and i came away from his presentation also heartened at the bill that was going to be a little better than you say. >> look it is democracy and a variety of opinions and a debate of this kind is healthy and i will be speaking to david leader this evening. [laughter] but seriously i don't understand -- i don't understand the argument for example of pauãjqbs e get effective regulation

after 30 years of a lot of people not doing their job, i'm very interested. i would like to see that plan. and it is striking to me that the best idea of the administration and our congressional leadership with regards to capital requirements and systemic risk and so on and so forth is it a regulator's authority to come back with the details. well, these are the guys that got it wrong for 20 or 30 years. they are the same guys, literally the same guys in the same ideological year. a bit of a stretch. but anyway, if you think other things are important that's fine. i'm in favor field states and of multiple barriers. some people call it suspended braces, keep your pants up in more than one way because it kind of matters if they fall down. you can call it what you want

and just because you think effective regulation is a good idea that's -- it doesn't bear on the question of the size of the banks. here's the key point. there are no social benefits that you can point to to the banks being bigger than $100 billion of total assets. there are social costs i can point to. you say simon, prove it. prove that making jpmorgan smaller will not have adverse consequences. that is an interesting question. i don't think jpmorgan is about to run an experiment for me but where should the burden of proof the? should the burden of proof be on the guys who just drag us into the biggest financial crisis since world war ii? that is what president obama calls it, what everyone calls it. should they -- shouldn't they have to prove that big is good for society and that the size advantages are commensurate with the costs the have manifestly

created? i think yes. i think that is on them and they've got nothing. it's true i do know they have crass research projects specifically to prove me wrong but it we will evaluate that research when it appears on the same basis we evaluate the research sponsored by the foreign companies with appropriate degree of skepticism. okay on the right this gentleman and the white shirt. >> i -- >> charges began the microphone for the cameras. speaking to the microphone. >> aideed work here at sais and have been having lots of the debates with banker friends of mine and along the same line some of the questions have already been asked and what you just said. do you think the economics is suffering a little bit in terms of credibility due to the fact that it's not a hard science? you just made a point of jpmorgan or whoever is not about

to run an experiment, right? because you said it's self-evident and what not but they're counter argument is if i were to go below $100 billion a year that's going to cut into innovation and gdp growth and it's great to have adverse affects that i can assure the political message. if the equivalent of tax costing jobs. you are keeping the american economy restrained when it should be growing. so i sort of lean toward the sides of mr. volcker. i don't know if i've seen anything other than an atm card the last 30 years it's been that innovative and useful but it seems like the burden of proof is actually still with you. use order for trying to ask this is self evident they shouldn't be above a certain size but i don't know that the profession has proved this yet. sprick plenty of people have

studied banks lies and look where the economy of scale runs out and they find that it's between ten to $20 billion of the evidence to go from 20 billion to 100 billion is a stretch and nobody has found any evidence linking above $100 billion does anything for anyone except the guys that from the bank. that is where the evidence is right now. now i do agree completely that the pushback from the financial sector is if you do that you are calling to cause a big recession and i would remind you that is what nicholas biddle said in the 1830's. and i would also tell you that when teddy roosevelt to done jpmorgan there was a lot of concern in the stock market that this would be destabilizing. you know, they have a lot of power if they want to do damage to this economy they probably can. they are threatening us. make no mistake about it and you should reflect how you feel

about that. you are being threatened. your representatives are being threatened by a few very powerful bankers. now andrew jackson is on the 20 billy dollar bill. he hated peter money, he would be mortified if he if he was on the 20-dollar bill but he's on the 20-dollar bill because he won a very important fight. he determined that we should not be captured to a financial oligarchy. i think there was a good call. we probably could imagine a different path with a central bank for the united states during the 19th century. maybe that would have been good. we didn't have that. but we also didn't have an economy dominated by a few very powerful finance years distorted in the way that other places state and other places struggled with in the century including europe and latin america. i think andrew jackson made the right call. we can argue on the economics,

