it made me topple over. i has that moment of weakness as we all do. >> i saw you cutting some rug out there. was there any particular style you were follow something >> i'm an old hip hop guy. break dancing in the day. >> reporter: what does it smell like inside that head? >> there's a good deal of dry sweat smell. if you ever get stuffed into a locker i think that's what the atmosphere is like. >> reporter: what if the guy had it on before had bad breath would that linger? >> bad breath. no. bo. definitely. >> the racing president. that's a hoot. that's going to do it for this edition of net impact. for all of us here we'll see you again next month.

securities, which was a massive monopoly, a robe of monopoly traded by jpmorgan thought his colleagues. and when teddy roosevelt did that, nobody really understood what he was doing it. nobody thought he had a chance for the senate was called the millionaires club for a reason. and actually, there was no theory about why this was a good idea. all of modern antitrust thinking came after roosevelt decided to confront jpmorgan. jpmorgan came to the white house. she was upset. and he said if we done anything wrong with regard to the structure of this monopoly, send your man to see my man and will fix it up. teddy roosevelt and his attorney general said no, we don't want to fix about. we want to stop it. and were going to go to the

supreme court and they did and they went five to four in the supreme court. from that decision came the modern antitrust movement. and by 1912, 10 years later, this movement was strong enough, the thinking behind it, the consensus in the change in consensus was dramatic enough to stand was broken up into 35, 37 pieces. now standard oil was the lifeblood of the american economy. this is a manufacturing economy, transportation economy. that was feel. fuel from the economy. they had become convinced because of the leader teddy roosevelt all big could be beautiful in america and certainly about the private benefits. they could also be dangerous to society. it's a very simple point and roosevelt i think was a very simple and direct thinker on this issue.

and he was just as much concern, by the way, about the political implications of this massive trust. it was the industrial trust of the railroad trusts after his attention. he was just as worried about the political side as he was about the next comic site. but the economic site is very important in its wife we develop a lot of the theory and the part he is. and let me ask you, who in this room -- mostly standard oil companies did very well. john d. rockefeller did very well and the williamsburg did even better because they revolted. i think he was trying to make up. who in this room would like to re-create the standard oil monopoly? okay, at lunch time there was one person. so we've got nobody now. that's an improvement. he said he was from the energy industry. of course not. of course it's obvious. it is obvious, it is intuitive

to you that if you let one company control to a substantial almost complete degree, oil distribution and even production in this country, that would be bad for society, good for the guys who run the company, maybe good for the shareholders depending on how that works out. not good for the united states. that's the basic principle on which we structure this economy in the 20th century. and yes i understand it's always complicated. there's always back-and-forth good i'm an economist. i'm dismal, writes? and i'm cynical, you know that. am i make this very clear in the book. but there is no way that it is acceptable for these large banks to operate at this size with this kind of risk profile, with this amount of political power? it must stop. and these are specific banks that the?

our proposal, the argument were having on congress and you know, we'll see how many people we bring with us. a lot of people are interested, but a lot of people are afraid here it is about limiting the size and power six banks. six banks, which operate, it is true, very much in the interest of the people who control them and were talking about several hundred people. and we won't take them on. were not ready to take them on. andrew jackson thought the second bank of the united states is too powerful in the 1830's. and a lot of people thought andrew jackson was greedy. you know, he took a bullet early in his career. they said the lead is looking out of. the second bank of the united dates with a well-run bank. nicholas idol was a charming character by all accounts. and jackson was struggling to

really get his point across, but he didn't have that much support our capital hill deity the most support once because biddle started to spend freely to encourage people to vote in his direction. but as adults thought back into adult extended the campaign contributions, and when transfers that i'm contracting credit in order to make the point that you cannot bring a sin, people begin to understand that jackson was on to some and. and mrs. what jefferson had warned about. see jefferson and hamilton debated the issues at the beginning of the public and hamilton was right there with the almost or much of the economic substance, but jefferson this is how we start the boat. jefferson had a very important point, which is factually correct, which is you must fear the arrival in the entrenchment of a financial aristocracy. that's a jackson faced and

prevailed against. that's a teddy roosevelt faced and largely prevailed against. it's also what fdr faced in the 1930's and six for 50 years. and i think honestly that's about as much as you hope for. these things do not stay fixed for ever. that destroyed the american republic in this dimension is a repeated cycle, repeated conversation between financial power and elected democrats, the principle of leadership. we need to find teddy roosevelt again. we need to have a teddy roosevelt moment. he acted in a preemptive manner. he did not act in the face of a crisis. he thought it had become too powerful one dangerous. if you wait, i think of it this eventually. they'll fix it after another awful crisis. 11 fdr, i think, i hope will come in and fix it, but why

