very important. the european central bank has put in three months or 1%. they did that a year ago and now they've detonate a web cms and the collateral necessary to borrow the european central bank. the banking system has been shedding assets because they have to raise additional capital and they've been concentrating more on that in one day and, unfortunately. a lot of you and mr. amara where that. some of the beneficiaries have been japanese banks have been buying portfolios and investors like wilbur on the market. but we've got to get the european bank back to lending. that is key to what i've said here. then i would just say a few words about the ken firm timelines to do this because if

you don't have firm timelines that won't happen. .. japan, korea, and china.

i think it's very important that this go aheaded with second and it third largest economy and the tenth largest economy, korea, in the world. he said he wants to move ahead on that. i hope so. of course it's cloudedlied by the disputes. the other is something and trade as was mentioned is a subject that terry shown tremendous leadership in over the last decade. we now have something new on the table not so new announced almost two years ago which is a transpacific partnership. i think japan should be part of that. it will take a courageous decision because there are a lot of people entrenched interest in japan that don't want to be part of that. ii think if he can do the things we talked about before, you know, he's an stimulus pushing the bank of japan on the monetary stimulus. it he can do the structure reform i discussed, and push on

these two northeast economic block and a trade agreement, i think it will be a big help to japan on the export. japan is dependent on the export. you need to stop the hollowing out of industry and japan moving elsewhere. at the end of the day, as we know there are major territorial dispute with china and korea. i think i looked favorably at the new prime minister i'll be sending a representative to korea to talk with miami -- ma'am park, the president elect of korea, and hopefully something can be worked out in this area. as you know, the senior delegation lead by kurt campbell is basically in japan and korea right now trying to see if the united states can have a helping

hand. that's the u.s.' two by allies in the north pacific. the territorial dispute with china, i think, it's going much more difficult, but japan, as you know, is one of the biggest foreign investors in china. it's not just japan that suffers on to this also china does. i'm hoping when the president basically takes over in march, that he and prime minister can work something out. a lot of voices in japan and china, which are very militant. it's not going to be an easy job. what i think is very important and for the united states this is most important to get this trade moving and get our allies working together. and so i tend to be an optimist like terri, and that's why we

work together on the trade deal. it's been a long, difficult battle and korea and latin america and the others. at the end of the day, i think it's worthwhile. i hope we'll be seeing a new dawn in korea in this regard. so we have a new leadership in china, new leadership in korea, and new leadership in japan. hopefully they will be able to see some of these things through. i think it's very important not just for asia for the countries but frankly for the world given what is happening elsewhere particularly in europe. having said that, terri, i think we should have our little conversation. thank you very much. [applause] [inaudible conversations]

here is the book you -- [inaudible] japanese. >> and the book, bill, is in portuguese and simple flied china, korean and now japanese as well. i think that, you know, the dissertation we just heard from bill, you know, is so lucid and straightforward that you sort of, you know, grab this motion of why didn't we start implement on some of these things quicker? you know, and we seem to get in to such complications. so the first question, bill, i think that i'd like to ask you, a couple of questions and let's throw it over and go any direction anybody wants. because we were talking about, you know, the lack of

coordination and cooperation and relationships and that people were goings especially in the european crisis and the like. now you have the long standing relationship with walter. can you talk about that relationship? and from the book's standpoint, who are some of the world leaders that you dealt with that had the most positive influence in terms of relationship development that n in getting things done? >> he was an internationalist first class and he expanded the cityback -- bank significantly overseas. he was a great friend of japan. he used to go japan regularly. i think he, along with paul volcker on the public sector side were major mentors of mine. i think it's fair to say you have seen that walter was the

greatest banker of his age. that's what city is going back to at this point in time. we have a lot of former citi wangers in the audience that agree with me. but as far as -- and, you know, working with walter, he's someone that got me involved in all of this stuff, and john reid, later on, were both, i think, significant world financial leaders. as far as having talked with a lot of people, i think meeting mandela, having dealt with a number of cases, spent an hour in 1980 with castro. he wanted my advice in how to structure the cuban debt. he said we can speak to you because we nationalized the foreign banks and you offset on the reserve. we are kind of even here. this was in nicaragua was running the -- who is back again

running nicaragua put us together. and certainly fascinating there. i can run through so many people. i had to one of the session with mandela, i was asked to tell, the then president of zimbabwe that he used his time up. he wasn't very happy with that, and because of that, i was able to do that our secretary of commerce, ron browne, asked me if he would chair at the 50th anniversary of the united nations, the africa lunch of the u.s. was giving at that time. i did. he said, look, if you can do that. you can do take anything else, bill. so there are a lot of people, i mean, you mentioned secretary of treasuries here in the united states certainly the various heads of the fed and central bankers, i think worldwide. i think one of the things we

need to see more of getting to the point that i know you want me to talk about is we need the leadership. we haven't seen the tough leadership in europe that we need to see to get out of crisis. we were lucky in the case of the latin american debt crisis that we had paul volcker at the fed, and jack at the international monetary fund. two of the most outstanding people public sector people i have ever known. and aye the world people forget now is so long in the early 1980s was about to go under. they compared it to moving deck chairs on the tie titanic. that worked out, i think nick brady with the brady plan. we had real relationship, and i think that's what we're missing in many part of the world including europe where you -- i must say at the ucb mario and before john have shown that. but a lot of policy makers and politicians have not.

so i think we need see that worldwide. we need see it in our own country. just witness this discussion that went on whatever you want to call it at the end of the year. and we have sort of the best to come yet. because we have to decide on the debt ceiling and spending. and so this is where we need leadership which we were used to. i tend to be an optimist about the united states because gave up on vietnam. on the watergate crisis and we came charging back. i think we'll do it here. we but would be nice if we didn't have to go to the cliff each time to do it. >>well, you know, and again when you start talking about the kind of relationships and kind of leadership, you know, we still seem to have this atmosphere where people talk more at each other than trying to find some common ground some common goal

in getting it con. you broach the goal of growth and jobs and that's the answer to all of this. you also talk a lot about temptation. we all, you know, sense that if the european situation got worse, and they're representing 23% of world gdp, you know, the effect that it's going to have on the united states, india, brazil is going to be real. and so with 40% of their exports coming in to the united states and so forth, you know, all of the sudden, you know, we started seeing the effect of our own growth, brazil's growth. india's growth. -- china. >> china pee we the united is under 2% growth. if we don't resolve the debt ceiling and the fiscal order you were talking about, you're going have that weight on it.

even though you proposed a lot of hope with japan in term some of the political leadership, they are still a negative growth with 7%. >> exactly. >> so now you're up to 50% or so of world gdp that is a drag on the economy. how do you look at, you know, the broadest sense of connotation as it relates to emerging market growth and developing country growth with 50% of world gdp possibly in that situation? >> i think the trade figures tell it off. whether you agree with the imf figure on growth or not. i think the trade figures show what is happening. there's no doubt picking one of the countries that was mentioned was china. china, i mean, for the last twenty years has been double digit growth. that's year they had one of the worst years in final memory. we'll see the figures coming out. it didn't get below 7%. when you move from double digit

to 7 something percent and the major driver is the largest export market is europe, and they didn't believe that europe would a. get to the problem, and b. take so long to get out. the second largest market is us. and so they help get the world out of the great recession by this tremendous stimulus program. you're not going see it again in china. so i basically think that you've got have things worked on at the g20. the only g20 summit -- i attended two was london the world was going to have great depression not the recession. they took certain steps to move ahead to stimulate growth. so i think that this next year is going to be tough, and i think you have sense complacency in europe. it's interesting one of the real drivers drivers in brussels is -- [inaudible] and he came out with a statement

the other day saying he's concerned about complacency. i think he's right on. you have the people saying oh ever since mario made that comment on july 26 where the markets have gone, you know, the markets can be right but the markets can be wrong. i think not having been able to do the three things i said with a fixed time line, basically said how long is europe going to be stuck here? and so i think that the -- this is a real question you mentioned india also. indian yafs up 8.5% 9% growth. dropped below 6%. when you have the major world economies where they are. i think you need a good doze of not only fiscal stimulus and monetary stimulus. you center to back it up with structure reform. i think deregulation and i think that's really key for the world to get out of this problem that it's in today. because we both agree, it's all

growth and jobs and if you can't show the path -- that's why i use brady plane. plan. it gave a pathway to growth. korea, 1998, kim jong came to power. the man on the left. the last thing he wanted to do is sign an imf agreement. and he told me, look, i inherited this, you got my full backing. do whatever is necessary. who are the first ones to sport -- support me? the japanese bank. they had 40% of the debt. i got the american and european banks in line. there you have the political will do it. brazil, fernando, 1994 the country had been in moratorium i don't know how many restructuring. he decided enough is enough as finance minister. he said we have to get the debt

deal done. we worked on it and got it done. within hours he he announced the plan. which took brazil out of hyper inflation and it's been up and down since. it's a different brazil today than in 1994 with fernando. and the last example i would give is turkey. the prime minister in 2001, my friend was vice president of the world bank was called to be finance minister. i worked with them on the particular plan. we have to convince the u.s. treasury to support the imf. he put in reform and told the people of turkey, look, you have to take this austerity for x period of time. we will lead you to growth. he did. look where turkey has come after that. i use these three examples. one in the middle east, one in latin america, one in asia where they were able to do this. it was an example of leadership

