>> for more go to our website, booktv.org and visit upcoming programs. from the 2014 "los angeles times" festival of books, a panel on finance. it's a little over one hour.

>> [inaudible conversations] >> okay, i guess we can start. thank you all for coming. this is a great crowd and we're all very happy to have you here as we talk about the financial crisis and financial history under the title "gaming the system: finance in america" which is really what it's all about. before introduced myself and the panelists i just want to make a couple of quick announcements. first of all we ask you to silence your cell phones and we point out that personal recording of these sessions is prohibited. there will be a book signing for all the members of the so panel and myself right after the session. i'm asked to type that if you're buying a book, you buy it upstairs in the lobby, and then

the sign will be across the street. we will sign them after you buy them. anyway, once again, welcome to all of you. we are privileged to have with us today three authors have taken three very different approaches to reporting and analyzing the financial crisis that began in 2008 and the many respects it's still with us. before introduced the model introduced by so. i michael hiltzik, business columnist at the "l.a. times" and i block for the "l.a. times" at a page called the economy hub which you can find the "l.a. times.com." am also the author of this book, the new deal in modern history which paperback edition of which came out last year which you can get upstairs. as i mentioned, the three authors with us today have all taken these very different

approaches to the financial crisis but their books all have a common thread in that the address issues of financial industry regulation and history and the ways that incumbents is this big, sprawling industry have managed through the years through a combination of political influence, very well-funded lobbying and the misdirection and deception to avoid the sort of regulation oversight that would've done much to avert a financial crisis of a few years ago and what do much to keep the same thing from happening again in the future. so on my left, though it's hard to be to my left, as some of you who've read my columns might note is nomi prins whose book published i think just as we, right? tuesday.

is "all the president's bankers the hidden alliances that drive american power." nomi is a former wall street executive is written for a wide range of publications including "the new york times," fortune, "mother jones" and the nation here and that's a pretty broad spectrum of publications in the united states. and her book exhaustively examines the relationships it when banks and bankers on the one hand, and our national government on the other going back to the turn of the last century and bringing the story forward pretty much to the present day. on my right is anat admati who is the author, co-author i guess of "the bankers new clothes" which is also just out of paperback. anat is george parker professor finance and economics at stanford's graduate school of business, and i know from personal expense is one of our most uncompromising and

penetrating analysts of the banking sector that we have today. her book shines a spotlight on how the banks have avoided what could be the most straightforward and most effective reforms of their industry since the crisis, largely by lobbying and i hope i'm not being too blunt, byline. -- by lying. and all my far right, is helaine olen, one of my former college at the "l.a. times" whose book is "pound foolish: exposing the dark side of the personal finance industry." helaine's work has appeared in the "washington post," salon, slate and forms, and her book really lays bare the charlatanism that underlies the personal finance that we are inundated with everyday on television, online and in print your so am going to ask our

authors to strongl by each givis some preliminary thoughts about their books, their themes, their motivations in writing their books, if they wish to effect anything you want to say about the book and the subject they can fit into say five to seven minutes each. and will move on to a blogger discussion but ultimately to your questions. so nomi, why don't you start us off? >> thank you, and is just an honor to be here and with this amazing panel. we're all sort of golf carted over so we have a good 10 minutes to talk about each other's things and we've known and historical as well. i came here via gruber, and the man who was -- by uber, and the man who drive me by car as talk about, i explained presidents and figures. he said it's tighter than ever now. yesterday. he said i hear it's gone back 100 years. this is nothing new. i said that's exactly what a

talk but in my book. he said, and it's not just about wall street and washington, told of the families, the blood and emerges. i said you are quoting me. that's weird. and it turned out he had heard something throughout the week. and just as an author you ask about writing and books, it's so amazing to have someone who wasn't related to me actually talk about a theme that was out there that is now part of this discourse. it was a really warm feeling to come you. the reason i wrote this book was because we know what's happened more recently in time. i had worked on wall street before the years, before the financial crisis that this happened in 2008. there's certainly an intense aligns them relationship and interdependence between washington and wall street that i think we're all aware. it's pretty obvious when heads

of large banks don't go to jail and the heads -- and small people who problem stores do. we know there's a problem in society and justice and accountability and and everything else. what we have today is a more concentrated power of wealth and we've ever had before. the big six banks in this country today controlled 84% of the deposits of all the fdic insured banks so, therefore, probably most of your accounts as well as 85% of the assets of all banks as well as 96% of derivatives. that's a phenomenal concentration of capital and leveraged capital and once at the fans. this is after the financial crisis but it didn't just get the asked italy. so i did was i looked at this idea of the big six and i have been coming was going on in washington and said there's a lot more to this than just what's going on with the big six. six is this interesting number in history because i have done a novel before called black

