out everybody scheduled and it needs, including her husband who has 5:00 in the morning get up on sunday, it is amazing. so this is a great book to help you do that. >> so what time do you eat it is chicken on sunday? >> we eat saturday night. soup is on sunday. hence the name, saturday night chicken. spink you think i would have caught that. "mr. sunday's saturday night chicken." it's lorraine wallace's book. chris wallace and lorraine wallace, thank you very much. >> thank you. ..

this kind of an independent endeavor. people asked me why did i write the book. the basic answers i thought it might be interesting to have some pain country in someone that knew what they were talking about. it's kind of discouraging. in addition his theory of portends to undo inmates in state has been great at creating myths and they become very destructive over the long-term. permit the service code the deregulation and greed on wall street.

simple fact is the banking industry was not deregulated at the bush administration. we had that picchu had attacked, privacy act and sarbanes-oxley. vermeil speculated, not deregulated. others funny agreed on wall street. there was not a sudden plague of greed. take some greed snuck out of the north. that's not what caused the financial crisis. in my book and talk about six things. first, the primary cars whose current policy. within an mixed. the worst regulated is done very well. the most regulated industry in the world of this. that's where we had our biggest problem not surprisingly. secondly, government policy created a massive disinvestment, what's called a bubble that got

focus in the residential real estate arcade. the bubble burst is all bubbles to destroying dollars of wealth and median jobs. thirdly, with almost two street makes very serious mistakes. if i'd been in charge of the institutions fail. however, mistakes were secondary and in the context and intent to that policy. fourthly, almost everything we've done started to even things that might help a little bit in the short-term will radically reduce our standard of living in the long-term. this point, even their sites and economic causes, the real cause in real cure is philosophical and i'm going to focus on that would have a presentation. finally, if we don't change the direction economically, the united states faces real serious long-term problems. we do bad things to children and

grandchildren. what happens, we build too much residential real estate. we invested at least $3 trillion maybe as much as a trillion dollars in residential real estate. without too many houses, houses never face. we should've invested in technology, manufacturing, education. we should've spent less and save more. we should've borrowed this from foreigners. the important thing people don't get, housing this consumption because people individually think they invested in the house. we can assume a house like another mobile. what they're really doing is over consuming. we had a massive overconsumption. it's analogous to eating the seed corn as analogous.

protect millions of people headed to the the wrong thing. we talked and honda both houses to the mortgage bankers, presidential legal attorney. those millions of people try to learn how to do something it's productive in a global economy. in addition, construction which is their competitive. you try that manufacturing wages, which we did with this artificial construction boom in miniature of millions of manufacturing jobs overseas to places they can have china and initially people in india and china didn't know how to do the work while. for having a really difficult time getting those jobs back. they make a mistake of that magnitude. markets are constantly making this tape and correction processes, but they never make the mistake of that magnitude. it takes government policy to create that the state.

in this case a three bit culprits, the fdic in government housing policy. a fundamental context are the root cause argued made by the federal reserve. something many people know, but don't get what it means. in 1913 the federal reserve is created, the monetary system is nationalized. there is no private monetary system. if you have problems in the monetary system, what this financial crisis is about, by definition the government policy profits. it's the other state highway bridges are falling down from me say that bridges are falling down on the government's problem. that's exactly true with monetary bridges falling down. the federal reserve is created in theory to reduce volatility in the economy. and practice what they do in the short-term is to increase

problems in the long-term. in a free market, markets are constantly correct. new businesses are created, old businesses failing. the feeling process is as important as the creation process. his human capital, physical capital can be redirected to more productive use. many top the downside correction process come all you do is create bigger problems in the world. it's analogous to not disciplined and then be surprised in the bad behavior when they're 16. that's up to federate characters duskin keeps corrections from happening. in addition, deal than the u.s. government cannot massive deficits is because the federal reserve's ability to play funny. today the federal reserve couldn't print money. no time at interest rates with me. i don't think the u.s. could -- and would not be creditworthy if you couldn't print money. that creates a huge temptation for politicians.

