship creates national support then it goes to public support for more complex policy. number two, a more systematic planning of foreign policy located in the white house not to the it dod or the white house and a fashion that engages congressional leadership because we have to plan. if we don't we will lose it. and point* to number three, nonspecific large problems have to be delegated to key individuals to work with the president, who interact with the secretary of state but not delegated exclusively right thing to our secretary of state has been no

related -- overloaded all like to resume that deals with the problems of the middle east or break it up i ran the certainly, afghanistan, pakist an, the problem and what our relationship with europe in addition to the traditional secretary's those of the special authority to deal with certain key pieces such as the middle east and afghanistan, pakistan and europe. >> host: i think in the last hour you have had a sense of what was remarkable about the conversations that i was lucky enough to be a part of with general scowcroft and mr. brzezinski and the book they produced "america and the world" that lays out this kind of thinking that helps the

next president to think more clearly about foreign policy. thank you. >> thank you

enter the home to the america's highest court to the grand places and those only accessible to the nine justices, the supreme court coming the first sunday in october on c-span. >> health and human services secretary sebelius talk about medicare fraud at this conference in washington and she also reiterated his support for the administration

proposed public auction for health insurance. this is one half-hour [inaudible conversations] >> we are about ready to get started if everyone could take their seats. one word for any of you who have not turned off of your cellphones or apply to them on silent we would ask that you do that now part of it is my honor and privilege to welcome the secretary of department of health and human services kathleen sebelius and assistant secretary cathy green made to our conference [applause] for me personally and is especially exciting to share the stage with two fellow kansans. go jayhawks.

that does not happen every day in washington i like to share a few brief words of introduction for our assistance secretary of aging kathy greenlee was appointed by the fourth assistant secretary for aging at the department of health and human services in june 2009. prior to coming to washington assistant secretary eight served as the kansas department on aging where she was responsible for overseeing the at older americans act program and a long term care payments and regulation of the life insurance survey before she became secretary of beijing ms. greenlee is served with the state of kansas and ran the state long-term care of this program. previously she served as general counsel at the insurance department where she oversaw the senior house insurance counseling program

and she also served as secretary or as the chief of staff and chief of operations for governor sebelius. kathy greenlee barrista the administration and aging a strong commitment to an powering in protecting older consumers whether it be from scams are health-care fraud or other types of abuse and exploitation and she holds a firm belief in the value of senior volunteers as a front-line of defense in this effort and of course, these of the values that also underlie the smp program and powering seniors at the grass-roots level to help prevent health-care fraud. i am proud and excited to have kathy here in the being our office and administration on aging i am thrilled she is here today to introduce us to secretary sebelius [applause]

>> good morning. and it is good to be with you this morning and wonderful to have the opportunity to introduce secretary sebelius to you this morning i had the privilege of introducing kathleen before but this is the first time since she came to washington this is a new venue. the secretary is not new she went to college here from trinity and here she met her future husband when he was attending georgetown law school so we have him to thank for her to move to kansas then she went to university of kansas and received a master's degree in public administration in. and 1986 she ran for public office for the first time and was elected to serve in the house of representatives in topeka and chief surgeon the

kansas house 80 years and in 1994 she ran and was elected as insurance commissioner for the state of kansas. that election was remarkable she beat an incumbent and also the first democrat to hold that office and a 100 years. this was a big change. she used to say when people say they have always done it this way they have always done it this way. there was a lot of legacy at the insurance department when she was commissioner she focused on consumer issues and gravitated immediately to issues of health, health insurance, health care has been a passion of hers for a long time she served as the chair for the house committee as the nationalists sharon's commissioners before serving as the president and during her second term she took a move first in the nation to deny the acquisition of kansas blue cross and blue cross plan

she denied because the increase of rates would have been significant on individuals including seniors and small businesses. 2002 she was elected governor of our fine station focused energy on education and comment significant issues as well as the environment and of course, health and healthcare. in 2006 she was elected to her second term and was recently named as the nation's top five governors. we began this year back in hat kansas she was our governor we just reelected her than the president called canseco and on april 29 she was sworn in to be the 21st secretary for the department of health and human services the night she was born and i was in the rotunda in topeka listening to good chief justice of the kansas supreme court reading her letter of resignation it was a bittersweet moment for many of us that worked with this fine leader for many

years. and we were sad to see her go as governor because what we know is what the nation is now learning the president could not have chosen a better leader at this time and we are very, very proud of your and the real issue is our new secretary of health and human services. secretary sebelius [applause] >> i did not want to come to washington alone so i had to bring kathy with me. [laughter] but i am totally delighted she was willing to accept the challenges as assistant secretary of beijing and i can tell you from nine experience she will be fabulous. she has the enormous passion for issues confronting seniors in this country and has done

some terrific the creative and importing work in kansas in terms of not only helping to fight consumer issues but rebalancing our portfolio in terms of community care, providing an important continuum of care, working on behalf of seniors in the heartland and i know the same passion and energy will be brought with her here to washington d.c. as she works on behalf of the seniors across the country. i know of barbs could work with the antifraud program but what i did not know she was a kansas -- from kansas which is even better news. but i am delighted to be here with two fellow jayhawks and as i say we go back a long way

and have a long history together. i know you have a real champion and her with the leader of the agency on aging. i also want to acknowledge a senior medical control volunteers who are here today. i know there are 10 of you who will be honored tomorrow please accept my congratulations in advance. i have to tell you with the approaching year, i find protection of medicare more and more important on a personal basis. i am getting up close to the qualifying age and i want to make sure we are solvent well into the future so i personally thank you for the good work you're doing on behalf of $0.07 across the country. we have some terrific partners

in agencies across government to fight medicare fraud and i know those agencies are represented here today and will be part of this conference for the next couple of days but announcing the department could tackle the challenge on our own. it is definitely a team effort and as any good team we recognize everybody has a part to play. in addition to the employees at the administration on aging, we have our medicare and medicaid services, office of inspector general and the department of justice who are all actively working on this. now my father was a member of congress in of 1965 when president johnson signed the medicare bill into law.

just over 40 years ago, 44 years ago and it was one of the most important steps on behalf of seniors that was ever taken certainly the biggest advance after social security from the truman. back then it is hard to imagine, but seeing years were among our poorest and volvo population because of health care costs and raising bills they were trying to struggle to pay on their own. today that situation has been transformed, seniors have the best care in america and have security about the health care that they have. and a new turn 65 are qualify as a disabled american and, you cannot be dropped because of health coverage. you cannot be denied coverage

because of a pre-existing condition. your rates don't change depending on your specific health situation in. it is what insurance is all about with sharing and balancing that rest. -- risk. we have made clear over the years that that safety net is so critical. that is why medicare is so popular. of providing care for seniors in this country is not cheap the federal government this year taxpayers in america will spend about $425 billion on medicare and another 200 billion on medicaid. and any time that amount of money come as $625 billion is changing hands we know there will be people around who want to get their mitts on some of that cash.

there is the old story about the bank robber willie sutton where they asked him why was it that he robbed banks? the answer was simple, that is where the money is. unfortunately that is the same situation with this major important government program. every day we pay more than 3 million claims 21 points finally different suppliers and providers everyday out of the centers for cms we need to pay quickly and efficiently so doctors can be reimbursed, farmers and -- pharmaceutical manufacturers, a quick managers reimbursed and seniors get the care that they need. but how do we make sure the claims payment goes on quickly and efficiently but also making sure those claims are legitimate?

there are several prevention and enforcement programs to do just that but over the years, the amount of claims payment and financing has grown far faster and our response. and the five years since 2003, medicare spending went up 10% per year but on the health care fraud it went up just barely 1% per year in spite of the fact we now know the investment yields huge returns and then adding a whole new prescription drug program with medicare part d but to monitor and make sure claims payments are legitimate have barely increase. since taking office in january president obama has recognized that this is a real and important tension comment that he not only provided additional resources, but

asked for some additional cross agency cooperation. in me comment attorney general eric holder and i announced the creation of the new health-care fraud prevention action team better known as he did is made up and headed up of the did secretary from the department of justice and hhs the first time the cabinet and subcabinet officials have participated in this kind of ever. the goal is to find new and improved ways to attack broad and those are paying off. by july a heat initiative led to the rest of 32 doctors and health care executives in four cities who were charged with cheating medicare out of a minimum of $16 million a similar effort in miami brought charges against 42

people for a scam involving expensive infusion treatments for hiv/aids patients. those initiatives are led by strike force teams and in addition to those in miami there are teams then los angeles, did the right, and we are prepared to expand those teams were ever the fraud may take us because the efforts have been successful we are trying to get out ahead of fraudulent activity it used to be claims were monitored after the fact and often took months or years to track down and by then perpetrators would be on to a new scam we're trying to send a signal that we are very eager to stop people from stealing from this program and willing to spend their resources to do with 31 to minor some of those activities we do have a new website stop

a medical or -- stop medicare fraud .gov we're also involved in an initiative at hhs to do faster data analysis of we can identify fraudulent activity more quickly broke if one county bills medicare 10 times as much as a nearby county with the same number of patients, it sends up a red flag sharing that affirmation on a real-time basis with the department of justice is something we're beginning to do with the first ever opportunity. fighting fraud is one of the best investments the government makes. for every dollar we spend, one minimum of $1.50 comes back to the taxpayer just on the

people we catch we cannot tell you how much is prevented by sending a signal that we are serious. we will still be after these criminals and still unfortunately even with enhanced efforts me able to review less than 3% of the claims on a timely basis. that brings me to the point* of the conference today that is why senior writer kurt -- senior medicare patrol program is so important the strongest defense against crime is not law enforcement but informed citizens that it has proven over and over, the control officers help prevent break-ins but the biggest reason and there is not more home burglaries we lock our doors and windows and a look out for our neighbors and report suspicious activity. but best defense against crime is when people can protect

themself and that is where the senior medicare patrol program comes in. smp has a simple motivation, american seniors do not like it when people steel from medicare. since 1997, smp has indicated more than 20 million seniors about medicare fraud and errors. teaching them how to recognize it, how to prevent it and educate neighbors and friends. of the device can be as simple as teaching pokes how to read the medicare summary notice or explaining to them the medicare never is like a credit card number they should never give away. the results are impressive. since 1997, the smp has saved taxpayers over $100 million that is 100 million of additional medical care that can be delivered to citizens of this country.