to do what is necessary. i mean, in korea, we got this done in a couple of months, and four months later they were raising five $5 billion in the international market which is lot of money. they took a decision and went tat. >> there's a lot of things you were talking about the leadership, the political leadership, the timing, and the banking union getting the banks back to the lending and the fiscal pack in those components on that part. you know, just as a side. in talking about another country, russia. you know, russia desperately wants reintroduce itself to the rest of the world and not some of the ways they have been. they have the opportunity with the g20 coming up in september. crystal ball -- did you see anything from a coordination standpoint from the go, 20

coming out of this? do you see russia's image changing? >> i think it's a big opportunity for the prime minister to show what could happen in russia. we'll have to see because they're sitting on top of the oil reserve. you know where the the price of oil is. there, as you pow, there are a lot of problems. we have to see whether, you know, russia can show that it's taking some of these reforms that needs to take, and we'll see and this is a perfect opportunity to do so. so far, i think, as i said, the only g20 meeting that really did any positive of the one in london. i give credit to gordon brown that was his greatest moment, i think, at that particular time to do it. you had well-organized meetings. i was in korean there was nobody

organizing like the koreans. it was a great organized meetings. wars and, you know, nothing much came out of it. then the one in france it rained the whole time and it was rain on the parade because it was a disaster and nothing happened. there was a lot of nice intentions comes out of mexico in the last g20 it's not clear what we'll see. one of the areas we didn't get in to here is the whole question of regulation of financial institutions. and this is one of the mandate of the g12020 the financial stability board. if they don't get this right and gate level playing field worldwide. we'll have more regulatory arbitrary than before. it's a worldwide problem not just a european problem. here in the united we have dodd-frank, in england we have vicars and in europe we have a

lincoln report and all sort of variations. switzerland has the whole series. and the whole idea is that the g20 through the financial stability board and the committee were going come through with a series of amendments and raising dam and liquidity standards on a universal-global cooperative basis coordinated basis that would avoid what happened in the great recession. so the next one is not worse. the record is mixed. >> let me take a break here and let's open it up. let start right over here. >> jim, rutgers university. lots of economists, such as your friend rudy, from m.i.t. you mentioned are believers that competition is the hallmark of a country thriving, growing,

including jobses, et. cetera. lots of economists, even before the euro was instituted argued they needed more competition rather than what a coordinated currency, et. cetera. they predicted a bad woes for europe under the euro. you mentioned a lot of the problems on the flip side of competition namely regulation. give us your perspective in terms of regulation and competition in the euro and government coordination. >> i think it's a good question. a lot needs to be done there. >> thank you.

>> and i think that at the time that the euro was put together, and my good friend, professor at colombia, nobel prize winner had different views of how it was going to work out and what happened. that was not in his idea book because you've had regulation there. you need more deregulation. there's no doubt about it. in order get more competitively take a case going back to greece because when you take a look at the unemployment rate between, you know, 58 percent --% of youth under 25. it's incredible. even in the great depression here. we didn't have that. overall unemployment of 26%. so you need that. i must say that victor, the

finance minister in portugal. we have a portuguese expert sitting here who is a professor of economic in portugal has tried to really drive that home. the need for portugal to be more competitive and they have made a lot of progress there. not enough but i think one of the things and i'm hoping we see out of all of these countries whether it be portugal, spain, italy, all of the countries they mentioned here that we get more in the way of competitiveness. take a look at france. now france is second largest economy in the eurozone, and it's very important that you see some of these reforms that are talked about happen. we're going to get france in stagnation if not recession. go back to -- as i said there's a japanese equivalent to but the

chinese expression, this is a great opportunity for the europeans to do correctly what they haven't done before. now, whether they'll pick up on it we'll see. but certainly just like ben bernanke can't solve all problems here in the united states, also mario can't solve the eurozone's problems either. so i think the point you're making of competition are key to being worked on at this moment. you can drive a lot things through now in the eurozone because of the economic situation. >> will there be a euro in ten or twenty years? >> i think they'll make it through. i think you'll question who the members will be. i think, obviously, in the case of greece, nobody wants to do anything. you have elections coming up in germany in september with chancellor merkel, and everyone wants to hold it together. but at the end of the day, it's going depend on whether greece

can implement the program they have agreed to. and i think there will be euro. the question is what it looks like and what the membership will be. originally there was a big school of thought saying that the euro should have been the northern tier of the motorcycle. -- membership. the next year or two i think are really key. and the idea of complacency. i had talks, actually, he was good enough to buy my book last year and read it. we discussed it, i was with him a month ago and i think he's one of the more thoughtful people in the bureaucracy in brussels. i think that when he starts talking about complacency. i should say younger came out also and talked about his concern on the value of the euro on the export. i think we are far from a lot of

members of the marketplace are that, you know, the worst is over for europe. don't worry. it's only a matter of time. [inaudible] >> did the u.k. make the right decision in being a member? >> well, the prime minister at the time certainly thinks so. adds you know, cameron osborn is young mentorrees of his. you argue that back and forth at this particular point in time. the question is if you had a referendum in the u.k. today, which you're not going have probably for another couple of years. what would the vote be? most polls think it would be to poll out if there's not some sort of restructuring of the u.k.'s role. certainly without the u.k., eurozone can don't exist.

i think chancellor merkel certainly wanted to keep in the e.u. because they never went to the eurozone. they are an act i have member of the -- active member of the e.u. she wants to keep it. >> time is getting a little tight here. let's go two questions very quickly. right here and right over here. >> do you think it would enhance economic opportunities of asia if we had more asian members of congress? >> that's an interesting thought. of course, if we had some very senior members in fact the senior senator just died who had tremendous clout there. you have seen more and more asian members elected male and female. i think you'll continue to see that, you know. [inaudible] >> well, you have, i think there

are several. so you one who is a korean one korean-american, and i think you'll see more going forward because you have a lot of asian-americans who are mayors, you know, in major cities, and i think that the answer is, i think would be very helpful to have more asian-americans as members of congress. of course, you had a governor who is now the secretary of commerce who is now our ambassador to beijing. if you believe the chinese -- he's the most popular ambassador of any in china today. so popular that some mens of the government think he's -- the chinese government think he's too popular. ..

>> it would be a substantial devaluation of the mediterranean countries. and that should result in job growth and economic growth.

something to increase tourism. >> it is fair to say that historically when i talk about latin america and the careers, they have the ability to devalue and push exports. we have one of the strong points today. which is why i am an advocate. and i think that we have exports. i think it always hangs out there that that is the biggest argument. because the currency is misaligned for a country like greece. i do not think he will have a two-tier or a three tier system.

and i think some numbers will be there and others will not. i think what is important, and i think that the policymakers are realizing this as well. you cannot just sort it out. you have to have plans for growth. that was the message that i took to portugal when i was there. in june of last year. and portugal has increased exports stay substantially. evaluation will won't give you that because you have to have deregulation. those are even more important. because it only lasts for so long. where is if you make the major

changes, and this is going to be challenged. you had 14 of these stimulus programs. none of them have really done the job. you have to bundle them up and put them through. that is the best way that i can answer you. i think that where europeans are falling down goes back to the question. he did not put the emphasis on being competitive. nor did they drive the fiscal side and they allowed it to happen and look the other way. now they are paying the price, but so is the rest of the world. >> ladies and gentlemen, i am afraid that i have the bad job of saying that i think we better hold it there.

>> i so want to make my point. >> okay. what a nice presentation. [applause] >> tomorrow, the founder of trans- africa, randall robinson, is our guest in and out. that is here on c-span2. >> the pentagon says it is doing automatic budget cuts on many employees. many will be to put on unpaid leave for 14 days this year. a reduction from the days initially planned. here is part of chuck hagel's remarks from the pentagon. watch this at c-span.org.

>> to confirm a story that is already out there and has been out there. we are going to reduce and the way these furloughs. but not eliminate them. it looks as though we will be able to go from an original estimate of 22 days to 14 days. we think that will save the department anywhere from $4 billion. and probably plan on about

2.5 billion. these numbers are floating, as you all now. good news from where we were before. many are working these numbers and i understand that there is going to be a briefing after we are finished here on that. let me hit the current budget situation in a little bit of detail. marty may have some thoughts on this as well. what the resolution has done for us -- it did fix some of the urgent problems. in particular, it puts some of the dollars back into the right accounts. we still don't have the

flexibility that we had hoped to get. but having money in the right accounts is particularly important. what that does is reduce is a shortfall. at least in the operations budget. and you also know that we came out better than we went in to the sequester where our numbers were $41 billion now versus the 46. and it gives us program authorities to start new programs. which is significant. some of the things that we are still looking at and working through, 41 billion is the number that we are having to

adjust to. this budget is about $7 billion higher than we had estimated. it is more expensive in some ways than bringing equipment and troops out of afghanistan. and many other contingencies as well. and the operation and maintenance accounts, where we will be short at least 22 billion for fiscal year 2013, we are going to have to deal with that reality. that means that we will have to prioritize and make some cuts. and we have some of these

specific things that we are going to have to do and are in the process of doing and we anticipate that we will have to do. cutting back the base operating support, reducing non-deployed units, i have already mentioned the furloughs. and we won't be able to eliminate those. >> chuck hagel talking about furlough days from 22 to 14. you can watch his entire pentagon briefing at c-span.org. >> coming up on c-span2. booktv. we will hear from the former head of at&t, ed whitaker, who served as the chairman of general motors.

his book is american turnaround. in a book by the former ceo of aig, maurice greenberg. later, banker to the world, leadership lessons from the frontlines of global finance. >> this week, north dakota's governor signed an too long new restrictions. on her next "washington journal", we will look at state abortion laws and the legal challenges that they face. then same-sex marriage before the u.s. supreme court. later, a roundtable discussion of the economy. "washington journal" airs each morning at seven eastern on c-span.