republicans and democrats. i don't think whether disciplined fiscal policy until monetary policy. the recent financial crisis. in the late 1990s, early 2000, alan greenspan had been there long time, wanted to be a hero. he was getting ready to retire for having the minor correction. greenspan was going to be good note, so he starts lowering interest rates, the effect to printing money. it creates negative real interest rate. so you can borrow dramatically less than the appreciation rate of housing, which incentive a huge investment house in which a prayer at such low interest rates. in right at the end of his term, greenspan realizes he's screwed up and he and his successors to raising interest rates very rapidly and create something:

inverted joker. an unnatural phenomenon. only the feds can do it. demand short-term rates are higher than long-term rates. if you make an investment in the best for the long-term, it's riskier, less liquid, so markets never do that. only the federal reserve due to appear by that matters is being spent money by borrowing thing time in months. that's their whole business. if you create an inverted yield curves, banks have negative margins. not a great business model. the banking business is quirky in that you can get higher interest rates by taking more risk. most of the bad loans -- the long-term thank you, mr. chairman. exponential under this negative and forget interest rate, which was the longest in u.s. history. one reason that happen at the same time he was claiming the federal reserve is claiming there is not going to be

recession. the good times would go on forever. he created a huge incentive to take inordinate risk and claim good times would go on forever. in a certain fundamental sense, we could have not radically headed by the without the money. that's one question the state is never answered. forget the money come from clinics second factor was the fdic. it sounds that you could figure bank deposit insurers market discipline. bdt operated in atlanta, competed with community banks. we took over a community bank after it failed and it looks like community banks had failed. 10 guys come 12 guys in the hotel boasts a business got together, started a pain, putting capital leverage to from average consumers at high interest rates. since the government guarantee

deposited, the consumer didn't care about their race. the bank took the money and font type to the cronies who then went wrote in the hotel business in the fdic lawsuit business on the dollar. big factor with large financial institutions failed countrywide. washington mutual, golden west, all financed high risk loan portfolios using government deposit insurance. there's no way the market would finance countrywide in high-risk business is that the government guarantee deposited insurance. deposit insurance is a major disorder deallocation cam. the third fact there is government housing policy that goes back a long time, with the government has tried to raise homeownership about the natural market rate. under the theory homeownership is a good egg. here's an interesting fact. owning a home does not change human behavior. it's exactly the opposite.

it allows you to own a home that results in better behavior in on this encouraging people to buy homes they can afford does not grow sbc. the government subsidy started with tax deductions from housing and in the early 70s they started i knew pat kingsley community reinvestment act, which forced banks to get into the low income, high risk subprime lending business and banks have no business being in that business of reminding other people's money. the bank should not be in the high end landing system. to build big events happened on september 9th 299. for bill clinton, president at the time made it mandatory, although it's gone back two years and he said okay, freddie mac and fannie mae, to government-sponsored enterprise have half-year loss of

affordable housing, i.e. subprime lending. that was a germanic announcement because of the size of freddy and fannie. there was an article in "the new york times" identified the risk involved in this issue in a sad lesson, freddie and fannie are so big that there's no way they can meet this goal without radically reducing mining standards and home mortgage business. for legitimate affordable housing market is not that big. if they achieve that goal, they'll take so much risk that freddie and fannie can get in financial trouble and that could have been in 10 years. they are so big they can take out the whole u.s. financial system. nine years that have been. we have $5 trillion had $2 trillion in subprime mortgages. even before they failed, they were leveraged 1000 to one. that means that a thousand dollars in debt.

and it's like having a net worth of $10,000 in being able to burrow $10 million. humiliated that is if the government guarantees your debt, which is what was going on. this isn't the way underestimated. we have the dominant player at the low venture or perhaps the market, it everybody into that hole. people go out of business if they get into the hole. this is a government driven entities that ann landers sanders for the whole industry under congressional take tape to have had their loans in subprime lending. politics played a huge role. i was on the committee of the financial services roundtable, largest banks in the u.s. senate is on the committee for seven years immersed trying to do something about freddie mac and fannie mae. it is mathematically certain freddie mac and fannie mae were going broke. anybody in this room would say these guys are going broke a window of congress, wonderful

people lake ray stolid and barney frank. i call barney frank dickie boy because the guy was smart and he wouldn't look at the facts. he had a religious belief in affordable housing and freddie and favors huge contributors. at one point they were the single biggest contributors of the democratic party. so congress evaded and freddie and fannie searched the housing market down the tubes. lots of bells and whistles but in massiveness investment printed too much money. it's in the housing market of the freddie mac and fannie mae. lots of other things like negative amortization, whole issue of the jury that his market, which i do cover in my book cannot be glad glad to talk about in the q&a. i want to focus on something more important.