smp volunteers are great crime deterrents members scattered across the country are like undercover cops if a criminal thinks he may get reported he is much less likely to try to cheat someone. i want to share one story with you about one of the volunteers who i heard about the other day as i was preparing for this presentation mario sanchez from texas who is 72 and has diabetes. earlier he had a work order from his medical supply company for the lancet and test strips he uses to test his blood sugar that were quarter was one of 3 million claims that medicare pays every day it easily could happen one of the ones that went through without any scrutiny but it was not. for one reason a few months

earlier mario had heard the smp presentation at the adult day care center he knew as valuable as medicare was to him it was just as buy able to crux who did use it to steal money from government so he made sure to read the work order very carefully it turned out his order was at 200 boxes and a $7,000 although he was only supposed to get two boxes of supplies and he contacted best senior medicare patrol and i held him to get the work order changed to the correct amount of just $200. but here is the most important part of the story. he not only review that won acclaim but now reviews every one of his claims and has worked with the folks at to the day-care center to help their review their claims and

goes over medical forms with friends and neighbors. that is the biggest benefit of what volunteers due to recruit other people to the cause. slowly building the kind of educated community that scares off potential criminals before they can even come up with a scamper earlier this year i was at an event with attorney general holder that mentioned the abc news piece about a man who would switch from selling drugs on the street to medicare fraud because it was easier and more profitable. i am not advocating we want people to go back to the streets to sell drugs. [laughter] but we also want to tell them that teaching seniors is not a good way to make an easy buck. so thank you we are starting to make that change. i know you are hearing a lot about fraud over the next few

days, but before i close i also want to say a few words about another hot health topic, a health reform. which is dominating the airwaves. and if you were watching the news over the weekend you probably have seen reports about the obama administration and the public option portion of the health reform plan. all i can tell you is that sunday must have been a very slow news day because here is the bottom line, absolutely nothing has changed. we continue to support the public auction that will help lower cost coming give american consumers more choice and keep private insurers on as part of people have other ideas about how to accomplish these goals, we will look at those as well but the public

option is a good way to do this or i have seen it work for state employees in states like kansas where the public option is side by side with private insurers offering competition and choice for state employees and provides choice in markets that are often dominated by one insurance company, a monopoly that can charge what it wants because it has no competition and that is what we want to do with health reform, more choices, more competition, that is the bottom-line goal. i also know lots of information has been circulated causing fear among some seniors about cutting valuable medicare services or rationing care per cry want to tell you nothing could be further from the truth. reno your efforts to reduce fraud and abuse will save

medicare services but as part is health-care reform reno there are critical importance health savings saving dollars for seniors on prescription drug costs, cutting in half the doughnut hole is a huge help to the 4 million seniors to currently hits the wall. saving doctors from medicare services from the proposed 21% cost though leftover legacy from the prior administration as it has never been fixed, and sent health reform, directors provide medicare services are scheduled to be cut 21%. you talk about losing your doctor, that will happen unless we just those cost and cutting down on the number of patients you are readmitted to the hospital following the hospital stay, not only saves

lives but saves dollars. my father who was in the congress when medicare was passed is now 88 my his sister turns 90 on sunday so i know how valuable in our family medicare services are. i see it each and every day and how the table it is to families across the country so we want to make sure we provide the services needed by seniors but also make sure that medicare is solvent along into the future we're not overpaying for drugs and equipment that are not lining the pockets of insurance companies in terms of overpayment for programs but delivering those dollars to provide for medical services. but we know medicare it is

universally beloved. view to a k boat today on medicare services, it is hard to believe that anyone would stand up and bowed to no. it would probably pass overwhelmingly in a bipartisan landslide but back in 1965, when there was the first vote on medicare services and a whopping democratic majority in both the house and the senate, medicare all they passed by 45 votes. the point* is a change is never easy. if we can achieve reform this fall we may have a chance to look back 40 years from now and say we were there when our country made another important step to ensuring high-quality health care for all americans. again, they do for your service, thank you for what you do to keep medicare

solvent and secure for the future and thank you for having me hear today [applause] [applause] >> as the healthcare conversation continues health care how big is a key resource online to see the bill latest links and seek the house and senate debate and even upload

your opinion with a citizen video the c-span healthcare hub at c-span.org/healthcare >> robert novak died on tuesday he sees the writing his column in july after being diagnosed with a brain tumor in 2007 he was our guest on the program "q&a" or he talked about his memoir, "the prince of darkness" this is one hour. >>host: bob novak-- novak you tell about the gridiron

gang? >>guest: in the last year of a clinton presidency, bill clinton the president decided he was a bag the gridiron dinner were the president usually goes to speak to the press it is very fancy he did not like it much, and taking his place was al gore. i got a phone call just two days before the dinner wondering if i would help to help him speak i got a call from the media guy and what they wanted me to do was have a phone interview with him were i would ask all kinds of questions, not with him but president bush and they would have president bush saying general, that was a little piece of tape they got from an interview that george w. bush had done earlier with a smart

alec guy up in massachusetts to know the name of the president's of pakistan general musharraf and president bush said general and could not think of his name so they had all of these questions every answer was general and it made a fool out of bush so would i be the fall guy and ask the questions? i said what is in it for me? they said it buys president will give me a interview on cnn. so he said absolutely and i said no, i have to have an assurance from the vice president purpose of the vice president called me at my apartment that night, assured me the thing to me for doing this stunt which kind of made me a pansy which quote he

would give me the interview, i checked the week after that and after that and he would never give me the interview and he said he did not want to do it so i thought he was a big phony for doing that. >>host: another year at the gridiron there was a song called thank heaven for little girls. >>guest: that i was the president of the gridiron that year it was a song everybody would have loved because president clinton was having all of the monica lewinsky trouble and everybody would start to work if we played thank heavens for little girls but i killed as president because i was sitting next to the president for four hours that night and i did not want to be embarrassed. >>host: what was he like for four hours? >>guest: to be honest, i was not talking to him for four

hours on the other side was the publisher of my newspaper lauren black who was now and a lot of trouble but that is another story. they talked mostly about franklin roosevelt so the president was down to talking to me for just about one hour and i was not tops on his parade it was cordial i tried to leave him on to say the payroll taxes were too high and he would look into tt he was interested but he wasn't and nothing was done we talked a little of the basketball he is tough and we talked a little basketball. i made a few other comments but nothing exciting. >>host: to call this a memoir or an autobiography? >>guest: it is a memoir. >>host: speaking of conrad black it has been on trial but

also to tell the story of wanting him to jointly go with your the university of illinois your alma mater to find a chair? explained that. >>guest: i know a lot to my family my grandfather was an immigrant and that all lot to the university of illinois my father and three brothers were graduates and i wanted to find a chair and western this civilization and culture so they would talk about eight dead white men in perpetuity i eighth found out it cost 1 million and 1/4 to find a chair so i went to conrad black and said let's make this the robert d. novak share a culture of civilization we teach spend $650,000 and he said that is a great idea. send me a letter and we will get it done i sent the letter but i got no reply, a lot of back-and-forth and finally

another guy who is now in jail, the actual publisher of the sun-times, they said this is the chicago mayor go see him and he said no. not on your life we would never do anything like that. i had to pick up the tab myself. it turned out well because it would have embarrassed the university of illinois to have a corrupt find a chair. >>host: you do several things that what you often do not see you have told us throhout this how much money you make. why did you decide to do that? >> people are very interested and you will find if you read it that i made a lot less money than people thought i made for much of my life i made very the bill when i started and i was not making much money when i started the column i made a lot more money than i thought it would make as a journalist, probably less than people thought but i

think they are interested in dapper pro brian, i think a lot of journalists to write memoirs and they don't tell you a thing. maybe it is the kind of business they are in their very secretive they aren't paulettes' and ballet dancers and tell to much i tried to hit the happy mediums wide tried to talked about my personal life. >>cspan: you are worth and the high single-digit seven '08 million dollars? you tell us the last year as cnn you raise 625,000 from cnn alone and 1,000,002. >>guest: i make a lot less than that now. >>cspan: but what are you doing that made use 625,000? >>guest: in the end it there were various times i was a:executive producer of "the

capital gang" which was a lot of work i spent a lot of work on that i was a regular on the crossfire two or three times per week, and i had my own program called the novak so rich i would jump out of airplanes and drive boats and was a regular on the politics show inside politics anchored by judy woodruff so they got their money out of me. >>cspan: how much as a columnist make? four instance i knew you were with of men's four years when you first guarded? >> when i first part of a i was paid $12,000, up $15,000 in 1963 which was not a lot of money even then. it was okay we each got 15

granddad the high 20 made the most what kind of money were they paying you? >>guest: $100,000. >>cspan: how was that for all of the work? how many days per week? >>guest: three columns per week. you cannot get rich by being a columnist itself that is much more than most make they do not make money the money is getting a high salary j in the newspaper business or television like you or things like that. >>cspan: how long have you written a comn? >>guest: since may 5th may 5th, 1963, the sick and longest-running column in america. >>cspan: on page 432 of your book a story about to o'neill then he left congress in 1986 and he wrote a book called man of the house and there is a

story in there about rowland evans and you which constituted and i am quoting the worst light of us ever committed to print by a public figu. explain. >>guest: in his memoir there was a lot of things but i will worry about myself the said that when he became majority leader before he was speaker rowly went to see him that he would give us news tidbits we would paid his way to be speaker of the house and he kicked us out of his office. that is an absolute lie. we did get to see him when he became majority leader we congratulcongratul ated him but had a very good relationship after that. as i look back of the columns were probably too praiseworthy he appeared on a forum that evans and i put on the

political forum he was on television with us every time he would see me he would cuff me on the head which i did not care for but that was a sign of affection so this was an absolute falsehood. we were doing a television show and he got himself into trouble for things he said and it soured him on us but he was known as a liar and he lied about us. >>cspan: you also do something that i don't think i have ever seen you name tons of your sources. >>guest: i always thought i thought i would write a memoir and i would double to all of my sources then if i tricked into retirement but i will not retire. i will never retire so i named the dead source is coming people who had died and people

who i think early this cannot heard them. i do not name some of the sources i am not a secretive but i tell more resources than you would think i tried to tell you how i got stories and take out the mystery of a columnist or reporter who gets the exclusive 67 you had something change between the time that you wrote the galley which we have been able to look at for some time and when the final book comes out. i will start who is mr. alex? >>guest: been in 1972 after george mcgovern ran and won the massachusetts primary by a landslide look like he was going for the nomination and democrats were very concerned. i quoted a very liberal senator without giving his

name in a column as saying when the working people of the country find out that george mcgovern is for legalization of marijuana and teach amnesty for draft dodgers and abortion they will turn sour on him and it will be a disaster for the democrats. that became humphrey trying to get the nomination and he turned that into the triple a candidate with amnesty and abortion and if the mcgovern people said i made that up i have never made up anything in my life for a column and they said it is a fictitious senator it came out way after the election rowly what have lunch with the senator and he said he was running for reelection and the people would kill him so many years later less i am writing the book he is long gone out of politics i asked if he will

lead his name be used and he will be back and said no. it was off the record even though he was all -- out of politics so we referred to him in the galley as mr. x. >>cspan: who is it? >>guest: he died between the time the galleys came out and the book came out and it is thomas eagleton for a short time they're running mates of the george mcgovern he never dreamed when he said those things about mcgovern that he would be his choice to be vice president until he was kicked off of the ticket because he did not tell him about a nervous disorder that he had that had been treated and they had kept that secret. it is a shocking story an

ironic that the man who uses this which haunted him out wallace thomas eagleton. >>cspan: why you feel you can reveal the source now that he is dead? >>guest: he is really a person that new about it and i think all bets are off when the source guys. a lot of sources i do reveal who are not dead but those who are. >>cspan: i will name them and then it what you say it can do bursting? >>guest: and longtime source ronald reagan's last chief of staff and former high power lobbyist and he revealed himself and another book as a source of somebody who was a go-between between me and richard armitage of the valerie plame case. >>cspan: why would he be

willing to do that? >>guest: i would never have used his name but it came down and a book by david korn. >>cspan: did you ask him? >>guest: the book had already appeared. >>cspan: karl rove then you say never enjoyed such a good source inside the right house to one that is true. it was a confirming source on the valerie plame story. he revealed himself has quoting himself what he told me so confidentiality was gone buy his own statement. . .

