his book "the courage to act." he recounts the 2008 financial crisis and explains the steps taken to help revive the u.s. economy. is interviewed by ohio senator sherrod brown, ranking member of the senate banking, housing and urban affairs committee. >> host: mr. chairman, nice to be with you. thank you for the book talk. impressive book, tonight. you begin reading the book at you begin to write this you showed up at work. your blue jeans, when it's jeans, when he do for a stay brookings and began to write this 600 page tome. and present in length come impressive in detail, impressive in recall. this book was on the stand was being sold october the 2015. so not much more than an 18 month process. how did you do that? >> guest: well, i started

right away as you point out. i left the fed on saturday. and on monday i was at brookings what other blogger i lots of vitriol. the federal reserve let me see my e-mails. because i manage by e-mail at dozens and dozens of e-mails everyday and it was are you so because you could go back and third seed in real-time which we think and what was happening. i else i daily news clippings, other types of materials. so i had a wealth of material so i just sat down and bang out a draft. i should also say i have some help from david skidmore who was a public affairs person at the fed who took a year off to edits this and helping with the process, helping with research.t i got a quick start and i would've done in about 14 months. >> host: a decade or less in so those are dramatic economic times, shortly in our lifetime, if not in our nation's history.c

you didn't probably have time to reflect much on your life during that decade. if not on our nation's history, you probably have time to reflect much on your life during that decade, certainly reflect on economic policy. as you wrote over that 18 month time period, what to do you learn about yourself question. >> first of all, a big purpose of it was to think at leisure the through the whole process and that was really useful. i think one of the things i learned, first of all, is there is a lot of hindsight bias. we all create a story about what happened. everything seems inevitable. this had happened, that had happened. as you go back, go back, you realize you were in the fog of war, as things are actually happening you're always trying to make judgments about one probability against another and one risk against another. i saw myself as a a risk manager. summary who was trying to assess

evolving chaotic situation and trying to find the right way forward, but it was a very, very difficult to know any given time what was really happening. >> i remember many years ago in readers digest, digest, as a kid, as a teenager, i remember seeing a line from someone that said with the boy i was be proud of the man i become. you don't strike me as a narcissistic man particularly or narcissistic person. were you generally pleased with the way it on folded in the way you accomplished what you did? we made mistakes in the. running up to the crisis. we were still balancing the risk of crisis against other risk into 2007 and it took us to august 2007 to recognize the thing was getting quite severe. after that we were very

aggressive. i think we did the right ring to stop the crisis and help the economy recover. so, like in any war plan, the first contact with the enemy, all of a sudden your lands are disturbed. there were certainly were lots of things on the margin we could've done different, but i think once we determine we were gonna hit this thing aggressively, aggressively, i do think we got the main things right. >> let's talk a little bit about you and your background. i know people are always interested in that and how that informs the chair of the federal reserve and years later. small-town jewishñ=@÷ kid, smaln south carolina as you said in your book. you said you're a dodger fan because of sandy koufax removed the boston and now washington. a lot of readers may have been surprised that you worked at a place called south of the border. i plead guilty, i know skyline

chili in cincinnati and the diners my wife and i go to in cleveland but i don't know south of the border. people on the east coast tell me everybody does because of all i-95 points to it. you were a middle-class kid, not poor, not really rich. what did working at south of the border do for you? >> it was and is a place where economics, where the economic situation is tough and people have to work hard. i worked as a construction worker. i worked in my dad's dad's drugstore and i worked for two summers as a waiter at south of the border. i got appreciation for how hard it is to put food on the table and pay the rent, particularly if you don't have a lot of education peter was good expense but i was both part of a not part of the community. i was not part of it in the sense that i was jewish and most of the town was southern baptists and quite different orientation, but i was also part

of the town in went to all the public schools. i worked with people in the drugstore. we knew everyone in town. my father offered credit to anybody he felt he could trust. the whole experience was one of getting to know really ordinary americans facing economic challenges, which we face for a long time. >> you tell stories about your grandmother in connecticut. you would sit on the front porch in north carolina talking to her about the depression. you and i were born more or less the same year, we all had parents or grandparents who talked about the depression. your grandmother had been living in connecticut when this happened and talked about the paradox of the shoes. tell that story. the great thing about this story is that fortunately for the country, you had talked enough about the depression, if i'm not putting dots together that don'e