tuesday and which i did less research than it did for this book but found a meeting that happened on wall street in 1929, on october 24, at noon wit where market was starting to fall, were all downgraded speculation that it happened during the '20s was coming to a head and this man named thomas lamont was the acting chairman of the morgan bank at the time, because jack morgan was the chairman at the time was off like partying in your. and he got five of the bankers together that collectively ran the big six banks at the time and they were called the big six banks at the time and that name had been coined by b.c. forbes in 1917 because it was about six banks but at the time those bankers were all related in some capacity. if they weren't related by blood they were related by marriage but if they weren't related by marriage their children more or would be. there was a strong connection in that room and this idea will put

in money, say the market, we can do this, et cetera. but the story went back behind and before those big six decided to save the markets from all the screw ups the had imposed upon them and what would become the great depression which would be imposed upon the greater society and all of the publishing in the united states, and globally. is back from the bank went back to 19 or seven. even before the. it will point in time jpmorgan had more money than the treasury department. in late 1890s there were too many crises, real people like normal people in the main street didn't have as much invested in the market. they were just impacted by them. that they would both have money pensions, deposits invested in them and where impacted by the. those were isolated but at the time there were panics in 1890s. the government called upon jpmorgan to help with panic in 1907 was a situation in which

teddy roosevelt was friends with the markets and what is going about talking about trust busting other industries he didn't bust the banks. the reason why is because he trusted and supported and was socially involved with j.p. morgan and other sort of the bankers at the time dick in addition to that when the panic happened in 1907 there was a trusted company called the knickerbocker trust company in new york and it imploded. the reason it did load is because of a lot of bad bets in copper. teddy roosevelt called upon j.p. morgan to do something to say se the situation again. jpmorgan setback at this. teddy roosevelt, you wait for my work. the treasury secretary was to wait for the word and a meeting that was called at midnight at the hotel manhattan in new york where morgan invited some of his friends, james stillman who is

head of national city bank which is now citibank, tom lamont who still hanging around in 1929 but was then much younger, and a bunch of other people to go around and talk about how they would say the market. they put in summary, also got $25 million from treasury department. that was the first time with the trustbusters and i need your help, here's some money, do whatever you need to do. organize people together, they don't do with morgan of money. to do with standard oil money and shares that is in the sector get back into saving not the knickerbocker trust company, not the company that people from harlem to fifth avenue and then between were trying to get their deposits out of because would affect their lives of the american trust company because in that he had invested in running that were his friends. that was a situation where the government basically said, teddy roosevelt said do this. morgan said okay, saved his friends. that was the beginning of the

situation that led to the federal reserve act of 1913 -- i only have like 30 seconds left, but basically out of that came this idea that the bankers wanted a bank that could support an even more i in these panics. so that even having to gather these midnight meetings or later in meetings that have some other backing. it was the bankers who pushed for the federal reserve act. i examined the original documents because i don't trust a lot of media. some media is fantastic but -- >> present company excluded. >> the purpose and need is to tell the truth but that doesn't always happen. in this case it absolutely happen. historically it was massa. he was again. he said the country, corporate all sorts of massive, we now see

jamie dimon stuff in certain publication. the j.p. morgan, j.p. morgan chase, a legacy. >> why don't we -- >> i will wrap up. anyway, the point is that these things have a long tail and there's a lot of blood and connections and relationships and everything else that manifest in policies that come not from wall street to washington, not from washington and wall street but are together but it's one box. it is in the revolving door. it is one box of power which is shared by different groups of people that have incredible philosophical, political and financial ties spent okay. anat, why don't you take it from there. [applause] >> i come at it as an academic. i teach finance at stanford business school, and i awoke like everybody else in fall 2008, actually before the, wondering what's going on and

why is it that this industry managed to harm so much. the more i looked, the more of a calling in a rabbit hole experience it was. so two great pieces of literature are alice in wonderland and emperors new clothes which is sort of the cover of the book. edited up being only men so the ties recovered enough. i couldn't believe what i heard and i couldn't believe what i didn't hear. what was all this nonsense? the more i looked and the more i read, and this is me and this is policy papers and this is even academics, the more disturbing it was. because some of it was just complete and utter nonsense that you could immediately -- you could debunk.

the headlines in the paper are just false. it's not true that the banks are asked to hold cash in some vault. that's false. to all kinds of subtle what we call bankers new clothes, meaning nonsense in one way or another. there's a whole wardrobe of those. as i talk to people it became obvious that, or it became unclear actually, what people do and what they wanted to know. and it became this feeling that i am in the rabbit hole and people, i try to see where they're coming from as i talk to them, and i'm tutoring whoever i come across. it takes a long time. and some of them don't care to know. so it became sort of okay, assume absolutely nothing, it's not that hard.