>> when they first moved here, he spent a lot of time at home. they would've largely been friends and relations in the area. very cordial and welcoming. during his name from 1815 on, they had lots of companies and they had many parties. and, you know, they were entertaining people who were used to find things in the city. and so this dual image of this from the country lady, she was not that. it was more about her comfort in

the big city than it was about her actual appearance. >> our conversation with historians and rachel jackson is now available on our website at c-span.org/first ladies. >> next on "after words", ed whitaker talks about his memoir, american turnaround. reinventing at&t and gm and the way we do business in the usa. his book was recently published. this is one hour. >> host: thank you for joining

us today. we are talking about the book "american turnaround." yet, the book is very optimistic about corporate america. welcome. >> thank you, it is nice to be here. >> host: he became chairman of general motor's immediately after the company filed for bankruptcy. why did you do a? >> i became chairman when it came out of bankruptcy. when they came out of bankruptcy. it is a good question. because when they first asked, i said no, i know nothing about this. and i was retired and i was sort of in the late 60s. but i kept talking to steve ratzinger, who was the car czar. i kept thinking about how my family had owned general motors all my life.

i drove one and what a great part of america it was. ultimately, i said, okay, let's give it a shot. so i finally said, okay. >> before you accepted the chairmanship, did you have a point of view about the government bailout? >> i just knew that they shouldn't go away. frankly, i did not follow it closely in the news. but i knew in my heart that they couldn't go way. it is too important to this country. >> host: how much of your decision was based on something that was more emotional. the idea that general motors shouldn't go away. and then the jobs and the suppliers and the entire ecosystem around the auto industry? >> guest: i had the emotional feeling that general motors couldn't go away. once you got beyond that feeling, you could think about the impact it would have for jobs. one fellow follows the other.

>> host: the bailout triggered a lot of emotional reaction. the government is stepping in to save general motors. what is your reaction? >> guest: there were a lot of people and pundits have said that that shouldn't happen with taxpayer money, although it already had with some other companies. i think it was the idea to bail out a company. a lot of people felt the opposite as well. so it was mixed emotions. >> host: i hear people criticizing the government. i am sure you do as well. have you been able to change anybody's minds who have talked about the bailout, thinking that in retrospect it was a good

idea? >> guest: we became known as government motors. it continues to hurt us today. but we did take out a loan and paid it back and pay back equity that the government may. yes, i think people want us to succeed. the label is still there. it still affects some people. but i think it is less now. i think once the indebtedness is totally paid, i think it will go away. >> host: in the book you talk about what he found when he arrived at general motors. a lot of it was not necessarily apparent to the public. what you found when you look understood, can you share with us about some of the surprises? >> i saw certain things, others

i didn't. the row was quite low, as you could imagine. but i saw a confused company that didn't have clear direction on what it was to do. what mission in life was, if you do not mind me saying that. it was bureaucratic, not well organized, matrix management, i just thought in general that it was a real mass. >> host: what was your approach to untangling this mass? can you walk us through what the first and second and third things that you did were? >> well, i will do my best. the first thing is we had to determine what the objective was. what the aimless. what you are trying to accomplish. nobody could tell me that incidentally. i found that very interesting.

i asked the question, what do we do with this company. we hash that out and finally decided -- it didn't take long -- that we would design and build the worlds best vehicles. it is pretty simple. that is our only mission. that's what we sent out to do. we defined what we wanted to do. anything that did not pertain to that was sort of superfluous. we defined the mission. then we cleaned up the organization. there was a management group, which meant that we needed to fix that. when you have several bosses, you really don't have a boss at all. so we started to streamline the management. made it more direct line reporting. and we organized and had an organization chart that one could understand.

we streamlined and preached design build to everybody from the start. we spent a lot of time on the assembly plant. the senior management it, i did. and i think the most important thing is that we made people responsible for the job. we gave them the authority to do it. and we held them accountable. only then did we start to make real progress. but that did not take long. that was key. >> guest: based on your experiences and talking to the management team, how was it that gm came to lose its way? not just on the product side. but in terms of the belief in the company. how did they get from where they were to what you found in 2009? >> i have heard a lot. i have saw some of this.

i have asked several top-level people. i said, how did we get in this mess. what went wrong here. you know, i got the answer from some that we didn't do anything wrong. the economy got us. which begs the question why didn't he get the other automakers. so that was not a very good answer. but i think there was an attitude. i have heard this from others as well. this is general motors, this is the way we do it, take it or leave it. this is what we do. i think holding to that attitude over a long time probably got them in trouble. >> guest: it is a common affliction among many organizations. talking about the other big organization. more generally, why do you think it is so hard for large

organizations to adapt. time and time again, the writing is on the wall. if they can't make the change. what are your thoughts on why it is so hard for companies to adapt. >> guest: i think it all comes back to management. i think one of the problems is maybe you get to thinking you are better than you are. you are unwilling to change. bureaucracy plays a role in that. the bureaucracy is built up. people not having enough to do and not feeling important. so they set off to implement new rules were put in new guidelines so that they can feel like they are part of the business. so you build in these bureaucracies and checks and balances. once you get an organization, it is very difficult to be flexible in sleep that way. so it ultimately goes back to

management. people just can't react. >> host: it is a challenge to be big and clickable. can you talk about your experiences? which the predecessor company, one of them is southwestern bell, the company became ceo of. and it basically ran through a wireless player to a global data company. how did you try to keep them flexible even as it was growing, in some cases doubling in size with opposition? >> guest: i certainly didn't do things perfectly. i don't know that i deserve all the credit for that.

but one thing was to keep active. and i guess that goes back to being headquartered in st. louis and we had been there a long time. people were set in their ways. in my case, i thought i would shake things up and say that this is not the same company. there were other reasons. so we did that. and so i thought people keeping new challenges together, management and nonmanagement is a good way to stay flexible. just when people wanted to settle down and start building the bureaucracy again, i always thought it was important to do something else to focus on. and i think that helped. not that we were totally free of

bureaucracy, but thinking that our objective is to be the biggest and the best and doing the best for our stockholders. to keep moving. i think that he had a huge effect. >> we also had a number of smaller deals and alliances. companies and innovators. can you talk about the potential importance of organizations and outside thinking in the form of innovators? >> guest: yes, not all of them were successful. but i will give you an example. we had a large yellow pages company. we formed a partnership with a company. we wrote software for yellow pages. and that greatly helped us in

our business. well, they had the talent and the ability to do that. we did not. we made a financial investment. they did is a great job and we were great partners to them. we did that several times. but i think that's a good example of that we did not have the capabilities to do that. i didn't want us to to get into things where we have no business, like writing software. so we formed an alliance or partnership. it worked out great for both companies. some companies want to pursue everything themselves. it is not necessary, it can be done. you sort of lose your way. you're much better off in some cases to form an alliance with somebody else to get it done. >> host: what are the examples that did not work out so well? >> do i have to talk about that?

>> guest: we had several. several things didn't work. we blew a few. >> host: there was a time when it seemed that a lot of the telecommunications companies are moving in a lot of different directions. some companies invested in cable and others invested in movies and hollywood and even the operating companies join together. they were remarkably disciplined in terms of the mission. can you tell me about where that comes from as a manager?

and how you keep your team focused while also looking for the opportunities that are potential blockbusters? >> guest: that was mostly common sense of the management team. we knew how to run a telephone company and do that for a number of years. most of us have grown up in the business. we could see changes coming. we had no business talking about computers. we didn't know a lot about it. all i could see it is if we went down that track, we are going to lose a lot of money and a lot of time. so early on we decided to stay focused on what we knew how to do. >> host: how much of management is common sense? that seems to be a theme that runs through the book. certainly your comments subsequent to the book.

do you think that it was by exercising good common sense? >> guest: that is what i have to say. i think it is mostly common sense and that is the term that i use. it looks logical and it makes sense. you can get people involved. it is not rocket science. i think it is mostly common sense. >> you talk about the different managers to help you in your career. did you learn mostly from good managers or did you learn from the supervisors and managers who were cutting it? >> i am not sure that i've ever been asked that question. but since you asked. i think you learn as much from

the good ones as you do from the bad ones. you and what to do and maybe what not to do. and you can't duplicate some mails. you have to be yourself, but you can sort of get a general idea of how to act and how not to act on what to do and what not to do. but i do think that you get some from both. >> host: how did you deal with your career. when he saw people who were not adhering to the values of the company were not getting the job done. what was your strategy dealing with this? >> i believe you have to get a feeling. maybe they don't know. maybe they don't understand. maybe they are good people. i think in the final analysis if they are impeding your objective of designing the world's best

vehicles, being the worlds best company in the world, you get rid of them. you know, that is not a heartless thing. if you don't do that thing, you heard everyone else as well. you are impeding everyone else. so it is not as harsh as i make it sound. sometimes there are other jobs that people can do. but you can't let roadblocks stay in the way of everybody else being successful. so you just have to move in and make some changes. >> host: at the outset of the conversation, you said one reason we are reluctant to take the job is because he didn't have a background in automotive. over the commonalities that he saw from your experiences and general motors. over the things that he felt

were common ground? >> guest: there were a lot of people in at&t and also gm. they were union forces to consider. there were a lot of similarities. organizations, peoples objectives. a lot of commonality. a big cultural difference? no, i do not think so. i have never really noticed them between companies. everybody talks about the culture here or the culture there. i have always found that people are people and they have the same objectives and ideas. >> what are some of the things that you did to get up to speed on manufacturing? >> i was really on a steep learning curve.

