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>> "the wall street journal" ceo conference this week heard about the global economic outlook from world bank president jim yong kim. we'll show you as much of this as we can until our live coverage at 8:30 eastern. [applause] >> so good morning. i was asked whether the ceos will actually show up for a panel at 8:15, and we all agreed, yes, so thank you for making me look like i know what i'm talking about. as you know, i am jim kim, the president of the world bank, stan fischer who accused me this morning of labeling him as venerable, which tells you what it's like to be a reporter,

who's had so many illustrious students that it took the international monetary fund a day and a half to have of of them with paper. and glenn hubbard who's the dean of the columbia business school and was one of the advisers to george w. bush. and i want to talk a little bit about the world economy, and i want to start -- oops, i want to start with the emerging markets. so a couple years ago i think one would have said that the developed world was faltering, that thank god for the emerging markets, china, india and the rest of them, they were providing the global demand, and we in countries like the u.s. and europe better get used to this because we are going to be less and less relevant in the futures we merging markets. and -- with emerging markets. i would say in the last six months maybe there's been some rethinking about that. so my question to you is, is the golden age of emerging markets behind us, and what are the chances, the factors that the next decade won't be so pleasant

as the last 20 or 30 years will be? let me start with you. >> well, you know, if you look back over the last five or six years, even africa had, you know, over 5% growth rates. and while, you know, there's been a slowdown, if you look at some of the biggest countries, it looks like india's going to have a good third quarter. and, you know, there are all kinds of downside risks, you know? the biggest one being what's going to happen here in this country when february rolls around. but we think that over the next year growth in the emerging markets is going to be over 5%x we think that's going to continue. so you're not going to see, i don't think, the 10-plus percent growth rate that is you saw prior to 2008, but, you know, a lot of the fundamentals in these countries are in much, much better shape than we even knew. you know, in 2008 we thought that africa was going to go off

the deep end with the financial crisis, but air kept a 5-plus percent growth rate all the way through, and i've traveled all the way through. i just came back from a long trip to the sahel, and the leaders there, i was very impressed with their understanding of, one, the importance of tear own sort of -- their own sort of managing their debt, you know, watching their current account deficits and also every single one of them what they tell me every time i talk to them is we've got to figure out a way to attract more capital. so, you know, something's happened over the last 10 or 15 years, and i think that emerging markets understand that they've got to be competitive, that they've got to create business environments that will attract all of you. and one message that i wanted to bring to this group is that, you know, think creatively about opportunities more all of you in the developing world -- for all

of you in the developing world. you know, we now are doing the, focusing a lot of our effort on trying to make deals. there's so much infrastructure need, so much investment need in these countries, and they all know that they're going of to have to attract private capital. and so the opportunities may be much greater than you think sitting from the outside looking at places like the sahel. >> stan fischer, what do you think? >> well, i think the emerging markets have done very well for a decade, it was a decade of very easy money, very easy access to finance. but if you look at the bricks -- brazil, russia, india, china, south africa -- the brick is china, and the others have not yet built a framework that is going to be very stable. the chinese have actually produced a plan which nobody

understood at the beginning, and now as time has gone by, it looks better and better including radical changes of changing the one-child family gradually. china grew for 40 years at 10%. it just outstripped korea which up to that point was the fastest for the longest. the rule of 70 says if you're growing at 10%, you double every seven years. so in that period today increased gdp by two the fifth plus something which is unprecedented in history. and it looks like from the third plenum that they've got most of what they should do including structural changes in place. so that's good news. now, whether they'll be able to do it and whether in the end they'll be driven back to bank financing under orders from the government, we don't know.

that probably could happen. for the others, today actually have to improve their policies, and this is a sad story of life that be you have -- if you have all the prerequisites in place but you pursue policies which get worse and worse, you get into trouble. there is this phrase the fragile five which consists of india, south africa, turkey and russia and brazil. it's interesting -- >> i was afraid you were going to put the united states on that list. thank you. >> where united -- united statee robust than those. the fact is that every one of them was either a brick or shortly after inventing the bricks, jim o'neill invented something called the mist. the mist consisted of ten

countries of whom the leaders were mexico, indonesia, doing reasonably, clay doing well and turkey, not career. not clear. and you can't stay on top if you don't keep adjusting your policies, and they haven't. and they're beginning to pay the price. will they learn the lesson? at some point they will. the sooner the better. we don't know about that. and i just second what jim kim said about africa. africa's continued to grow at 5%. it's largely based on exploitation of natural resources, but there's more than that going on in quite a few countries, and it's well worth looking at. and lastly, latin america is divided in two; countries doing the right things, countries not doing the right things. the ones not doing the right things don't look especially good right now. that's venezuela in particular.

so even there we see the same fact that you'd better get your policies straightened out, and i hope they to it. >> okay, glenn hubbard, so we have an optimist and i would say cautiously pessimistic, stan fischer. where are you on this? >> i would say caution as well. certainly, the easy credit has been largely responsible for an emerging market boom as has china's own development. i think that stan is absolutely right, that the policies are paramount. you know, there's so much attention now being paid to tapering and fed policy in the u.s. with spillover to the emerging world, that's a bit like to torture jerry baker's early morning music analogies, like blaming it on the bossanova. the fed is not responsible for structural problems in emerging economies. if you take china, for example, agree that some of the recent economic developments have been good, but it is still a financial sector whose policies don't work, structural reforms likewise are needed in india as

well. and so i think around the world rather than looking at big monetary or macro factors, these are individual policy factors. and i would agree with both of the other panelists that africa remains an exciting bright spot be, particularly for the climate in entrepreneurship. i know at my own school we have been on the ground in africa now for a decade training people who train entrepreneurs. really exciting. >> interesting. let's talk about a couple of developed countries. start with europe. i am always fond of writing about europe, because it makes me feel better about washington. [laughter] stan, why don't you start. what -- do they have any reasonable chance of finding their way to a set of institutional arrangements and policies that allow them to grow at a rate that raises living standards? >> they have a reasonable possibility of doing that, but it's going to take longer than is politically convenient, and we'll see whether they can

maintain that balance. they're trying to create something which took the united states 900 year -- 100 years to create which is a more or less unified center based on the european monetary union. and this banking union, for instance, moving much faster than anybody thought they could. but take note, the united states fixed its banks by 2009, basically. and you see the difference between american banking and european banking. now the european central bank is about to undertake an asset quality review of the banks which are going to be supervised by it which means they aren't going to be fixed until 2014 or '15 at the very earliest. they have the money to do it, the european stability mechanism can recapitalize banks. so that can be done. but they've got to get the work done. so it means they're behind.

why? because persuading 15 or 17 countries that today want to be if a banking union and hand the supervision to some other group rather than their own regulators is not easy. it's happened. and then their going to move on -- they're going to move on at some point to the fiscal side. now, everybody thinks you have to move immediately to american centralized government which is larger and more important than the national governments. they don't have to do that to begin with. they just need to have a reasonable sum of money at the disposition of the central authority so they can move funds around among countries, and that's a different proposition. they'll be able to do that if the political will remains, and that's going to be a very tough issue. i would say that just think about this, that two years ago everyone was sure the euro wouldn't survive a year. well, here it is, people aren't even talking about its disappearance. they have a habit of overcoming these difficulties despite

everything, and so i'm moderately optimistic it'll happen. >> glenn, what about japan? they're kind of rolling the dice on policy. do you think this has a chance, a good chance of success? >> well, i think that the you look at the various arrows, i think you'll see a range of chances. the change in monetary policy has been very welcome. japan has had persistent deflation that can be arrested, that's a monetary phenomenon. it is simply not the case central banks are powerless here. the government i'm a little more skeptical. certainly, the talk from the incoming administration was very promising at the beginning and continues to be, but the real issue inside japan are structural roadway forms that -- are structural reforms that have bedeviled the japanese economy for a decade, and i really don't see a whole lot of progress being made there. so good discussion. if the progress can be made, excellent outcome and monetary

policy welcome. >> and, dr. kim, what do you hear from people when you travel around the world about what they think about the united states in 2013? are we seen as a place to envy and admire because we have all this entrepreneurial fervor, or are we seen as a laughingstock because we can't even figure out how to keep our government open? >> well, i think, you know, if you just look back at what happened in august of 2011, the last time we had a near miss, i mean, we followed the numbers very carefully, and, you know, stock markets in developing countries took a 15% hit, borrowing costs went up 75 basis points. so whatever happens here has a very direct impact on what happens in the developing world. but i think there's still tremendous admiration for the ability of the u.s. to innovate. and let me tell you, every single country in the world is thinking about what they need to