>> guest: i thought i was a personal friend of bill kristol. i never would have to revealed it, but he at the time -- this is a complicated story -- one of the leading neocons wrote an attack on me in the "national review," listed me and pat buchanan and other people as hating america, which is just ridiculous, and assault because

i was not in favor of the intervention in iraq. i was opposed to intervention in iraq. and he had -- from had grievances against me and wrote this piece, and i just from when i heard this was running in the "national review" i called up bill kristol, a great neocon and asked him what he knew about this and he said he never heard of the story. i couldn't believe that he didn't know about it. never called me back, never returned the call, never had another conversation with him. used to talk to him once a week. and then later he was the only conservative journalist i knew who attacked me for the cia leak case, the valerie plame case, in which he referred to my action on c-span as reprehensible and i believe it had nothing to do with valerie plame but i believe that there was a resentment on my position on israel and on the u.s. intervention in iraq.

c-span: let's stop for a moment about is real thing. george bush but converted to catholicism and what is your position on israel? >> guest: im for israel, and for the preservation of israel but i believe policy has been the interests and self-destructive, and i have -- my name has appeared in hundreds of columns which has been critical of israeli policy. almost all of those columns are written by rowland evans put my name appeared on them and i was certainly -- and supported him since he retired and of course has passed away. i occasionally write on israel, i still don't like the column, it's the same theme. but i think it is not an antiisraeli position. i was just in israel this year talking to journalists and people who share my opinion that they should take a more forthcoming position on a negotiated settlement. so it's just a difference of opinion. but the very -- many

jewish-american who are really more aggressive and unrelenting and is released have been critical of me, including some of the neocons. and i'm afraid bill kristol -- i can't understand why mr. kristol had turned on me, but maybe that's the reason. c-span: when was the last time you saw him or talk to him? >> guest: i see him at receptions and things and i say hello. but we don't really come first. c-span: i mentioned converting to catholicism. a source was somewhat responsible for you converting to catholicism? >> guest: well, the person who first -- who first set me down that road, although i believe it was the holy spirit who really guided me was jeff bell, who is a supply side. he ran for this end to the kucinich weiss in new jersey, strong -- he was an aide to ronald reagan and jack kemp, close friend of mine as well as the source, and he started to

proselytize me could solaces on. it was a long row after i almost died of spinal meningitis in 1982. c-span: i was actually referring to the priest at st. matthew's cathedral. >> guest: well, the priest -- i thought -- yes. he was really more of a source of a republican politician before he became a priest. my wife and i, before we became catholics we moved downtown and we started walking over to st. patrick's church and suddenly found our old friend was one of the priests there and later became the pastor and was certainly a major factor in my conversion. c-span: he said you work for senator pete domenici. and in what led to him becoming a priest? >> guest: he had a late vocation in life. i don't know that he was ever on the staff -- he was a lawyer in washington, and i think he was an advisor and a supporter of senator domenici. i don't know if he was ever on

the staff but he was a big -- very close to raleigh and a source of his. c-span: one year did you convert? >> guest: i converted in 196619 -- was 11 years ago. what was that? c-span: 1996. what year did rally die? wally evans? >> guest: what year did he die. i think he died about -- it's hard to tell -- i'm battle remembering those years. c-span: how long had he been retired from writing the column? >> guest: he had been retired about five years. he retired in -- he retired from the column after 30 years, so that would have -- that would have been -- c-span: 93? >> guest: 93 -- i think he died at 98. c-span: i'm going to go back to some of these sources and emineth -- but the other thing you tell in the book is about your for cancers. why do you tell that and what are they? >> guest: i tried to tell my

story in the book. i think some journalists would just tell you some stories they've written and not that they are real human beings. i think it's had an impact on me. i had prostate cancer, lung cancer, cancer on one kidney -- and all removed. and i currently have a growth on the other kidney that appears to be a cancer, but it's not growing. so we are doing watchful waiting on it and we haven't removed it. c-span: you tell the story about the whole business of the cancer -- there had been a kidney operation when you went out to california. how did that happen? >> guest: y was -- c-span: or the long cancer. >> guest: it was my second cancer. the doctor, a very good doctor at johns hopkins, where they had removed my prostate cancer, had a regimen that looked like it wasn't going to be -- it wasn't going very painful. it was going to be a long process of taking out for a biopsy and remove most of my

long, and i believe up for a long time. bob mccandless, lobbyist in town and great friend of mine, had represented a trans america and one of the doctors was the head of the john wayne cancer institute, one of the great cancer doctors in the world, dr. donald morton. he said get this guy. i called him and he said fly right out. he flew out and said i can take this out. c-span: que flout? >> guest: i flew to california and he said i can take this out and have you out of the hospital in three days and back in washington in a week. c-span: to anybody note here that you had it? >> guest: i told people dak. but i didn't make a fuss about it. c-span: and what impact has it had, these cancers, on your work? what are you, 76-years-old? >> guest: line 76. i think they are -- the slow to

down considerably. you're having all these surgeries. i have broken both hips, had spinal meningitis. i'm a miracle i'm alive. i think the good lord have some purpose for me. that makes you think about mortality and what your role is and what your place is. but i'm amazed that i survived all that. c-span: how did you break both hips? >> guest: i broke one walking out of a basketball game at the university of maryland. and the other one, had can now of the shower after the first debate of bush versus carey at the university of miami -- c-span: 2004. >> guest: 2004. and it wasn't till i was so upset about bush doing a lousy in the debate, but i was about to catch a plane trying to finish a column and the careless like an old man and i slipped and broke a hip.

very -- i don't know if you've ever had anything like that. you are a younger fellow, but be careful and don't slip because it's very painful. c-span: back to the source. you name bill moyers has the best lbj source. >> guest: that's right. c-span: he was 25-years-old at that time. >> guest: that's right. he was trying to deal with the press, and we were trying to -- rowlie had agreed sources in the kennedy white house because he was very close to jack kennedy. and kennedy had had pierre salinger i mean johnson -- johnson had pierre salinger phone rowlie and tell him your day is over year. you don't have any sources. you're out of there. rowlie was trying to rebuild some sources and had some success with bill moyers. bill has been very critical of me in years to come. he thinks i move far to the right, and i think he's moved far to the left. c-span: wilbur mills, a marvelous source. who was the?

>> guest: wilbur mills was the chairman of ways and means committee. he had a reputation as the smartest member of congress, and he was brilliant. and had some very strong ideas on tax policy. tax cutting, but only in return for cutting tax advantages. and so, he got crossways with john f. kennedy, who wanted to cut taxes without necessarily taking out the loopholes. c-span: you say you never criticize a source in your column. >> guest: try not to. sometimes you do a little bit. you don't get total protection by being a source. but that's the way the world works. very few reporters will admit that. that's one of the -- i think that's one of the unusual things about this. c-span: the biggest scoop ever. bob ellsworth melvie laird, force eckert riggins, you call him your best congressional source. melvie laird.

>> guest: yes, he was wonderful we would have a -- go up to his little hideaway office in the house of representatives and we would have when he was an, he was the most powerful republican of the house. ford was nominally the leader but melvie laird was in charge and he would say shall we have the shooter, we have little whiskey before dinner. everybody drink in those days and then he would really tell me what was going on in the house. but i got a scoop that he was being named secretary of defense, which was a total surprise. nobody -- by nixon. because everybody thought that scott jackson, a democrat, was going to be named secretary of defense, because nixon wanted one democrat in the cabinet. that was a huge scope, and it ran in front pages. it was a -- we got on a sunday night, put it out for monday morning and most peters couldn't

get their own story. "the washington post" did but most papers couldn't and so they used our column on page one. c-span: one would bother ellsworth -- she was a congressman; i don't know if he was of the time, a republican from kansas -- why would he said this to you? >> guest: i asked him if i could use his name for the source. c-span: for this? >> guest: for this book. many of the swiss as i did ask and i asked him and he said sure. i asked him what he gave to me and he's like to, i wanted to help you out. there was no ulterr motive. he didn't want to kill the thing. he liked it. he felt it was a good nomination, but he was helpful to me. reporters have to get people that are fond of them and want to help them out as well as help themselves out by leaking information. c-span: if you gave three or four reasons on why somebody would be a source and we information. >> guest: one thing is to kill the story because it became public. one is to ingratiate himself with a person so he gets good press. and one is to do damage to the

story, to somebody in the story that's happening now. or else in the case of mr. ellsworth, just to do me a favor. c-span: you also tell us about your drinking problem. i can remember you, a scenario. around lunch time you have a couple loved to cut the sarks -- you would have a couple of the cutty sarks and then go home with your life and have another couple cutty and wind. are you an alcoholic or were you? >> guest: i really thought -- that was on her an easy day. eight drinks. if i was covering a story are going to a political dinner or political reception i would have a lot more than that. but i didn't think i was an alcoholic because i didn't drink in the morning. i didn't -- i didn't ever miss appointments, never missed a column. i didn't feel -- when i was cut ofand i couldn't drink, i didn't feel better.

so i said to myself line of an alcoholic. i had a drinking problem whether i was alcoholic or not i don't know. which probably would have caused great trouble for me except for the fact that in 1982i got spinal meningitis and almost died. and i really couldn't drink after that. it just wouldn't go down. i couldn't drink scotch any more. i know that. and maybe i always thought, maybe that was the lord helping me out when i couldn't help myself out. c-span: do you drink at all now? >> guest: i drank a little bit. as i see in the book sometimes -- i found out in more recent years if i just have a few drinks it's a few drinks too many. i fainted a couple of times. so i can't really drink at all now. so i will have maybe two or three drinks a week and will never have more than one and a night. c-span: to is the kit you punch in the face? >> guest: >> guest: at the republican convention in san for cisco and 1964, the column was only a year old, and "newsweek" was doing a

real tough job in the press section as the -- c-span: you and rowlie evans. >> guest: yes, as the hottest reporting team since the al asad brothers broke up. people out there probably don't know who they were but a very hot column team and so they were running this story and i was covering the platform committee and this young republican came up to me and said i had misquoted him or quote to him when he was supposed to be off the record and some racist remarks he had made to me at the young republican national convention a few weeks earlier, also in san francisco. and he started calling me a slimy and other epithets. and so i was -- i had been out drinking the night before. i had a short temper and so i sought him. he was much younger fellow in the view that he was probably could have wiped up the floor

with me but everybody grab us, so he never got to hit me back. and i was -- i had told rowlie about it so he didn't get a bad idea and i said now, keep it quiet. so, he went out to dinner that night and regaled everybody with the story of the donner party. at the donner party was herb caen, the famous columnist in the san francisco chronicle who put it in the column about me punching the sky. and of course "newsweek" was doing this article and they wanted -- they said they were going to put it in the story. so i big ben bradlee, who was then the bureau chief -- "newsweek" washington bureau chief -- not to use the stories. i said it was out of character. maybe it was, maybe it wasn't. but he wasn't having any of it, he ran the story. and they referred to me as i am the greatest as a takeoff on muhammad ali.