and these people are all smarter than me. this is incredibly complex. you can believe it. thousands of parts. but i grabbed engineers, designers. spent a lot of time with them. spent a lot of time in the assembly plants, looking at these things, it was just astounding to me that what started out turned out to be a problem not many minutes later. but i guess you learn by observing and watching and asking a lot of questions. and that is the only way. i didn't do a lot of reading or anything. >> host: in terms of the turnaround portion of the business, were there other executives who had attempted? was there anybody that you got advice from?

not really. that doesn't mean that i wouldn't. but i didn't know who to call. i didn't know what to do. inside gm, everyone was kind of charge or tartar undercard. we have some very talented people there. we still do. i set it off with internal team that i had with a few changes and just kept going. many can tell you. i just kind of went along with the gm people. >> host: can you talk about your relationship with the board of directors? because he started out as a chairman and ultimately became the ceo. every step of the way. you needed the boards support. how did this forge a relationship and what was the

dynamic content dynamic like and how did it evolve? >> guest: some of the board members left during the bankruptcy. but then we appointed more to get to a normal sized board. some i knew beforehand and others i didn't. the government made recommendations. we asked them to be on the board. we said that the approach we were going to take, which was straightforward, we were sent there to fix gm. that was the mission. to make this thing a viable company again. we were very focused and brought the message that we will design and build and sell the world's best vehicles. we need to move quickly. we need your support.

so we shorten these things considerably. we stayed away from the details. the bigger question of financing and morale and positioning and marketing in that sort of thing. the board was very supportive of that. he kept them informed. we just took off. >> host: talk about the urgency in your mind for getting out from underneath t.a.r.p. you talk about people being under the embryo and the impact that it had on employees and on morale. why did you feel was important to get out from underneath the government program? >> guest: i thought the employee morale was not the best that it could be. as you could imagine. i think some were shunned by

their neighbors. they felt defeated, beaten down, not worth very much. you go home and there are people on both sides. so that was a big factor. the other factor was we were labeled government motors. the dealers were fat, the potential customers told us that. we had to get rid of the label are you also some other things, we were not in the lower end of the credit. we found out quickly that people were more likely to make their car payment on their house payment. we theorized you could live in your car, but you couldn't drive to your house. we did but we did not participate in the market. everybody else did and i was a huge number of sales. the sooner we can share the label of government motors and

start talking about what a great car we were building and put our money where our mouth was and where it employs would see some success and pay back some of these indebtedness to the government, the morale would improve, and it did drastically. the equity interest and to be able to pay that off and make the employee feel better. because people are the most important part of any company. if they do not feel good and they are not involved and excited and responsible, you just don't make it. we set out to do that quickly. >> host: critical to that is ipo. you have never been ceo of a company that had given ipo. what was that experience like?

let's talk about a young company, some company that is going to be hot off the gate. what was it like for them to go public? >> we had the government, the canadian government, some of the bondholders, initial public offering to go public is something that you do normally as a young company. but we were determined to do that. that is the only way we could pay back the equity. of course, the ability depends on how you are viewed. are you going to be successful in the future. are you making money.

can you pay back debts if you owe a? do you have a future? and so we were making any money after bankruptcy, of course. we didn't have any of the factors that would allow you to be part of this ipo. you would never get your money back or make the return. so we knew that profitability was key to this. early predictions were that it would take two or three years. but that proved to be false. we started making money very quickly in january or february. we made enough money to pay the loan back very quickly. so we pay back the loan and we still have the equity. every quarter and month, we were selling more cars. you could see renewed faith. they were building a good product. so we started talking to the

government about maybe we want to do this sooner than we thought. maybe a lot sooner than we thought. as it turned out, we were profitable enough and going strong enough in our volumes were good. our business picked up. it was done in november of 2010. so it worked out very good based on those factors. >> host: but to get there there was a struggle. you bite in the book that the internal concern was that the government was getting a little too comfortable having a grip on gm. what did you mean by that reign. >> guest: i must amend something, but i don't know why. the government let us run gm. we did not get any day-to-day oversight. we had a very cordial relationship. and they let us do it. but it was most important and i

think we wanted to go quicker than the government had in mind. we kept pushing that. it did not seem to be their top priority, but it did turn into that. it helped us get rid of the label a little quicker. the label is still there a little bit. but it is gone. you know, the government is a smaller part of that. gm still has some work to do to pay back the taxpayers and all of it. but we are getting there. and i think that the government was difficult. because t.a.r.p. established many things around the business. and everybody could understand that. but over a period of time, you obviously had to be able to pay the same salaries as everyone

knows. you had to be competitive on the market. the sooner that we could do that, the better off we were. it was important from that standpoint for us. >> host: it sounds like you were a little bit surprised that they didn't extend an invitation for you to come to washington despite your offer to talk to them. were you surprised by the dynamic between the company in the federal government? was a not quite what you expected? >> when i reflected back on it, there were other companies as well. other companies going on in the world. several companies with the government had bailed out. we were among the smallest.

he didn't seem to be the top priority. we needed to do that. we needed to do that in a reasonable period of time. >> host: when you reflect back on american business, i am struck by how low the confidence levels have become. a lot of it was directed at wall street and the banks. they would fill out a survey where many are distrustful of corporate america. what do you think companies can do to rebuild that trust. we have an obligation to restore the pride in american business.

>> yes, it is the largest manufacturer in the u.s. i think the corporation have to be trusted by its customers. you have to stand behind it, you have to be involved in the community. there is a lot of things to do. once you lose your reputation in business, it is tough to get it back. or it doesn't happen overnight. you have to work at it. what you do to give back his produce great products at a fair price. you have employees that are engaged. you participate in the community. you are receptive to certain things. but it doesn't come overnight. you have to stay with that. and i think that is the way you get back. >> host: this book is optimistic about business. what is your optimism come from? what are the moments in your

business career that you can contribute to the positive outlook about business in the country? >> guest: i am from at&t and gm. i saw the power of people and what people can do when they have authority and you let them go. there is a great resource that we forget about. looking at what they did. there were 3 million or 4 million customers. now there are hundreds of millions of mobility industry dead. we forget the people. people have an amazing capacity to do things. look at general motors. how can you not be optimistic after watching that?

to a very successful company doing great with employees and great vehicle is and how could you not be optimistic? i think that applies to every sector of business. it is terrific. >> host: it is really remarkable and people do certain things. >> guest: is a huge resource. >> host: you write about modest

background. really pulling yourself up by your bootstraps. i have met people who have come up from an upbringing who tend to be a little better or rough around the edges. they don't quite embrace the opportunity. you attribute that to your family and the way that you were raised? >> guest: i do think that my family upbringing had a lot to do that. my mother was not the most optimistic person in the world. but she said to you just keep on going and you keep on trying, and good things will happen over time. i believe that that is right. i am not optimistic on the time. i am not pessimistic all the time. but i do think it's a great opportunity and persistence is one of the main keys to success. if you keep going and have an objective in mind, you have a chance to make it.

if i can make it, anybody can make it. i don't know how it all happened to me. i have seen the power of people and what is going to happen. not everybody wants that. everybody is different. but it can happen and i am optimistic about the future in the country. >> guest: my mother made me go to college. she looked me in the eye and said oh, no. you're going to go to college. i was taken back by that. and i did. and good things happen along the way. >> host: digester dropped out of

college? >> guest: yes, she did. her father was in the depression, he had a business. she went back home to work. she only taught for a short time. i guess just a couple of years. but she was a smart woman. >> host: clearly valued for education. >> host: the rest is history? >> guest: i was at texas tech between my junior and senior year. i needed a job. as you said, we were a modest

company. i went to the employment office in dallas and told him about how we needed a summer job and he said that we don't have any, we are all full. and i said, you don't understand that i have to have a job. and he said, well, we just don't have any. and i said, well, i need this job and i will do you a great job. i will essentially work for very little. whatever it took. and i guess he took pity on me and said, we have a job for you. the rest is history. >> host: how did you overcome your shyness to viper job. and later in life, interact with a lot of people and communicate

with a lot of people. do you think you were always a fundamentally shy person? wasn't tied to something else? >> guest: my heart beats fast still in situations. so i think i am still shy. but if you really need something, you can sort of overcome certain things temporarily. but i think that i have always been shy. i am not a great social person. i do not think that i ever will be. i enjoy people a lot. i like being around people. but i still have my shy moments when my heart beats faster and you say, oh. you know, you just deal with it. and you get better with age.