do to build an innovative sort of new generation coming up. so my experience is by running the university, it has come up with almost every leader i talk to. because they're saying what do we need to do to become more competitive, what do we need to do with the primary, secondary and especially the tertiary level? so the admiration for that part of the united states still remains very strong. i mean, there are a lot of countries -- china's one, korea maybe another -- who have done so well at process improvement, but the real, real innovation is still, i think, a bit out of reach, and those countries want that, and they know that we have that here in the united states. >> you both mentioned central banks' behavior. i wonder if you could -- there's beginning to be some criticism that the central banks have done too much, that they have taken too much of the responsibility for getting growth going particularly in the u.s. and

that there are risks now of financial instability or whatever. in the circumstances, stan, do you think that the central banks -- the fed in particular -- are doing too much, or is this what the doctor ordered? >> well, without the fed we'd have had a much deeper recession. without the extraordinary things that it's done. the economy would be in much worse shape today, and we need to remember that. precisely how to get out of it, at what speed to get out of it is a much harder thing to measure, and to calculate, and there's this problem of not quite understanding what's happened to the participation rate of the labor force. a far fewer percentage of americans working today. so there are dangers. i mean, there's a central bank governor, we have to reduce our interest rates in israel because united states rates were so low that if we had kept them where

they should have been, 4% say, we'd have had an inflow of funds that would have just created a lot of damage. so we cut the rate. housing prices have taken off. you're beginning to see housing prices take off in the united states. but these are things which you can watch closely. everybody knows now about asset prices. and presumably, they will take that into account. and moderate policy accordingly. so, yes, it's dangerous, but it's much -- >> but it was necessary. >> but it was necessary. this is another line -- there's another line which is you shouldn't help the governments get off the -- don't face the dilemma that they should be facing. leave the job to them. well, i -- as a central bank governor, i thought that was very nice, but it really wasn't our job to try and figure out how to teach the government to behave better. we had certain tools at our disposal. this is what was going to

happen. we used them. and that, i think, is the only way you can behave. the moment you start thinking you're disciplining government when you're an unappointed -- when you're an unelected public official, i think you're in deep waters. >> glenn? >> i think there's no question that we're asking too much of the federal reserve and that the federal reserve is in dangerous territory. it did start out with extraordinarily positive responses. i mean, the response to the crisis -- stan, i think, is absolutely right -- without the federal reserve's aggressive response, we could well have had a depression. but it's worth knowing that the fed's early actions in things like the mortgage-backed securities markets were aimed at structural issues in the financial system. i'm less persuaded that some of the other measures -- long duration treasuries, variety of quantitative easing measures -- have had much of an effect on the real economy and run the risk of misallocating capital in the economy. if you go back, what we needed,

it was closer to negative interest rates that we could not engineer. the textbook answer for that would have been big fiscal policy changes, massive investment incentives and things like that. the government sat on its hands. so the problem really is not the federal reserve, the problem's been the government. i agree with stan that it's not the fed chairman's place to give lectures to government officials, but nor should we believe that the fed can engineer an unemployment rate of 6% or 6.5% simply by its own policy to. >> i want to -- i have another question for you, but i don't want to deny you the opportunity to second guess the fed, so -- [laughter] >> thankfully, that's not part of my job description. i want to, before we turn to questions from the audience, i want to ask you about climate change, dr. kim. be to what extent do you think the global governments are doing enough to prepare for the risks that we're really going to have a problem? >> well, i think, you know,

first, let's start with the science. you know, this is something that i've dug into deeply when i came onboard, and there are a couple of things. first of all, i think the science is pretty clear that there is a phenomenon of manmade climate change, and the second question then is what do you do about it. and what we were looking for is are there things that government, corporations, that everyone can do right now that pretty much people agree on? so one of them, 70% of all greenhouse gases come from cities. so is it possible to build more livable, cleaner cities? well, new york city and mayor bloomberg has shown us that you can make tremendous progress. i mean, his goal was 30 president reduction in -- 30% reduction in the carbon footprint by 2030, they're going to get there by 2017. that's something we can do, and we're working on that with china. china has completely changed its approach because they've had to close down their cities due to pollution. >> yeah. >> and they're losing a million people a year.

>> so you've mentioned some good examples, but are in general they doing enough in. >> not yet, not yet. but here are the things we can do more on. cleaner cities, renewable energy, climate-start agriculture. forms of agriculture that not only have better yields, but actually put carbon back into the ground. we can do that, and rather than arguing about, you know, rather than arguing about only political solutions, we have to try to reach a political solution globally, but in the meantime, there's so many things we can do that's good for people, business and the environment. >> john, are you here somewhere? if you have a question, raise your hand, and someone will bring you a microphone. and wave your hand, otherwise i'll keep talking, because you know i can do that. [laughter] there's one in the back. just speak loudly. tell us who you are. >> [inaudible] i have a question about china. the first part is china's been a hugely important consumer of

global commodities -- [inaudible] 20% over the last couple of years. and the second part -- [inaudible] we've experienced two decades of overinvestment booms around the world, housing in the united states, technology, emerging markets. i'd like each of you to put odds on the probability that china is experiencing an overinvestment boom. >> okay. so let's take the second question first. >> 100%. would be the odds. i mean, china has been massively overinvesting. it is invested in large numbers of negative net present value projects. that's not because their leaders don't understand economics, it is a bet about generating employment. i think it's a bad bet. it's one that leads to financial problems down the road, but absolutely there's massive overinvestment.

>> if you look at the numbers, if you go back 10, 15, 20 years, china was investing at about 28% of gdp, and then it's gone up with time, ask now it's 45% of gdp. we've actually never seen that level of investment in the world before. so the chinese know they have to unwind. they've said they're very serious about, you know, moving from an investment-focused growth model to one more focused on consumption, and i think they're very much in that vein. you know, i've met with them, i've talked with all of leaders there, and they understand what they're doing. and this group of leaders has much more savvy around economics than previous groups of leaders. but it's going to be tough because that unwinding has to happen gradually. but they know they have to do it. >> martin. >> -- [inaudible] next year. looks like nominal gdp will be a little bit better than this year, so the underlying term may -- >> he's speaking about the --

>> brics and next 11, which are going to be the stars -- >> so of the 15 emerging markets, who's going to be a star, and who's going to be a dud? [laughter] don't all answer at once. >> my guess is that china will turn out more positive than is expected, there'll be about 8% or growth. remember that when china grows at 8% after ten years of growth at 10, it is adding far many more to global gdp at 8% growth this year than it added when it was growing at 10% ten years ago because the economy's two and a half times larger than it was previously. well, duds? there are a lot of candidates, and i'm not sure that i want to sort to them out. but i think there is a, there is a chance that politics in india's a great disappointment.

i don't know if you want to go as far as calling it a dud. but india had it right, but the politics has taken over, and it's doing things that do not make a whole lot of sense economically, and there's an election coming up. >> right. >> wherever there's an election coming up, it's worth considering what they're going to do up to the election and then how long it'll take them to undo it. one last thing, we used to have this saying in the imf takes ten years to build up a country and to build up its framework, and it takes one election to destroy it. and it happens time and time again, and it's very sad. >> a ringing endorsement of democracy here, stan. how about brazil? glenn, more likely to be a dud or a star? >> i think probably somewhere in the middle. it's back again to the policy mix question that we talked about in the panel discussion. i would add an easy to the dud, too, of argentina which continues its century-long on is

session with terrible public policy as a poster child dud. [laughter] >> they cleared their ears with that. >> you want to nominate a star and a dud? look, you have to nominate a dud if you nominate a star. >> let me tell you where, a couple of places where i'm hopeful. and, again, let's go back to africa. one of our -- almost half off our business now is private sector, and so our job is to help to find ways of derisking investments, if you will. and i was just in burkina faso, but they've got great leadership. the private sector has been growing, the leadership is totally committed to building a better business environment, and they pay 75 cents a kilowatt hour for electricity which is seven times what we pay here in washington d.c. if we can find ways of getting long-term capital for them to be able to invest in energy at a much lower rate, those countries are going to grow. i mean, they're educating their people much more. i mean, a totally different

scene now. and i would just say once again that if anyone is interested, please talk to us because our role is to find ways of making the, we think, the innate attractiveness of investing in africa apparent to people like yourselves. and i think you'll be surprised at how much we know about individual economies and governments and the policy environment. and you may think differently about the possibility. another place that i hope grows quickly that we're doing everything we can is myanmar. myanmar has a huge potential upside. they've made some very courageous decisions. and we as a global community have to show that there's a democracy dividend. and so we're running like crazy to build energy infrastructure there. and if we do, i think they're going to -- they could be with a very, very strong -- >> what about russia? does anybody think russia's going to -- >> russia's not going to do well under the -- [laughter] current