i want to focus on what i believe caused the financial crisis because it's a continuing problem and what i really believe the curious. financial crisis is primarily caused by philosophical ideas. a combination of all tourism and pragmatism that caused the financial crisis. all tourism is not benevolence. altered with them basically says everybody is more port menu. as interpreted by state is, that means the collective is important and the individual doesn't matter. everybody has a right to a nice house. provided by who? everybody has a right to free medical care. provided by who? my right to free medical care is my right to enslave a doctor to provide me with that medical care for enslave somebody else to pay for that doctor.

it's exactly the opposite of the concept of rights and the american concept of rights, you have the right to let you produce, what you create. you don't have the right to somebody else produces and what somebody else create. if you think about business, like to do a lot of lip service about all tourism. in a globally competitive environment, you're out of business very soon. you're not going to be ultra mistake. pragmatism is what we teach in our business schools in the basic rules is to do what works. here's the dilemma, lots of things work in the short-term that are incredibly instructive in the long-term. make it amortization mortgages come the subprime lending for years ever economic disasters. one of the biggest problems is you can't be rational because rationality demands a long-term live. you can't act on principle because pragmatism has no

principles and is not surprising that ethical violations in business because people don't back on principle and you can't be principles of the don't believe he should have principles. you have to do what works. ultraslim and pragmatism at the free lunch mentality. we face that right now in the debate in our country. we have massive deficits and social security, and a day care and nobody really wants to do anything about it. the free lunch mentality leads to a lack of personal responsibility and the lack of personal responsibility is ultimately dead in democracy. in fact, by far the central issue in our society is personal responsibility. are you responsible for yourself or are you entitled to a somebody else produces? that is the fundamental issue in our society. the founding fathers talked about the tierney of the

majority and they were worried about the abuse at the individual right, but they also realized and 51% of the people realize they can vote for free lunch for 49%, producing the party's over. finally the 30% quits. just like the cause of philosophical come so this picture. the care expressed by thomas jefferson of the declaration of independence. life, liberty and pursuit of happiness. each individual's moral right to their own life. each individual's right to the pursuit of personal happiness. each individual's personal right to their labor. if you produce a lot, you get a lot, including the right to give it to whoever you want on whatever terms you want to. if you think about that moral prerogative, it demands personal responsibility because there is no free good lunch. it demands that reward self

discipline. life, liberty and the pursuit of happiness. let's talk about liberty for a minute. a lot of defenders of liberty you think of it is a nice thing to have. but it's a lot more important than that. liberty makes human progress possible. there's only one real natural resource, the human mind. 10,000 years ago, oil use is useless today. 15 years ago telecommunication would make tables out of copper expensive and rare. fiber optics made out of silicon. there's only one true natural resource and that is the human mind. in order to be good, you have to

build a think for yourselves and pursue which you believe is true. somebody forces you to act as if two plus two is five, you cannot productively contribute to human progress. many government rules and regulations force you to act as if two plus two is five and no wonder you can't be thoughtful and productive. in addition, all human progress by definition is based on creativity. unless somebody knows some do better, there can be no progress. creativity is only possible to an independent thinker. somebody that thinks a good crowd cannot be innovative and contribute to the human progress. freedom is essential for human well-being. not because it's nice, but a sure state and king in dependent being. if you look at human life expectancy for one human beings

evolved 50,000 -- 250,000 b.c. up to 1750, late 1700s, human life expectancy advanced almost none. since late 1700s until today, there's been a radical improvement in human life expectancy across the whole planet. it was an invention of the late 1700s that allowed that to happen. they invention was the concept of rule of law, individual rights, capitalism. as a human adventure that radically improved quality of life and life expectancy on this planet. it was a big deal but it did that because being free is essential for human product dignity to that man's nature is a thinking being. how about pursuit of happiness? before jefferson commit the fourth increase of enlightenment, everybody existed for someone else's good. nobody existed for their own