politics -- you know, you probably guessed from my funny accent i am an immigrant. i've been here 25 years, citizen for ten years. i thought long and hard before becoming a citizen. i took a test. who became a test before becoming american? there you go. a few of you. did the rest of you even know there was a test? i did well on the test. i think we have a very good constitutional framework and iain incredibly strong position but as far as i can see from my reading then and now there is nothing that says we have it forever. there is nothing written or assured that says you don't get taken over and don't get a distorted like so many other countries have. i feel we can fight it off and i think the jackson of roosevelt and fdr furious did fight it off but it has to be done. it doesn't happen for you. someone has to do it. how are we doing on time? what is the constraint here?

and for a few questions. okay. on the left in the front. and i will be and not afterwards if people -- if i don't get to everybody's questions. >> another funny accent here but first of all i completely agree with your position. i seem to have made the same conclusions after the crisis so i like to call that privatizing the games socializing the losses and i think it's got to be stopped somehow and another one is regulatory capture. i think that describes really well what happened and i applaud you for carrying the message. it is a great message to questions. first you mentioned we need to limit the size of the bank's and they get to choose either the commercial banks or investment banks. anything else that needs to be

done in order to bring the system and to balance again? and my second question is on a solid your article about jamie dimond, and the question is do you think it is beneficial to take the conversation private and have you heard back from him? [laughter] >> may i ask what country are you from an originally? >> russia. >> does anything about our predicament here strike you as of pleasantly familiar? >> exactly >> why i end up in a place of such dramatic change because between moscow and the nineties and now here i just moved from san francisco. >> if you could go back to moscow -- no i'm just kidding. look, we have taken on some features we usually prefer to

spread to other countries and when we see the countries we say look a certain sector, the leal and gas sector for example and the banks as well has gotten too powerful to read or the corrine and jean paul has taken over and distorted the system. i think whenever our treasury in the 1990's and other countries they always insisted that when you talk anticrisis measures to address the underlying problem which isn't easy to do. and that is what we have to do. the other measure -- we talked about it in the book. the keen blind spot is the size of banks. it is of the legislation, that is even sensible people on capitol hill are still not getting too. but certainly we think there should be a lot more capital in the financial system. we think that the current

official consensus on raising the capitol would basically take us back -- move all financial institutions to the capitol level equivalent to what lehman brothers had the day before it failed even if you measure the lehman brothers capital correctly which doesn't strike as a compelling idea. lehman brothers did have enough capital why would anybody at that level have enough capital. and we also think over-the-counter derivatives. i know people's eyes glaze over whenever i say that. but it's important and it's a very political. but they should be the should be traded on exchanges and there should be a lot more capital held against positions and you see the contraction in the amount of derivatives trading on the basis. there's also a subsidy for the derivatives which arises from the fact the broker-dealers to read the contract to big to fail that therefore have funding costs and that is a big part of the problem. i think that is less likely to get addressed than the banks. and as for jamie dimond, all of the point we make hour about

policy. this isn't a personal antiindividual crusades. i think it is helpful to put names on it. this is not a conspiracy. most of the reviews in the book have been for a positive i think to people so far have said a conspiracy theory -- they didn't read the book. we will make it very clear this is not people conspiring. this is a system of incentives and believes that is developed over time, and it's a very unfortunate distorted system that needs to be fixed. i'm happy to talk to any banker big or small who wants to talk about this, and i do engage with them at every opportunity. and jamie dimond has not yet called me. [laughter] >> how about this lady in the middle, we will take two more. this lady here and this gentleman here have been very patient. >> okey it's on. recently i heard a lot of people in the last was greenspan