types of policies they're implementing. incidentally, martin, on brazil, there is an election coming up, and it's going to be one party that believes in what i think of as good policies and one party that has implemented what i think of as not good policies. and so that's a very uncertain outcome. >> yeah. >> anybody else? oh, come on. all right. let me ask you this, do you think that we have a chance, dr. kim, in eradicating global poverty, extreme poverty which is, as you define it, people who live on $1.25 a day or less in our generation? are we close enough to doing that? >> we can't. you know, china lifted -- more than 600 million people out of poverty this the last 0 years. -- 20 years. we have a chance to do it, but our research shows that about two-thirds of the poverty alleviation comes from growth and about a third comes from

various policies meant to support the poor directly. and so the ting that gives me -- is encouraging to me is there's not a single country that i have visited -- and that's visited countries -- that doesn't understand the importance of private sector as a part of their overall economic strategy even, you know, india. they have a $1 trillion infrastructure deficit over the next five years, and the government has said to all of us that, you know, more than half of that's got to come from the private sector, so we want to learn how to help the private sector do better. now, you know, they've got a ways to go as stan and others have said, but i have to tell you, they're committed to it. at least they clearly understand that private sector growth is going to be critical if they want to reach their aims. >> yep. tell us who you are. >> [inaudible] from unify. so one of the issues of, i guess, 5% growth, 8% growth, these are all interesting in some larger emerging markets or

even in brics, actually, because i do a lot of business in brazil and in india. 20% foreign currency exchange just ate it all up. so what are we talking about 5 or 8% when i lose 20% in foreign exchange? i think the risk of foreign exchange is today, for me, much higher than the growth of gdp. any comments on how do you see foreign exchange develop especially as it comes to euro and dollar? because most of us report in euro and dollar so, ultimately, that's way we have to be measured. >> the vilest thing an economist can say is currencies fluctuate. i'm not sure we have deep insight -- or at least speaking for myself -- the question you raise is really two things. one, at a micro level about whatever hedging strategy's optimal for your business, and different businesses have different strategies. the other is there are predictable movements based on policy differences that you can certainly look at. but hedging coming to mind.

comes to mind. >> there's a gentleman there. >> casper otto from europe. in your mind, is there any reason why europe's not growing in the next two to three years? >> start growing, yes. >> but rationale for it? >> you mean at 5%? >> two would be good. >> 2%. everybody says there's no adjustment mechanism for the periphery question, there is. there are changes in relative prices, and they've been happening. the countries that are in programs, the pigs, have -- except for italy -- significantly reduced their costs relative to others. so they can start coming out of it. we've also got the ecb coming back to life which will give a partial, a partial push to growth for some time. and then there's a dynamic that'll take place in the global economy. there's a chance it'll work out. i mean, everybody was -- you have to realize how quickly

views change. brick -- britain was the sick man of europe until three months, six months ago. all of a sudden, it's the star. it's grown for three quarters. and that sort of thing changes moods and changes investment rates a lot. whether it'll be growing it to 3%, i doubt it. whether it'll be growing -- will it have grown consistently for several quarters? quite possible. >> i know we have a couple more questions, but i'm told that it's time to move to the next panel, so will you please join me in thanking glenn hubbard -- [applause] >> a live picture this morning from the grave site of john f. kennedy, our nation's 33rd president today, as we mark the 50th anniversary of his death by assassination. the grave is marked by an eternal flame originally requested by with first lady jacqueline kennedy. the permanent grave site was opened in march of 1967.

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[background sounds] [background sounds] [background sounds] >> we'll come back to arlington national cemetery throughout the day as the nation remembers president john f. kennedy. live now i as the national journal and the atlantic host a

discussion looking at u.s. fiscal policy and the financial system, monetary experts will examine the u.s. financial system five years after the market crash of 2008 and how the middle class are doing. it's just getting underway. >> now dating back to april of 2009 looking at what's been happening with the middle class in these months and years since the economic downturn in 2008. the middle class is, obviously, central to the customer base at allstate, so allstate has been our inspiration in trying to understand how the middle class is faring through a series of quarterly polls that we call the allstate/national journal/heartland monitor polls. so what you'll hear this morning is the results of the is theth of -- the 19th of those polls, and interesting that it comes just about five years after the financial downturn. so in this particular poll what we're looking at is holistically how the middle class is feeling about the economy, how they are feeling about how they're faring and is how they're feeling about the future as well. also interesting that today's

presentation comes on the day after we've set a new record in the stock market, the 40th record year to date. the dow cresting 16,000. the dow up 22% this year, the nasdaq up 31%. so a sort of interesting backdrop for this conversation about the middle class and how the middle class is faring. in addition to you all here, we have live stream viewers watching along with us, so welcome to those audiences and welcome to the c-span audience as well. we're delighted to have you here with us. we encourage everyone in the audience and at home or in your offices to tweet and join in the conversation in that way. you'll see some of tweets happening on the screen here using hash tag hmp fiscal group, hash tag hmp fiscal future. and you can follow us at @atlantic underscore live and @nj live events. we'll have time for q&a throughout the morning, and we'll welcome your questions and would also ask you, if you don't

mind, to please silence your cell phones. i'd like to introduce sanjay gupta, marketing executive with years and years of experience. he joined allstate last year from allied financial where he helped lead global rebranding efforts and was also behind a lot of the rapid growth in the consumer deposit business. he was the vice president of consumer and small business banking at bank of america where he spent seven years and was in key marketing roles at federal express. now welcome sanjay gupta for his opening remarks. [applause] >> good morning, everyone, and thank you, elizabeth. thank you for joining us today right before the holiday week is coming up on us. you know, elizabeth and the atlantic have been wonderful partners of ours, and it's been something we've been doing for many years. and, in fact, this is our 19th heartland poll. and much like when we turn 19,

there are things to be concerned about and things to look forward to. there can be no question that today's poll reinforces what we've seen in our previous heartland surveys. that our country's perceived to be headed in the wrong direction with the president and congress falling to new lows in public approval ratings. most of our poll results point to the growing sense of mistrust and lack of optimism regarding the economy. 88% of americans said the economy is in fair or poor shape. and despite the booming stock market, as elizabeth referred to, and the recovery in housing prices, over half the people still believe we are in a recession. and what's worse is nearly half also believe that the actions taken by the white house will decrease opportunity for them moving forward.

that comes to -- when it comes to their own personal finances and responsibility, it's surprisingly tar more positive. -- far more positive. a point i'll return to shortly. so to be expected, the pessimism has been fueled in no small part by the current political stalemate, especially the inability to show direction on the federal budget. and in the wake of the federal shutdown, nearly three in four americans are not in the least confident that congress and the president can reach an agreement on the budget by january. so taken together we have not seen such dark clouds on the economy since we began polling on these issues back in the depths of the recession. in fact, all of the macro indicators i just indicated underscore that americans don't trust their leaders, and the issue they care most about -- like having access to better jobs, enhanced education for the

children and a chance for a secure retirement -- are seemingly being ignored. in fact, you can say the only part of government that is listening to the people is the, this sa. is the nsa. [laughter] one could say that this overwhelming lack of confidence is having a direct impact, itself becoming a tremendous drag on economic recovery. so while polls clearly indicate the people are disspiritted and some are still hurting, if you turn to a micro level of analysis, specifically on how our responsibilities view their own personal finances, we get some very positive numbers. according to our recent survey, most americans feel self-assured in their ability to successfully make their way through these uncertain economic times. they believe they have the necessary knowledge to make the right financial decisions, are

realistic in what they can afford and hope to save. and are meeting their financial obligations. so let's take a look at some of these numbers. 80% of americans said that considering all aspects of their lives from personal finance to family life to their health, things are going well. surprising. and a solid majority surveyed also believe it's realistic for them to be able to pay their data day bills, make their monthly mortgage payments and pay off hair debts. and moreover, when it m comes to their american core values of fiscal responsibility and individual initiative, they remain remarkably resilient. 84% of americans definitely have a financial plan to manage their personal finances even if things are not going according to that plan. half this think that it's better to rely on their own personal retirement savings rather than on government pension programs. and more than one in three still prefer to handle their own finances.