c-span: rowlie evin astana in 2001, march 23rd, 2001. what was the difference between you to ask people? >> guest: well, we were just the -- the chapter in the book is referred to as odd couple. and rowlie balls upper-class cutty sarks -- wasp. he grew up with governors, went to boarding school, and was in the georgetown social circuit. and i came from a jewish immigrant family and certainly will small -- didn't ever travel in his social circle. so we were -- socially we came from really quite different worlds. c-span: your site some oral histories that you saw for the first time in 2004, 2006 -- >> guest: when i was writing the book. c-span: -- when you were writing the book, of the things that you didn't know about rowlie evans back when you were working

together. and part of it was relationship that he had with the kennedys. >> guest: it was always a relationship with bobby kennedy and things that meetings he had with kennedy that i didn't know about, things that kennedy had told him which were relevant as we were writing about in the column. but he never -- he never told me about it. he told the oral history at the kennedy library about it when he was interviewed about it i believe in the 1970's. c-span: what was your reaction when you saw he had been told you? >> guest: i was surprised. really surprised. i loved rowlie and he was long gone by then. can't get mad at somebody like that. but i was surprised -- it was interesting that he had this very -- he had this very close relationship with body. he told me that he was too close to body. and he's told that in the oral history, too, but he has also told it to me, and that he would

never, ever get that close to a politician again. c-span: what's the story about the column, when you wrote something and he was very upset about it and were rated the body was going to be that? >> guest: body was on a collision course with lyndon johnson. he was a senator by this time from new york. and he broke with him on the vietnam war, came out with a call for a coalition government. and i said to -- this went so much against -- we were very hawkish on vietnam. i said to rowlie, we have got to take a hard line on this position. i wrote the column, and he made some changes and it was a very tough column. he was a pretty tough column on of the. before it ran, he told me that he was -- he seemed to have had second thoughts about the column for some reason, and suggested that we had to have similar lines in the future. i said that was impossible. and so, he said, well, maybe the

end of the column. what i didn't know is that all this time he was in communication with bobby, and talking to him, and upset about it. also, i didn't know that -- because the thing blew over, and i didn't know that bobby had told him, and after the thing lamb, that i think his friendship with rowlie was more important than recriminations. and he told him, don't worry about it, and the storm in our crisis and our partnership passed over. c-span: you also tell us about about the people that you were working with on the capital gang and with crossfire and with john mclaughlin. how would you like to express your feelings about john mclaughlin? >> guest: i really grew to love jon laughlin. i was president at the creation

of the mccaul clan group when he was getting started. the whole idea of the mclaughlin group was an amazing thing. no experience at all in a television, very little in journalism. he worked for a -- he was a movie reviewer for a jset publication. he had been a priest, as you know. and so i was there at the beginning. and as john grew as the fame of the program grew and john breaux and dominance over everything, our relationship deteriorated. we had a blowup over really nothing, on the set. he wouldn't talk to me afterwards. and i decided i had to leave it, and that's when i left him after several years and started the capital gang with cnn. cspan: but you would talk about going to a city where you would all get paid $2,500 to be on a panel. he would get 10,000. he would stay a luxury hotel and

you would stay at regular hartel. >> guest: sometimes he would get picked up by a limo and we would get picked up by a van. jack germond, one of the of originals on the capitol, he wouldn't have any more, he wouldn't go on the road shows anymore but i didn't want to go until i finally did break with him i didn't want to completely break and i didn't -- i also -- i could use the $2,500. c-span: you told about the difficulties between al hunt and mona geren and others on capitol gang. what was that about? >> guest: well, after pat buchanan started on capital gang and pat -- the was pat, me, mark shields and l. hunt, and i selected them and everybody got along very well. when pat left to become ronald reagan's communication directors -- i'm sorry, not ronald reagan's communications director. that was a different thing. when he left to run for president, i'm sorry. when he left to run for

president, i decided we had to have some women on the show, and we brought much herron -- mona charen who is a conservative woman and there was works immediately to her and al hunt and lasted about four years but it was a very unhappy marriage and finally he stopped. cspan: how did you know there were sparks? >> guest: they were on the air. they never really attacked each other in private but they had in there is in confrontations on the air. c-span: so when people watch it that's not always an act? >> guest: no, not always, particularly with mona and al, and she was replaced by kate colburn. c-span: but you say in the book -- is cade colburn your godmother -- >> guest: yes -- jeff phyllis lagat for the. c-span: but you also say cade disappointed you when it came to the "national review" article by

david frum. >> guest: yeah, she didn't stand up for me and didn't alert me and she kind of took a neutral view between me and frum. and i thought he had really slandered me and libelled me as being unpatriotic and hoping that america loses the war. i mean, that is really a final thing to say. c-span: how do you have any relationship with david frum today? >> guest: no. c-span: how do you -- with all these different personalities, how do you get along on a day-to-day basis? >> guest: you mean how do i live with myself? [laughter] c-span: no, i don't mean that at all. i mean, you're not the only one that has these disagreements in town. how do you -- >> guest: weld at -- c-span: -- sifted out? >> guest: i think that's -- you know, i don't want to sound like a wholley joke, but i think having faith is more important than these disagreements. i think trying to do a good job.

i work very hard on the column. i try to -- to this very day, i tried to write things that people don't read elsewhere, and dig out information. and so, but i think these are all part of life, and a life in washington that i hope people find interesting, that they may not imagine that this really exist. c-span: wide former mayor john lindsay call you the prince of darkness? >> guest: it was and former mayor john lindsay, it was a different john lindsay. c-span: waite, a newsweek reporter? >> guest: yes. c-span: why did he -- >> guest: we were both young reporters covering the senate. i was for the "wall street journal." he was working for the washington post. and we used to site late at night, waiting for wayne morse to finish his long speeches, so we could -- we couldn't leave the senate until it was adjourned. and we would have long talks about philosophy and the course of western civilization. and i was very gloomy as a young man about the prospects for at that time belonging to any religious faith, and i was deeply pessimistic. and he referred to me as the

prince of darkness. c-span: what is -- defined as much as you can about politics today. what do you believe in? >> guest: i believe in lower taxes, limited government, elected economics -- limited power of the government -- individual economic freedom, strong national defense, prudent and cautious in world affairs, and internationalist and global trade and economics. c-span: at three places in the but you insert a name. and i went to google to find out who it was and i'm still not clear on it. i do know that he's part of ezra palin cullom -- bertran -- >> guest: de born.

c-span: who is he? >> guest: he was a nobleman in the middle ages. and he really caused help. and he was -- he durham councils. he committed mayhem against fellow nobleman. he carried off meetings. and dante in the inferno said in life -- because in life he had been a stir of strife in death he was condemned for an eternity to stand at the gates of purgatory with his severed head in his hands and ezra palin was very interested in bertran de born and read about him so that is my first about him and looked but i hope we don't end up in purgatory with my severed head in my arms. c-span: what will be the news in

this book when they write about it? >> guest: i thi the news that the author of the aaa -- amnesty, abortion, and acid -- on george mcgovern was his temper a running mate and fellow liberal, tom eagleton. i think that is going to be news. i think the broader news are the things i write about. i'm very critical of lyndon johnson. i'm critical of -- i'm very critical of jimmy carter, who i had a longing to me. i'm very critical of mixing. i'm critical of the gene kilpatrick. and so i think some of the things i've never written in columns come out in the book. c-span: you say that henry kissinger, john negroponte and al haig were all sources. >> guest: they were more rowlie's sources the my source, yes. c-span: and what we? >> guest: c-span: did you feel y were being used or did you -- >> guest: i didn't have a -- i

got some contact with john negroponte. i never got much out of a page and kissinger. it was beaten's sources. c-span: but you do say that you don't remember ever criticizing henry kissinger in a column. >> guest: no, i criticized how lot. in the book as i criticized him that rowlie never criticized him so we had attention on that, but i was highly critical of henry. all the criticism in the column of henry was from me and not from rowlie. these little things were more complicated because we were a partnership and we had to kind of part in these things out on how it would come out in the column. c-span: and he said that bald heldman, chief of staff to richard nixon was treated more harshly because he refused to contact you, he refused to talk with you. brian >> guest: i think yes. probably justifiably he deserved it. c-span: are you going to get criticized in your opinion do you think by the journalism community for this kind of? >> guest: yes. c-span: for edmonton all of this? >> guest: i think so. journalists are not supposed to tell these things and how

journalists really function. c-span: you talk about your partner on crossfire from time to time, tom gradin. you talk about his wife and her relationship with robert mcnamara. >> guest: well, she talked about it. c-span: i know she did. but what was the tom breeden thing? and he was -- eventually they let him go when he was 71. >> guest: 71. they let him go without notice. his contract is expiring and he was out the door. they could be -- television could be very rough. of course c-span's, then benefits and toward its employees. c-span: what we are a different business. you were a commercial business at cnn. how did they treat you do you think over the years and when you left after your argument with james carville? >> guest: they fired me after my argument with james carville. i was on for 25 years but i was ready to quit. so i didn't want to work for them, and they didn't want me to work for them, so they let me

go. but really, brought in, they had killed all of my programs. i didn't have any programs left. so, they were looking for a reason to let me go. the program's i had -- crossfire, capital gang, inside politics, and the novak zone -- for all cancelled. so, i was just kind of -- was making a lot of money and doing very little. i knew my days were numbered there, what ever happened between me and james carville. c-span: what age were you when you jump from the airplane? and why did you do it? >> guest: i guess i was what, 72 or 73? something like that. the program on novak zone was a little program where i interview somebody every week. and we will try to have all of interviews like athletes or piano players or opera singers. and i would do things. i was a super new married and

what traviata at the washington opera, and i drove a boat at the severin river at the naval academy, and i wanted to do an interview with the army parachute jumping team, and they sent back a letter saying we could do the interview but why would mr. novak like to jump? and i always was afraid -- i am essentially a coward. i'm always afraid that i'm going to be shown up as a cover, so i said yes, i will jump. i was scared to death. but, so i haven't told my wife i was going to do it. i haven't told my doctor i was going to do it, with all the illnesses i've had. but it was quite an experience, never to be repeated. c-span: you wrote that david stockman might have been the best high levels were steve ever had. >> guest: that's right. c-span: who was he? >> guest: david stockman was the budget director in the reagan administration. a brilliant guy. and he was the prince of the supply-side economics. i was a supply-siders.

we used to have -- we use to talk constantly on the phone. and we had breakfast at the hay adams every other saturday. and the odd saturdays he didn't talk to me; he talked to build a writer who was a left-wing journalist. and he wrote an article for the atlantic monthly, according david stockman on the record just attacking the reagan administration. i sit in the bucket was a little like in the middle of the the russian revolution, stalin had turned against marxism. and a was an incredible stat in the back for reagan, who didn't fire stockman. he couldn't believe it. he believes stockman hadn't intended to do it, and he kept him on. he was a destructive force for the rest of his time there in the white house. c-span: why do you think he would have written in this book that he had the meetings with you, when they didn't have an?

i mean, i remember the -- >> guest: i don't know. i guess he's a lawyer. because for example he said he had lunch with me at jack kemp when he decided to make and budget director. and the three of us never had lunch. i went over my records. jack kemp went over his records. we never have lunch together. i explained how that i had been told that he was being pushed for it and i checked it out and found out he had already been just about picked. i wrote a column on in the time of -- labels and in the business of promoting him. c-span: i have purposely not talked about the valerie plame affair for a couple of reasons. one, we can talk about it at a later time that number to everybody's been to be asking you about it. but you wrote to chapters out of 46 chapter when you start off on sunday morning july 6th 2003i drive from a downtown apartment in the studios and four northwest washington to appear on nbc's meet the press for the 236 time. what was your approach and hear about the plame affair?