wait? and also, what if you don't get it tr? what is -- this is obviously another countries, you don't know if you think the leaders coming in and you often get chaos or craziness. a lot of the popular anger i think on this issue, a lot of the people who are angry from left and right have a very important point. and the book is designed in part to speak to them and to help articulate that anger into sensible policy proposals. but it may not have been invented just that anger. legitimate anger, but unproductive anger and all kinds of crazy things can happen. in conclusion, i just would say that we need to fix this. it's a fixable problem. there many tough problems defend

our country and the world and there are many problems that are really hard to address. i mean, in economic terms, in terms -- and ethical terms, and broadly speaking political terms, this is not one of those problems. this is a financial system that got out of control. its structure is become dangerous. it must be fixed. if bridges were falling down because of a poor design, we would fix the design of the bridges. it's not a country that big on denial. but we're not doing it because finances very powerful because a big financial players have a strong degree of ideological sway still. and this problem will be fixed when and if people like yourselves become convinced and

convinced the people you know info for people who make this a top rarity. and i think if were lucky we can do it in 10 years. if are lucky we can have a teddy roosevelt moment. but we haven't even started yet. and i think now is the time to begin. thank you very much. [applause] >> okay, questions and you're supposed to wait for the microphone. in the front row here. i'll do left right on there. and very balanced politically. if you look at the blurbs we've got them in front to show how this where we draw from across the political spectrum. so i do the same thing within the brand. in the center to start with. >> yes, hello? who else beside you is making this case that is a political

figure who is marginally in our arguments. obviously your professor speaking of practical experience. but he was doing in the political form other than maybe mr. volcker? and the reason i ask that question is there is no -- there is no marshaling of facts and the political form that is possible for the public to really digest at this point. we don't have a president although obama has done certainly well. like roosevelt in 1933 who's calling the bankers and confident, cool, et cetera. so there's no question at that point where the enemy was and that's the way they addressed it. and what they did. but in these circumstances, the case hasn't been made.

and you're starting to make it. but in the political form or you martial anger to take action to do what you're saying has to be done, it hasn't been done. >> i absolutely agree. look, that's why we're early days. the president could do it no question. he's perfectly capable of doing it and i run a website, one of the leading economics blogs in the country called baseline scenario and we follow this issue and other issues on a day-to-day basis and i also do this with the huffington post. you know, we're strong supporters of the president on some dimensions, but not on this one. even within the financial issues on the consumer protection, i think some of the somewhat belatedly but eventually the administration has come to sensible position in the award, the deputy treasury secretary gave a speech to the chamber of commerce that in two weeks nobody to them on a figure standing $1.4 million a day lobbying with financial reform.

four or five here do the members of congress are pushing measures that are not in the interest of your to favor some particular favorites and it should stop. and that's exactly the right thing to say. but do not seem too big to fail and they cannot issue one. honestly there are some politicians out there who hopes and expectations. i think are 10 to 15 members of the democratic caucus who could potentially depending on the debate, with sensible petition. right now there's only one whose release he can clearly on this issue and that's senator ted coffman of delaware. he was appointed to ted writing seat and is not running for reelection. he therefore has no fear or any consequence. and you should look at his speeches. he's given three speeches in the last couple weeks are remarkable. you might say he's just an appointed senator. i can assure you anyone who speaks truth about these issues right now gets attention and larry summers was questioned on

the abc weekend show about one of their senator cowpland is right. i don't think we summers is implementing the agenda that senator coffman would be comfortable with. we need to bring more voices out in this debate about financial reform in the senate right now is unimportant. i think it's incredibly important that this be positioned so that people can speak clearly and truthfully on this issue and not edit all lost in some political gain. but we'll see how that plays out. i'll take a question on the right the gentleman in the back of them will go to the back. >> i'm not an economist. [inaudible] but when i heard you on diane raines the other night, the other day, my mind went back some i think 15 years and i can remember this huge debate that

went on when banks were allowed to become investment companies as well. i don't know if i have that right. there was a lot of harbingers of june at that time and i think that's of course a lot is what happened. instead of breaking these companies up, will it be -- would have the same purpose to divide retail banking again from the investment banking and allow bank of america to be a busy retail banker at 3% interest, et cetera and then be separate from the investment and let that be the breakup? would that work? >> so this question is often put, a very, very good question in terms of should we go back to glass-steagall which was the lord of the 1930's that make the split between what we for long time called investment banks and and the one time called commercial banks. i think the spirit of glass-steagall is right. the spirit is you shouldn't be allegedly with house money. if you have federally guaranteed deposits in your bank, and if