it's an astounding 89% of americans feel confident they understand the information they need to make the right financial decisions. so despite these headwinds, i find it remarkable that the american people are so resilient and, quite frankly, it is this american trait and tradition of individual responsibility, more specifically the ability to control one's financial do decision and destiny, that makes in this country unique and the foundation of a cultural, political and financial system. see political gridlock, this personal optimism and core value could ultimately be in jeopardy. so just imagine if suddenly we had less partisanship, more compromise and actionable policies to generate sustainable growth. our heartland poll numbers on trust and economy would rise

dramatically and shadow those clouds of pessimism. so while we're all deeply troubled by today's findings, they do provide a basis for encouragement. then the question of whether washington has finally gotten the message that the american people want them to put aside their narrow interests and work toward the collective good of the country. i have confidence that this is still possible. this offers us hope and a sense of optimism that things can, indeed, change for the better. thank you again for joining us this morning, and i look forward to hearing from our keynote speaker and the panel, and let me turn it back to elizabeth. thank you. [applause] >> thank you so much, sanjay, and thanks again to allstate for this terrific partnership. we're going to kick off this morning with a headline interview between ron brownstein, director of atlantic media, and sheila bair, former chairman of the federal goes sit insurance corporation. ms. bair served as chairman from

june 2006 through june 2011, what i think we would all agree was one of the most tumultuous periods in the history of nation's banking system. she was working there to bolster public confidence in the financial system and to bring some more stability to it. she, prior to joining the fdic was the dean's professor of financial regulatory policy for the isenberg school of management at the university of massachusetts amherst, and she's received numerous awards including the john f. kennedy profiles in courage award, she's twice been named as the second most powerful woman in the world by "forbes" magazine, and she was named by harvard magazine and the washington post magazine as one of seven of america's top leaders. so we will hear from sheila bair. ron has had two stints with national journal and with atlantic media. in between he was national affairs columnist and national political correspondent for the los angeles times and while

there was twice a finalist for the pulitzer prize for his coverage of presidential elections. he is the steady hand behind all the editorial coverage across our company and writes often for both the national journal and the atlantic, has a weekly column in national journal and has covered lots of beats for us, most of them here in washington at the white house and as national politics correspondent and was west coast correspondent for some time as well. so i welcome to the stage ron brownstein and sheila bair. thank you. [applause] .. the big story really is, if you

look at roughly the top third of the socioeconomic ladder, people with a college degree, families above the median income, people with a forum time worker. they're feeling pretty good about the financial system again. the feeling it is a reliable pathway towards getting to where they want to go in their life. they are investing again, participating in 401(k)s in the market. below that there is still enormous skepticism as they come through, people without college degrees, enormous skepticism. and reluctance to be participating in the. i guess someone and when you look at these two perspectives, which one of them is right? are they both write the? >> i think they are both right in different ways. they are enjoying lofty valuations. they're less likely to have lost their jobs or take pay cut backs.

the recovery has been driven by inflation, what i called financial, stock and bond evaluations have got out. using and we'll reach growth decline for the bottom tier. so there would talk about the inflation rate but if you're real wages drop in, it can be somewhat problematic. i think they're both right in the perspective and discuss the forth and even -- unevenness. >> what is most important thing we do through public policy that we are not doing? >> widen the circle of people who are achieving some level of financial stability? >> i think we need to focus on jobs. we need to focus on making our economy more competitive in the global economy. i've advocated for fundamental

tax reform but i think there's huge inefficiencies in our tax code that is skewed allocation of resources in way that's not helpful to our economy, creates friction. i've advocated for infrastructure spending. the ways we could compete in this country are through lower energy costs, better infrastructure, better trained workforce, legal certainty, political certain. those are traditionally the strings including the u.s. but we're not really focusing on them or not focusing on growing our real economy, producing things that of the people in this world will want to buy. we're still trying to go back to the broken model we use prior to the crisis of cheap credit, fueling growth. it just is not sustainable. >> you phrase the question, concerns about whether, in fact, monetary policy is discouraging people from -- >> i think it is. our gut tells us there's significasignifica nt distortions in the market, and i think it's to the household level. it makes me conservative with my

own personal finances. i think if you're a corporate ceo interlocutor shareprice is saying this is nice, but how much of that is me and the real value of my company, and how much of that is the fed? it makes you uncertain. you don't want to make as long-term investments. you want to sit on your piles of cash and that's what people are doing. >> talking about as you look at the ball, you feel the uncertainty about what people to the extent they have money, to the extent -- what do they do with it? one of the things that's pretty striking, one of the sharpest diversions in the poll is that those without college degrees, those below the median income very leery still of the stock market. which has as you pointed out come back. we're here at 16,000. should public, should we be encouraging through tax policy or otherwise, do we want a wider circle of people investing in the market? >> i think traditionally younger people with a very long

investment horizon can take the ups and downs of the stock market. i still think if you have a very long-term horizon that that makes sense to do. getting in now, 16,000, you know, don't just put a long-term money and because it's going to go down, back down and backup hopefully eventually it will. but there's a couple of problems. a lot of people are not making enough money -- you need -- unlike a bank account we can small amounts in can but small amounts and to be cost efficient to get into the stock market through a brokerage account unique some minimum amount of money for a lot of people just don't have. also the lack of understanding as well as some of the well-publicized admiration and stockmarket pricing are problematic. we have a lot of market fragmentation right now so you see technical glitches, sending stocks into short-term death

spirals and people see that, read about in a paper saying why don't want to put my money and that? i still think if you go with a broad indexed funds, well-established fund companies, long-term investment that still makes sense but i can understand why people worry. the distrust german to wall street and all things financial still a huge hangover from the crisis, much of it is justified. i can understand why they are fearful. for long-term i think it makes sense spill another experiment in social policy we ran really over the '20s over the clinton administration and the bush administration was a concentrated effort and systemic effort to encourage more people to own their own homes. we did have a big increase from 64% of the population we went at the height of 69% in 2005 and now it is comeback substantially since the crash and has fallen faster and further on african-americans and hispanics than among whites and we seen large and growing in wealth to the point where the wealth gap as your colleagues at pew has

document is the widest commonwealth government racialized is the the widest it's ever been since we came -- since we started keeping these stats. do we want to try to encourage people to go back up that hill? do we want to get the homeownership, should policy be encouraging again more families, particularly at or below the median income, to buy their own homes? do we want to get that number back at? >> the first point i want to make is we confused supporting mortgage finance with confusing homeownership. so yes, we did get homeownership rate up by significant percentage, but the vast majority of subprime or refinance the. they were to purchase mortgages and they were constructed to generate constantly refinancing with high introductory rates of 9% or higher, jump up to 13 or 14%, yet to keep refinancing. so let's get that straight. so people get a little cash out

and that fueled consumer spending and was a significant -- it was not a sustainable model. the traditional model of owning a home, making monthly payments, not pulling out of equity, let that equity bill, yes, i think it is still a smart thing to do for people who are ready for a home, who understand what it means to make that regular mortgage payment, to be responsible for your own repairs in things, the insurance, all of that. when they're ready for it, yes, at all income levels that is a good thing, a good way to keep in wealth. but there is a difference between federal programs and subsidized mortgage finance and those that subsidize homeownership in wealth accumulation. and i hope we will not make that same mistake. >> just to be clear, do you or do you not see the effort to increase homeownership? did that contribute to the crisis of? >> so, no. well, it was a rationalization for the gaza. a lot of mortgage originators,

securitizers and for while a lot of bond investors, gses, everybody were rationalizing it as we're helping poor people get mortgages. a lot of the african-americans and latinos who lost their homes did not become new homeowners in the subprime praise. they probably had saved 30 year fixed rate mortgages and refinance out into these toxic subprime loans are some of them even owned their homes and were pushed marketed come get some cash, take this mortgage. so look, i just don't want to go back to the. i would just repeat my earlier point, if are going to support homeownership, doing it to fha, people with low down payments that's fine as long as there's counseling and you've got steady passage of making regular payments, that can show you that people are ready for the next step. you don't give them any favors by giving them a mortgage and home they don't understand, they can't afford, they can't handle. they would eventually is that

house with a lot of heartache and it's not the direction we want to give. >> again in this theme of the great divide, one of the biggest, we talked about this in the poll was attitudes towards credit. again, this top third basically again use credit as a very positive force that is allowing them to in effect barred from the for future earnings and two more now. below that still enormous doubt about the entire system of debt and whether it leads, creates more of a risk than opportunities. you had a remarkable extent she wrote about with a credit card. talk about that and what may be the broader lesson that is for policy and the public. >> first of all, i understand why lower income people worry of debt and i don't think it's a bad thing. unfortunately, the credit products that are able to low-income households can be quite expensive and quite abusive. i think it's good they are worried. yes, but people even those who fancy themselves as really financially sophisticated can

get trapped. so just, i put myself at the because i thought that was an important lesson for me and i wanted to share it with others. but i had this store, retailer, credit card which i hardly ever used, and so i used it last christmas for christmas sales and so i'm not used to think of them because i don't hardly ever use it. so the bill came, i paid the bill but they misread my handwriting or whatever so there was like a $2 charge, their skin or whatever said i didn't pay $2. so okay, that would have been fine except the next token in their wakina with a $10 late fee on the 2-dollar charge. i got annoyed and ignored. that mea culpa, should've called and told him to correct. corrected. let it go for a few months. it lacked -- so then later my husband and i were applying for a construction loan for a property we just bought, and so they pulled my credit report, another problem, i don't regulate check my credit report.

it lacked my score by almost 100 points. i was -- it was amazing but it is taking forever to get it fixed. computers blindly. there's no human interaction. no common sense, no people looking at things anymore. you have this mess to deal with. and you've got the credit reporting agency, all these missing pieces that you have to get everything fixed on. i thought it was an important lesson, you can ignore the stuff and if it's silly and they're treating you badly, you still have to do with the system as it exists. so mea culpa on that. but i think, too, you know, this lack of automation which is not just prevalent in financial services, but particularly for large financial institutions -- >> ladies and gentlemen, please direct your attention to our main interim. the black watch played at the white house.