>> guest: there has been so much written about that is on true that is exaggerated that is -- i just would give my role in it in detail and everything else in the open, not holding anything back. that's what i did in the first chapter, which i tell what happened that week, and in the aftermath of it in the -- what was it, about 44 of chapter of the book. c-span: near the end of the book. how many years did you work on the? >> guest: it took me three years to write the book and a year to cut the book, because it's a thick book as you can see. it's over 600 pages, but the manuscript was 1,400 pages. so i took -- i just wrote everything. i had never done -- this is my sixth book -- i had never done that with any other book, written way over in length. but i just wanted to put everything down. and then bill schultz, former washington editor of the "reader's digest" -- i had been a roving editor in the "reader's

digest" -- he had cut my material for the "reader's digest" and he really was the one who cut the book down. c-span: is there another book then after this? >> guest: i don't think so. the stuff -- it doesn't really fit together as a book to get somebody might want to try to piece it together but i'm content with this. c-span: you are from joliet illinois. where is your wife geraldine from? >> guest: she is from hillsborough texas. c-span: how did you meet her? >> guest: she was working for lyndon johnson and i was covering the whole for "the wall street journal." c-span: he satiates politics. >> guest: she really does. she's a saint. but she had to be a saint to live with me all these years. we were married in 1962. she really doesn't like politics at all. she started off as a democrat and she's a registered republican now. c-span: you have two children. one -- at least you mentioned in the book -- worked for regnery publishing. >> guest: still does. c-span: does he --

>> guest: he is the director of marketing for regnery. alex. c-span: and the other one, zelda, worked for you. >> guest: she worked for quayle, vice president quayle, jack kemp, she worked for alan keyes, jack kemp, dan quayle, then she went to work for me. she worked with me for three years and started having babies. she has ford children. c-span: why do you want to read this book? and what's the message here? because you can't a story of being very connected in washington for all these years. >> guest: i would like to have people who are interested in politics, interested in government who have watched me on television, maybe have read the column, to show how -- with the real washington is like, what i'm like, what i really think, what moved me, how i moved from shall we say a right-center left position to a

right wing position. the people, i think, that are the market for this book are people who are interested in politics and what's happening on the inside politics and how journalism works. c-span: you know, this always works for journalists. you're read on page 193 -- these words never published until now, and so i'm going to read them. they are from john sears was -- >> guest: john sears was a young aide for the nixon administration. he was later a campaign manager for ronald reagan in 1976 and part of 1980. c-span: what year did he give you these words? >> guest: this was after -- this was in 1971 when we were working on a book about nixon. c-span: he can be very tough guy as long as he doesn't >> guest: he's written about nixon. c-span: thank you.

why did we just read this for the first time in this book? >> guest: he had given it to me for use in the nixon book that we wrote, that we published, "nexium: the frustration of power," which was published in 1971. and it never fit in the book. and going through my papers i felt that this was -- we were talking about nixon -- i thought that that was an interesting thing to put in the book. c-span: you call yourself selfish and your wife self sacrifice. >> guest: yes, that was --

that's been the case for our whole life. i think it was a specific that we were on a trip, reporting trip in 1964, and south america. and discovered she was pregnant. and really we all -- we should have gone home immediately but i had all these appointments. we went to bolivia and she was really sick will pause is the highest capital in the world, 14,000 feet and she was miserable. the military dictator, the guy who just had a coup in bolivia for the next morning. i didn't want to give up the appointment and she stuck it out with me. c-span: there's so much else. robert matsui, a source? a congressman, now dead. >> guest: now dead. he was one of my most secret sources. he was a democrat, liberal democrat from california. and we were on crossfire and capital gang duking it out,

fighting on cnn many times. nobody would ever dream he was a source but he really clued me in on what was happening in the democrats. and he did it i believe just so i got it all street and didn't get things wrong. he was a very honest man, gentleman. i didn't know if you knew him, he was a lovely human being. c-span: and his wife now took his seat in congress. 638 pages. we are out of time. one last question. are you still a four pack a day smoker? >> guest: i quit smoking when i started a column in 1963 and, mr. lam, that's why i'm alive today. c-span: robert novak, author of the prince of darkness. thank you very much. c-span: >> robert novak died tuesday morning from a brain tumor first diagnosed in july. he wrote a regular political opinion column for 45 years and was syndicated and nearly 300 newspapers around the world. he was 78-years-old

frequent cnbc commentator gary ritholtz blames federal

reserve chairman, president, senators and treasury secretaries for the financial crisis of 2008 in his book, "bailout nation." book review bookstore in huntington new york posted this event. it's a little more than one hour. >> thank you very much. everybody can hear me? whenever i speak to a crowd about what's been going on in the economy and the markets i always have to figure out what i am going to leave out and what i am not going to talk about. when i first started doing these sort of tax it was how can i fill 45 minutes? it's impossible. and now it is how can i cut this down to 45 minutes? we will start now and and around tuesday but we will take breaks for bathroom and eating occasionally. so, what we will do is i will speak about some highlights from the book and other relevant things and open up for questions. we will open up for q&a. and we will go from there. i am not going to do just a

traditional reading because no one wants to hear my nasal twang reading. i'm going to give you the highlights of the more interesting sectors that are relevant to what this week about of the staff continues to be front-page headlines and so hopefully you will find this stuff somewhat interesting. so, let's start with ten things you probably didn't know about the bailouts. i was at a dinner about three months ago and i was by far the biggest piker in the room. everybody else was this guy worked for the city of new york and that guy was a senior person at goldman sachs and this person was at the federal reserve, and the book still being edited and finished up, and the conversation was how do we pull ourselves out of this collapse? how do we get out of this horrific morass? and what struck me that i heard over and over again was people

did not understand how this came to pass and it was very much an example there is an old story about six blind men describing an elephant and one of the blind guys has a tail and the other has and pannier, tosk, legg, a trunk and they are all describing a different aspect and no one sees the whole so part of the goal of the book was to really give a big overview and show everything that's happening in a way that makes some sense. so the first full statement that's out there, the first major misunderstanding is this was an accident. this was a perfect storm. it was completely random. born in italy and shot it will never happen again and i got some bad news for you. it was no such thing. nobody wanted this to happen. but there were a series of decisions made by corporate executives, bankers, government

regulators, by of actors in the financial sector that pretty much it wasn't that this wasn't a one in a million shot. this was inevitable. this was unavoidable given a lot of the policies and the behavior's in place over the past ten, 15 years the second thing i heard that really made my hair stand on end plus when we finished putting all this money into these companies, we are going to make a profit on this. that, that is just one of the more astonishing is statements and we are all being sold stuff ytd seals many people on the phone but it has to at least be credible. you have to at least believe that sihanouk will hold 40 times its weight in water. if you don't buy the basic premise, you are not even going to think about it or it has to be entertaining. the line that they were selling it was neither entertaining for

realistic. the reality is if you take inflation adjusted cost of the special one tire expenditures come back to the we louisiana purchase, world 41, world war ii, the korean war, s&l crisis, raced to the moon, marshall plan, rebuilding europe and rebuilding japan. combine all that stuff together and it still doesn't add up to the total amount of money we committed over the past 12 months. now the difference those 260 years worth of expenditures or versus the past 12 months is that money was spent and we will never see it back. in terms of the $14.5 trillion that we have spent guaranteed loans promised or somehow assumed responsibility for, the expectation is that we will get

85, 90, 95% of that back. in order to get a profit would have to be 100 plus%. that's how unlikely. the problem when you're dealing with really big numbers is 10% of 14 trillion is still $1.4 trillion. let me step back and talk about numbers. i know people hate when you talk about billions and billions and trillions and everybody's all eyes glaze over but let me just give you a couple of ways to think about these numbers. before the recession started in an average year the u.s. economy as a whole was about $14 trillion. that is a big number. biggest economy in the world won four of the entire global economy, $14 trillion. in every given deere the u.s. government is three, $3.5 trillion, so when you are talking about bailouts of $14 trillion it is the whole output of everybody in the country from one full year. so, that is a pretty big number and again, all of that isn't

gone, but i got to think there are other things we could be doing with that money. and then i have got an interesting question from someone when i was writing the book and they said, you know, what is truly an? i really don't understand a trillion because when we talk about millions you can conceptualize it. the guy's house down the block is million dollars and when you talk about a billion, it is a big number, big amount of money. it is steve jobs money, larry ellison or bill gates money, but you can't roughly grasp it. when you start talking about a trillion it is hard to conceptualize. most people don't know and the best way if you leave the average life span 2 billion

seconds, you would have to live to be 31,500 years and change. laughter echoes of the difference between a billion and children a million is all of lot and when we are talking about 14.5 million a trillion dollar economy where the government is three and change trillion these are big numbers. the joke someone had said previously was we used to call these astronomical numbers because the differences and distances between stars but now i'm going to have to start calling the economic numbers because that is how much money we are actually spending. no one is at fault for this. the ceos were acting on behalf shareholders. i have been reading although not as much lately. the 15 seals of the biggest companies involved in this to,

collective $1.5 billion in salary and bonuses. now, these are not the steve jobs of the world who are inventing things and company stock prices are going from three to 150. these are the donner is destroying their companies and basically taking a lot of money for doing so so angela mozilo at countrywide, $400 million. steno kneal at merrill lynch, $160 million, dick fuld of lehman brothers recently condemning his company to death, pocketed about $500 million in stock over the previous couple of years. again, we are not talking about people just a little wealthy who did a great -- someone asked friends renaissance technology paid himself $3 billion a year. is he losing money, destroying companies? seeking 40% a year for his

investors the past 30 years. that i can pay himself whatever the hell he wants. if you're making money and not destroying the a, eat it between him and his clients, but if you are supposedly running a company on the benefit of your shareholders and are doing a really bad job i have a hard time rationalizing not just tens of millions of dollars, but hundreds of millions of dollars. stop and think about 30, 40 years ago the ray seiler between the lowest paid and we e and besio was 35-1. it's now sky rocketed to over 300-1 and its setting up -- it was heading for hundred-1 before all this happened. so, let's since i mentioned dick fuld let's talk about dick fuld of lehman brothers. one of the talking points we keep hearing is it was a terrible mistake for the federal reserve to let lehman brothers die. remember what happened in march of 2008, bear stearns had