good. jefferson said an interesting thing. i guarantee success in that pursue, but we have it right. there was a world changing idea. creating the most successful monopolist society in history. people have the right to their life, then actually nicer to other people. at the end of the day everybody ends up hating each other because several slates to each other. each of us has a moral right to pursuit of personal happiness. here's an interesting thing about that idea. it's a very selfish idea. it's selfish and the proper context of the term that sometimes we forget. and the concept of pursuing one's rational self and trace properly understood is not about taking advantage of other people. it's taken advantage of other people self-destructive because pretty soon no one will trust you. if you go to try and manipulate

other people come you'll do more damage to you that none analyst psychological damage to yourself. it's not about taking advantage of other people, but it's also not about self-sacrifice. a question i teach a lot of students and a question i asked them to ask themselves and a few of children, ask your children this question. do you have as much right to your life as anybody else has to their life? do you have as much right to your life as anybody else has to their life? of course you do. why would she believe anything different but not? pursuing rational self-interest is not about taking advantage of other people in self-sacrifice. there is a moral code however that underlies free society of free markets. i called the trader principle. life is about trade-in value for value. it's about getting better

together. the banking business to let us make a process that we got better together. life is about figuring out trade-in value for value and only two stable relationship can nations, win, win, lose, lose. he said this about the relationships and pretty soon it ends up being a lose-lose. you'll get better and end up in lose relationship. any relationship that matters, you should ask what's in it for you, but also was for them because at the end of the day there'll be nothing in it for you. of course it's in a rational of testing quality of life because you've got to hold a context and ask what kind of world i like to live in but what i enjoy doing? act in self-interest is so suddenly being viewed, but about

having a purposeful, meaningful life for you. if we are going to defend the pursuit of happiness, we cannot defend free markets, we cannot defend a free society are capitalism is a fundamental, philosophical issue and i was part of the genius of the founding fathers and a lot of what this fight is all about because it can next to personal responsibility. if you can't pursuit of happiness, by be responsible? a couple calls on economics. undertrained business guy, trained economists and economic prediction is impossible. people always ask about it. i think when some kind of economic recovery and people conservative yahrzeit were getting ready to have an economic catastrophe is possible in the boy called roof. we still have a very resilient

economy. it's going to be way below the growth rate should be. we're probably going to face the nation and look like the make 70s. the combat difference between a 1.5% and 2% growth rate at a 4% 5% over 15 years is huge. we're probably not going to have in the short-term all talk and assist icann, but were setting up an environment for way below growth, which is very significant long-term consequences. i do get worried about 10, 20 years down the road. we do have a recipe for economic disaster and if we don't change tumultuous and pragmatism, free lunch in talladega and resort principles, the numbers are

staggering. the unfunded liability of social security, medicare, the new upon the carrier is the axis of a hundred trillion dollars. that is a stunning number are. we are running over $1 trillion in if we had a recount in the way businesses do accounting, we're running a $2 trillion annual negative profit statement for the u.s. government. we have a big problem with retirement of the baby boom and we have the k-12 education system by any rational economics times. we had the potential for bad times but don't change direction. there is good news. it's not too late because these things go exponential in about eight years. we got about that time frame in order to start moving. if we don't live in the next four or five years, it becomes almost impossible math that rate is fixed problem with bass and

social upheaval, which would be fun i don't think. i happen to be, even with election results, i'm fairly optimistic and i found strange. i do think there are two things. the american sense of life as a protector to a degree that americans fundamentally don't like big government. they don't like big government and went home sick today with the wrong direction, we actually did 2010 were americans don't like this direction and i think that's a nice caviar. the biggest thing we've got is the best ideas. the good news is status and does not work. it's failed over and over again. people tell me how surprised they were when the soviet union failed. as an economist it didn't surprise me at all.

communism always fails. they might do something even crazy, but it always fails in status and always fails. the question is when it fails, will they be there with the right idea to have the country in the right direction? estabrook of heritage, cato me to have bright ideas. so even now i'm not saying we couldn't get back, we went because we have the right ideas. one last thought about the counterweights of american central life. ..