talking about paul volcker's proposal rule that these organizations should not be trading in their own accounts with our money but just as greenspan said the other day i agree with him but it just isn't practical you won't be able to separate ze accounts from the proprietary account of the bank, the personal trading to the other trading. others say you can't separate it. it sounds good but in the real world it won't work. do you think it would work? >> it certainly could be but i testify to the senate banking committee in february on this issue. there were a number of representatives of the industry fighting against it and all my left was john reed, the former head of citibank's who says he regrets putting together the size of citibank and he also said in his view you could impose this kind of restriction on proprietary trading for any

large bank for example. now i think the deeper more troubling question is how much difference would make. what they find other ways to get around that and find other ways to take excessive risks? and i sure they would. so, while i am supportive of the volcker role both in general and on the specifics, i do not think it would solve much of the problems and i do not think it would address the problem of too big to fail. fine, let's do it but you should not regard that as a substitute for -- the solution it's a set of solutions and you've got to go after multiple directions and assume some of them are not going to work and it's good to have redundancy built into the system began amount you would get from that measure certainly in isolation would be tiny and as a part of measures it's not i think the key issue. okay this gentleman here has the last question.

>> thank you. it does what you have in mind need to be done and all of the world's financial centers preventing in the next crisis or is this something that can be done here and that would be enough to avoid the so title of your book? >> it certainly can be and should be done here. it would be helpful for avoiding a massive meltdown. i do worry about the rest of the world and i think we should take a leadership role and should push for them to rein in their banks. they are much deeper. many countries are much deeper in the whole of relying on a relatively fewer acres than we are. we have by tradition by history and by established practice in more decentralized system and more countries to rid the system has become more concentrated overtime but we can reasonably imagine the situation we have $100 billion competing with each other and competing globally

rather than that being small relative to the economy where some countries even a 100 million-dollar bank would be relative to the country and some countries including europe think the big banks are fine. now first and foremost we deal with this ourselves and try to persuade people to come with us and if they don't want to come we have to consider what extent we regard as safe for the non-financial companies to do business with massive banks that could get in trouble in other countries and to what extent we want a massive banks that could cause problems to operate in the united states. we don't flexible allow u.s. citizens to bank with financial institutions based on their own. we have very clear rules that prevent you from interacting with banks in various countries because we regard that as not consistent with our national interest. i think those criteria have to be reassessed. we should push the allies to come with us and make the banks

safer but if they want to cooperate and i think we have to reassess what we allow them to do in the country with our financial system and remember the driver, what people want to participate in in in this economy is the dynamism, the information, the new companies, the resourcefulness of the people come and what i think and hope again we will once again be the resilient credit worthiness of the sector and the government sector. that's us. you get to work in the financial markets if you play by our rules. not on any other basis. it's the united states and that is the when you work and you can say to the outside world. other countries by the weak all other countries can say that we can and we should and i think on that note -- thank you very much. [applause]

[inaudible conversations] to the 2008 economic

collapse. it is even was part of the greater omaha chamber of commerce 2010 annual meeting. [applause] >> , first of all i want to thank you for coming. i should declare right off the bat i am a friend of hank's. have been. i admire him before he took the job, i admire him a lot more after the job is done as the secretary of the treasury. the name of this book is "on the brink" and that is where we were in 2007 and 2008. at that time, our economy, our

financial world when it intracardiac a rest and we had four people in the operating room we were very fortunate as a country to have in place. we had hank, we had been bernanke tim geithner and sheila bair, the head of the fdic. i have a lot of people in finance, and a lot of people in business and a lot of people the government, and i can't think of for people that would have done a better job of getting us through that. now it's kind of fashionable now to look back and pick out one of little aspect or another of what was happening, and our country's financial system froze up during that period. some of you in this room or at a party i was at in september of 2008 when the talk was are the

money market fund safe? now, when you have 3.5 or more petroleum funds held by 30 million people, who on sunday and i are worrying about whether they can get their money, that money was half of all of the deposits held by the u.s. banks the time. you have a panic. you had commercial paper frees up an entirely and some of the biggest companies in the united states and some of them are described in this book they worry about whether they were going to meet their payroll in a short period of time to meet you at the sixth largest bank in the country in terms of domestic deposits, washington mutual field over the weekend. you had the third largest bank, wachovia, the needed a shotgun marriage on a monday morning to survive. most interestingly, this book starts in early september when freddie mac and fannie mae were essentially broke. here are two institutions that

guaranteed 40% or so of the residential mortgages in the united states whose debt was held all over the world and a very significant amounts including by foreign governments that would not have taken kindly to the default of freddie and fannie. you had them owning a very large portfolio of mortgages themselves, and like i say in early september debose were broke. .. ..