>> host: talk about how you evolved as a leader. he became the ceo of southwestern bell in 1990. do you think that i could've stepped into general motors in 2009 and to do what you did just a few years ago? >> guest: i do not think so. i think that all the years helped me prepare for that. i've learned a lot in the 17 years. we did a lot of things. and you just get wiser with age. maybe you get a little bit more wisdom. i think you do learn some things. so that time as the ceo and chairman was most helpful. >> host: at at&t, you had a lot of interaction with gov at&t, yt of interaction with government. state and local and federal

government. not all that was positive. at general motors you had the relationship with the government as well. what are your feelings about the institution in the united states? are you as optimistic about the ability of our government to continue to be a beacon of democracy and inspire our citizenry in the same way that america can restore its luster? >> guest: there are a lot of things going on in government these days. it seems that common sense has kind of gone out the window. it seems like there is not much agreement. it seems like no one is willing

to compromise. but i hope what goes around comes around. i hope some of the uncertainty goes away with time. i would have to say yes, i am optimistic. surely there are some leaders they are that understand the america people and can make that happen. >> host: you mention in the book people that came to the world of business. in a number of these individuals like you working in business for a number of years. and for whatever reason, a sense of public duty to help at times of difficulty. do you think that will continue? using government is a hospitable enough place to come in and make an impact?

>> guest: i do think so. i think that people will still do public service and many others. i have been fortunate. i have seen how things work. i want to do my part to keep this country great. yes, i would volunteer. i think anybody would do that. i think anybody would do that. >> host: throughout the history of at&t, there has been a long-standing effort to push consumers into products and services, going back to the earliest days when bell labs was part of this family. we talk a lot about the impact

of the entire world of media and consumer electronics. that was a risky move at the time. what inspired you to pull the trigger on that? >> guest: managements duty first is to do well. the only way he can do well what the stockholders continue to make their investment better, and i do that through dividends or growth or increase stock price. but you can never stand still. if you stand still, you just are not going to make it. so here came this great idea with the iphone. risky as it could be. and steve jobs wanted a lot of money for these things. it was kind of an unproven

technology. i knew that we have a network and this thing had to have a network to run. and he had the device with the capability. so it comes back to that common sense again. you just have a feeling this is going to be important. is it worth taking a risk for? well, it's not something that you agonize over. you already know the answer. this is risky, but my work. we are not betting the company. this is worth taking. let's push our chips on the table and see what happens. and that is what we did. we got lucky on that one and the rest is history at work. >> host: i realized you delegated a lot of the day-to-day.

around the issues of control. for a long time, telecommunication companies wanted to control the consumer experience. as much as it could. that is why we had the phone company that could provide you with your caller id and your call waiting and a bundled package that you got from a provider. >> guest: it worked pretty good as well. >> host: for a long time. along comes steve jobs. he wants to be the front and center person in the relationship. i realize that there was not much discussion around the wrist and worker that was their conversation about control, especially to a third-party? >> guest: yes, there was a lot of discussion around that.

we were just as convinced that we were going to control the network. and there was a lot of back-and-forth. more than we can imagine. there was a great deal. and one said, we will never do that. we will never do that or this. it can't be done this way. no way would we do that. but i think we all agreed that it took a network in the device. we had to give a little. but we put a great product out there with the network. but there were a lot of things. >> host: a really good unleash not just at at&t, but all the carriers, a new mentality of --

you didn't have to be the person that could build all the things and provide all the weather. so the result is to be a much richer experience for the consumer. >> guest: we do, we like the network being used. ..

i know good things are going to have it. a lot more is going b. if you ask me to tell you what that is, that would be difficult. post goes surely, your worlds collide as the car becomes much more like a smartphone if you will. the dashboard of the car is becoming very sophisticated. who are your thoughts about the level of information to knowledge advancements in the underworld when you got dare? the luxury automakers have been focused on information technology and is now starting to proliferate in the mainstream

auto manufacturers. >> there was a lot going on, more than i thought. a lot of thought in the technology of the car. the car be a wi-fi hotspot and one that you don't go away firm. one that stays with you the whole time. there's some interesting things, like you can't do wi-fi and drive at the same time. but there are appearances. there's a lot of thought being put into that. we are going to see some drastic, radical, interesting changes. there's a lot of work going on. all of this comes together at some point or another. it will be interesting. >> host: will be the most exciting things you thought either in the vehicle side or the technology side and your

final days at general motors? >> in my days when there were sparked to send carburetors and they, that's pretty gone cars pretty much run by a computer. maybe most people don't know that. i certainly didn't come up that's all exciting how that works and the possibility of advances fair. different propulsion systems is interesting at general motors and like we had the chevy volt, which was an electric car, but she didn't have to worry about range anxiety. you could go up to 300 miles of the car. companies have a responsibility to explore it in the control of to. these interesting development. new designs are exciting.

better gas mileage. that's exciting. the ways you can do that. people talk about this sounds silly, tires with less friction. go get more miles a gallon, but no friction can't stop. there's real world things to talk about. but i think it's exciting what's going forward. the same thing is true of at&t. look at the data explosion of what is happening. we may be limited based that term and so i'm sure there'll be new technologies to overcome that. it's an exciting time. it's a time to be optimistic. >> host: how do executives, ceos balance r&d and innovation with the very real day-to-day pressures of earnings-per-share and struck

price and shareholder pressures? surely had to deal with that of both of your come knees. what's the formula? >> guest: wheelies that the number one duty was to perpetuate the come to me. if you take the viewpoint we have to perpetuate the come to me, maybe you have to do be prepared for up-and-down earnings, which you must perpetuate the company for its people in private and very survival. if you take that view, you're willing to spend on capital projects and do more in that realm. i think you understand that it's necessary to do to stay in the forefront. if you have that mindset, you're probably pretty good. you have to sometimes take your on some of the other measurement the analysts want quarterly earnings. >> host: kind of like a ceos. >> guest: they would like to have daily earnings. but quarterly earnings.

i think we always did look to the future and understand you have to maybe take some every now and then to perpetuate the business and that's the most important. >> host: as you had in fact and changed at&t and gm, take you to take a few minutes and tell me how each of those companies changed you. let's start with at&t. how do you view at&t differently than when you came in? >> guest: i was tired or her. a little more tired. i have a lot more gray hair. i think i came out knowing the power of people and having optimism in the future and turn in the company over. i probably had less patience than when i went in. you tend to want things happen faster and faster and you run out of patience.

i felt comfortable the company was going to do just fine without ed whitacre and i felt good about the people. at gm, i think i saw how quickly things can change and never got to really absurd that it at&t, but how quickly things change in people get behind something and make it happen. so i came away knowing more than i ever knew that things can happen quickly when people put their mind to it. so it's more now about the power of people. it's not quite as bleak as many people think for america appeared in fact, he knows it's not quite as bleak as people think it is for america. the one sure thing that has changed but it is today will be

different in a few months, a few weeks, a few days. he knows people are adaptable if you let them do that. if you can keep the bureaucracy away things cannot then. so he's changed a lot. >> host: are you a car guy now? >> guest: i like to think i am. i sure know more now than i did. from that standpoint, car guy. >> host: what do you drive today? >> guest: i ready cts the cadillac and i love it. posted thank you so much, ed whitacre. the book is "american turnaround: reinventing at&t and gm and the way we do business in the usa." it's been a pleasure. >> guest: my pleasure, stephanie. thank you very much.

>> when they first moved here, he spends a lot of time at home. the primary people who would have visited prior to the war of 1812 would have largely been friends and relations from the area. rachel is a pretty nice hostess. very cordial and welcoming. during jackson's fame after the battle of new orleans, pretty much from 1859 through the rest of rachel's life, and they have got some massive company and they had many, many parties or

evening dinners here at the hermitage. they were entertaining people who are used to finding things in the city and they appreciated those fine thing. this kind of dual image of her as frumpy country lady, she wasn't that exactly. it was more about her comfort in the big cities than i was about her actual appearance. >> the former ceo of aig, hank greenberg talks about his book, "the aig story."

>> good evening to all of you. i think will get underway. first i'd like to welcome you to the center for national interest and i like to think it president, dmitry science for bringing us together this evening. thank you for that. i'd also like to welcome hank greenberg to the century. he's the chair and a first in that regard went to thank you for your dedication for many years, starting at his creation and development in advance and company have devoted time, energy, passion and substance really to the center and now as it is the center for the national interest and thank you for that. hank greenberg has also not only made a substantial contribution to this center, intellectually and in many capacities, but he

also, as they think a number of you know in this audience has made a substantial contribution when you are vice chair of the council on foreign relations. i had to mention that because they happen to be headed the office and my first meeting with hank greenberg by the way was an interview. those of you who know my skills to suppress them into time of cfr and pete peterson was the chair. so we were sitting outside of hank greenberg's office and last but the fear of god in me because he said we are going and to meet with hank greenberg. he's a renowned businessman, made a tremendous mark on the development and of aig to write, time efficient, no-nonsense and i'll look you in the eye. he told me, make sure you are direct, look them in the eye and

get to the point. so i said i will. the good news is i got the job. , if i may say, hang on this book, "the aig story." the book underpins with hank greenberg has failed. i like henry kissinger's inscription in the back in which he talks about your being truly a major figure in american business in the 20th century. someone who is principled, strongly committed and does not waver on what principles in a time of crisis. this story really substantiates to that. the book is not only a chronicle of his personal story, starting

with his departure from the unit army officer in the korean war and its entry into the insurance industry with continental casualty co., the 10 going on to become the head of ceo h. aig. bringing it to what became the largest insurance company in the world with almost over a trillion dollars worth of assets. slithers the outside, but also the other side should seek start at one and one we will probe especially today. that is the substantive side of this book, which specifically set forth some very profound and serious questions about government regulation in the financial industry. what are the unintended consequences of this kind of

regulation? and what it does says in this case we witnessed the rise and fall of aag. what it does for the organization and in this case to a business that was truly national asset to -- for the united states. this is a must-read in with that i want to turn it to hank greenberg. please join in welcoming him here today. [applause] >> pollack, thank you very much. i want to also recognize dmitry, what makes this work a nation go. i live in new york, he's here in wash and wear the organization is and i try to talk quite frequently, but he's the man that spoke this organization. no misunderstanding about that.