>> we combined that energy that people have about doing good work in the world but doing it personally. you have to have a right to your own life. a second thing that a high respect for rational decision-making, making logic decisions based on fact, not invading the fact, dealing very thoughtful, very thoughtful process. but most importantly, i think you get a clear sense of purpose and use your thinking capacity to accomplish your purpose. you raise your self-esteem. self-esteem is the foundation for happiness and happiness is the beginning of the game. i don't mean happiness on a friday night. a life well lived.

i call blood, sweat and tears have to. when you're 80 and you look back and say that was hard and i'm glad i did it. that kind of hard earned with effort and energy. life will live happiness. that is the end of the game. nothing wrong with money. money is a good thing to happiness is the end of the game. self-esteem properly earned is the foundation for happiness. self-esteem is a complex subject and i want to share one thought with you. for everybody in this room, the vast majority of people on this planet, the single biggest driver of self-esteem is your work. because he's been a just proportionate amount of time, effort and energy at work. that's what makes working important. that's why this issue about unemployment, underemployment is way more than economics. it is actually a very spiritual issue. work is spiritually important.

something i've said many times to employees at bb&t. you do your job well, it's far, far more important. you will never fool him. if you don't do your work the best you can possibly do, given their level of skill, if you don't do your work the best you can possibly do it, you will lower your self-esteem. if you're a college student and colleges you work him if you don't do your work the best you can do it you will lower your self-esteem even if you make a good grade by the way. the flip of that is also too. if you do your work the best you can do it, given the level of knowledge, you will raise your self-esteem the that's more important to get a good promotion for more money it's about your character. it's a fundamental human need. i think the interesting societal implications to that.

take a construction worker, a brick layer has a tough, hard, grinding job. my granddad had a job like that. but he and his wife were successful. they raise their children, made his granddaughter becomes ceo of a publicly traded company, maybe not. has a hard grinding life with a successful in the context. and very interestingly he did something very powerful from his work. he gets to be proud of himself. he gets to self-esteem. take that same brick layer and give them welfare. he may be better off, but he loses something incredibly important. he loses his bride. he loses his self-esteem. you know, status of all political persuasions are really involved in this discussion to create security. it's a false discussion but it's an interesting discussion. and while americans care about security this is not the land of

security. people didn't get on a boat and come to jamestown -- in a state is a of opportunity. opportunity to be great, opportunity to fail and try again. but most importantly, the opportunity of that brick layer to live life on his own terms. to pursue his personal happiness, given his beliefs and his values. that's why people came to the united states, to pursue their personal happiness, given their beliefs and their values as free independent people. and that american sense of life is what made our country so great, and it's what so pressing to defend. thank you so much. [applause]

>> john, that was really, really terrific. i'm always glad here and other optimist in washington. you will all have seen the book i hope outside, perhaps you've had a chance to read it already. i encourage you to do so. it's full of great insight. let's have a few questions. whose first? sir. >> i'm bob hirschi. how can we move things further in the direction you talk about people do more for themselves as opposed to the government? >> i wish i had the total and to do that. the reason i talk about philosophy, if you look at what's happened to the united states we philosophically -- that's when you get public policy. policy follows ideas. so i think we have to defend the ideas that made america great. including personal

responsibility, and i don't mean we ignore community but you can't into to what someone else produces and what someone else did. that's an important id. long-term the most important thing i think we did is we capture -- the left to go with universities and difficult universities, they took over the elementary education and a because they teach all the teachers. we've got to get a system that because we are having the wrong ideas -- ideas in washington are taught in our school systems, university city. the way to do that is to totally privatize education. do that without tax credits but what that would create i think is competition in education. since ideas are better, those ideas will win out if they continue in a fair arena. long-term the biggest fight is over the education system and privatizing education. and also interestingly, minorities were huge victims of our education system.

it's not designed except for people -- that's not a very acceptable kind of system. the long-term fight is about education. the fight in the short term i think we have to combined philosophical ideas and we do need, we got in attack against leaders across the spectrum by really world class -- these statist ideas, these experience have all been tried and of all been failed. if we do it right, we might not convince the people on the far left that they are right but we will convince them to be less confident in the ideas, and so we have to preach to the choir on philosophy and for the people who don't vote a great philosophical, they're too old for us to change their ideas, we've got have world class research that refused the consequences that they claim will come from their policy.