connected, that lead you later to graduate school in economics and study in the depression. talk about the paradox of the shoes. >> sure. we used to sit on the front porch with my grandmother and she would tell me stories about her youth when she was living in connecticut. the stories told me was that she was very proud because her children were able to go to school and where new shoes every year. lots of the kids in town didn't get new shoes or in some cases didn't have shoes. i said why not. she said the shoe factories in this connecticut town had shut down in the depression and their fathers lost their jobs and therefore there was not enough money to provide shoes for the kids. i was six or seven years old but i could see something wrong with this. all they had to do was open the factory, produce shoes and then the kids would have the shoes per she said no, it didn't work that way.

that's the real intellectual puzzle of the great depression per the factors are still there and the workers are still there but for some reason it's not happening. the magneto problem is that the system isn't working. it was a real puzzle to me. i don't want to pretend that i was inspired from age six to study the great depression. i was interested in all kinds of things but when i came back to it in graduate school, i found it to be what i would later consider to be the holy grail of macroeconomics. it's the greatest puzzle that, mishaps. i did spend a lot of time researching and thinking about it. >> i'm guessing that the paradox of the shoes will go down in some kind of economic history. let's talk about 2007. i was put on a committee that is called the sleepy banking committee. they had finished with sarbanes-oxley but didn't have a lot on their agenda. where i came from it was different. my wife and i, not been, but then lived in a zip code that

had more foreclosures than any other zip code in america. it seemed to me in 2007 - 2008 that there wasn't all that much attention from the fed on the housing issues because we hadn't, the housing crisis was more caused by a whole lot of reasons. in cleveland it was predatory lending, a synergism and obviously what was happening with manufacturing declining. why did the fed sort of miss this in some sense? why was the government, overall, not cognizant that there were places all over the country. in fact, ohio, ohio was about the middle of this. hadn't more foreclosures every

year than it had the year before, all over the state. why did we not see that as a country? why did we not see how serious that was? >> i don't quite accept your characterization. i spoke about foreclosures a a number of times before the crisis. my concern was that, some foreclosures are probably unavoidable, but in some cases it seem like there just wasn't enough effort being made to modify mortgages and find a solution for people to stay in their home. i did speak about that. we were very concerned about the housing market which was beginning to slow as early as 2006 and i talked both about foreclosures in the general problems in mortgages alike in testimonies and speeches. we thought about it partly from a macroeconomic perspective. what was the risk to the economy overall? we did worry about effects on communities for example, the empty houses affecting local tax

revenues and the fed didn't pay attention to that issue. >> i heard that statement but i also would say that consumer protections to stop predatory lending in some of the responsibilities and authority that the fed had, particularly prior to you, and i'm not casting aspersions on anyone, but i just don't know. i began to hear from people in cleveland and other cities that the fed or other regulators were not particularly there for any of us. >> the use of the word predatory is really critical because i talk about it to some length in

my book. at the time, in the book i had a go back before the time i was at the fed because it extends back into the '90s, these issues and debates, one of the big stations distinctions in washington was predatory lending which was illegal lending that got people in trouble immediately and subprime lending that is legitimate. that was touted as being a a good development because it allows people with more modest means to counteract redlining. to get into a home and participate in the american dream. quite honestly, one of the reasons that there wasn't more aggressive efforts to address subprime lending was the fear of cutting that off. again a very strong distinction made between predatory lending which was already illegal, it was a question of enforcement so we can debate about enforcement, versus subprime lending which

was viewed as a different kind of thing. >> let me take it from a different angle. before your book, you write i don't think he fed staff spoke about how good the staff was and in my dealings i would agree with that. i don't thing the key fed staff are captured by the firms they regulated in the sense that they perceive to be in their own career for financial interest to go easy. they were open to arguments that regulatory burdens should not be excessive in the competitive market forces would, to some extent, extent, deter poor lending practices. i work at an institution where lobbyists are omnipresent. regulators here are some the same people you might remember. after dodd frank passed they said now or at halftime. now we need to go after the