>> there you go. talk about automation. [laughter] >> anyway, they are adequate. i think, look, banks, large banks, these algorithms, know your customer for heaven's sake. this kind of thing is just really annoying. >> what kind of critique it so far to the consumer financial protection bureau? >> i give them a good grade. i do but i think they got this mortgage and mortgage standards out. still a pressure. i hope they hold the ground. they are starting to examine non-bank credit providers and lower income people, typically use these non-bank providers. some of them do quite good things and others are quite high cost. borderline abusive credit products. there was not a lot of regulation of the nonbanks space and mortgage originators in particular, most of these mortgage brokers that originate subprime were not a philly with banks. they sometimes hold the banks. so we needed more lending

standards, some supervision of these non-bank providers and i think it's a healthy thing and i wished banks would stop beating up on them because i think over time this has happened this more level playing field eyed consumer protection will help make. >> dodd-frank, what are you most optimistic about the way it is being implemented and what concerns you the most? >> gary gensler did a great job getting the rules finalize on derivatives and we're seeing a lot more derivatives trading going to centralized clearing and centralized execution facilities. so that's good. my own agency has done a great job with implementing the lion's share of what we have to do which was the title to resolution mechanism for large systemic institutions. huge progress. we saw last week moody's eliminating the holding company that the use to get to these huge financial institutions saying we think it's much less likely they'll get financial support going forward. the consumer bureau i think has done a great job. i think those are some

highlights. the fed has done a good job with the stress test but the fed pretty much, none of the big rules that deal with assistance to building, enhance the enhancd standards for large institutions, with the call to sifi surcharge, those are all a work in progress. they need to get finalize. so i would hope that in that space particularly we have more prioritization of getting the rules finalize. and, of course, the volcker rule which is ridiculous it's been dragging on this long. >> what you're feeling after yesterday's move on the filibuster it seems janet yellen will be the chair of the fed. a good thing? >> yet. i supported her. i don't agree with her on monetary policy but you don't need to grow somebody on everything to support them. i think she's an intelligent, highly intelligent, highly qualified but i think she's open-minded. i hope you'll continue to listen. to get the kind of response is you're getting undersurface. keep going and pushing. this is helping main street because i'm very skeptical that it is and i think it's bringing a lot of risk and distortion that will come back to bite us.

>> another kind of red flag that comes out of the polling and not the first one to show this but it is just a reminder of how thin a slice of the country is participating in really saving for retirement at this point. just only 37% of people said they had an employer sponsored 401(k). almost half say their behind where they think they should be for retirement here with a big gap, you start looking at the lower two-thirds of the latter. on the other hand, we have this long-term pressure in the federal budget not only the deficit by the fact that more of the expenditure is shifting toward entitlement programs for the elderly compared 4 40 years ago and it's becoming tough to find money for investing in kids. something has got to give their at the same time we have a public strain on our ability to fund retirement, and we're seeing these numbers seem like a train wreck, talk about train a coming down the road in terms of

individuals ability to save on their own. how do we spread that circle? >> how much more time to we have? look, i think we need entitlement reform. i think you do it now and so still going to be a while before social security medicare trust funds exhaust the reserves. and so do it now. achaemenid savings over time and the pain will be less when it happens. you can do a combination of revenue increases, slowing the growth of the future benefit increases, that's what we did in 1983 when the bureau was faced with problems in such a steady but we need deal with it now because if you wait until then, the solutions will be more limited and much harsher. for younger people, yes, that's the other reason i worry about my kids and for all this if we don't start dialing it back. we are not investing enough long-term in their futures, and we have this horrible problem of short-term is a mormon only want to do with problems are right in her face and we don't -- get

smart and about our federal dollars in a way that make long-term strategic sense. reform the tax code, get rid of all the special benefits. >> one way investment income is treated, right? >> absolutely. i would get the top rates down but personal and corporate, for personal i would get rid of preferential treatment of capital gains but there's a reason why somebody who has the labor, you earn your money to labor instead of investing money watch you pay a tire -- a higher tax rate? that makes no sense. if you can broaden the base, get rid of loopholes and exceptions you can get the top rate down so they would be less severe only if you're worried about the middle income folks to have come everybody gets $5000 of capital gains tax-free or something like that. you can do some kind of adjustment like that but overall the fact these hedge fund guys, that -- in the tax rate of what

you and i pay, that's because spend one last quick question. among the many provocative ideas that you put out over the last several years, one was that regulators should face a lifetime ban on returning to the companies they regulate. i want you to talk about that but also gets her thought, given that on the former treasury secretary ending up at a private equity firm, tim geithner. >> look, especially with examiners i think you need to have some very, very tough restriction. even on the process now, i think everybody tries to do a good job. it's what i call cognitive capture. i don't think people are examining things with an id. going to get a job and people impacted with my actions later. it starts, you start looking at entities the way that, you start seeing the world as the way they see the wood.

it skews your chosen. if longer-term your career path is to go back into the industry, do you want to make waves, controversy, a reputation as a troublemaker? i'm sorry but even the best people, it can affect their decision-making. sulleys for institution should regulate it, no, i don't think you should go back to work for them. especially for examiners i would like to see like the foreign service, it's a lifetime calling. pay them more, training better and give them international anti-but i think it would be huge debt more give-and-take between u.s. and non-us regulators. there's a lot of distrust and misunderstanding of each other which was a problem during the crisis. with tim, i wish them well. look, he did not regulate them and everybody, everybody in the financial sector benefited from the bailout one way or another. i wish them well in the world of revolving doors that doesn't give me a lot of heartburn and i wish them every success of. >> let's bring in the audience were some questions. we have some microphones. we have a question over here.

>> i'm a physician. my late husband was marty slate around the pension benefit guarantee corporation in the clinton administration. i've been a fan for a long time. my question is, how would you go about taking the money that's sloshing around in the stock market, money with quote unquote invested and move it from the financial casino into the really pashtun will become a? also corporate profits, company are sitting on it and they're not investing in the production of goods and services. >> right. it's a very good question. i think, look, monetary policy again, if you're a ceo and you're sitting there looking at your share price, is it me or is it the fed? they need to get out. there's going to be something. i don't see there's a way to get

around it, but we need to find out where we really are. and start focusing on growing this economy. the real economy, not through credit infused asset bubbles, but to actually making things more efficiently. better quality and better cost than some of our foreign competitors. that's where we need to be focused and 97 with fiscal policy. the answer is with the president and the congress. and the fact they can't even find a budget much was put together a strategy for our economy making a stronger economy more competitive is quite compelling. so you know, perhaps we need to start with reform of the political system and i know all this takes time. there's some extreme edition a special on the west coast of have runoff elections, getting rid of primaries. your top two vote getters. that's a goat to the general election in november and i think you can get more centrist candidates through that process. short-term you just need to get.

when i worked in the senate in the 80s, look back at what we did. the 81 tax cuts, the 82 deficit reduction tax cut, fundamentally change the tax code to delete a lot of additional economic growth and those were not necessarily popular. there were a lot of individual consistencies who were angry about a lot of those things that everybody locked arms and says we've got to do this for the country. they did it. i think even in this environment you can succeed together principle decision to make good for the country, you're taking the index you on it. i think you can still get reelected for office. but they're running scared right now integrating a lot of dysfunction of the. >> let's get another question in. >> hi. i'm a retired hud official from california. as you say, this takes time and i'm wondering how much time. because, in the morning about really the income gap.