you're so big that we have to save you, it if you run the payment system in this country, do then get an extra level of protection. you shouldn't be allowed to go out and take massive speculative bets. that's the basic idea. now i think we did to modernize glass-steagall and apply it to messily proposed in our book good and so while arguing for a sidestep, a hard cap on the size of banks as a percent of the economy of senate gdp, we also say that i should choose whether they wanted classified as a boring bank or commercial bank and they can be of eager, but not that big eared or would they want to be i'm sorry not reckless, risk-taking speculative investment bank in which case they would have to be smaller. the two cops coming to choose which one you want and ask you to give thanks to comply with that in his office would have to comply with the shareholders didn't lose value oral therapy alternatives. so i think that is our interpretation of the poker

principles, not the volker rose that i've been before concretely,, but the principle behind what mr. volcker has been arguing is completely sound and senator coffman is arguing for that about and i think other people might pick up on that. if you went -- you had the opportunity to go to las vegas, with camino, the government of the united states are your brother-in-law or your dad back in you and observing all your losses, would you take more risk or less? i would take more risk you are right? if it goes well you get to keep the upset. if it goes badly, someone else is going to pay for that. that's good. i like that. it's not fair to your dad or whoever it is, who cares. it's a great opportunity for me. i should take it. that basic principle and that's what went on in the 1920's. we need to fix it again. question on the left. the lady here in the middle.

>> two questions. one is, what do you think should be done to re-create antitrust, you know, movement while the obama administration is here? any mention that there's some difficulties with that to get the g20 two agreed to help with this. but what can the u.s. do on this front? another question is assuming that the economist on the left and right, many of them are agreeing with you because, you know, they're advocating well on the right, free markets and on the left regulation. you have some consensus on the left and right. why do you think then that there another such difficulty in washington, you know, what the republicans say, supposedly a figment of them have been advocating free-market. is it because they're beholding to that, you know, larger

interest in the really not representing that. you know, how do you go about dealing with it, considering that we want to bring together maybe the two sides and this might be possible for the washington politicians? >> fell to the second question first. why is there so much support in principle from this idea from left and right and center? why does it not have more traction? i think we'll get there. i think right now it is the power of the lobbies that is tremendously strong. i mean, i think we've had this before as i said good i think teddy roosevelt faced lobbies that were just as strong, different form, but nelson aldrich, for example, who was the dominant intellectual force in the senate on these issues the first decade of the 20th century, his daughter married john d. rockefeller's son, right. the republican party, which was

teddy roosevelt's party was very tight with business. and i would stress one reason we wrote the book and one reason i get these talks is that the business that you're, so it's not just about intellectuals and people writing the larger income in business that are should take this very seriously. one blurb, one adores that we have, which is not in the book because it came to late to be included. the books website is called 13 bankers.com and you can look can look at reactions and endorsements are. george david who is the chairman of united technologies, very big company, centered in nice endorsement of the experience highly of the book. i would say he understands quite clearly that the financial arrangements we have in this country are not in the interest of the nonfinancial sector and he's absolutely right. we also people from the hedge funds that are, that's a minor one to speak out because they're

afraid of the market consequences. we have people from the other part of the financial sector who give his endorsement. i think it would change. i think that you need money. you need people who are willing to put money into political campaigns and to run against this issue. and you need, you know that takes time. the checks and balances in the united states are healthy. but it means we don't spin around right away. we take our time and it takes a lot of arguing among ourselves before we decide what is reasonable has changed because a lot has changed. so we'll get there. we'll get there fast enough? will we get there before there's another crisis? i don't know. will we get there was in another legislative opportunity? i don't know, but will get there. and this is related to the ukraine antitrust movement. remember because of the way antitrust is developed and focused on industrial companies, the conference but to have an antitrust or not particularly appropriate to banking. so for example, there are -- i mean, we do have some

legislative principles which we can relate to like the regal meal act puts a sidestep and largest banks in the country. nothing can be more than retail deposits. that's pretty low for antitrust perspective. persons with my mac or provincial perspective. don't put too many eggs in one basket, don't put any one player. i talked to the person who put the legislation is very sensible. two problems with that love. first of all, we action since 1994 has not been in retail projects, it has been banks funding to other banks. so the retail captain for good secondly, there's some loopholes support the love that regulators , regulators were about things is because bank of america to be driven to those loopholes, so this had to be closed. but that is fair and that idea of figuring out -- i think it's the spirit of antitrust, just like the spirit of glass-steagall. thus we need to figure out how to update and how to apply.