but if we don't clear the nonsense, we have no hope. so this book is a book with a mission to at least remove the nonsense from this debate so we can maybe challenge all the banking emperors actually have no clothes. the bottom line is, the system has not changed in the last five years. it's very disturbing and very scary. all the talking here has been a narrative. they want you to believe that it was just a natural disaster that happened and they sent these really, really bright nice ambulance is for all of us to help us. but instead, or th they tell yot was just some problem with some liquidity problem. that's the narratives that are favored. these are narratives that are meant to hide the responsibility of the regulators themselves and

politician for very bad regulations that absolutely failed to protect us, and a which were barely tweaked since. so the narratives about big reform i can't unpack all of them but they are just false. the analogy you can think about is, imagine trucks driving at 90 miles an hour with fuel and residential neighborhoods, and they tell you they are really good drivers and 90 miles an hour is enough to essential speed for us. terrible things will happen it to us if we drive slower. and here are the policemen just watching by. they don't even have the speedometers showing this be. and then they're burning the engines by the way, incredibly inefficient, and tons of them around. and then when they implode and take each other down and all these collateral damage happen,

then they got to be saved. their insurance covers got to be saved and everything else so we can have this fuel flowing again into the market. then they get up and say i going to fix me up so i can keep running, get back in the car and drive again at 87 miles an hour. big reforms we did. we are still leaving all this risk that we can see and all of that. and so the battle is nowhere pretty, and the lobbying is intense on every bit of it. so the forces against a very small and powerless in the end. it's very difficult partly because of this policy that i did not appreciate but i do know. trying to just bring in a voice that doesn't care exactly what the outcome is, but cares for

the public. it is my responsibility tried to unpack all these things that are completely wrong that people were saying, empower more people to challenge those inverse. otherwise -- those inverse. otherwise were just driving again at the speed and the next time it happens we are going to wonder how come they didn't save us and they will have a story. you can bet they will have a story about and don't get a lot of people to spend narratives for them including academics unfortunately. so that's where i come at it. [applause] >> okay, country, your turn. i came into this, i write about it everywhere most of us are most likely to interact with the financial services sector and that's in our personal finances. the way i came into this is either so beers and late 1990s

wrote and edited the money makeover future for the "los angeles times." i think it of windows because it still runs occasionally you have the subject and you fix them up with financial planner and to get some financial advice an application is their life is going to be just go find after this but you need a little financial advice and all would be well. so i came back to this several years ago long after i stopped doing it and wanted to ask the question of how we got in to this point. how can we become convinced that with financial planning and doing good financial behaviors we would all be okay? we never addressed the point in this world that we're putting more and more responsibility on people, pensions were being taken away as pensions were being taken away, as our salaries were stagnating and falling, and at the same time we're saying you need to save for retirement. you need to say for your kids

college education. and by the we will take away the right to declare bankruptcy on student loans if it doesn't work out. you need to be more and more of their medical expenses, expenses or hospitalizations alone would have 20% up between lash initiate according to some people. and it's your fault this doesn't work out. so what i became very interested in was how we have been sold on this idea exactly. because it all seemed very natural to us but, in fact, our own, plenty our own retirement was less than really 30, 35 years old at this point. so i went back and, of course, what i discovered pretty quickly is there is one group of people doing really well off of the system, and it's not anybody in this room. it's the financial services sector. it doesn't matter how badly you were doing. they are making a mint on all of us. to give one quick example because i don't have a lot of time to speak, retirement

savings, we collectively have $23 trillion. that sounds like an enormous sum of money. that actually comes out to less than $20,000 per person. that's going to go far especially since the estimates for medical calls for household in retirement are over 200,000. but, of course, why are we tolerating this? if we don't really know how much the financial services sector is making off of this pile of money except to know that it's an awful lot of money. the estimates have ranged from 90 billion annually at the low in the 500 billion annually at the high end. it's probably somewhere in there. your guess is as good as anybody else's. they claim they don't know, they can't track this money. somehow they managed to take it but they can't tell you where it's going. it's really quite fascinating actually. but we become convinced that this is all our own fault, and sort of premise of my book was

to tell the story of how we have been sold on this idea that we could control our financial fate in this world where our salaries were stagnating under cost of living were going up, and why we were fighting back. and, of course, as i do the book i find out more and more about the lobbying in washington, the vast amounts of money being thrown around to make sure you were not protected because i like to say about your dealing with the financial services sector, if our food was regulate as little financial products we would all have food poisoning at least once a week. [laughter] and you can ask why that is, okay? and how this, how we were sold on the fact that women, it wasnt women were underpaid and lived longer and had more responsibilities on the money. it was that women were too emotional and that's why we have lots of it. you could go to the whole gamut of these things.