regulators. you and i and our staffs and your regulators, back when you were non-civilian, tend to hear from the most elite in society over and over and hear the same song. it's easy to get socialized lincoln to say, you want them to stay in the white house and w i have to go and get my public opinion back. but that doesn't strike me as a place where people get public opinion, while francis echo mountain -- to his parish priest. that doesn't strike me that way. it seems to me that the fed is less likely to be aware of the pain of how many regulars we know people who have their homes foreclosed on and are so likely to see that and understand that. >> guest: you know, one feature of the federal reserve system is you've got these 12 federal reserve banks around the country. there's one in cleveland. the president of the cleveland bank would report to us what was

happening in cleveland with housing and the like. your concern i think is, it's not wrong at all, but i think what was happening well before the crisis is was that there was a philosophical perspective that we shared not just by the fed, by others, that the financial system should be less regulated so he could be more dynamic and so on. .. with that, but greenspan's view was that the banks had sufficient capitol even really have to watch and to carefully. the regulation should not be too burdensome. >> all sufficient capital issue was not done right either. >> i understand that. let me ask you in a different way. why did tarp funding, what did bank bailouts work?

your conception and pushing through congress to a bunch of reluctant members of congress, why did that work better than what >> guest: well, w first we need today stabilize wall street because we were afraid of the collapse of the financial system would be catastrophic. we work today stabilize wall street. this wasn't a federal reserve responsibility. working with fannie and freddie which were owned by treasury. i was aware of all that was going on because i was on one of the committees.

all i can say, there was a lot of effort. i frequently heard from presidents. obama, what are you guys doing, you need to do more. i don't have a satisfactory answer. it was hard to do. people didn't respond to your calls for refinancing. theyed redefaulting after modifications were done. records were incomplete. i share your frustration. i felt the same way at the time. it was after all the obama administration that was working on this and it was difficult to the extent to work as desired. >> host: you spoke to congress many times, including the banking committee in which i served, and you -- you didn't show it in your face but i understand from your book you were not necessarily having the

time of your life. many of us would accuse you and the fed, more so your predecessor because we wanted to give youce more of a chance. criticism could come back on a lot of institutions. although ia would testify, i always disliked that. why that? >> guest: it wasn't really about informing the oversight committee. it was really about hearing the committee make leading questions or -- or basically make speeches, and there was a lot of conflictke involved and i'm the kind of person that doesn't like conflict so it was unpleasant. -- i certainly did it. i testified almost 80 times while i was chairman and

acknowledge the necessity but doesn't mean i had to enjoy it. >> host: it doesn't mean that. for viewers' interest, fed testified twice, gives a report. it was required by hawkins which had something that makes us different from european banks, central banks. it's important that the federal reserve has a dual obligation. one is to combat inflation and fightto employment. i would complement you and some of the questions may not sound like but i would complement you. you seemed to take the dual as a

mandate, something the past chairs would not have done. perhaps your time itself, as you understand or the paradox of the shoes. let me talk about the first time with youd. with a cast about 10 others had a very serious sobering conversation. i got a call. i was in ohio, industrial town. i got a call from the majority leaders saying we need you at 12:00, at noon with chairman bernanke.

leihman, fannie and freddie was about to happen. you spoke to us outlining the problem and said we need legislation, my recollection he said it wouldha be a bill and we need you to pass it immediately, $700 million. one of the things i write reasons to be for and to be honest. best vote i will ever cast, worst political vote i will ever cast. i needed to vote for it. it was painful. i'm not a wall street guy. i al knew what was best for my country. if you recall, the republicans opposed and in the house it wet

down. >> guest: i remember that very well. >> host: you write about it in some detail. by the time what you did with tarp, but in your book -- i want to go sort of to the next steep. you talk about leihman and tarp itself. i want to talk about chapter 18. it's hard to forget, although, it's easy to forget details how hard i a bad situation the couny was in from that day in 2008, in the last four months, for the first time in 2009, our economy,

lost 8-plus million jobs, many industrial jobs. you write over and over how the economy needed fiscal help. youte got the help in the late bush years. you thought it was inadequate but important. in the beginning of the obama administration another fiscal help bill that in retrospect, why is it so hard, after we did that it was overwhelming republican opposition to spending money to help you with the monetary policy, why was it hard for you and secretary, you were appointed by president bush

a republican, i don't know about all about politics except about what i read in there, why was it so hard for the two of you to convince republicans to step up on the fiscal policy to grow the economyis? >> guest: well, i think that people had>> the wrong idea basically. deficits were very large not just because of fiscal programs because the economy was in a big recession. there was a lot of fear about that would do and whether it was going to lead to very high interest rates. in europe, in uk we saw more rapidin turn, so don't ask me to defend it. i think it was entirely wrong. >> host: why? >> guest: i think there's this kind of view that the government is the same as a family.