and i'm serious. in 1902 there was no theory. there's no economic theory this is what the result was doing it is. now i think it's obvious to everyone in the room are you would let one company to run all your roads in a big chunk of the company. but it wasn't obvious to people then. as i think we have to shift our thinking to reach of a lot of hard thinking and hard analysis, some of which is technical, with a mock him within finance. some of his completely accessible to everybody in the most everyone in this room. back to the center. this gentleman in the middle here. >> it's difficult for people like us to grapple with subjects like this is that academics like yourself don't all say the same thing. there was a harvard business school fellow one today on cnbc

talking with aaron for night and he said the dog though it's a bad bill -- >> david mas. >> yacht. >> lucky guess. >> he said he questions are too big to fail issue and said that the real issue is how intermixed the organization is ours. he said the key issue is whether the end course enforcement. and then there was some discussion on what needed to be done to improve enforcement. but it is difficult when you have people saying different things. and i cannot wait from his presentation a little heartened that the dog will was going to be a little better than you say. >> book. this is democracy in a variety of opinions and it's very healthy and i will be speaking sharply today that later this evening. [laughter] but seriously, i don't understand -- i don't understand the argument, for example, the improvement made by streak in "the new york times" column.

the program is a fantastic four's fourth sensible on a lot of issues including this one. but he said the issue is too interconnected, they're not too big to fail. but i'm jack-in-the-box because all of the above, okay. there's nothing -- just because, paul also said we should of effective regulation in this country. i'm in favor of effective regulation and eight being in favor of a tasty dinner. if you can tell me how we get effective regulation after 30 years of a lot of people not doing their job, i'm very interested. as i could see that plan, right? and it is striking to me that the best idea of the administration and our congressional leadership with regard to capital requirement and systemic risk and so on and so forth is that skivvies regulators authority to solve this and come back with the

details heard these other guys who got it wrong for 20 or 30 years they're the same guys, literally same guys. within the same ideological year. bit of a stretch. but anyway, if you think other things are important, that's fine. we can do it all. i'm in favor of fail safe. i'm the favor of multiple barriers here. some people call a suspended embraces, you know, keep your pants up in more than one way so it matters if they fall down. you can call which one. and just because you think affect regulation is a good idea, i mean, that doesn't be on the question of the bigness of the size of the banks. here's the key point. there are no social benefit the chicken .22 banks being bigger than $100 billion in total assets. there are many social cost that i can point to. you say simon, you know, prove it. griffey making jp morgan small or will not have adverse

consequences. that's an interesting question. i don't think jp morgan is about to run an experiment for me. but where should the version of proof be here? should the burden of proof be on the guys who just dragged us into the biggest financial crisis since world war ii. that's a president obama calls it here that's what everyone calls it. shouldn't they have to prove that big is good for society and that those types of damages arguments are what the cost that they are so manifestly created? i think yes. and they've got nothing. that's true. i do know that they assume crash research projects in progress, specifically to prove me wrong. but i think we'll evaluate that research when it appears on the same base as we research sponsored at pharmaceutical companies, with an appropriate degree of skepticism. on the right, this gentleman in the white shirt. >> hi.

i actually -- >> tried to speak into the microphone for the cameras. >> all right. i did graduate work here and i found and i had lots of these debates with banker friends of mine and along the same as the sum of the questions of authority been asked in what you just said, do you think that economics is suffering a little bit in terms of credibility to just the fact that it's not a hard science? like you just made a point of jp morgan or whoever is not about to do an experiment, right, because, you know, you said both of them and whatnot, but their counter argument is if i were to go below $100 million a year, that's going to cut into innovation. it's going to cut into potentially gdp growth or it's going to have these adverse effects that coming and no, i can have political messages already. it's the equivalent of a tax. it's costing jobs good you know,

keeping the american economy restrained when it should be growing and so on. and, you know, i sort of lean towards the side of mr. volker. i don't know if i seen anything other than an atm card in the last 30 years it's been that innovative and useful. but it seems like the burden of truth is actually sort of still with you. i mean, you sort of trying to ask is, this is self-evident that they should be above a certain size, but i don't know the economist profession is prove this yet. >> well, plenty of people at citibank size and plenty of people applied for were the economies of scale run out and typically they defined as between 10 and $20 billion. so the evidence go from 20 billion to 100 billion is a stretch. no one has found evidence that they did about $100 billion of anything except for the guys who run the bank. that is for the evidence is right now. now i do agree completely that the pushback from the financial sector is well if you do that, you're really go