it's your financial problems are because our childhood memories, not because of your class. i basically wrote a book telling this story and really came to the conclusion that we need to begin talking about this as a society and not take such faults on ourselves and begin to talk about this in ways that we no longer think communist, if only i've not gone to starbucks eight times last month, clearly i could've paid a $10,000 medical bill. so on that note i will conclude about the panel began. [applause] >> okay. well, thanks to all of you for those quick digests. one thing that interests me, as writers, i think many of us have the experience that when we are either researching the book or maybe writing it, there's a

particular moment, an anecdote or a fact we learned that really defines for us either the theme of our book or maybe justifies for us why we are committing ourselves to spending two years, maybe three, or however long it is, really deep ending into the subject. and i wonder if maybe each of you could dredge up if you have a case like that, and anecdote, a fact, a moment that sort of defined for you why you were taking on this project. and anat, i don't know if this is the one for you, but i think in your book you tell a story of hearing the chairman i think of deutsche bank justifying a rationalizing something. if not that, some other story. why don't you start? >> well, my moment where i was going to speak up actually had to do with, first, wondering am i missing something?

let me read another thing and let me read another thing. and then thinking, it's just a big confusion some have. but the big moment with the was opening up a textbook on banking and being absolutely horrified at what i saw. that really was shocking. this particular book still has completely false teachings that contradict the absolute basic courses we teach and other classes in finance. as the banking can just deny all the courses in the world and somehow there's a gravity. you're supposed to leave at the door everything you know. they can make it up as they go along. so basically they tell you that banking is very special as an industry, and in reality a specialness of banking is with what they get away with. that's a specialness.

the privilege that they have to defy everything and to live in an entitlement for cheap funding, to take risks with it and hide of those risks, and have somebody else bear the downside. and when i realized that this really was the essence of what was going on, it was a matter of unpacking little bit by little bit for anybody who doesn't know what a balance sheet is, most people don't know 10 know that, what the words mean and how simple it really is to see through all this nonsense. so that was the moment. but there's been many amazing stories. some day when i write the book, outside job, i might tell it. but i might drop dead from it. >> helaine, was there a moment speaks i joke that you have done my book right would've been five years, 500,000 words and would effective junk all, half of it

and start all over and my children would publish it after i'm done because that's how many scams are in the world. the were a lot of moments but the one that crystallized it for me when you're writing a book about personal finance, people come to you if i've got this solved. these are what many people sometimes and they're not all awful people. i began looking at something called financial literacy. it is financial literacy month right now. the idea is if we can just teach people about their finances in school, all will be well and to learn all the behaviors they should learn. it sounds reasonable. like how could you be against teaching money, teaching kids against money? i'm thinking maybe this will work. i discovered one of the greatest boondoggles i've ever stubbly do. financial literacy starts with ford motor credit in the mid 1990s. they are trying to cover up the fact that they're having a problem with what we now call

subprime auto loans. so they get the bright idea that they're going to fund children's education, and they start throwing money at this and it starts to pick up. it really starts to pick up after 2008, if you go into the lexis database you see the amount doubles and double doubln and doubles with her time within a year. and what becomes down to is you start having the banks who are putting this product into the school with the names emblazoned on it as brand awareness, are basically using this as a way of dumping responsibility for all of the disasters of the past several decades on you. so it's not that they issued a subprime mortgage to somebody who shouldn't have had it that was 100 pages, single space with more gotchas, you should have read. picture taken that class in the eighth grade, you might've been able to get it. it's all your fault and you should have known when the

mortgage broker is getting paid and she should've known he was getting paid to sell you a mortgage, that he should have known that i can't afford that house, and accurate prices don't always go well. you should announce not to listen to but it went on like this. i just found example after example of how financial literacy have basically been sold to us. i really became to show how the ethos of responsibility that we were responsible for the banks have done have been sold to all of us. [applause] >> when i first even begin to have any word with people in washington, d.c., i was shocked to see they have absolute no idea about anything at all. part of the way they learned was that the financial services industry was running what they called financial services the university and taking staffers,

wining and dining them for a weekends, to teach them how it works. >> i have to just interject to say, i don't think about this in the book but i attended a major financial or see event on the hill where they were wining and dining all the age with really great food and such. same thing. >> that's the key to financial literacy on the video. how to read a menu. [laughter] >> especially when you're not paying the bill. >> that is the key point. it's other people's money and that's also -- >> the last chapter of my book. >> and it's also not just a political system that religious goes back to you protect your own. if your own or other bankers, or other politicians or your family is integrated or you understand them better than all other policies will drive that way. we kind of the foot that bill.