i remember getting this question in the commission services hearing, my teenage daughter overspends her credit card and you cut it up. it's a very important distinction. the difference is that the recession government spending or tax cuts can help the economy recover and that in return reduces and to be honest we were less osterity. the federal stimulus that we got

in 2009 was ton a significant offset by the contraction of state and local level. a lot of spending is state and local level. that was offsetting for state and local level. >> host: in the reagan years when the economy began to come back and job growth, part was fueled by job growth from state and local levels and federal levels. since awful recession which we've had growth for 60 consecutive months since the auto rescue, but we've had a drag on that so there are fewer and fewer with the obama

administration there are fewer government jobs which you used head-wins. you were doing anything you could on the monetary level and congress wasn't. let me use your words. economic spending could replace public spending. interest rates already near zero, the economy certainly needed fiscal help in government spending, tax cuts to promote private spending or both. the wall street journal, the fall of 2008, the wall street journal that i effectively endorsed obama for president, that was rather amusing. i wasn't endorsing a campaign,

and so one of the things you had just said that you said so at the time, my biggest frustration as a sitting senator with chairman bernanke was not transparency, myen biggest frustration was to get you to talk more about what we needed to do. in an ideal world i wished that you had turned to republican critics. i know that's an unfed thing to do. we have to do public spending. this is the best time when our infrastructure is declining. why couldn't you be more prescriptive and stronger in your words even though your predecessor may not have acted that way? >> guest: you think that would have worked?

>> host: moved the public a little bit. >> guest: i was cautious. i did say quite often that we needed to be less now because this is a time that we needed to get more jobs and to think about longer-term balance instead. i will explain. the explanation was that i was concerned about -- about overstepping, essentially, about -- about violating the implicit contract that congress doesn't make monetary policy. i don't approve of it. so i tried, you know, my general rule and you can think this is wrong and you may be right but just so explain my general rule was to talk about the direction of policy, the fact that we needed more fiscal support in the economy and away from the

issues of transportation. i was pretty clear that we wanted more fiscal support because reluctant to say, well, it has to be infrastructure versus a tax cut and i felt that if i did that i would do more harm than good because there would be a reaction that fed should mind -- >> host: shocked is probably not your word, maybe unfair to use. how surprised you were from conservatives in both houses, specially tea party but even more traditional conservatives blaming the fed when they weren't blaming gse's, fannie and freddie for the whole problem. understanding you weren't going to say you should pass the six-year transportation bill, you might want to think of tax cuts, increase income tax

credit, but something that had to bother you precisely was the whole idea of every year or two a group of members of congress often republican leadership threatened to shut the government down and there's no question that that hurt our economic growth. did you speak plainly about that? >> guest: i did, i absolutely did. i think that was an easy call. at least some small benefit to offset but the debt limit, people may not understand that it's not about constraining government spending, and not paying your bills is not a dead-beat thing to do. i was very clear about that. i spoke about that quite often. i let the treasury take the lead

because that was their role. >> host: was the -- okay, let me go on a different place. only one of the things that happened that this concerns some of us at least in the country, i think, and maybe the house and senate is the increasingly consolidation of a small number of financial institutions. i believe 15 years ago that the largest six financial institutions made up 18% of gdp. by 2010, in large part because of what happened with freddie mac and bear stearns, by 2010 was about almost 60% of gdp. hasn't changed much since.