>> i thank you so much for your remarks. he said americans fundamental don't want big government. i worry that's not the case but in any case let's assume this. them like you we need election for big government? >> that's a fair question, and i don't know that americans don't -- i've thought about that your but i still don't think they want the. when asked them the question they say they don't. over and over they say -- but, unfortunately, a lot of people can't integrate what that means. they don't want the consequences of not having big government. what they want is a free lunch. they don't want to have to pay taxes and they want all these benefits. so it's an intellectual disconnect, lack of integration.

and i think that is fundamental issue. that's where maybe the objective arguments are more important, where we showed them that this doesn't work and this negative consequence. and i particularly think we've got to show older people how bad it is for their children. and i don't think many grandmothers want to do bad things for the grandchildren. have done a good job letting people rationalize, that's not true. i just read an article where social security has no real problem. anyone who writes that it's hard to take an series leader go with they're doing is reinforcing a rational belief that people want to hold. they want to think there's no problem with social security even though the facts are there. so we have to be, how you do that, it keeps people inspired at the same time because it's a lot easier to say i'm going to go bunch of stuff. so we've got this philosophical

fight and we've got this, hey, this doesn't work fight. it's a harder message, i'll admit. everybody in here as a pair knows when your kid is 13 it's pretty easy to let them get away with a lot of stuff. it's harder to be the disciplinarian. my wife did that. that is our challenge of how to make the discipline. >> i'm just interested in your perspective, you know, as, from a policy and a former perspective on what should sort of happen with the g. is the issue right now, where -- gse, continues, the housing market hasn't recovered. how do we move onto the less government centered system by which an uppity put the, back in a tailspin? >> i happened to be in the banking system.

to remember when freddie mac and fannie mae basically played no role in the system. we did not have a problem. it was 20% down. yuma county local savings and loan, and losses in housing finance were very, very small to the savings and loan industry was systematically destroyed by government policy during the '60s and 70s. politicians won't have the vietnam war and the great society. they did what you tax people so we got wrapped inflation, kind of like today. the early '80s they tried to break that. savings and loans have been financing houses at 8% fixed-rate and suddenly they were paying 13% for the money and industry got wiped out. that's when fannie or freddie filled in again. life-insurance compass, banks did home finance. the private market from finance is a market of developed overnight. here's the plan for freddie mac and fannie mae me. one year from now they are closed. that's it. there will be market solutions,

and housing caps will be allocated more rationally. it destroys wealth and welding because it refills -- revisits -- the recent freddie mac and fannie mae domenic housing market today, see what they're doing economically as a rational. if we are economically rational other people would be doing it, right? fha is even more economically irrational but if you want to subsidize homeownership, do it with cash payments for everyone knows what you do. okay, i'm going to give people money. i'm opposed to that but there's a certain integrity in that versus subsidizing all these institutions where people can't figure out what's going on. a lot of the money at the end of the day goes to people that are not in the housing business. the biggest supporters of freddie mac and fannie mae our large investment banks who do this stuff. crony capitalists are the ultimate kind.

they are closing one year from now. a private rocket will is to develop in that period of time and house financing will be rationed and it will improve the well being of the united states. >> john, when we were speaking before, you mentioned to me the state of, for example, the feds involvement in the micromanagement. just give us a couple examples of the. it was so mind boggling. >> people do not realize how bad dodd-frank is. because it's being vigil. it is i believe a very conscious effort by statists to take over the capital financial system of the training. if you want to control an economy, control the outtake of capital. the way to do it safely is due in the backroom. if you nation is things, socialism doesn't work one raise because anyone can see the government business fails. but if you can blame someone else when it doesn't work then

it's a great way to do. this dodd-frank credit allocation in the united states is in place. they had made any big moves yet but they are wrong. the so-called consumer compliance. not only can they make banks, keep banks that can make you offer products, kind of like subprime lending and you will see subprime consumer lending. so the government can force -- they can also stop allocation the way they do the israel simple. they control the capital ratios for the banking business. before this crisis people don't realize is a bank making a subprime high risk loan had to have as much capital as making a loan -- do you think they'll increase subprime lending? if they want green energy they can subsidized by same green energy has a social purpose therefore banks can have half the capital.