how all this impacts people is because we foot the bill. to all of us. the political and financial system that is about power that has nothing to do with this. there are moments in the book were i was like wow. i was in the middle of nowhere at times, abilene, kansas, president eisenhower's library. and just their everyday and pouring through this information because what i did was i went to every single voice and i was like i want the big six makers at the time. these people were just the head of the banks for a minute ahead of the banks for decades. if they work heads for decades they were in the treasury department or the defense department or the state department or the national security department. there wasn't a place where the wasn't overlapping and interaction. and it was just because wall street was influencing wall street. it was because wall street and washington was the same thing. two sides of the same coin about and all of the stories i found

really just showed there was so much personal integration, personal, you write about the new deal and fdr were one of the most fascinating things when i went to the fbi library in new york was -- fdr library. i was look at documents no one else a look at the custodial stop me to all the different the banks were friends with fdr. a lot of people know that the all of them, and when i say friend, i mean connected, yachting. james roosevelt it was fdr's father worked with jpmorgan great amount of them -- metropolitan club in europe and to discuss matters of the day. this is something that went for without history. the families and individuals were all very integrated. every place i went they were just these stories. i can keep going to i won't, but

candidates, roosevelt, rockefellers. these aren't conspiracies. that was the one thing i want to uncover through documents is that the one thing i noticed all of the most throughout the research is that these are not things we are assuming are conspiracies because that's what the messages. that weren't a bunch of people on the island if there weren't people reading the system. it's a real. and it's much more at the core of what america is and, therefore, what our democracy isn't. if you really look at the information, and then does something all along the way, going in.org the connection but i just had no idea how many they would really be and how close and tight they really were. [applause] >> that's a great point. and since you mentioned having been at the hyde park

presidential library, one of the impressions i got when i was there was have had all of the equipment was. none of the microfilm readers worked and they were all broken down, and there was, is of course a part of the national archive system and in putting out appeals for money from the average person. >> to preserve the truth. >> one thing about fdr that i want to move into sort of the next phase of our discussion, fdr had a lot of friends. yet grown up in great wealth but he had a lot of friends caching he had a lot of friends and one person really and it was a great moment that they came across when he was writing a speech or prepared a fireside chat is going to be about how he's going to raise taxes on the wealthiest

people, raise them up to marginal rate of 90% or so but and he was getting a dramatic reading with harold ickes i think who was his interior secretary, and a republican by the way, but a very progressive on. and vincent astor was in the room and he was a very, very close personal friend of fdr. and one of the original 400 i think of ward mcalister's great term. and fdr was reading this out and get to the point where he said, this is one going to do to taxes on the wealthy, and astor sort of said, you know, franklin, i'm one of those people. and roosevelt sort of looked at him and said well, you are going to have to pay, to, vincent. but this leads me into the question i want to ask you, nomi, which is in all of the period that you covered going back to the dawn of the 20th

century, it seems to me commend you can check me if i'm wrong on this, that there was really only one period in which there really was a successful campaign for wall street and banking regulation, and that was the '30s. when they got the security's act of 1933 and of 1934. we got the sec. we got disclosures of corporate finances. we got, we brought the new stock exchange to heal all these things. the fdic of course. is that true? and if so, why have we been so unable to do it at other periods, and what was it about the '30s that made a difference? >> it was a man named winfred aldrich who was the son of nelson aldredge who was the father of the federal reserve again a family think -- >> and by the way, related to nelson aldrich rockefeller spent yes, the great uncle of nelson

rockefeller, four time you governor, vice president and david rockefeller who ran all stay for two decades. winthrop a couple generation before that was friends with fdr and he was actually concerned about the speculation that a driven the mortgage. he was concerned about economy and confidence in general and confidence in general in thanking as was fdr in his first inaugural address he talked about banking. he didn't name names but he talked about stabilizing the system but he believed because it grown up in wealth that a system that was more stable for everybody would lift america in general and winthrop believed the same thing which is about it because jamie dimon would never get up and say i'm going to split of my bank, that would be a good idea so everyone in the country can be more stable. but then it did. winthrop got a front-page piece in "the new york times" to push glass-steagall which was the act in 1933 that separated speculative activities of all these deposits that now 84% are the big six banks and fdic

insured by the government, and he promoted it and the action was going back and forth to washington to get the senate and to get senator carter glass to make that build even stronger than it was going to be to include the morgan bank which was also one of his competitors so that didn't hurt. there's so much of interest going on but the point is that time with a populist what was going with fdr a very, very, very skilled politician understand the language and getting certain friends like aldrich and also james pro-consumer national city bank at the time to work with them. they separated their banks before the legislation. so that was something that happened to that of the country, helped the bankers, helped fdr. that lasted, that stability in baking and the separation lasted for about 40 or so years before in the '70s things started disintegrating and there's a lot of reasons it between. that's when bankers and other ways to make money.