collapsed. they were somewhat rescued. we gave $29 billion to jpmorgan to buy in. i haven't quite figured out why yet. no one has given me a good explanation other than the fact that jpmorgan had about $4 trillion of derivative exposure from bear stearns, but if that is the case, it was up to them to buy it. if their stearns wasn't going to bring down jpmorgan they sure as heck should have done something to prevent that from happening so i am still scratching my head on that. but after bear stearns collapsed , and this is, there is a chapter on moral hazard the definition of moral hazard is if we prevent people from suffering the consequences of their own actions, we are just going to cause people to be more reckless. we actually have seen studies between ets and air bags. there haven't been a decrease in highway deaths after we have added crumple zones and seat

belt in airbags and 80 s and the best explanation anyone has come up with is people know the of all these safety features so they drive a little faster. that is roughly what a moral hazard ease. if you know that your car is in short you can leave the keys running while you go to the store to grab a quart of milk and if it is stolen, well as you have insurance so that is a basic form of moral hazard. i take what happened with dick fuld is he suffered from a moral hazard of his own. a lot of people don't realize after bear stearns went down it was pretty easy to look around and say who is next. it was obviously lyndon brothers. huge expose essentially lehman brothers had it in spades. so he started to raise money and they did an offering, secondary and brought some money and talked to a few banks and then things started to get worse in

the housing market. all this toxic paper they had started getting worse and worse and it was a pretty downward spiral for quite awhile and at a certain point, he reached out to warren buffett. warren buffett one of the wealthiest men in the planet in the united states, he owns part shire halfway, has a big piece of it and he essentially had previously swore off wall street. remember when the solomon brothers ran into trouble 20 years earlier warren buffett came in and kind of rescued them and walked out saying i want nothing to do with wall street ever again. but don't come 30 years later he saw the opportunity to take advantage of situations which is what good investors to and he responded to dick fuld and said here's what i'm going to offer. i'm going to offer a couple of billion dollars and you are going to have to pay a dividend. i am going to say nice things about lehman brothers and your company will be saved. and remember when we are dealing

with warren buffett is not just any old investor. warren buffett comes with corporate america good housekeeping seal of approval. at any time or in the footsteps into something that's it's a safe. it doesn't matter if it is the biggest piece of junk will be rescued. as we saw later on on even more onerous terms he put money into general electric added to goldman sachs, compared to the later deals when the crisis was more intense warren buffett offer was actually much more generous. the interest rate was lower, the amount of options and warrants that came with it was less so relative to what came in the future it was actually a pretty good deal. and for some inexplicable reason, dick fuld turned warren buffett down. so whenever anybody says why do you think the federal reserve and treasury secretary night lehman brothers stock to me the answer is if dick fuld told warren buffett to go screw himself why are we going to give these guys any money?

he could haveaved this company six months ago, three months ago. so a lot of things cascaded after lehman brothers went belly up. remember after bear stearns you heard commentary from federal reserve chief ben bernanke said i really don't want to do this again. this is a once in a lifetime, this is a one off. there will never be another bailout like this and he was right because of the other bailouts were much more expensive. they got -- the lead out about $29 billion for jpmorgan even if they lose half $15 billion is a bargain compared to the 45 billion we have put into citigroup, 45 billion we put into bank of america. i lost track how much money has gone to gm and chrysler. aig, 180 billion. so hay, 15 billion for bear stearns, that is in the discount rack but the thing that keeps coming out and began another false statement people don't and draw the conclusion by letting

lehman brothers fail, aig collapsed and that is kind of an interesting way to look at it. they came right after another you had fannie mae and lehman brothers dan aig, but did lehman brothers really cause aig to collapse? you go and look at all of the derivatives aig had and remember, aig is a 100 year old insurance company that is broken into pieces, the big insurance half is fairly clean, fairly conservative, fairly well-run and then there's a sort of structured product hedge fund on the side that was very aggressive, very reckless, very speculative. all that stuff started out in that structured product half, and some of it adrienne better than others. in general it was pretty much a mess because again, you are dealing with numbers that are so huge there is no room for error. perfect example, aig essentially

wrote $3 trillion worth of derivative instruments every year of which they were taking one-tenth of 1%. one-tenth of 1% doesn't sound like a lot of money but on $3 trillion that is still $3 billion a year. pretty good profits. and one of my favorite quotes in the book, besio said it was free money. we just wrote the policy and collected the money and never worried about it again. insurance company imagined an insurance company sells everybody hurricane insurance and doesn't pull money for it what are the odds a hurricane will hit long island? once in 100 years but eventually the 100 year hurricane hits and you have to write a big check and if you don't have the money you're bankrupt and that is pretty much what happened with the structured product division except some of the stuff the date they actually did correctly so when you're writing derivatives trading options or

any other product like that you have to think like a bookie. if you are a fan of the los angeles lakers it doesn't matter if you are a bookie taking bets you have to make sure no matter who wins or not going to pay more from one side to the other. all you are looking to do is capture the spread. when people talk about the point spread its the same thing in >> they were such that lehman brothers would pay their debts are not. so you set up whether they paid their debt are not you are balanced you just collect what is in the metal even one-tenth of 1% adds up to real money so one week or two after the lehman debacle happen aig had to settle their derivatives and they also without a headache it was fairly balanced with not much disruption you would have heard about it and you didn't and the reason was people were surprised this is one of the things that the federal

reserve and some of the exchanges had people set this up on the weekend. on sunday if you go to bloomberg there were all of these derivatives trains people had called and it was wild and the next day the whole thing settled out without much it had a. that is fascinating the better way to think the lehman brothers and aig picture to swimmers if you ever get stock in a riptide did you do not have your head and a swim parallel to the sure you get pulled out 75 for 100 yards. that is what happened they were both sucked out by the same forces that had a tremendous amount of derivative exposure talking about trillions and trillions of dollars they used a lot of leverage but neither had a proper reserves for this money they had a tremendous amount

of exports shared -- exposure to the mortgage market just happens lehman brothers died then aig died barely it was the same wave that killed them both one did not cause the other but whenever you talk about some a talk about lehman brothers with the federal reserve rescued lehman if i could change what the federal reserve did i would go back before fall 2008 and change a bunch of other decisions they made that turned out to be terrible so let's talk a little about some of those. there were three pieces of legislation that led to the collapse the fascinating thing i hear some democrats blame the republicans who blame democrats but if you go back and look at this legislation

all of this was passed at the request of these companies. the three big ones, first you have the glass-steagall repeal it was day diss -- depression-era piece of legislation that if you are a depository bank, you cannot get too involved in all three because those guys are crazy their speculative, aggressive, they tend to do money lasalle you have to have all wall we do not want you to own and you cannot invest too much to have a boring business model and it should be profitable and low risk and keep on the side. that did not work for a lot of big banks there were very much looking for much more aggressive growth and the biggest mover behind this is the citigroup pro citigroup for 10 years had been lobbying for the repeal of glass-steagall they wanted to buy brokerage firms, insurance

companies and merge and get bigger and bigger and the problem with citigroup was not they were too big to fail but they were so huge they were too big to succeed and completely unmanageable, hundreds of billions in assets, thousands and thousands of workers, it was 20 companies under one roof with the ceo getting reports from 25 vice presidents who what could stay on top of that? too many moving parts when we look at the entire structure of the big banks in the united states of the 65% of the assets are held by 25 banks these are the giant banks and jpmorgan, wells fargo, wachovia, go down the list. on the other hand, there are

7,000 banks that hold the rest of the assets that works out to be about 35% most are small, local, regional banks they're not giant chains of 5,000 but they have maybe 5410 branches and make loans to people who can afford to pay them back. that is a crazy concept but they are rated aa or aaa they are solvent, they have money put away very little of losses they run banks the way they should be run. but for whatever reason they figured out small and comfortable and closely watched makes money as opposed to citigroup so citigroup requested glass-steagall to be repealed they forced it they did the repeal before it was final and legal if forced the government to approve the

merger it was done at their request and they promptly proceeded to blow themselves up. to big companies that were very involved with derivatives one had a free hand of train derivatives from the exchanger from the government they cut out a deal with bonnie and clyde. to people and the derivatives world i call the bonnie and clyde of derivatives it was wendy gramm on the board of directors of enron at the time it collapsed it was the biggest bankruptcy in the united states it is now a small change and her husband and texas senator phil gramm in 2000 he took a writer called the commodities futures modernization act is essentially written by enron part of this may derivatives of every type, a mortgage files and securitization

stacked up, derivatives credit default swaps bets on of people made their mortgage it made them exempt from any sort of regulation, scrutiny for all other requirement that every other financial instrument has a few have a share of stock, you have to trust that the stock will be what it pretends to be the other person on the other side will deliver it to you if you buy an option which is good for six months is six months from now at the option is worth more you have to make sure the person will pay you and they have the wherewithal, futures, options, stocks, they train on the exchange and the exchange makes sure everybody involved is financially secure, they have cash, a capital requirements and capable of paying their debt when it comes to. this legislation is attached to prevent that from happening

and it is literally attached on the eve before the christmas break i believe unanimously in the senate but nobody read it. the only person, and nobody in the senate the only person who read it and complained about it was a woman who was in charge of the commodities trading board and she said these derivatives need to be traded like everything else like options and futures and you need to have to know who the party is too big is the exchange when need to disclose how many are out there but just general transparency requirements like every other traded option out there but instead they claim it is a unique product, i do not worry about the companies can handle the responsibility they do not need additional regulation. so ag and enron push for this and enron blew up for a number of reasons fraud and not the

least of it but aig committed suicide when the derivatives came home to roost. that was the end of it. brought them down. the third thing for the third piece of legislation this is the last one, was the obscure little rule of the sec called the net capitalization rule. of that means if you are a big investment bank like goldman sachs are merrill lynch if you want to buy any sort of investment product, for each dollar put up you can only by $12 worth of stock. of you think about that 12 /1 sounds like a lot of leverage but they are constantly moving money around and lending money and stuff goes back and forth it so they need lo room to play with that is the argument and 12 /1 they argued was a little tight so in 2004 the five ceos of the five

biggest investment houses bear stearns, maryland, goldman sachs and morgan stanley went to the sick and sen we're big boys this 12 /1 is to constraining let us take care of us and we will make sure we will not do anything stupid so the sec pass this there was very little public discussion 1% and iowa said this is dangerous it sounds like a lot of leverage but they said they will not go crazy we will give them a little buffer but they ended up going 40 /1 28 /1 at 12/1 you have a little room for error but not a lot. at 40 /1 there is your room for error. your assets dropped 3%, you are out of business or wiped out that is what happened with that amount of leverage they

were borrowing short and lending long they happen 90 jlo's they were taking it at 1% and lending out 40 years at 2% but they were at capturing that but three months to recover again so when the 90 day money dried up the had to make the payment if they could they were paying groped for that division or that the instrument was broke 40 /1 turned up to be disastrous and again the companies asked for it. the thing is when you look at the ceos they all made an incredible amount of money but nobody made more money than the ceo of cul-de-sacul-de-sa cs hank paulson he eventually becomes george bush aides or nine treasury secretary. so after he gets this role in