i'm reading joseph stiglitz. i'm reading, i just read thom hartmann and i just ordered his book on the crash of 2016. and i really wonder how much time we have, and how frightened should we get the american people, or how concerned should we get the american people on this issue? >> well, it is problematic. when we get the stimulus bill, the stimulus bill in 2009, i'm not a fan of the. it was more short-term stuff but it was a sugar high stuff, get the economy edges and things will be good again and to work. we talked to infrastructure spending them. the famous shovel-ready. that will take too much time. if we did and we would have the jobs by now, better waterways. so we need to get off of the shorshort term thing and we neeo think long-term. if we start now, same thing with entitlement reform, wait until the problem is upon us, the options will be much more limited and much more severe to do with. without changing the culture and changing the mindset of our political leadership, i'm sorry,

i wish i had a good answer for you but i just don't spin and let me ask you one final question, we have about a minute left. we have some case studies here with nonprofits and others that are trying to find ways to the people manage their money better and to do this on a better long-term future. at a time when washington is having trouble moving in any direction, what's the role of you think is a local government or nonprofit, solutions that come out of washington to some of the problems we're describing? >> i think in the near term we shouldn't look to washington. i think some state governments are doing a lot better job, ngos on their own frankly want to step in and fill the void, better corporate leadership on this would be nice, too. maybe, look, i think for wealth accumulation, for lower income families, first and foremost better wages, that's going to be hard to do. but i think all the research

shows automatic savings where a certain amount is automatic taken out of paychecks. if you don't have a 401(k), banks can set up i race for you. banks can we encourage banks at the fdic to offer the very, very low cost, virtually cost savings accounts for lower income people do have automatic direct deposit, automatic savings vehicles. i think there are things that we can do through leadership, the ngo community. and then i wish corporate america would look at their model. there's a company called costco which a lot of you are probably familiar with. i read an article the other day, they hate their co2 and 50,000 i get. they have good wages for the workers. they give them health benefits and they seem to be quite profitable and to a good job for the shareholders. do you really need -- income disparities and what you pay your employees and what you do your top management, and really to -- don't you get more value added by giving the folks better

wage and peace of mind with health care coverage. perhaps corporate america and the basis schools could rethink how we make corporations more productive and maybe that starts with paying your employees better and giving them health benefits. >> join me in thanking sheila bair for the great conversation. [applause] i would also say, i encourage everybody here and watching, we have extensive coverage through our partnership with allstate of all of the issues you discuss at our nationaljournal.com backslash next economy site. and now i will turn over the stage to my colleague at "national journal" michael hirsh was the chief correspondent and he will be introduced the first case study with mary dupont. so with that, michael, the stage is yours. >> good morning, everybody.

let's get started. okay, it's great to be here today to talk about stand by me. i'm the director of financial empowerment for the state of delaware, and stand by me is a statewide financial empowerment program that the priority of governor jack markell. so when he came into office, he decided that this was going to be a priority of his administration. and we worked together and formed a partnership with united way of delaware, which is also a statewide united way, to create a financial empowerment strategy that's available to all delawareans. so we are not strictly focused on low income delawareans. this is available to everyone. okay.

these are the types of issues that we are seeing since we started in may of 2011. we've worked with about 3000 individuals, providing them with personal financial coaching. and these are the kinds of issues that we are seeing, is that people have a lot of debt for a variety of things, medical, student loans, credit cards. we see people supplementing their income with credit, very low credit scores, lack of access to financial services. a lot of people using payday loans, title loans, rental

furniture, monthly expenses that exceed income. the ability to just pay bills and make ends meet. no savings or safety net, and this all adds up to really debilitating stress over these issues that interferes with other goals in life, such as advancing in the workforce, getting hit in school, raising a family. these are the kinds of things that wake you up in the middle of the night. sorry. okay, finally got it. i think it's interesting to look at the median income.

because what we are saying is that the national household income, we have income disparities across the races. the median national income for whites is 57,000. in delaware we're doing a little bit better. it's 62000. for african-americans its 33,000. in delaware its 42. and 39,000 for hispanics. 35 in delaware. and 68,085,000 -- 68,000, and 85,000. but i think it's really interesting to see that what we're talking about, there was during the conversation with

sheila bair, we see that we are talking about two-thirds of the population that's really struggling to make ends meet. so stand by me is an initiative where the government is actively involved, and using the leverage of his office, we have been able to engage all of the different sectors throughout the state of delaware. so we are working with employers, nonprofit organizations. we work with national partners, faith-based community, k-12, colleges and higher education. and we're also working with targeted constituencies, people with disabilities, immigrants, child care providers. and the most amazing thing to

me, before coming into government i did work in the nonprofit sector, and this is not a job that the nonprofit sector can do alone. we have to have state government involved. in order to get real muscle behind this work and i know to really bring everybody to the table. so this is what stand by me is. this is what we offer, personal financial coaching but we work with people on budgeting, debt, credit, basic money management, making ends meet. we offer workshops which is a way to engage people, their interactive workshops. we do a lot of work on financial services, helping people to just navigate the financial mainstream, but mostly helping people do get out of the payday loans that they are tied up in. a lot of people come to us, they have multiple payday loans that

are totally out of control. and we offer an array of consumer friendly financial products to try to provide alternatives to this. we also help people with navigating the whole financial system as it relates to postsecondary education. because as we all know, that those with a college degree our ultimate going to be able to earn more, by getting that college degree today is so complicated. just applying not only for college but also paying for it and getting financial aid and student loan debt, again, this is something that is a real problem. and then we make a lot of referrals to local nonprofits and organizations that help with specific issues such as debt consolidation, foreclosure assistance, tax preparation,

et cetera. so how are we really going to be able to use this model to change what's going on in our country? the empty seat at the table is how i look at it. until we are really able to effectively engage the state government. there are a lot of cities that have gotten involved, but states need to be involved in this. i can't tell you how amazing it is to work in the state where, when people know that this is important to the governor, automatically the doors open. automatically conversations are being had with employers come with postsecondary institutions, with school districts. everyone is suddenly interested, not just in how do we offer financial literacy. because it's not about financial literacy.

it's about 11, helping employees -- one on one, helping employees, helping students to understand more about how to get to these systems. doors open when governors are involved. obviously governors are important people and have lots of things to do. said the governor doesn't have to be on a day-to-day, but just saying, making this a priority makes a big difference. so in delaware, the way that we are really looking to change the tide on this issue is that everyone has collective ownership. this isn't just the nonprofit sector that has to get this job done. this is walgreens. it's shoprite supermarkets. it's the hotels that we are working with. is the community colleges. it's the high schools. we are all working together, and all the different agencies in

state government, we are coming together to work on these issues. because ultimately, the financial security and the financial success of our constituencies is going to influence the success that each organization has. so if employers are waking up in the middle of the night or they're not able to get to work because the car broke down and they don't have money to fix it, or if students in college have to drop out because they're not going, because they can't figure out how to pay for living expenses as well as, for tuition and books, these organizations are suffering. so i think it's that aha moment. so if anything has -- if anything good has come from the crisis is that everybody concerned to recognize that this is important to all of us.

so this is how our program is structured. we actually have raised money through the private sector. because when the governor came into office, his first job was to cut state services and to start to cut down because the state of delaware along with most other states in the country was in a major fiscal crisis. so he says, this is a priority, but we're going to have to find money to the private sector. so through the partnership with the state in united way we've been able to raise the money, and we've contracted with one nonprofit partner in each of our three counties -- yes, we're a small state -- and then we partner with businesses where we offer stand by me as an employee benefit. we partner with community colleges where we offer stand by me as a resource to students and their families, as well as to the staff.

and we're also in the high schools working on college access programs. so you can see all of the different -- we're working not only with large companies, but we're also working with childcare centers where we have integrated stand by me into the states childcare quality system so that as childcare centers bring stand by me in and offered as an employee benefit, they also get credit towards the increasing quality of their childcare center. so what we have tried to do is integrate stand by me as a part of other priorities that the governor has. one of them is college access, so we work with k-12 and the department of education. childcare, we work with the office of early learning. the governor is a big advocate for people with disabilities, so we have a full-time financial coach that works at the division

of locational rehabilitation, helping people with disabilities as they are going into jobs, helping them to plan, put together a budget. this is the constituency that we are serving. 53% report that hav they have le or no control over their finances. 57% report being extremely to somewhat worried about their finances. interestingly enough, as i said, everyone is invited to participate, and we are everywhere. we make it easy for people to access. yet, 72% are women. i guess we are more willing to ask for directions when they get lost mac 52% are african-american. we are also seeing that although we have no income guidelines, the majority of the population that we are serving our low to

moderate income. these are the services that we have provided. we help people, as you can see how it's grown, the program has been up and running for about two and a half years. and we're helping people with all of these different services. and here's what we are seeing. what are the issues that people are working on? the big one, credit and debt. and credit and debt is a major problem that not only are we seeing it in credit reports, and the way people feel about their financial well being, but it's also about being able to make ends meet. savings is lower down on the scale, but we're also helping people to put together budgets so that they can have a monthly plan where they can pay their bills and also hopefully save.