i also want to recognize the ambassador from the philippine. we were together for many years. he ran one of our biggest companies in the philippines and i'm delighted he's been recognized to be a master of the night date. why did i write this book? a couple of reasons really. there were hundreds of thousands of people at aig who worked with me for years and i believe their story has to be told. how did we get from the public, had $300 million of market value when i left at the end in march 2005 as 180 billion. so we had great growth.

it was accomplished by many, many people. i'll get into that in a moment. aag was an outgrowth of the star companies come a small collection of insurance companies that the founder put together. i joined him and after several years they succeeded him. we added several insurance companies, small ones and to some public and something caught aag. the star companies were never part of aag. they were kept out because they were too small to be put in aag and i'm thankful we did that. [laughter] innateness and within minutes the time. we grew rather rapidly.

there's several things we had in our genes that made us grow from where we were to become a large insurance company in history. obviously the people. if you want to cause mavericks, we would not. we were the traditional type of fund or writing, where most of the business was either automobile for homeowners with very little growth in anything that was new. although marchers were going to london and we believe we should be a market in the united states they really could accomplish that. that was on the general insurance side. the life insurance site had a small company in the philippines but didn't stay small for long. it became a very huge company in the philippines. as we did with other companies. great american life and operated

in many countries around the world. we brought a new vision to the insurance industries, both in products, innovation and management structure. we introduce something i learned when i were, was a great company but never worked. a sudden agency department and underwriting department. at the end of the year they lost money in one to blame the other and that went on and on. we introduced a profit site or where one person was in charge of products, marketing of it. you know who's accountable and there's no blaming anybody else. it is your accountability. that structure was so embedded to aig thinking that the people who understood it unfortunate state of the company.

those who couldn't live under that structure didn't want to be held accountable when off to our competitors. that made us stronger and weaker in his operated worldwide. there is a culture of the company that culture doesn't happen on a maniacally. the culture we had was a winning culture. the senior people were together very well and the is initially at aig was made up of mostly inside people running the company. we have some very fine people at the time. all of that changed. the first part of the book touches on that, but to show what we meant to the country overall is a couple of it and

it's about replay. there is a book written on something called the glomar marine. a book about a russian sub that went down in the northwest pacific and the russians didn't know where it was. they look similar and couldn't find it. the u.s. knew exactly where was and wanted to recover it because the codebooks were important in the technology was important. it was decided they would try and recover. it is a general counsel with his deputy and a deputy of howard hughes because if they were going to do that, they had to build a vessel, a very large vessel with a hole in the center

that was scooped this hubbub. you have to think about what they decided were doing or looking for that of emma would have been if they fired. couldn't bring it to i.e. we put it on the beach. i wasn't going to work. they had to find some pacific island and obviously was in u.s. possession and starts there. we provided the insurance that operation. there weren't many companies don't have the vision for the underwriting skill to take on a project right away. i happen to be -- while the operation is going on, i was in hong kong and newport meeting of

aig when i had a call from the agency that the "los angeles times" hipper the story. during the course of the recovery. obviously that didn't provide the kind of information, even if you got technology that they had or didn't have. but there's one example of aig's value to the country. there are many, many stories like that. i was asked by a highly official to go out and meet with president marcos who i knew very well because we have authorization should need. there's more terms as president than either permitted by law.

he was going to stay as long as he was alive. the evolution is possible. marcos was ill. he was on dialysis. i did go out. admiral law who had been head of the naval forces, who had just retired. also john reid who had been the head of citigroup at that time. they had a big operation in the philippines. so we had dinner with the president and i decided i would wait until dinner was over. thank you it to stop down the type of your game. i'm not going to lose. i'm going to win the election.

but nobody would believe that. you overstate. step down while you can. so what happened, he went on. the election was held. there were uprisings in the country and things went on to. the u.s. had to take a helicopter and flew him to hawaii where he subsequently died. how many companies that you know what provide the services to the country? [laughter] there were many, many others. the point of the book was to say how different we were and how valuable an asset we were to this country and the thousands of people that made that possible. the second part of the book is what happened. we had in new york a attorney

general who decided there was a lot on the books of new york called the martin act, enacted in 1921. it was designed as a doormat -- one of the staff dug it out. it's silent as to intent. if you could accuse somebody of a fraudulent act, he took the position to prove intent. so you can go after anybody who's made and missed take and force him into submission or to go to trial. nt is that it can many companies have agreed to settle them and

paid huge fine. what happened, what caused them to go after me, the two things that were mentioned. i was on a conference call with security analysts and asked me was the regulatory environment like today? this is after enron when there is a change in regulation in the united states. is that it's like a murder charge, trying to explain severity of the change in the regulatory environment and it did change. sarbanes-oxley brought about in our machine's in corporate governance and directors of companies felt vulnerable, so they all wanted their own way of representing them on the board. what happened to ceos of

companies were really downgraded in the management of an institution. in some cases could, in many cases not good. when a board is trying to run a company is operating in 130 countries, with the management knows moment to moment was going on, direct risk him four times a year no matter how diligent they are. it's rather difficult for them to have a detailed knowledge of what it is to run that come to me. the management of aig was on the road constantly and our regional executives, reporting this on a real-time basis. i could tell aig result by two

days anything i want to know about the come to me. so throughout the quarter we know how we're doing in every part of the road we operated in. so in the year 2000, we have consolidated an insurance company called transatlantic reasserted a year before and we had a thing about a 40% interest and went up to 50% in that year. i had just come back trying to catch up, without being in their areas and one of them said we're going to show a little bit of reduction in reserves in the quarter. we had about 25 billion of property casual reserves.

what does that mean? when you have reserves, when you're playing claims, the normal process after you pay it, the reserve comes down. the transatlantic that we just consolidated had been paying catastrophe losses and so they were down 40 elion of the 56 million. that's an inconsequential number. it's nothing. and so, one of my people said why don't we get what is called a finding reinsurance treaty, which essentially common in the current industry you have premium sunglasses from a reinsurer for a finite period of

time. in order to be counted as reinsurance, it has to be 1% risk factor. 1%. we have 500 elion of premium, whatever the number was of lost reserves from a warren buffett come to me. they happened to be at our largest reinsurer, so it was logical to talk with them. i made a call to the president to a new very well, a very honorable guy. he said he would check to see if they have the proper portfolio. the cub packs several days later and said we can do this. i was out of it after that. we used to do 40 million things the year.

so buffett had a company in virginia that had done a transaction that led to the company's bankruptcy in the two top people went to jail called for medical goods insurance company. so buffett was asked, did you do any of these other deals and he referred back to the transaction five years ago, which was approved every year by the auditors and gave mr. there are the transactions they had done. so spitzer jumps on this transaction. he did a reserves from premium. he could talk about baseball and it would've been the same. he had no knowledge. he used that to bludgeon the board.

and my friend, mr. khan was on the board at the time. a standup person i might say. he was on the board. probably the only two who fought the silliness being presented. the auditors approved this for five years in a row, withdrew their approval. if the auditors don't sign off on the year-end results, that will cause a little shakiness in the value of the come any. we're a aaa rated company, had the highest rating and a growth pattern that was the envy of the whole industry. it was clear spitzer was going to demand my head.

this change in corporate governance that i referred to really became a great example of what happened, the destruction that led to was just unbelievable. there was a meeting holub uptown tpd was the head of the firm and a good friend of space there. he was the talking part or in the other lawyer firm, which is a corporate lawyer for aig had been an associate enough for. it was really evenhanded you could tell. they had a meeting and decided i should start down. i was going to step down in may at the annual meeting. this is in march.

i was going to remain as the chair for a couple years to see how the transition was going to work, which i thought was a reasonable thing to do. spitzer demanded i leave then. i said i wouldn't do that. they came back and said you can stay as chair. i decided how to make a trip to malaysia and china and decided i was not going to remain chair. i asked the reporters to write a letter. i know that as the auditors, though, this transaction effect shareholders equity or earnings? he said no.

you've approved it for five years in a row. we can't do that now. it was clear they were getting pressure from the national office and the national office is getting pressure from spitzer. he asks, just circle that i don't approve that. it has no effect on earnings, so what's the difference? he wouldn't do it. it was clear that spitzer had one aig over. they then paid spitzer is $6 million find. that led to class-action suits were several billion dollars more. seizing about what this man did. he went on national television and accused me of criminal fraud

without ever having an edited or presenting evidence that i did anything wrong. john wrote an op-ed in "the wall street journal", commenting, how can an attorney general to this to one of america's leading ceos? spitzer called him and threatened him the day after that. so clearly would have been in corporate america is sports lost enormous power. pour soup over more and more responsibilities. is that good for american business? is that good for the economy? is one of the reasons i've written this book because i do think we are at a crossroads.