they had oil to recycle into the middle east. they started going off this idea of more stability at home means a better profit for us and thought how would you make and much, much greater profit if you don't really care about the answer go off in her own direction. politically they were allowed to do that but all of the presidents that came after that. >> you and i were talking before the panel began, in the preface, the new prophecy written for the paperback edition of your book you talk about the blindness of bankers and, in fact, the willful blindness, the term you choose. where do you see now, if there's one particular product or market that really has the most danger for us all, that the banks haven't been weaned from and maybe our back into an unhealthy way, where the most mischief is possible? >> the mischief is possible in

every which way. i mean, it's really there are many ways. whenever i see the banks go congregate in some investment, i think first of all probably the regulation views this essay that but it is not the particular they went into municipalities, linking to municipalities and we saw what that did. it was pretty clear they were going to get to municipalities into trouble. over lending to certain countries in europe because regulation encourages lending to the government, over lending to businesses in your. so there's a sovereign and your. now the subprime. so there are many ways to take risk. the problem and banking is not risk-taking because i come from silicon valley were a lot more risk is taken actually. a big thing that makes it banking so fragile is that they take it with somebody else's borrowed money. that's the problem. so they are like a homeowner who

bought a mansion with no down payment but they are a corporation but they have access to the own profit. they just rushed to pay them out to protect -- to protect them from their creditors which is the depositors which is us. it's not necessary, and the problem is that they are allowed to. so in terms of the blindness can well, it's a term after the book i met a writer who had a book called willful blindness, why we -- whatever, don't see the obvious, it's about see no evil hear no evil which really represents we told me that there's blind spots in banking it was more of the willful blindness kind. in other words, they don't want to hear about it because it's not convenient for me. i said many incidences about i don't want to hear what you have to say because i have my story and i'm sticking to it.

>> okay, helaine, you talk about, there's a lot of your book that really resonated with me because just tell the story on myself, my wife and i were for a while subscribers to money magazine. we discovered two things about money magazine while we were some scrubbers but one was that you will only have to subscribe for one year because it basically repeated itself year after year. the other thing was that every month it would come in the mail box and we'll put the game which was fined the waldo. and the waldo was the place in every single addition. it never missed one, where it offered the advice that what you should do to save yourself from financial ruin is consolidate your credit cards. and that one nugget figured

without fail in every last addition of money magazine. so that brings i the to the question which i would like to ask you, since the theme of the book really is the deck is stacked against the ordinary investor or the ordinary household because of all of this that we get inundated with. what can the average american, what are we thinking in terms of being investors or safer -- savers. what we do to save ourselves? is anything in particular that people should read or keep in mind? >> there's the big picture. the big picture as we all need to start speaking up about this because ultimately we are not going to keep up and the only way is we have to insist on protections out of washington and that's not happening until we start squawking about it but it might not happened in but at least we will get potentially

get summer. because right now people generally don't realize how stacked the deck is against them and a domain in terms of income, and health insurance and in retirement. i mean in terms of the fact that the financial services industry has very little duty to help you. we all think that if we go seek help, it's like going to a doctor and disperse want to give us advice that's in the best interest and there some sort of hippocratic financial oath that they are violating if they don't. in fact, that is absolutely untrue. most financial advisors and to do something called the suitability standard which could be described as if it fits, it's okay. 50 being fairly loose if anybody was ever shopped for a dress or suit knows. -- 50 being fairly this. because most people don't have any clue, i say is you have to ask questions constantly.

and don't assume someone is acting on your behalf but so that means asking, do they have a legal duty to ask -- act in your best interest? if they don't walk away. they are not your friend. asked what the keys they are getting are, how they are getting paid. on the double dipping, which means they are charging you and getting money from the financial services sector? don't assume because you're paying for it it's okay. don't assume members of if you're not paying for it you are getting a free service. you're not. somebody else is paying the bill and that someone else doesn't have your best interest at heart. and those were the things i try to tell people, just don't take anything for granted but don't just say okay. >> one of the things about michael lewis was not in the news finish one of his actually weakest book called boomerang with some exploration of the