we do, we have developed a financial wellness strategy called that fitch us where we give people points and prizes in the workplace like the health wellness programs that are out there today. and i personally think this is the future the third leg of the stool. we've been focused on green energy to address our abuse of natural resources. we focus on health wellness because of our bad lifestyle habits in america. and now we're going to have to be focused on financial wellness. it's going to be something that we are all going to have to participate in. so i think my time is up. >> please. we have time for just a couple of questions i think. i'm just wondering, what kind of

fringe services do you see desperate people resorting to? have you been able to make any inroads, particularly with the new consumer financial protection bureau at the federal level? hasn't improved any? >> well, first of all, the french financial sector is also controlled at the state level. what the cpb can do is they can educate consumers about these issues. in delaware, one of the big economic development strategies about 20 years ago was to invite all of the credit card companies to delaware to create jobs. and the way that we're able to attract those businesses was to eliminate the usury law. so that's why all of your credit card bills come from delaware, and that's what you're paying 25, 30, 40% on your credit cards. so unfortunately for payday

lenders, title lenders and these fringe financial services in delaware, as in most states, there's a lot of them. and the problem is that most people are not able to go to a regular bank because the credit score, because they have no savings. so being able to get a consumer loan, like you might do, is difficult for a lot of people. so they do have to resort to payday loans. >> let's open it up to the audience. questions for mary? anybody? okay. i don't see any hands right away. let me just ask you. i'm curious about whether you're getting any kind of pushback or help from, particularly the financial industry. i know that in the run up to the financial crisis, you know,

subprime mortgage bubble era, some states tried to crack down on predatory lending. not a lot of pushback from big lobbies representing wall street, representing fannie and freddie and so forth. what's been the reaction, you know, to this program in delaware? have you gotten help or hindrance? >> help. for the most part, under the cra this would be an eligible activity and. so we do get a lot of support. we have a lot of partnership with local financial institutions who helped to fund the program. unfortunately when it comes to providing financial products, it's more challenging because the regulatory environment. and we need a lot of exceptions to the regulations in order to be able to offer products to people who have difficulty or

who have a difficult in the past. maintaining a bank account or with their credit. >> we do have a couple of questions, i'm sorry. the lady on my right, right here. >> linda from the national press foundation. it sounds like a great program that you have in terms of education and helping people manage their money. i wonder what the minimum wage is in delaware and whether there's any movement to increase that so people have more money to understand and manage. >> well, that is a good question. i'll be honest. i can't answer you. i don't know what the minimum wages, but whatever the minimum wages, not just the minimum wage, even if it was $10 an hour, it's not enough. what we find is that people are working more than one job. a lot of people that we are working with him, you know, in

the businesses that we are serving, they have multiple jobs and they're using their credit cards to supplement income. so when we look at wages over the last 20 years, the wages are stagnant, but the cost of living has gone up. so that's i think something in terms of public policy that we really need to have a look at. >> we have another one over here. >> i. the reason, sounds like you're getting a huge amount of traction in delaware. and to what degree are the other states looking in your direction and deciding about whether they will move forward with a similar sort of organization, or are you going to reach out and expand to the greater country? what's the view of the future of

expanding your success? >> we are very interested in reaching out to other states around the country. we really think that having, as i said, having the governor and called really makes a difference. there's so many different state agencies, and the ability of the government to influence other sectors throughout the state. we've just put together a playbook for national replication. the national governors association is doing a case study on the program that's going to be distributed to the other states. we just completed an 18 month evaluation and an evaluation in the workplace. and these are materials that we're going to be able to provide the research and the documentation, and actually the model for other states are interested in replicating. so we do have some

conversations. the governor and i are talking to some people here in washington, and hopefully we will be working with nga as well. >> well, i'm afraid we're out of time, but thank you very much for the absolute fascinating presentation. and now i'm going to surrender the stage to ed reilly, the global chief executive officer of strategic communications for ftc consulting, who's going to present the very, very vivid data in the heartland monitor poll that really underlies a lot of things you're trying to correct with your program. thank you. >> thank you. [applause] >> thank you all very much. i'm going to try to quickly move through this survey so that it brings to life some of the discussion that we've had. just by way of introduction, i would say this is our 19th survey that we've done over the last five years.

we began this project with the support of all state back in january of 2009. our goal was to begin to document and look at the changing circumstances that americans were dealing with, given the global financial crisis that we were in the midst of. one of our areas of initial angry was to try to figure out whether or not this might create lasting changes in terms of people's behaviors, attitudes and perceptions about the own economic security or whether this was merely an event, a blip that would pass with time quickly and people would revert to more normalized behavior. i think we can say today, 19 service into this, that we have seen there have been some lasting changes come both in terms of people's attitudes and opinions, but there have also been lasting changes in terms of the reality that they're living with in terms of their own economic security and their sense of opportunity for the

immediate future for them and their families but also for the next generation. we think "national journal." partnership and opportunity work with them, particularly all state for the support that they have given to this project as we've been able to look at these very important issues going forward. the survey that we're going to go over today was fielded between november 2 and the sixth. we surveyed 1000 respondents. they're supposed to be adults, 18 plus. the margin of error will be plus or minus 3.1%. as we talk about this. in terms of just some key summary findings before we jump in, the political and economic indicators are at or near their low watermarks since we began this series. most americans believe that the u.s. economy is still in recession. americans believe that they can handle their daily financial obligations. however, they are less sure about needing long-term financial milestones that one

would normally set out in order to achieve financial security. most have faith in the financial system, but many do see it as still very risky. participating in the market, participating in long-term investments, those things continue to raise concerns for many americans in the aftermath of the crisis. and, finally, that americans believe that the fiscal troubles that manifest themselves here and on the stage in washington, d.c. has had a direct impact and hurt their own personal finances. so with that, let me give a quick snapshot of some of the political overview which does set some context for how people view their own economic circumstances. in terms of, i'm going to contrast where we are today to where we were one year ago. in terms of right track, wrong track for the country, you will see that in 2013 it was 10% to

negative. that has fallen now to 42% to the negative. in terms of the approval rating of the president, that was 12% to the positive one year ago. it is now 17% to the negative. in terms of the approval or disapproval of congress, it has moved from 51% of a negative moving towards a unanimous view of a- 75% to the negative. so very chilling numbers as we look there. would like a president obama, you know, facing from different constituencies you see that among white house old, white americans that it has moved approval from 12 to 13, down by 14%. he has lost support with african-american households by 8%. with hispanic households in particular, a very key constituency in his reelection campaign, down 26%. with republicans, not much lower to go, down 4% from 11 to seven.

interest in with both independents and democrats now 19 and 17% respectively during the last year. and also we'll talk a little bit about the divide of non-college and college educated households down 20 with non-college educated households, and down 11 with college educated households. so again a very significant slip. just further building on this, if you look at this chart, the first line is the president's approval rating down from november 2012. the people's belief that economy will improve over the next 12 months, you see a slide down on that but a bit of a been back to the positive. country had in the right direction consistently down. that the policies of the current administration will increase opportunity for you, for people like me, you see that that is basically slid down and then

bottomed to where it is right now and that congressional approval rating you see dropping. in all of these indicators you see this slide down. however, if you look at this one item, and this speaks to a constant finding throughout this poll, all around you is bad, all around you is slipping, but how do you do your own personal situation. and will it improve over the next 12 months? you see that while that has slid down a little bit, that is basically remained constant throughout the poll. not a great number with 40% saying that they are confident that there will be an improvement in their own financial situation, but something that speaks to a core belief that we come from the very beginning of this. that while i question the leadership class of the country, while i question whether not my neighbors can deal with the financial crisis that we are in the middle of, while i question whether or not the political class can come up with solutions, i think i'll do okay.

this sort of individual sense of confidence that i will navigate my way through this means a constant. this is a little bit of a difficult, think of this as a square pie chart. this basically just takes a look at some of the groups that we will talk about as we go through the survey. 61% -- segments of the american public based on indicators, we see that 61% of households at least one full-time worker of varying income levels and education, that is actively in the workforce right now. 39% all into another category. so you see the top blue a full-time households, full-time worker in household, income over $50,000 a year in that household, and a college degree. makes up 23% of the sample. the next group down our full-time working households without a college degree, represents 15% of the sample.

earning $50,000 plus. the next group down which represents 6% of the sample is a full-time working households earning less than $50,000 a year and has a college degree. these tend to be younger households, people just entering the workforce, have a college degree and are still under $50,000 a year. and then use the full-time households earning less than $50,000 a year, no college degree represents 14% t to 15% f the sample are households that have retirees. no one is actively participate in the workforce. they are retirees. then 21% do not have retirees and do not have a full-time worker. so these are individuals who are working part-time, individuals or the hard unemployed, have somebody in household who is not fully participating in a full-time job in the workforce. then you see this hard-core households with an unemployed person. you see the portion of that

where both people, two-thirds of that group, that 13% are in households where neither, where no one is working full-time or participating in the workforce. but they are also as you see, they stretch out into the other group noted by the red line of weather is an unemployed member of the household but they might have another full-time worker. they might in households earning over 50k, college degree. there's a few of those. you my cv will be in households earning over 50k a year with no degree, et cetera, et cetera. so you see, so one of the things that we're beginning to see in this survey is there is this hard-core group of people that are not participating in the economy. they do not have steady work and that they remain a serious problem. >> then this very busy chart, and let me make one digression here. this data that will not be a test one and done, number one or number two, this data is

available online. the entire series. for those of you who find an area of interest, you'll be able to avail yourself of the data directly. ..