and, which have received in this complicated hank's problem, in a very short. met before september the watchdog agency that congress had established to watch these agencies had had given them a clean bill of health, and that clean bill of health might be fun to go back and read that now. well, let's get onto hank's book when i got this book, i got it a little early and i expected to learn a lot about the financial crisis and i did, but i didn't realize that i would also learn something about how to attract women. [laughter] it is a little late i realize, but hank had a surefire, a

surefire approach, which when he took windy out on their first date in boston, i would like you to describe it in if you would even like to elaborate on my little bit i would like to hear about it. >> let me say before he do that war and i am delighted to be here today in omaha. again, i have been a longtime friend and admirer of war and's and he was just a real pillar of strength and source of strength for me during the credit crisis. warren was referring to something in the book. i was not a model of maturity when i was a senior at dartmouth college and i had my first date with wendy. we where at the boston pops, and she wasn't very impressed when i made my program into a paper airplane and sailed it at arthur >> did you hit him?

>> no, no. but she gave me another chance. >> did she go home early that night? >> yeah, yeah. she went home early that night. >> fortunately he got a second chance. tell us a little bit about-- he says in the book, i am a tough guy. at one point he said that that he was a wrestler in high school and all ivy at dartmouth as a tackle and so on but when the president asked him to be secretary of treasury, and hank's original reaction was not to do it but he decided to do it. he had one big worry and i think the crowd might be interested in knowing what makes a grown man crumpled. >> warren is talking about my mom. i am quite close to my mother. she is a strong mother. she is in engaged and interested in politics and policy and she was not an admirer of george

bush and very unhappy with the war and very interested in women's issues and so on, so there have been a fair amount of speculation in the press that i might go to washington. i had turned down the opportunity a couple of times, and i had assured her that i was not going to go because i had no intent of killing. but then, when i had reversed myself and decided very suddenly it was the right thing to do not to say no to my country, i was in illinois, where we live and still have our primary residence, and i was there on memorial day weekend because the president was going to make the announcement on the tuesday after memorial day weekend so i was seeing my mom. unfortunately, we were at church together. i had a longtime friend ask me about what i was doing next and i told her. of course she went up to my mom and said, isn't this great

marianna? mom didn't think it was great, so when i arrived up to tell my mom, she had already known about it and i didn't see her sob much, but she was sobbing and very angry. angry and crying. she said to me, i started with nixon and now i was going to end up with bush and that i deserve everything i got. [laughter] and that i was jumping on a sinking ship. i will say this though, in the end, i say that by the time i finished in washington, my mother had a different opinion of george w. bush. but, it is not a good way to start off in wendy was not much happier with me. 's be one of the most interesting things i found in the book and i had not heard a word about this before, was your account of how some top russian officials had gone to some top chinese officials with the

suggestion essentially that they start dumping their bombs up probably freddie and fannie at that time. that almost sounds like a bear raid. i thought that was the sort of thing that just the evil guys on wall street did you tell me about that. >> it never happened, but we are very, very concerned about stabilizing fannie and freddie because as warren said, there were 5.4 jillion dollars of securities that were either insured or issued direct we buy these institutions. they were highly leveraged institutions, and the securities were held i think about 1.7 trillion.ñr the biggest portion was inside the u.s., and we had gone-- i have been trying to get reform legislation from congress beginning in 2006, and to get thnd