brain and now we can't do with access and how we get tempted by credit and things like that. what my book explained is sort of the magic of leverage and what that does, and the dark side of the. the point about leverage everybody but bankers feeds off of. and those who lend i very good at structuring credit in such a way. so right now banking has to do is sort of too much and too little credit at the same time, credit that is good, the practice of collection, credit card debt and other things that are quite questionable at the same time, you know, some lending that is not happening, or boom, bust, bailout spent real quickly. i have these squirrels in my backyard and i talk about them in some books. not in this one, but it is so easy to take someone else's money, to leverage someone else's money, tibet however you

want to the political structure that allows you to do into political and financial infrastructure essays you what it does work out at the expense of everything that went into it that there is no real reason and there's nothing to break that danger on to the rest everyone else. and the don't consolidate your credit. throw the thing away. that will be painful. but there's so many ways, so we waste extract the money to leverage to go up and have it mailed out. there wasn't a little bit of. it was a huge bailout. it's going on every day, plus the infrastructure creates an implicit bailout. and so there's a definite danger to that. >> that was one other thing that we learned from money magazine which was about all of this advice was wrong spent basically by money magazine and do everything opposite. [laughter] >> no, one comment that struck

me on reading all of your books is the claim by her subjects that they actually are put on this earth to do good and that they do good. the banks say they are lending -- their lending provides the greece that makes they can't ago. the personal finance site say they are saving people money and helping them and as for the future, whether it's college or retirement. and we hear this again and again certainly when regulation comes up we are told it will destroy a good thing. i know lewis douglas who was one of fdr's original cabinet members of both probably anat and nomi and know the name, very conservative, but at the moment when fdr called in his cabinet and said i am taking america off the gold standard, lewis

douglas' reaction was, well, this is the end of western civilization. so there's always this idea in the financial sector that we can't do without them. and i'd like to hear from each of you if you have some thoughts on how much of that, how much of a kernel of truth there is in that, if any, and how much of it is just pure narrative and marketing? >> well, sometimes when i don't have a lot of time i use this quote from paul volcker. again, it's a book that came out right after ours called pay off, why wall street always wins. in the preface to quote, and the prophecies is unfortunate for america obama and biden, and he worked many years for biden as a staffer, are financially illiterate. but then later when he worked for ted kaufman,, ted kaufman ws in the center because he wasn't

running for reelection so he was protected -- >> from delaware. >> so he took joe biden succeed when he went to be vice president. he did not need to run for reelection and, therefore, he didn't care about campaign contributions. he describes in the book, a conversation between paul volcker and ted kaufman, senator, in which paul volcker said anything you propose to do at all, anything at all always say lending will suffer, growth will suffer. and then he tossed and he says, i'm quoting, it's all bull shit. that's what you said. i go do something to some event where i speak, the sausage being made. i see the interaction between

the lawyers of the regular's and the lawyers of, a lot of lawyers involved by the way. not economist by the way. a lot of legal stuff. it's this power-play that's complicated and they have this interesting relationship to its like the tax code. they want to buy that complicated to generate more jobs for consultants and other people so they write a very complicated legislation, lots of loopholes. the volcker rule, the weight came off the shelf, completely impossible to implement because it's 1000 pages of legalese roasted by the time it's done you might as well forget. or let me give you another example with words that you know. living will. so under the monstrous dodd-frank act that is supposed to save us somehow, through the same regular that more, only to mangle this whole thing all the way and cut it by a thousand

cuts, and if any regulator tears to do something they cut their budget, too, as you see. anyway, in the big first the title of it there is a requirement the banks write a living will. when you worry about your loved ones, making decisions when your allies about disconnecting you from machines. they want the banks to describe how they would go through the same bankruptcy code that lehman brothers went through, that took five years and designate all the assets, but took down the rest of the system when it was triggered. how at jpmorgan chase, at least four times bigger than lehman brothers, depends on the accounting system, a lot more if you count or other derivatives and a lot more, trillions of dollars, no other company in the world has more assets to manage. how this will be a knotted through a bankruptcy court. good luck to all of us.

so they spent a lot of time and a lot of money writing these things and then they regulator is supposed to check these things and they're supposed to tell us somehow at jpmorgan chase at the time when maybe of the companies will go down as well will go down through bankruptcy without harming us. i do not need to see what they submitted to know the answer is there's no way in the world this will happen. so they will say no, read my lips, no more bailouts. except for if there is no bailout, though be collateral damage. we will let them implode and will charge these covers to fix them. meanwhile, it will not be any fuel, all these dead bodies, et cetera, et cetera. in other words, if you drive them to shave let them drive at 90 miles per hour, the point is not all these are effectively useful. there are things to do and they are not that complicated, but it's a mess. >> the dodd-frank act is bull