again, bloomberg calculated that those large banks have about 80 basis points, eight tenths of one percent when they borrow money because the financial markets believe that they are too big to fail and so they are at low risk to lend money to and that gives those banks because smaller banks can't compete. whatever the advantage. should we be concerned about that that those six or seven largest banks, they're not just some say too big to fail, others too big to regulate, some say too big to jail in a humorous sort of way, should we be concerned about political power? >> guest: some suggest that they

really -- to funding advantage that shrunk considerably. also the agreement thatnt we had international is moving us in a good direction, and there's two things i would just say in general, one is that under the new capital rules, under dodd-frank there are a lot of imposed because they're big. the very biggest banks have to have more capital than banks that are quite big but not the biggest. the very biggest firms -- >> host: higher percentage of capital. >> guest: right.o special oversight under the systemic financial institution rules, supervision is tougher for the larger institutions, on the other side we have liquidation authority which, i

think, is moving forward and ultimately will give the fdic the ability to unwind a failing firm in the way that it could be done without bringing down the rest of the system. we are making it more costly to being big and what you're seeing in the news is companies talking about shrinking, the ge capital is vesting. just today there was a discussion that aig ought to break up so they can avoid the extra capital oversight. there's the discussion in the shrinking andof simplifying. on top of that we have the living wills. they have to show how they can

be simplified and why they cannot be -- why is it a necessity for the size that they have and in the hands of regulators, that's not necessarily going to be the case all of the time, but the tools are actually there to move us in the right direction. >> host: let me talk about, the living wills for a moment because i was going to ask that. the pronouncements and words of ben bernanke, give us a little prediction, if not exactly a prediction, that the fed is now looking at all these big banks, the fed is saying to them, if you don't -- if you can't be unwound without either government infusionc of a tarp-like government infusion or go through bankruptcy cleanly,

you're going to have to divest. give me a prediction if that would happen. do you think the living wills will precipitate some banks, you said ge capital, do you see that happening to any of these banks? >> guest: yeah, i do. i think it can happen. i think it will happen in some cases. the alternative that there's determination that they can be unwound safely. fed imposing the capacity rule which says that big banks have to have not only enough capital but in in addition to that, they have to have long-term bonds that can be converted to capital should, you know, should they come close to failing and these convertible bonds, they're going to be more expensive than other bonds. you're getting things pushed

against the cost advantage. the trick here is to -- is to simplified, downsize the large financial institutions without losing, on the other hand, it's often lost. they do provide important services, they do provide a lot of jobs, so you don't want -- it's not really feasible to break them up in a lot of community b banks, how do we get the banks to move in a good direction while maintaining economic value, the value they provide to the economy? the best way to do that is to be tougher to be big and also to take away the funding advantage by making a plausible case that, in fact, they would be -- >> host: you argue that most of that money that bloomberg might have cited, they didn't cite them yesterday. you're arguing that much of that

has been flatten. >> guest: reduced significantly. i would note, again, this is just a small piece of anecdotal evidence. they are no longer assuming when they rate the bonds of large banks. i don't want to overstate it. if there's sufficient attention paid over time dodd-frank did allow tools that allowed regulators -- >> host: are you concerned about dodd-frank, to strip away a number of the powers coordinating of all the coordinated panel, if you will, of the fed, fdic, are you concerned about that? >> guest: some of the language is about gutting, eliminating

dodd-frank. i don't think you need to defend every single claws. there are some things that are less effective than other things. i would hope that we come to a situation where changes could be made and so on, but i would certainly oppose to wholesale roll back. >> host: two biggest initiatist, legislative initiatives, affordable care act and dodd-frank, we work together on an insurance change on something called the colins rule but very little on dodd-frank.

at -- if leihman brothers did that, was it as lesson not to do that? >> guest: coal of -- the goal of bankruptcy is to protect. unfortunately that was not the main purpose. when leihman collapsed, we weren't concerned about the stockholders. leihman was easily safed, but anyway, the trouble with bankruptcy laws is they are not focused on the principal public purpose in a financial crisis which prevents the collapse of

the overall system. it gives discretion to fdic and regulators to do what's necessary to stabilize the company, to stabilize the system without necessarily being constrained by doing only and exactly those things which will give the highest return to the shareholders, and that's the difference. bankruptcy is about protecting general, but the higher priority should be protecting the system. that's why i would prefer to see liquidation authority which is -- which is specifically dedicated to the proposition that the main objective needs to be protected in the overall system. >> host: perhaps a more personal question. preface to an earlier question. don't move markets. understanding it was sort of amusing in this book how you went on from 2002 you were --