so they have set up a mechanism where they can control the allocation of capital in the united states in one of those of like sometime -- they've also set up a mechanism and ugly this is intentional. will have massive consolidation in making a debate model that does not work. i grew up as a commute to make it. i think community bank is very important for our country. regulatory cost structure is much more -- why is that? the big institution you can get frustrated, makes you angry but you can hire some of the people to deal with it. if you're running a team of giving, and i was there one day, you've got to do. so setting up to think about things that are productive and creative and i just wonder business, he's got to think about making a bunch of brain-dead government bureaucrats happy. there's been no innovation since dodd-frank. the micromanagement -- i think

this -- today, we have had the incentive program for our powers approved by the federal government. i know that's hard to believe he can as we might instant our toes to take an inordinate risk their i don't how we would do that but they have to be approved. so you've got micromanagement of large institutions. with with a going to come and i believe this is the intention is to consolidate the industry to 1520 place, then you can control the they don't like all these messy community banks. they won't ever say that. they wanted very consolidated industry that they can control. is also the lending standards of are the worst in my 40 year career. why is that? they have this obsession with standardization pictures the problem with standardization. i grew up with small lending institutions. you have to judge people. are you going to pay me back or

not but you can run numbers and numbers are helpful, but at the end of the day a lot of the small business loans should be made based on numbers. they are made based on this guy based on this guys got graded and somehow he's going to get in the. you can't do that anymore. this is how all these things have unintended -- it and what they call fair trade. if you use judgment and the lending process you can be accused of racial, some kind of discrimination. and so what do you have to do? you have to get your standardized process. what does that mean question has to be tighter standards. they tightened lending standards for small business more than anytime in my 40 year career. so small businesses, huge job creators, actually don't have much access to capital markets today. some of these things you can argue they didn't intend to i don't know. if want to control an economy, control the banking business. control the allocation of

capital. >> here we are. >> back to the issue of people believing they don't need to rely on the government, i read recently some articles about the baby boomers and what they have and have not saved for retirement. and if such a stark contrast with the world war ii generati generation, didn't carry balances on the credit cards, and now between different habits and the recent financial hit, they are very unprepared. so to me that is concerning because it -- i don't want to face it because i might need it. and i wondered from your banking case if you have seen a pretty

strong change in an area? >> a good question. my generation is way under safe. and also the savings, israel event. relatively small percentage of people safe. notches income, people just self-discipline have saved for their retirement. then there's a lot of people out the other end of the spectrum at basically haven't saved. once they get misled in a way because they thought their house was safe, right? when you create these bubbles you mislead and a lot of harm and damage to consumers. they thought their house was savings and, of course, the house is may be worth less than they owe. they haven't developed the self-discipline for savings. so i think that is a real economic challenge. and then, of course, what's bizarre is right now we are doing everything we can to disincentivized savings. the banking business, lots of older people, older ladies who

may be their husbands died and he and she together worked hard, to put money in the bank account. 75, 80 and above where you live on the interest on that savings. and bernanke cautiously is holding interest rates below market rates. he is stealing from those old people. he is punishing savers. they don't really have, some of them go into riskier investment. at that age you really shouldn't be doing anything risky. he ought to be living off the interest, and they probably could if the federal reserve wasn't going down interest rates. there's this massive registration of wealth. probably the biggest in u.s. history from savers to people that will spend money, that will buy houses. nnm of economic activity that for some reason it isn't working out. people are not stupid. they figured out that there's a huge disincentive to save, and that there's something wrong