i think it is disgraceful what they've done. i would not settle for a time. they try to get me to settle in a number of times. i would not do that. we are at the court of appeals right now. the court of appeals has determined whether or not the martin act as currently written concurrently been used as constitutionally proper. it can't be. you have to prove you did something wrong. you have to prove intent. i was so far away from the trend action at the justice department looked at me for five years. nothing we can do. that's led to the first part of aig's destruction. so after that, you go on. aig is coasting along on its

strengths, but all the risk management controls we had in the come to me were disassembled . we had enterprise risk management system. one of the first put together anything claimed aig has so many different companies that were so diverse, how could anybody manage it? diversification is good, not bad. of course you have to know how to manage it. diversification is a proper strategy, be a geographical diversification and business diversification. so if one thing goes wrong, the other scarier. that worked for us for years, decades. so to claim the diversification is bad, you should become a simple insurance company.

those look at their records. they are terrible. there's nothing wrong with this strategy, semi-scuppers of directors towing companies are kind of strategy they should have. is that what we want in the economy? or is that plain wrong? so that issue goes on. i'm not of the company. the risk management structure breaks down. i chaired the new york fed for a number of years and one of the top risk management is left aside. he put together a great risk management structure for the noninsurance entities that we had. we had the leasing company. i see that was just sold to china for 20 odd billion dollars

loss on their books. great step forward. but we had a great risk management system. he began taking on more and more risky credit default swaps, covering cds with package mortgages. well i'm not for a moment. the cds are put together by investment banks and supposedly had been rated or the rating agencies. this is a aaa rated portfolio before you read a credit default swap, you want to know what you are ensuring essentially. most were declared to be aaa.

they all had good markets content and. it turned out to be true poker page. so why would aig respond to collateral calls of those who it plays to those of aig? but they did. they kept on providing collateral because aig lost its aaa rating. we have been aaa for as long as i can remember. so i kept on coming up with collateral. the problem is there was no price discovery on this cd does. there is no market you traded on the stock market. every broker dealer had a different price for the same cdl. so why would she respond to

collateral calls? you couldn't get the same price or many of the others, why would she respond to it? i wouldn't have responded at all. seven things got hot and running on the liquidity and badgering

records. the treasury. to give you $85 billion at 14.5%

interest. everyone was bartering at 1.5 to 2%. i'm going to take 79.5% of the equity of the company. infidel play, you're fired. i am putting it somebody else. somebody else happen to be at libby on the golden board. so he was asked to sign the agreement. he said i'm not going to sign it. you just fired me. so he was on the board, signed the agreement, resigns retroactively three days later. i've never heard the secretary of the treasury of the united states calling a company ceo and firing him. it is the job of the tourists, not the secretary of the treasury. and to have a goldman director

doing that, because of the $85 billion that aig caught, 60 billion went out the back door quickly, backdoor bailout and 14 million but to goldman sachs and others. aig was required to sign an agreement was a total release to the counterparties and they were saddled with a camcorder, could not talk about it. that is what the american system is like today and we've got real problems ahead of us. during my term, we were nationalized twice. once in there and wanted pakistan. we got compensated in both cases.

i went to the world court only got compensated on the uranium issue and in pakistan i met with bhutto. he compensated for that. when that's what i described happened in the third world country, i began pounding the table about what they had done two companies. we are doing that by suing the u.s. government and the court of claims. so that's what the environment is like today. the boards have taken over companies. ceos have lost a lot of power. i'm not saying they're wrong or right. all i can tell you is my experience with an aggressive

disgraced attorney general that started the process and then what happened to enron that led to changes in the entire environment. there's got to find their way to reasonable regulatory environment that encourages business, not discourages business. >> quite riveting story and also of great concern on the points you've made and what impact these developments and circumstances will have an hot hot on american economy. we will invite this audience to pose questions. but like to begin to pick up on a critical point a reference on corporate governance. the reference sarbanes-oxley, clearly dodd-frank is out there.

what specific advice or recommendations which you have on the balance of regulation at this time? you have a dodd-frank document that is several thousand pages and most of the people say they've never read it. what is the right talents? >> i think you have to find what different degrees of corporate governance based upon the size of the company in the business that it didn't. if you have a global company as an example in different businesses, you have to rely on management because i don't care how good directors are i'm also full-time direct heirs, what is it going to know?

get rid of the management in getting new ceo. obviously you have to report to the board. not only report to them, they have to have the permission they want and need. but she can't have them trying to second-guess the management of the comp me. get rid of the management if you don't trust them. we never had that problem and aig. we invited directors to come to the senior staff meeting to send in what was happening on a day-to-day basis. you don't try to hold anything back from the directors. it's got to be a confidence factor in you can't frighten directors that have been and

regulations that make them do things they normally wouldn't want to do. the pendulum has swung so far in one direction that the relationship between the board and the ceo has become strained and that's not the way it should be. it's just the wrong atmosphere. from the late 60s until 2005, it worked better than better. it worked beautifully. clearly we were doing something right. look at the outside fact thursday brought this on. although the outside direct is one of their own lawyers. they were interested in their own selves can.

that became obvious. we better look at some of the attorney general's to make sure they are doing what they are supposed to do and not what they want to do. attorney general studies the office promote themselves to governor. spitzer's successor was attorney general. you've got a guy who has ambitions as well. is that the right kind of structure that you want? corporate governance has changed. the pendulum has gone too far in one direction. we have to get back and have a hard look at. the government goes back on how also started on the real estate issues. fannie mae and freddie mac were urged to issue and buy more and more mortgages of quality

postsecondary. geithner was the head of the new york fed. citigroup was writing new york in his backyard. did he know what was going on in citigroup? did he find that out later? you're supposed out examiners all the time. where are they? there's a lot of people take the sec. the investment banks, goldman sachs and morgan stanley and others, lehman had 40 to one leverage of capital. why would you let that happen? they had six months between bear stearns and what happened afterwards. what did the government do during that six-month?

said to blame industry, look at the others who had responsibilities failing. >> what go to does that tie-ins. >> one of the scariest part unrelated to risk. every company, every board relies. what do we do about that? if auditors are subject to political pressures, we have a huge problem. >> of course they are. look what happened at run. one of the biggest investments in the country. so they were frightened to

death. the least thing to blink and they are out of there. we've got to bring the pendulum back to the center and not go wild and think every company is somehow cricket. that is not the case. >> let me pick up on the point you made in the first question. your focus and obviously you are tom at the largest insurance company in history. what advice would you give to smaller come in these and are you concerned about developments and what it means for the american economy? >> i'm running a company now it's private and it's not going to go public. [laughter] we are growing nicely and expanding internationally, rapidly. it's a great company and it will be a greater company.

we have great people. everything we did in running aig. guess i'm concerned, paula, as to what has to be done. we need some wisdom at the governmental level not to overkill the golden goose, which is corporate america by regulating a database is. but that's what we're doing. we'll have more and more regulation that she threw your hands up and say should i be incorporated? there's a lot of states you want to be incorporated in. i would recommend to any company designs they have the martin act. you'd be crazy to do that.

[inaudible] [inaudible] [inaudible]

[inaudible] >> what happened in very simple. they disbanded the risk management system. the guy running aig financial products told sullivan, we don't need him. the risk management people, we have our own console then took down the risk management supposed to be looking at aig. in fact, i would tell you it's in the book. the auditors went to visit ceo and said sullivan and his number

two, the cfo are incapable of running the company. they did nothing about it. >> we have three questions for going to take. and we begin with dmitry science. [inaudible] [inaudible]

[inaudible] [inaudible]

[inaudible] [inaudible] [inaudible]

[inaudible] [inaudible] >> thank you. any comments on that? >> of course i agree with dmitry on that. we need to have a better balance between the regulation on freedom of the ceo to run his company, her company and the

board of directors that is supportive, not antagonistic. you can't have that. it won't work. >> we have your question asked of them will right to you. [inaudible] -- without reading the latest story about hanky-panky, no pun in 10 did on wall street. is this a growing trend? hasn't always been been this way? or is the reporting getting better? >> and maybe a little bit of both. i'm not sure the so-called hanky-panky turns out to be as bad as his sometimes been reported. you know, you've got to be specific in nature the things you read. many of them turn out to be

non-improper when you get done with it. when you have an aggressive regulator trying to make a name for himself, he will bring an action. he may lose it three to four years later. in the meantime he moves on and has job. and we have a more complex world. so don't believe everything you read. there's some wrongdoing, but there's always been wrongdoing whether in the financial world or otherwise. i would come to that conclusion as you have. [inaudible]

i have to pose the question, what if what we are talking about here, and the abuse of governmental powers further and further embedded in our system and is difficult to get any kind of pendulum. by way of illustration, i note on page 232 of your book, the causes of the financial crisis of 2008 in thousand nine and governmental policies threatening the standards. you talk about interest rates held too low for too long. here we are with interest rates being held very low for a very long time. are we learning anything and are we in danger of attacking the german economic system? >> we are printing money every month. we are printing hundreds of billions of dollars monthly.

were going to pay a price at some point. we need a leader and people recognize that individual is a leader who can you about change. it won't be easy. we have to change the attitude of congress. there's no free lunch. were ultimately going to pay a price for everything were doing. when companies can't manage their business, one being held to standards nobody can live under, it is impossible. running a company that does business in 130 countries is a full-time job. you need somebody with lots of energy, knows his business and is willing to do whatever it takes to make a company better and better better. that is what a good ceo does.

that's the definition. how are you going to attract people like that and hold them accountable for things they have no control over? it used to be you have a terrace, half inside, half outside. and they passed a rule at the new york stock exchange after being pressured by government agencies to know that wasn't going to work. you have to have more outsiders than in theaters. then the only one who should be on the board as to ceo. incidentally, we want to have a meeting of the board that the ceo. what do they talk about? the right kind of tie or what?

that's got to change. you have to have confidence between the board and ceo. once you've lost that, that's gone. how are we going to change it? it's going to take a leader in the white house and congressional leadership to bring about a change. what made america great? it wasn't being overregulated. that's not what does it. you want regulation, but proper regulation in people who are not just determined to find fault. take a look at the regulation and a small country. a city state in singapore. the regulators are very bright people. how do they get right people? they pay them enough.

we've got to change our structure because we are killing the very things that made us great. i wrote this book, not anything i hope to get out of it. i hope to awaken people to what happens. we cannot let going on. what do we look like? >> hank greenberg, truly an icon of american business. this book, "the aig story" is a must-read for those who are can turned and care about the unintended consequences of governmental regulation on industry, financial institutions in the future of the american economy. thank you for coming today.