you joined the administration as fed governor then into the -- what became the president bush chief adviser. the transition in your mind that your language had to be much more precise and more than you ever in your life, how did that work that at home? how does family react to some guy that hasre to talk that way? do you talk differently? >> guest: i talk differently. [laughter] >> host: i've been accused by my wife after some various kinds of things to talking like that at home. >> guest: do you cite the good of the american people? >> host: i understand the pressure that was on you during, of course, all of that. >> guest: my home life was a tremendous relief to me. you asked me about my personal experience and my wife is really

good at giving me an oasis and sanctuary and unwind and think about something else for a change and those are important for my mental health. >> host: page 42 in this book, you talk about a book that you were writing in 2002 when you got the call that changed your life to go to washington and be appointed as a federal reserve as ad governor. you're working on a book, the age of decollusion, how -- age of delusion, 120 pages into this book. what would the next ben bernanke call, not theim solutions and te issues you worked on, but the lead-up to this?

>> guest: lead-up would be sleep at the switch or something like that that one of the -- one of the aspects of the 90's and the early 2000's that things looked awfully stable overall and underneath the surface they were rising. debt, for example, that lead to this that we saw in 2007 and 2008, i guess that would be in terms of the period before the crisis, that would identify, you know,he excessive confidence in someen ways as being the proble. in that respect when you ask me about the future and dodd-frank, i always have to say, we have to remain vigilant. you have to make sure that

you're paying close attention. one of the first things that i thought about after getting in the banking committee is so many people in this country, so many people in wall street and financial services were rewarded for risk taking. they got the rewards and public lost jobs, if you remember the month that obama took office we were losing 800,000 jobs a month. the loss of stock market for senior citizens were inflicted on them. a lot of that has come back, of course, you know, but i had -- i was talk to go tom curry and he talked about one of the things that the bang culture has changed, is that every major financial institution, at least the goal, has a risk officer now. somebody that has the stature and compensation to sit at the

table, not making any money for the firm, they are pulling the firm back on risky behavior. are we doing that well enough, is that risk officer in every board room have the authority, and the support of the board of directors to tell a company, no, you can't do that, that's too risky for the company? >> guest: of course, i'm not sitting on the fed now. janet yellen is talking about these issues. they had risk officers but they were not necessarily as -- at the table, as you said. they weren't taken seriously or not seriously enough. a strong supervision to make sure that the risk officers have a high profile and do report to the board andil have the information that they need and the banks are able to assess their own risks.

you could ask the banks, how would that affect your portfolio, get back to in a couple of weeks, they couldn't give you an answer to that kind of question. now the stress test, you could only pass the stress test and give permission to the shareholders, again, i don't want to say the problem is solved but things are moving in the right direction and consistent with the regulators that would be a big improvement. the other aspect of bank supervision has to do with bank structure. one of the problems is if people are paid bonuses on quarter results, you can take a lot of risks and move onto another company and the affects are felt down the road. there's a lot more down and regulators are insisting on

packages that allow if investment ends up losing money that you would not get or pay back the money that you received. so trying to create a longer term perspective and a broader risk-sensitive prospective. there is aey change in the culture. i don't want to blame a that the problem is solve but the direction is very clear. >> host: do you see in the last institution where you last taught, for instance, had a reputation to sending to wall street to design the most extraordinary, complex vehicles and various kinds of cdo's, are young people -- are young people less likely to do that now? >> guest: there's still a lot of interest, of course, in finance at princeton and elsewhere. the best and the brightest are not necessarily head to go wall street at least not in the numbers as the 90's or 2000's.