49% of them, $100,000 a year or more. of those without a college degree, only 25% go above the 100,000 mark. so you see that while the non- college degree household, lower ceiling on income in terms of what's available for an. another group to look at and that is interesting is the retired households. one of the things we have found through the survey is some of the people who felt capable of negotiating the current turbulence have been those that have already been retired for those that are already on some type of a program. obviously, 98% of them are over 50 years of age. 52% identified themselves as part of the middle class versus 45 as a sample of the hole.

19% of them are nonwhite. this is a much wider population group that has other impacts as we look at this come into 70% versus 63% of the example on a home. these groups in the middle clustered around the highlighted group in the gold bar represents those who are more comfortable dealing with the future than the rest of the population. however, while high income americans have a better feeling about their personal finances in the moment right now, they don't necessarily share the financial optimism of those of lesser means. those with low optimism talking about improving, that is from a relative perspective. they might well think it's got to get better because it's pretty tough where i am right now. but it does speak to the lack of confidence of those who are achieving in terms of looking at improvement in their finances in the near-term future.

the 50,000, full-time workers with a college degree, 66% of that group say their personal finances is in excellent shape. they say the situation will improve in the next year as opposed to 30%. they are the ones who are most confident about where they are today. they are also the ones that have the greatest drop-off in terms of where they will be the next 12 months. and again, those with the greatest optimism could be 50 million or less. they have a full-time household but no degree. and those from other employed households also at 41%. no full-time workers and no retirees. those that are participating in the margins are plus 49%.

so in terms of just looking at this in terms of the confidence of those who are winning about the next 12 months, it is a very frail situation at this moment. we also ask people most americans think that the financial system today, we ask them a pair phrased question will this financial system be a path to a secure financial future for you? to a substantial minority come as the majority believed that it will work that way in 58% to a substantial minority, 35% say that when they think about the financial system they look at something that appears to be risky for them if you look at the household by income group across the bottom, the college-educated 50,000 plus households, full-time employees are the most confident about participating in the financial system and that will provide them the means to enhance their economic security. if you look at those that are on

the margins, they have the least confidence about that. so again, those that are retired and those that are earning about $50,000 a year. they are the most confident, they have the most concern about our financial system providing real opportunity for them as they look to the future. interestingly, in some other questions you don't look at the financial system. where would you put your money? people respond to home ownership that comes up as number one as a way of building wealth. other people talk about more hands-on type of ownership of to and including gold. the idea that something that isn't paper but something that has a physical asset could be much more important than what they see as a shaky market. interestingly, when we ask americans do you think the u.s. economy is currently in a

recession or not, 53% of americans believe that we are still in a recession. 41% believe that the recession has passed. this has some sort of an ideological cut also that i would note while if you look republicans by a margin of 56% to 40% believe that we are still in a recession. that's interesting because it pushes against the other finding of who is optimistic the 50,000 households. 57% of republican households aren't about $50,000 a year to get you have a finding that is somewhat ideological but we are still in a recession. independent, 58% of 36% in closer than with democrats of 44 believing that we are out of recession, but a very slim margin on that. again, looking about by income group there are not as many surprises as you would expect, but i would say there is a one

ideological piece as to whether or not we are in a recession but if you are republican regardless of your income level, you are more likely to believe that we are still in recession. those that believe we are still in recession are also much less likely to approve of obama's job performance and ar dark skepticl about participating in the financial system. so if you are believing that we are in a recession, you want 65, 28 approve or disapprove of the job the president is doing. if you believe we are still in a recession, 41% tracking pretty much right along with the sample as a whole, 53-41 believe this is system is risky. if you believe we are not in a recession, you are more likely to approve of the president's job, versus the sample as a whole quite dramatically. and you are much more likely to believe that the financial

system is safe and reliable. and again, i think what's important is this underlines the contours of those that have recovered and the separate but ron talked about early on about a third of the sample that are feeling okay that is behind us now if w and we are facing the future, versus those who feel that they are blinding through the results of the events of 2,008 and 2,009. then looking in terms of how americans just assess whether or not they can keep up with their daily responsibilities and plan for their future. we asked questions how realistic what it be for you to meet the following given your financial circumstance? if you were faced with that decision today. so, you know you could basically negotiate these day-to-day financial realities. paying your bills, 90% say that it's realistic, medical bills down to 71, making mortgage

payments, 68, paying off debt and 68%. to think about the future putting things aside for the future, maintaining a comfortable standard of living during retirement down to 59. 39% -- 38% say that isn't realistic. investing your money for future needs. 58% saying that's realistic. 39% say that's not realistic. according six months of expenses in case of a job loss or emergency, 50%. basically an even split. 50% say that's realistic, 48% say that's not. and paying for college education for your children, 45-47. what's interesting about this is if you look at this by the college and noncollege household break. you know, we ask people again, you know, what are the sort of basic financial tools that you have at your disposal? maintaining a checking account, 94% of college households dropped 78% in the non- college.

savings come 84 d-delta 65 and a noncollege household. credit cards 81 down to 51, life insurance 70 down to 50. four o. one k., beginning to save for retirement, 45 down to 19. ira, 43 down to 20. and a pension that you will participate, 36 down to 19. so seeing a sharp divide based on the college degree in the household and with a college degree usually means in terms of household income. how important -- we then ask americans how important each of you think the following financial activities are for you to meet your own personal financial goals? taking off and avoiding new debt, 94% of the pile. sticking to your monthly budget, 94%, maintaining emergency funding, 83%. saving for retirement, 84 and estate planning for the future

come 83. purchasing life insurance, 78. easy to tracking down. those things that are immediate at the top of the list. those things that are longer term begin to go down. and then looking at investing in the stock market, only 38%. and that that is something that's important in terms about their own financial activities as they move forward. and then in asking the question about whether or not you think you are ahead, on track were behind. and some of these areas of financial performance. 75% say that they were either ahead or on track of paying off and avoiding new debt. 80% say sticking to a monthly budget. 64% purchasing life insurance. down to 52 when you get to saving ahead for the nonessential items in the future down to 49 when you talk about saving for retirement countdown to 46 when you talk about

contributing to a four o. one k. -- 409k. saving for your kids education, college education, down to 32%. their ability to stay ahead or to be on track in that area. state planning at 40 and investing in the stock market is the low at 41. so they can come you see in terms of the large numbers of the population, you feel that they are either behind or just fighting to keep pace with meeting with a recognized as the demands of the future or paying off or staying afloat on a day-to-day basis in terms of meeting their financial obligations. with all that said, you know, we've been asking that this is a part of th that self-confidence that americans have about themselves. we ask if you have an important financial decision to make today, how confident are you that you have the ability to understand the information coming you gain the right information to make the right

decisions? 89%, 47% say that they are very confident of the total of 89% say that they are very confident to make those decisions. decisions about buying a home, 77%. 50% say that they are very confident in that. planning for retirement, 75% say that they are very confident that they have the tools to do that. 35% say they are very confident, a little more ambivalence but still, really striking confident that people believe they have the ability to do that. and then ask planning, setting up longer-term stuff for your children and inheritance, 64% say they are very confident that they have the ability -- excuse me, 64% say they are confident in total 30% say they are very confident. so my question whether or not this confidence is well placed, the fact is this has been a consistent theme, you know, throughout the survey of americans basically saying i am bistable and i trust myself, my

family, my neighbor' neighbors o guide me on these financial decisions. this graph, the dark blue color here are those who say that they have a solid plan for your finances going forward. the middle, the lighter shade of blue for those that say they have a plan, but they also have some questions. they are a little bit, they are looking for more support. and those that say they don't have a plan and really need some guidance. so again, when we asked people, you know when you are thinking about your money and how you handle your personal finances, do you feel like you have a solid plan, but you need some help or you really need some guidance here in the difficulty. the total sample, 55% say they feel they have a good plan and they're executing. 29% say they could use a little help and 14% say they don't have a plan and they could use real

guidance here. looking at this again by this demographic breaks and interesting, the most confident group are those with full-time workers come household of $50,000 a year but do not have a college degree and also retirees at 71%. we spoke about earlier. they are into executing the plan. so in overwhelming majority of the retiree households, 71% say that they are confident they have a solid plan and they are executing on that. so again you see on the margins of those that are in lower income households were those that are having not full participation in the labor force, these issues of concern about their long-term planning is quite pronounced. we ask that question in terms of financial regulation, transparency and financial institutions. are you looking to get increased