[applause] >> mr. secretary, we are going to put them down as undecided.

[applause] mr. chairman, as they listen to those common, it struck me what a wonderful thing free speech is. >> postmen donald rumsfeld was making justifications. what she didn't hear were questions that cut a chance to ask him, which is how much money is halliburton going to make? how many u.s. soldiers will be calvinists were? how? how many iraqi civilians will die from this adventure? i think this question since. like someone donald rumsfeld. >> earlier this year he talked about the economic and financial challenges facing europe, japan, china and south korea.

he spoke to the japan society and is introduced by the president and ceo of the auto publishing. >> first of all its great to be back at the japan society and we enjoy our relationship that way. tokyo has been the headquarters of art asia pacific operation for 25 years now. we enjoyed a terrific relationship in a lot of different ways. one of my colleagues is this me, doug pederson, who just joined us from city and is heading up the standard & poor's rating. we welcome you. doug is a dollar or the city, all over the world and as such has lived quite a bit of time in japan it though. it's great to be here as well with you, doug.

in terms of the whole notion of the book, by the way some modest title, "banker to the world." when i heard of a cinema close personal friend like everybody in this room is. so when he was talking about the concept of what he wanted to write about, lessons of debt crises in all of this, i knew it was in her sweet spot of what we needed to be able to do. we were able to convince them and now i'm not talking to you as his friend. i'm talking to you as his publisher. we had the decision we're going to do this book and we did. the ink wasn't even dry when henry kissinger came out and said this is a must-read if any section or in a level the finance industry.

no sooner did he do that, paul volker came out and wanted to make a statement how this is a must read and wanted to put it forward in the book, so we added a forward in the book. and then we saw a can when steve forbes, and other good friend was working on the european crisis at the time in trying to make sense for certain aspects and said this is a must-read for angela merkel, nicholas sarkozy and dave cameron. in my way of thinking, he left out countries and might've gotten something out of it. it's easy to see why after you get a read is that why so many people need to know what they'll knows in what he did with it. everybody knows that he'll spend

53 years. i've heard over 50 bills. were going to go with over 50. that's a considerable amount of time. when you think about the timeframe and he was a devout disciple of our late and great chairman of the city, walter wriston. again when you talk about bill, you talk about icons. every single secretary would come to see walter wriston. there were problems in argentina, problems in uruguay, problems in brazil, mexico, problems in jamaica, panama. and then there were problems in

korea, problems in japan. and then we went back to the european crisis in south africa where there were problems. in every case, treasury secretary would calm and say look, walter, i need help. we don't have these people at the treasury. can you offer somebody that would understand and that would understand and deal to do with it? he would always say, i've got the person. the person's name is bill rose, but she can't take them. you can only fire one night. and here is the fun part. every once in while how he would go on vacation. every time he had to call him and tell him to come back to new york right away.

every time he started talking about going on vacation, people talked because they knew something was coming. with all the lessons he developed and learned and applied to in terms of debt crisis, i'm not naming individuals, but one person said there isn't a debt crisis that bill rhodes does not like. ladies and gentlemen, our treat tonight is to be with bill rhodes. ladies and gentlemen, the "banker to the world." [applause] >> thank you very much, wilbur and terry for your kind

comments. i should mention the title of the book was the idea of mcgraw-hill, the publisher, just to get that straight. i want to thank the japan society for inviting me to talk about my book, "banker to the world: leadership lessons from the front lines of global finance." i should mention in the japanese edition i think the ministry of finance and the japanese banks for having such great supporters of the work i did on sovereign debt restructuring worldwide for over 30 years. couldn't have done it without them. wilber mansion not be taught and that europe, but i also have things to say about japan. we are now in the fourth year of the christ says in europe and it certainly casts a long shadow.

it is fair to say the problems in europe have caused major problems worldwide with the size of that economy, including japan, united states, china. look at the trade figures worldwide. in 2010, coming out of the great recession 13.9%. in 2011 it was 5% and the final figures for last year, 2012 will be somewhere between 2.5 or 2.7. it is no wonder you have the problems you do in major economies worldwide with the slowdown in trade. i think unfortunately were going to see a continuation of the problems in europe, at least for most part of 2013. just take a look at the greatest

figures that of germany, the strongest economy in the heroes sound when it came out. we have our own problems here in the united states notwithstanding the immediate crisis on the so-called fiscal cliff. all he managed to do is put out some of the biggest decisions for another two or three. i think europe has vanished along with a little help from ourselves and all spare to cloud the world economy. in the case of japan, people are hopeful that the election is james watt b. who wants to finally get japan out of what is close to two decades have a less period of time and he's come forth as he notes is the stimulus package, which is equivalent to 116 billion u.s.,

10 trillion yen, 2.2% gdp. a lot of that would go to infrastructure. a lot to the area. of course hussein 14 such packages can the late 1990s and this one has to be different and also he's pressing the bank of japan. last time was to introduce the governor several years ago who is a very good governor, one of the major central banks in the world, pressing him to put in my monetary stimulus, which is necessary. one of the points in this room somewhere years ago and i've been with him three times in the last three months is monetary and fiscal stimulus aren't enough. in the case of japan needed

major deregulation. hopefully that while flowing to the package of the new prime minister. certainly it's a tough job, but this is the world's third-largest economy and if we don't get japan movie with other problems that europe, et cetera, the world is in for another couple tough years. obviously we wish him the best in that. it's important it's not just the fiscal and monetary stimulus if you also take advantage of the structural reform matter. japan faces as you on now, as well as i do a number of problems. what is the new energy policy? was the policy towards nuclear energy. the aging population i could run on territorial disputes with its

neighbors in china and korea. there's a lot of different problems, but it's crisis opportunity situation. cheap chinese used the expression that's very similar and i think the new prime minister is the right person at the right time to take the steps, but not limit them to just the monetary and fiscal side. need all these other problems and turn them in to opportunities. one last point and i will mention japan at the end of my remarks here. my good friend who died a number of years ago was a brilliant economist and new japan very well. he taught at m.i.t. this always concerned when dad

that i am honored that would catch up, not withstanding over 90% is held by japanese. of course now it's 235% of gdp, largest of any developed country in the world. this is something that has to be taken account as the stimulus programs are pushed ahead because it's something japan has to deal with sooner rather than later. it is sort of like a super spending problem here. so what are we looking at worldwide? i mention the three largest economies in the world. i've not mention china because i've talked about developed economies, but we look to the emerging markets of 2013 to be a driver and we have a new leadership in china. champagne will come in as

premier and take the post them or should then i'm optimistic based on my knowledge of these two individuals in what you're going to see if they'll open up the economy and the financial sec there and they will free interest rate move rapidly with the convertibility and importantly they need and will stimulate domestic consumption. china is too dependent on exports and this will mean putting in more of a social safety net to free up saving to help finances. so i'm optimistic fair. we'll see a theme here and there along what i'm saying, but the real changes will take place after march of the relationship

notwithstanding the territorial disputes between japan and china are key for both countries. so i'd like to just put that on the table. if you look at where growth is going, the finance thinks it won't do much better next year than this year. but it talks about growth in 2.7% rather than 2.5%. we have to see this figures in a sense are correct. those figures are pretty low when you look at economic growth. others have much higher figures as you know. it is very important that we see europe move ahead. the europeans have this idea

that because the euro zone was made up of so-called developed countries, unlike latin america in the 80s and 90s in the financial crisis in the late 1990s than any of the lessons a lot of people in this audience learn, you know, from those two crises in other ones in turkey and i could run on eastern and central europe were not valid for them because they were so-called developed economies. so what i thought i would do here is run through the lessons we learned bair that unfortunately should've been looked looked at by europeans and are only now starting to realize that they could have cut down this negative situation because let's face it, europe as a whole for stagnation.

a cookie-cutter approach does not work. this is something they didn't want to see. greece got into a situation by long time mismanagement on the fiscal side, tracked the banks and. in ireland the banks tried the sovereign in. in the case of portugal at where some portuguese in the audience here was basically a decade of no growth in portugal. in the case of spain, it was a bubble in real estate was fine and pay mainly the savings and loan institutions, some of which have gone under. and the government are basically drove up the deficit and regional governments because region is very porton in spain.

also drove up the problem with big deficits and they weren't attended to. in each one of these do have somewhat of a different reason. the case of italy, a dead to gdp of 120% and growing and a lack of action to do anything about it by the former government came as a technician and technicians are great, with a period of time is limited because they have no popular support vis-à-vis an election, whether p. crease or italy and we'll see how it does. you need popular mandates to get these changes really through. i'm encouraged in the case of ireland they are making good progress getting back to the market, but there's still a lot of problems. the latest victim in cyprus. they ran up the