with this and it -- we are punishing the people who did the right thing, which has got i think ethical consequence. i don't think the federal reserve has the moral right to take all the people that saved and worked hard and give it to people so they can spend it, like a bigger house. that is not ethical. that's one thing that is wrong with government. >> john, again, as -- [applause] as president of the heritage foundation, i want to say to you as my colleague, president of the cato institute, there's not a word you said that i disagree with. thank you. ladies and gentlemen, if you have a copy of john's book and would like to have it signed, he will be doing that right here right now. and we are adjourned. thank you, john. >> tell us what you think about a program this weekend. you can't tweet us at booktv,

comment on facebook wall, or send us an e-mail. tv, nonfiction books every weekend on c-span2. >> the intense discussions, arguments within "national review" that i alluded to were primarily not totally but primarily in the '60s as they were still think that way your the conservative movement was still jelling. in the 1970s, russia's focus is on, it initially on the possibility of actually replacing the republican party with a new conservative party. i found a letter in which he said to a friend my problem, about 1975, my problem with the republican party isn't that it's

not conservative enough. it's that it isn't big enough. again, he wanted to win. and republicans after watergate in the mid '70s were just in terrible shape. i won't recite the details but, you know, a lot of them probably felt they were back where they were back in the 1930s. not only minority part but a small minority part. russia wants to take this opportunity to start a new conservative party. not rigidly conservative but consciously conservative. one in which the liberal wing of the republican party would not be present and, therefore, would not have the veto power he thought they would have. he believed the key to this was one, not necessary the most important thing but an important thing, is to moderate economic

conservatism a little bit and be a little more populist, recognize the needs, the position of the little guy. he always had some of that in him. but also to wealth, the populist issues. and not only southerners but what then were known as conservative democrats. people later became reagan democrats. bush was one of the first to note the size and importance of that voting bloc. he was one of the first and msha one of the most effective advocates of bringing it into the republican party. and he advised reagan did you this. the new reagan and the first president bush pretty well. had known reagan since the mid '60s. both reagan and then vice president bush some years later to do this.

he was successful in that, although i don't think reagan really needed to be. i'm not sure that reagan really needed to be told that, but certainly it is encouraging to hear from someone to be respected as much as he respected russia. rusher also wanted reagan to be ahead of this new conservative party. well, to make a long story short reagan refuses, probably prudently. most political scientist, and that the training, that if a third party is going to be on a national level, it cannot start small. it's got to start big. probably a superstar like reagan. so once reagan refused in the 75, made 75 to join this third party project rusher got going and wrote a book about, it was probably targets for that particular idea, but rusher had

succeeded in getting conservatives to think more about the need to expand the republican party, and for the republican party to be more coherent. not so ideologically coherent that it was willing to forfeit elections. i think rusher was passed that phase of his political development or perspective by them. so he recognize that if reagan wasn't going to head it, it was probably not going to get too far. but he stuck with it, the full details are in the book, chapter 13, but he came to see in the late '70s and that it really was possible for a guy like greg to win the republican nomination. ever since reagan won the republican nomination in 1980 and had an rusher's uk total successful presidency, rusher

remain to the end of his days an absolute republican party loyalist. rightly or wrongly. that's another interesting lesson to a man who one time had been a third party advocates comes back to a more conventional local you, although he was also a strong conservative but in closing i just want to say to words about rusher's significance as a symbol among conservatives. he was a very elegant man. he was not particularly told he wasn't athletic, new, things that buckley was, but he was wonderfully articulate. he always spoke in perfectly formed census, both in public and in private conversation. he was always there well tested did not find one in opera. he traveled all over the world. so this was a little unusual for a semi-populist conservatives, and for a guy as ideological as he was.

perhaps leading conservatives today could use a few more people like that. in other words, it was hard for a manhattan liberal to say oh, rusher's -- conservatives are hicks, this and that. you couldn't say that about buckley, and you can say it about rusher, so rusher sort of reinforce this since the "national review," pretty smart, sophisticated people, fun to have around. rusher was another example of the kind of conservative. younger conservatives tended to admire that and he tried to bring them along in that style of thing. also as doctor edwards referred to, rusher was a major, major conservative debater for quite a while. most prominent l.a. pbs show called the advocates. he was a conservative advocate in the debate shall. he did extremely well, and a lot of people would watchha