>> host: i would like for them to ohio to manufacturer, high-tech, what they do wall street is important to the economy but at least the 25 years. >> guest: there has been a shift in where college graduates are going. >> host: i have two more questions for you. one is we talked about my frustrations and you answered the question well, i thought, i still had the frustration that you weren't prescriptive enough as much as i would like you to be on what congress needs to do, you don't have any of those stray jackets on today, give me one or two things congress should be doing, whether fiscal policy to moving forward?

provide: we need to goodro infrastructure. we need to fix immigration, i object to the limits on high-scaled immigration. it needs to be rethought. skills and training, really critical for growth and income distribution. and i think the government needs to keep a sound role in r&d technology, the government has the ability to fund basic science that no individual company necessarily wants. >> host: part of infrastructure. highways, bridges, sewer. >> guest: government's job is to provide the foundation in some sense for that and it's just been really hard lately as i'm sure you appreciate to get bipartisan support for, you know, sensible programs and there's a lot that could be done to help us -- our productivity

gains have been very anemic in the last couple of years. a lot of things that could be done to make our economy more vibrant for sure. >> host: i said i had two more questions, i don't, i have more than that. what are the things we can do about wealth and equality? maybe issues in globalization, issues of training. >> guest: this is a very long-term trend. the fed reserve is accused of exacerbating inequality, a whole variety of things. it's not going to be easy to reverse that oil tanker. i guess the two main tools that we have, they're not completely satisfactory are tax and

transfer policy, to make calls about that and the other is skills and training to make sure that everybody has access, has the opportunity to succeed in contemporary labor market and we haven't succeeded in doing that. the inequality in educational outcomes is in many ways to inequality to income and wealth distribution. >> host: what do you mean reference to tax policy? >> guest: this is congress' decision. clearly one tool that you have as a legislature to address inequality is tax rates, income wealth, inheritance. i'm not advocating a tax rate. that's not my role.

it's a tool that you can consider, but it is one tool that congress has to look at. >> host: speaks with a louder voice than almost any other distinguished economist. i know you're not going to let me pin you down on what the tax rates should be, i would like to hear your assessment of what we are doing right and wrong, everything from earned income tax credit to a state tax to corporate tax to the personal income tax. >> guest: you mentioned two areas,me earned income tax credt and other credits that reward work and reward education, that those are constructive and they avoid some of the tradeoffs that you worry about that you create attacks on benefits, taking away attacks, for example. there's a lot of bipartisan

agreement that closing loopholes, addressing the territorial issues, those are things that -- that, i think, should be able to get done, it seems to me. there are some areas where progress could be made for sure. >> host: i'm hoping that we can come to agreement on territorial tax so we can give incentives for companies to bring their overseas dollarsas back home ata rate of 10 to 11%. and the money goes to infrastructure and so that does -- minimum tax from then on. >> guest: right, instead of being a one-time thing, you want to make a transition to a more rational system. >> host: that's part of what we are trying to do. my last question is, of course, about baseball and one of the things that you love about

baseball, one of the things that i love about baseball is you can sort of compare across eras, obviously not always and you are lucky enough to see where there's two outs in the ninth inning and my question is this, and i represent ohio as you know and the southern part of my state, pete rose is not -- i'm not n asking your opinion, pete rose is not in the hall of fame because of betting of games, joe jackson playing for cleveland and part of black sox scandal, understanding the blemishes in their careers, there was a rooky player from the new york giants, this story came up recently because they were playing the cubs.

my team the cleveland indians would be the longest-existing team to not win the world series one rooky star, how far is major league baseball when it labels him for the five world series appearances and 15 years in the major leagues? >> guest: it's interesting. they had this so-called neighborhood play. the idea when there's a double place -- >> host: be in the neighborhood. >> guest: now they have replay. the point is that the standards change and at the time back in

1807, as i understand it, the convention was that you didn't have to go to second base. and so i think it was unfair to pull fred merkel, is he related to the german chancellor? >> host: i would not use that word in connection with her. [laughter] >> guest: that wasn't my intention. i think it was a little unfair that what was the standard practice was reversed in a crucial play at the end of the world series. at least that was something. >> host: thank you chairman bernanke. thank you for your service to our country. >> guest: thank you, senator. >> and there's more book tv and prime time wednesday night on books about science and technology, at 8:00 michelle,

who built that. at 9:45 a discussion about bring ing animals of extinction back to life. at 10:40, machines of loving grace. >> michael ramírez on career and cartoons. >> i have a figure of extremist iraelis settlers. if you notice, he's on a prayer

rug, both of the figures are utilizing a false religion for political purpose. so it proves that once again i'm an equal important defender. >> on c-span's q&a. >> now a look at the israeli politics. this is an hour and 45 minutes. [inaudible conversations] >> ladies and gentlemen, we would like to start, would you kindly turn