shit. just to sum up what and what you said because it is true that you can drive a truck through anything that is remotely related to restrain anything despite every complaint that is coming from the banking system and the millions of lobbyists and lawyers and pr people that are expounded upon. upon. >> regulator to want to admit their own -- >> the volcker rule, it's like six pages of some what kind of rule and then it's like 900 pages of exceptions to the rule. it's ridiculous. and living wills, too. going back to your question, after world war ii and after that treated where, before that were fdr went off the gold standard, it was something bankers wanted at the time. although they were in support of some of the reforms the divided speculation from deposits, whenever it's easier to have money to speculate with, i.e. you don't have to connect to go to, you don't have accountability to what you do with it, whatever the matter is,

the less research and have the easier it is, the more likely you will make money quickly. that was part of the gold standard. that went to the nixon created gus when nixon finally took the u.s. off of the gold standard he went up and talked about how it was his idea but, in fact, it was rockefeller and others, because they really, really pushed for this idea that america needed to expand. in order for america to be powerful after the world war into the cold war, now in the ukraine, in order for america to be powerful to join philosophy between the people that run wall street and the people that were in washington, the people selected, elected, is that american competitiveness is something that is important to both come important militarily to eisenhower when he came in, the eisenhower doctrine talked about a military support of capitalism versus communism. that coincided 100% with the

financial support because while the u.s. was supporting military maneuvers, the u.s. banker opening branches in those countries to it was not an accident in terms of where the geography of the click financially came. so they do believe it very strong because someone quoted it or someone quoted -- anyway, they are mutually reinforcing power, and the people that are involved on both political and financial, the most elite level understand that it is mutually reinforcing. they don't guess, they don't think, they don't debate. they don't need to understand. even if they did it wouldn't matter because the ideology is the same. the ideology about americans competitiveness and it doesn't matter if that falls on the face. americans fall on the face or anybody else in any other country falls on the face because of that doctrine. there are speeches in my book where different people under different president say the

exact same words. >> sounds like reading each other's lines. allen, why don't you take -- >> as i think we all know our ability to believe our own bs isn't the unparalleled. and to think a lot of the explanation that goes on here, we all believe we are virtuous actress of this world. maybe there's an exception here and there but most of us don't. and that includes the bankers and the financial sources of people. they really think what they are doing is okay and in our best interest. they think this is important stuff and if we don't do it the way they say, that things are going to happen. i think a lot of times -- it's in their best interest because they convinced themselves of that. these are often very powerful interests. and i think as people, in l.a., i will use my favorite celebrities have a which is i think when you live in l.a. you eventually know someone who become sort of a celebrity and to get to watch the process.

the process is if they start getting surrounded by sycophants and people who tell them what they wanted. normal people are sort of embarrassed to go near them. so what happens is they slow lose their ability to hear the word no. and they get surrounded by people who tell them to agree with them, and this is what happens to bankers and powerful people as well. so they just hear their in their feedback loop basically and they hear what they think, in what they think is of course they're acting right and we are all wrong and that's basically how it happens. ..

that is going to be the skunk at the party but with a question. the left interpretation is to designate as is thinking, creed, class. consider the interpretation view emphasizes the role of government, specifically the role of direct leaders in pushing banks afraid of losing their franchise to make laws that were bound to fail in fannie mae and freddie mac into. some of the talk in metaphors.

just personal curiosity. do any of your books mention the government and the creation of this man's? thank you. >> refer to take another question i want to remind you books are for sale upstairs and we will be signing across the way. in 10 minutes. lady right over here. >> yes, my question is in regard to the student loan system. the student loan system is on it anniversary next year and has cost a trillion dollars it says to. it is not uncommon to find in it does of people having social security tax garnished for student loan payment and you have close to 50% of all students not taking out student loans and increased the number

of 20%, 30% of delinquency are not making any payments at all. is it possible this could be the next great financial crisis in the u.s.? >> absolutely. i'm pretty convinced this will get solved until students are immersed in the and brand-new relief at this point. while they notice the problem is both growing for 30 years and when students lost the right to declare bankruptcy and long-term private 2005 legislation, the amount of unfettered double this in about seven years. as soon as the bank's defense by the way would never do this. we can't get blood from the stone. apparently they think they can. so this is what happened. the only way it's going to start with them because you learn to manage money well or take financial literacy classes or go to a lesser college. double step kazoo within minutes

that. if it doesn't, it will eventually crash. i thought it would happen by now. it hasn't. it could go on a lot longer than we think i suspect. >> china's runaway with us. we will all be across the right to take more questions than to sign books. feel free to join us over there. [applause] >> thank you very much. [applause] [inaudible conversations]