place it was called the bear stearns -- bear stearns exemption bear stearns gone, lehman brothers bond, maryland just about and rescued from the grave by bank of america, morgan stanley turned into a bank holding company goldman sachs into a bank holding company all five companies given exemption are either gone or no longer exist in the prior forms a when people say the fed killed these guys, they committed suicide these companies all got what they asked for and it blew them up. i want to see how far we are. the book is not nearly as dry or a tedious four as boring as this. [laughter] i just find myself still up to researching this for over one year, is still astonished that a lot of the mainstream policy makers and press and pundits are still putting out less

than ideal affirmation everybody is making excuses and very few say here is what happens so i will give you just five moreata points on what i think we need to do to fix its member from the depression through 2000 whenever things looked pretty well it is not that i think we need to regulate everything, but we pay five year-old indicate room with a plate of cookies, i do not regulate, just self regulate there is no cookies that is what the banks did. [laughter] we need to know our rules and our boundaries even though there should be some obvious ethical borders and things you should not be able to do you can buy rules in place that prevent us from blowing ourselves up. eventually it reaches the

point* where a good system, and well constructed set of rules and regulations prevent the worst behavior from taking place natalee on wall street but anywhere else. very quickly glass-steagall which used to keep things step -- separated past to come back and it made to be kept separate separate from the wall street speculators and they are not insured. keep them separate you have to take derivatives and treat them like every other financial instrument like futures options or all of the things they are required to make it transparent or the counterparties disclosed to make sure they are financially capable to pay their bills you can do that and it is relatively simple. i did not talk about the

rating agencies and what stunned me about the latest proposal, nobody says anything about rating agencies that thing that makes them so bad first in the '70s there we're given a special status by the sec given the oligopoly just the three of them moody's and fitch pretty much run the show and back in the day it was paid for by bond investors you want to know the rating and you would subscribe to the service that changed in the '90s to what i call payola you had to grease the dj in the fifties if you want to record played it is illegal because those are public airways but similar evade the rating agencies you have a special trust, you are uniquely situated as the entity and they change their model from the of buyer pays to the

underwriter peso morgan stanley and goldman sachs would pay them for a rating and it is even worse than it sounds because sometimes the ratings for the bonds would come back with questions and they said we need a triple a what do i need to do? you need to do this and they would do with the reason the aaa is so important, when we talk about how as a guide defaults and a house in california and i slammed goes under? big pension fund foundations and government they all bought this jaunt and securitize products and bought it because it was rated aaa that is important because just about everyone of the funds buys the charter -- by the charter had

to buy only triple-a-rated stop they could not by speculation if you are in a town and you have $10 million two-part can tell you pay the teachers, the police or fire department you are not speculating you are buying the a rated bonds they have to be guaranteed not to go belly up united 12% you get four or 5% this way you make a little money on the flow until you have to pay the teachers that allows you to hire one extra cop or teacher that is the duty of money that you can floated and pick up interest and less then you close schools and police departments are going bankrupt which is what the country or i slanted because they had this triple a rated so the rating agencies have to be changed it is the

most egregious oversight in the proposal and the way you change them is you either get rid of the pay a lot, they have to sell their product to the bond buyers not the underwriters. i think it is then the book but from 1998 through 2008 moody's revenue quarter growth basis on subprime rating the numbers went from 2 billion up at 8 billion it was crazy for about model is done and these people have proven they are no where the-- to launder trustworthy. if you really believe in the market you could let the market bring in more people rather than having this monopoly and people come to know how to rate the bonds will be able to do webber cut my favorite quotes in the book congressman waxman brings in the head of the s&p and asks

him a bunch of questions or what ever he says and then he says i have to see the paper which is that e mail that i wanted entered into the evidence it is between two and a list that they were complaining they would rate anything even if it was structured by a cal beregovoy get a paper structured by cows we will put a triple a on it. so there is a ton more than i can literally stand up here and speak for another three days. instead of that will open it to questions they have a microphone because this is going out to c-span booktv so raise your hand will have the microphone come over and we will get it started. >> we have to wait for a

battery pack because i talked that long for our rated? >> we have seen so many nefarious ceos gm is belly up what can we do about getting good corporate leadership as well as the board's you were supposed to watch these with integrity? >> bair not own today are sold to the watchdog. >> that is a terrific question there are two ways to answer it. first, we make a lot of stuff we are it still and dollar amounts the biggest industrial manufacturer we just send our stuff to china but we make a lot of super computers become a caterpillar, boeing airplanes, it is just more and more of the very visible manufacturing is overseas and the overall trend is batted just continues to move

overseas we still make stuff but it is less and less we are coming like this and china is coming like this we will eventually pass each other but i briefly touch upon this in the book, there are three groups involved in the compensation of these executives. i have been saying the compensation is not the problem it is a symptom of the problem. when you own a stock, it is a democratic process purview and the rest of the million shareholders are the owners of the company and to democratically elected board and it hires a manager and agrees to pay them and the board of directors is supposed to represent the shareholders. let's take boeing now headquartered negative record -- chicago if we on

1,000 shares you probably own another tender 20 companies how much time and energy and effort and the individual investor what into investigating sure these guys running for the board of directors of bowling? how can i make sure they will elect good managers talk may be sure they will not bring and their cronies that i call crony capitalism and brief each other? you're on my board i am not your board let's give each other raises back 20 or 30 years ago when the board members were making 50 or 200,000 it was toilet paper the big company spends more on pencils but when they started to brief in huge numbers of ceos and senior executives things started to get out of hand so that crony capitalist are the first bad actors. the second group is the compensation consultants these

people are just weasel's the sole purpose is to come rubber-stamp some on got a pay package of they justify all the other corporations are doing it we need to do this to be competitive if we only pay him at the 50 billion he goes across the street for 60 but he is not worth 50. that is the second group that goes back to the board and they gave them some cover rehire these wis weasels we hired them to tell us but the third group that has not gotten blamed and we were talking about this earlier, one of the real unknown bad players are the mutual funds. you do not have the expertise or the time or the money or the wherewithal to say who are each of the seven or nine guys on the board? what is their background, history, trustwort hy will they represent

shareholders? nobody in this room has that ability but again you own 1,000 shares how much time is it worth to investigate nine board members or the three that come up this year or the next of your 10 or 20 stocks you do not have that ability or time but fidelity has 500 million shares, vanguard has 1/4 billion, all of these big mutual fund companies are the big holders or the big owners of these companies. the way they seem to have treated it our investors just want us to get a good return this is the paper we're moving around but that is not the case you are the owner of the company you are hiring the guys to run the company and those other guys of hire the people that do the day-to-day work and one of the things i like to see happen is the mutual fund companies are

required to recognize they're fiduciary obligation renown the standard of care is a legal obligation is too just be a reasonably and not do anything to frolov at -- khoo list fiduciary obligation should be your the honor on behalf of your investors that means a do due diligence on board members these guys are notorious for not voting shares because of a star rattling somebody's cage, by the way the only group that ratchet-- rattle the cages calpers because they're so big they can tell anybody to jump but if you are abc mutual fund and you ask questions and they just came public xyz says this guy is giving us grief and a threat 102 drop we will not handle the 401(k) you will not

get the ipo money or get to the fees so nothing happens. the mutual fund has to get more involved air the only ones with the time or money or expertise to keep the board membs honest that is the only. >> point* that i found to keep the board members on this because left to their own devices they eat all of the cookies. >> what do think about the fact that the federal reserve system come central-bank which is essentially a private company made up of the large banks of this country being a regulator, not the main regulator? isn't that like the fox guarding the hen house? >> part of the problem under alan greenspan day disappeared

and greenspan is the odd creature, a free market guy who was constantly intervening in the free market which is a very difficult conundrum to reconcile. he makes no sense or belt the federal reserve is charged with doing a couple of things. they said interest-rate policy and they are to maintain full employment so cold inflation as low as possible of the same time get as much hiring as possible but the second function, the regulatory function, there are periods when they do better or worse but under greenspan they do pool at -- corley but with full per there is no messing around you basically a call you to his office and if you gave him crap you would save you do not want to be a banker that is fine but if you keep this crap but you are done. that is a different era that

greenspan era when markets and stocks were like rooting for sports teams a lot of things were overlooked during the bull market. i would rather see the fdic be the regulator of all of the regulation and supervision that took place over the past 20 years the one division the one regulator that does the outstanding job is the fdic when the company is bankrupt, they don't fool around washington mutual determined to be insolvent they show up on friday on saturday morning they fire the senior executives. board of directors is fired, shareholders you bought a company that was as of mid you are wiped out they shopped what is left around to a couple of companies it was jpmorgan that also owned chase

they figured westcoast exposure why not? they do the transaction at $2 billion all of the debt is wiped out the bondholders get the proceeds so they lost about 75 or 80% of the loan that is what hapns when you lend money to the insolvent company you do not get little back all the with the bailouts we did make them give it back which was a terrible mistake. then washington mutual opens up and if you are a deposit holder the all the difference you notice you are not charged could $2 atm fee but as far as you know, nothing happens there is no run on the bank were no lines around the block it is a very transparent and seamless process. talking to sheeler bear who

was appointed in the first term they are the ones they look at it at the lunch bucket guys they would roll up their sleeves and look at the books and say you live or you die and they have the expertise to do it. when you look at the other regulators, the ftc is a big law firm has been abetted over the past 10 years it was ignored by the clinton administration but destroyed by the bush administration. another favorite quote bird -- first head of the sick and by the way in the book clinton, summers, a program, rubin, alan greenspan, it is bipartisan they both get trashed but harvey pitt is the corporate lawyer who headed by clients if you think you'll get a subpoena start shredding

right away. you do not, once you get you cannot shred which if you think about it, if you suspect you would get a subpoena you should have an obligation to preserve documents it should not be let's shred this and he is not exactly what we called the investor friendly attorney and he was made head of the ftc one of the investor groups that would that this nominee said making harvey pitt the head of the securities and exchange commission would be like all pointing osama bin login to the homeland security chief and low and behold eventually it was john mccain who called for harvey pitt said and he was forced to step down the fdic is really the one that did the best job and i agree the federal reserve should not be regulating they clearly are not good at it now but they are great that monetary policy but at least that is

plausible. >> going back to glass-steagall what is the likelihood of it being reinstated cracks or do think the banks have such a strong lobby that any type every regulation and that way would be a possible? >> i continually, the best line out of the obama administration was rahm emanuel lewis said never waste a crisis prize suspect we wasted a crisis there was the opportunity three months ago when everybody was in free fall to reinstate glass-steagall to get it overturned and put in something intelligent to roll back the leverage to a reason we could is because all five companies are gone broke i don't know i'm surprised we are already debating health care because we have not resolved is not that health

care does not need to have something done but this is a giant disaster percodan and it is modest and there is not allowed there i am not a washington observer or cover congress but i would say six months ago i would tell you it is 95% but now i have to stretch to get at 50/50. as the panic or crisis subsides the possibility of going through gets worse and worse the time would be martyr april when everybody worried going to hell in a handbasket is said as saying stabilize they need to say also make sure does not happen again and my fear the tremendous lobby of wall street investment houses and banks one of the prime minister's in italy was complaining that why is

goldman sachs everywhere in the italian financial system? why are they running our country? i said why should your country be any different than ours? [laughter] they run the united states with senators, congressmen they are very smart and intelligent group of people but at a certain point* they're not the only intelligent people in the world and it is starting to look a little to head the goldman sachs throughout the government rue been, john poor's nine, john thain, paul send, all goldman sachs and work your way down the list and they said they are starting to look like the consultants so i am not a big fan of then being nearly as influential on the policy side is out of control two weeks ago or last week they t.a.r.p to write even in the midst of

a crisis and people wanting to kill bankers and all of these guys are making their phone numbers on listed from google worth there still lobbying spending millions of dollars so it is unconscionable. >> there is a lot of discussion about a government getting involved with c8 -- ceo pay that have received government money what is your feeling about the government putting limits on the ceo pay and related to that, goldman sachs also in my opinion, they had the counterparty risk they were implicitly bailed out. >> 27 billion worth of goldman and 70 billion went to overseas banks. if you go to las vegas and you are in the casino and hit the

jackpot the loss vegas casino board well make sure that that casino will pay the a gambling board makes sure the casino will not back out but if you go into the alley and shooting craps with guns in the las vegas and you win and they take off you cannot go to the gambling commission and say make them pay but that is what happened i have yet to figure out why almost $120 billion past through a aig to the other entities if you make a bet with a guy who is incompetent or insolvent or cannot lose a business-- run a business then do not play with them. as the ceo pay i am not in favor of a government said teeing ceo pay but that is why you don't take money from the government. he who pays the piper calls the tune of yourself went and

competence and the government has to give you $40 billion and then say by the way you idiots we are capping at a mere $500,000 i know it will be tight, you may have to go on food stamps but we will limit up $500,000 if you do not want that do not take the money but what i find amazing about all of the bank's the return the t.a.r.p money that is the cheapest money you can get your hands on. now the want to be out from under the government they do not want compensation structure over them but at the same time if you borrow from the 5% or 1% and then you have to make less than the obligation to the shareholder is to take the cheap money but i have a theory there is no explanation why hank paulson forced one dozen banks to take the money the 10 biggest banks essentially were forced to split up 100 billion and the

only thing that makes sense they were afraid to say citibank is a disaster police say they are going belly up it will cause a panic so we will spread it around. that is the only explanation there was a "60 minutes" piece because all of the bankers said we do not want the money in the bus out. i am trying to remember which one, wells fargo? somebody said i do not want mind this money and you cannot take me -- make me take it and and paulson said you do not have to take the money but then we will do a review and audit of your books and i have a feeling they will come up with the exact amount of money of what they will make you take is what you need if you take it later i will make sure it will hurt and literally those of the things that were said and everybody rolled

over. a lot of these guys worked so many decades to reach the pinnacle of their career and you're at the top of your industry and company and very few guys are willing to say up your ears i have to do the honorable thing because what you are proposing is another call. i can tell you 10 guys that did not do those of the 10 that took the money it only and of causing more turmoil. >> i have an opportunity to look at your book and it seems to me the you are at odds with the idea of the bailout. >> a little bit. [laughter] >> which is at odds with all of the king's horses and all of the king's men what is the alternative?

>> my favorite example, chrysler 1980 then bear stearns per barrel by the way one of the things that is consistent in all of these bailouts they all happen around a presidential election. why is that? it is not a coincidence when the country is in a tough election it is a political hot potato. lockheed 1971 before the election bear stearns 2008 to sell they tend to happen during election years and they are closely contested. one barons called the big auto maker's chrysler was the perennial the earlier and after world war ii there was a lot of economic expansion and instead of negotiating a tough contract everybody was making

so much money the automakers kick to the can down the road there's a reason they were called generous motors very generous benefits and pension and salary to the point* where as time went on, general motors cost structure with chrysler and ford that gets the same contracts just became incompatible with the real world and finally by the time we got through the '70s oil shock and competition from overseas chrysler was the longer sustainable it was clear they needed a loan. have you seen the new "star trek" movie? you do not get a counterfactual and the real world you do not get the control group but would have happened? in the book i mentioned a previous "star trek" episode

there is a transporter malfunction and captain kirk is took to an alternative university discoverer's spock has a beard and one little change that took place 20 years ago has said the whole universe often a different directions and what would happen if we did not bail-out chrysler? people think that is successful the money was repaid what could be bad? 1980 and the big three have a market sheriff 75% now that is down at 40% they lost 1/3 of the market share the union is 1.5 million members prepare as of last year that was down at 400,000 by the time they come out of bankruptcy it will be closer 250,000 answer you have lost 80 percent of your members and the same existing cost structure was in place in

1990 and 2000 and ford having sold off a lot of pieces a couple of years ago so they did not have to go bankrupt but gm goes undercover chrysler goes under if we let them go belly up, three things would happen first we are gone but a big company with a lot of assets and intellectual property, they basically somebody comes along and buys them maybe it is a japanese company, maybe it is what's his name selanne boxes of coke somebody comes along and they get all of the stuff without the union contract or without the debt or overhead they basically get the best part of chrysler without any of the bad stuff that you can become competitive.

second, after they were done giving themselves high five the management at gm and ford would have the come to jesus moment where they say if that happened to them that they happen to us our costs structure is not a lot better so maybe that will force some change. third, the union suddenly says maybe our structure is too generous? we are a major cost to the company with a negotiated deal it is not as aggressive. if we let chrysler go belly up they would have survived and come out better and all three companies would have been more competitive it is a theory because we don't have the alternative universe if you look at bear stearns it is not a lot different it is the fifth largest investment bank fay threw themselves up and was that nobody told them they

mortgage-backed securities you're biggest business. do not employ those choices. see you tomorrow so a few look at that process and say you are insolvent? i am sorry we will liquidate and sell the pieces. if jpmorgan has $4 trillion worth of derivative exposure, that is their problem. what we did with washington mutual we have done with citigroup for bankamerica or bear stearns we sell-off the pieces to pay the bondholders it is not like these assets disappear look what happened two. >> host: the bulk of the productive assets research and investment banking is essentially now call barclays. all of that stuff disappears. they could have done that with

bear stearns have they gone belly up earlier before we got to a crisis it may have forced the issue earlier before things were so bad it would be much easier i cannot help but think the bulk of a crisis resolution is not the system it is to stop that system of panic and pain among the elected officials or corporations. i spent most of my career advising brokers what not to do and they did it anyway. that is my history. and very often use they don't buy this or few do use a stop-loss and in 2002 how many times i heard from people speed to this client he is in a panic he is in a panic the cash as he is losing money and wants the pain to stop and he says he put me in this bad stuff and you said not to buy

it and i did but what do i do? if you don't have a time machine you have lost half of your money i told you what to do now you have a choice you can ride it out or make the pain stopped and 10 out of 10 would say the same thing, i don't care what it cost, and just get me out and that is usually the bottom but that is my impression of the bailout's we're not to save the company as it was the federal reserve and the president and treasurer secretary saying make the pain the stock and believes there not losing the money it is your money so it is not as painful as a guide to liquidates at the bottom. i will make the pain stopped and you will pay for it. let's take one last question. >> i am a retired engineer my

question is a lot of these guys went through the business schools for their degrees, do the business schools have been a responsibility to teach something about what would happen? i am not talking morality by trying to determine the consequences of these actions. >> yes and no of problem with the academic community is they are tenure digest had an interesting meeting with two young guys who graduated from the chicago business goal which by the way that is one of the key components of free-market policy milton friedman and of love that stuff. despite the crisis unfolding, and they are still to share the same thing they were before coming the it into gold don't worry, the market

can handle itself force of regulate and you end up with a tenured professor who know how to teach this but wait i have to learn this all over? so you get a lot of institutional inner shopper pro the closest parallel will be the board of directors and the mutual funds. you need the department shares and the presidents of these universities to look at these professors and say who is teaching stuff that is outmoded? maybe we need to rethink your curriculum so there is some -- so far removed it is hard to see. i had economics 101 professor i'm convinced everything he taught me was wrong that is the last economics class everything after that was based on mathematics and financial analysis, not

traditional economic theory i had one person tell me i am unburdened by a classical education and it has allowed me to look from a different perspective per brest's universities and colleges have to do some soul-searching and say are we still teaching stuff that is unjustifiable? i know we have gone a little longer pro is that pretty much it? thank you very much. i appreciate everybody's questions of [applause] of just over an hour

was hosted by the university club of chicago. >> well, it is a pleasure and honor to speak here about "horse soldiers". it is trooper pro i did work on robert frost former estate

and vermont and had various checker jobs on my way to becoming a writer in 2003 published last addition of my last book and harm's way that led directly into "horse soldiers" i will talk about that this afternoon how i arrived at this story of these special forces soldiers and afghanistan and in harm's way is a book about 900 young men of world war ii july 1945 don't into the pacific ocean and it through negligence of left to drown we come to know the story through the movie jaws later on the the famous monologue that you know, about capt. plan about being on board that ship these men really existed, some were from our area

here i went and met them and it was the book about selflessness and service and community. i wondered if i could write a similar book about the modern soldier in 2001 just six weeks after 9/11, we don't know that, all of us in this room like me did not know what would happen next after we turned on the radio and heard the news i remember where i was. i was walking into a coffee shop at the same time someone who has now become an acquaintance through this process there was a soldier named cal spencer getting out of a river after a routine training he is close to 40 he feels he is too old and wishes he were home having a martini.

when he turns on the radio he hears what i am hearing and what you heard but he knows something will happen. what happened, something historic that has never happened before in the history of the united states that special forces soldiers from a band of 12 men come a middle aged are sent into afghanistan to attack the taliban and al qaeda camps that sponsored the 9/11 attacks. they were actually plan and z but they become plan a very quickly with a brilliant stroke of planning and what they did work to. the structured did collapse and for all intents and purposes the subtitle of the book says they did achieve a strategic victory. the book begins with 9/11 crisis and we follow them from

their homes and into afghanistan and we cut back to their homes because i feel this is a book from who after the business of the book after combat went on to do teach at west point to do counter-terrorism very smart all of these guys are so smart and intelligent i have learned more about the problem solving by talking to the members of the military and anywhere else. i have been privileged to travel around the country and speak at the united states special command operation and meat with john mulholland. i also went to fort campbell and addressed the chips many of whom are in the book. i tried to send a copy of the book to most people in it i am in the process of doing that i waited for the is reduced to

come back and they are great reviews it is an interesting and long process the book took awhile to write i went to afghanistan and interviewed 100 people died and to be the pilots and so on. i will talk and then take some questions but i want to describe their return to the beginning and have they set it our mind back to what we faced september and october 2000 weinberger would like for us to imagine we are a small village in afghanistan and i have just arrived to meet you and my job is to hopefully convince you to do something that is both in our self-interest. i know in the room there are people at this table that have

their own self-interest and people over here as well and they may not get along and somebody in the back may be the leader of the village perhaps this gentleman over here once this position of power so when a move into this society in my base camp already back in my case i have been poring over intelligence reports going over language skills i have been reading about use the one antar i already know quite a bit my job is never to pull the trigger if i don't have to but to create political and social change to get the guys to get along and point* in one direction the person in the back who thinks he is in charge maybe i will convince them you should be in charge. my job is not tong