>> good evening a welcome to koala ridge books. we are hosting an event tonight which is being taped for c-span so welcome to c-span. this is booktv. swindlers hucksters american history is rife with those out to deceive. where is the line between aggressive businesspeople and out and out conmen? to answer this question and more edgars balleisen is here to share his new book "fraud" an american history from barnam to madoff. the associate professor of

history and senior fellow at the kenan institute for ethics at duke university documents the relationship between deregulation and the rise of fraud. we are going to introduce tonight enzi state history chair department chair david who will further introduce our guests and i was turned over to him at this moment. >> thank you very much. welcome everybody. as was said i am head of the history department and first of all i want to thank ed for asking me to moderate this panel. i'm really looking forward to it. ed has our advantage it does to you. he is a member of the faculty. he is also duke's vice provost for disciplinary study where he is reading a major project funded by the national endowment for the manatees and exploring new careers humanities and ph.d.s and i have great

interest in that because i want to explore career opportunities. kevin anderson who is currently the senior deputy attorney general of the state of north carolina. he also heads the consumer protection division and has been directing that for the past five years. he is the lead attorney on a wide range of cases and investigations involving financial fraud, health care tell him -- telecommunications and internet issues and has had many cases before the north carolina supreme court. next them is former congressman matt miller from the 13th district or once was the 13th district but has been gerrymandered in all different kinds of shapes and places. mr. miller representative the 13th district from 2003 to 2012. here in dispatch this degree

from chapel hill from the london school of economics and his law degree from columbia university. he also served as a law clerk for judge j. dickinson on the fourth quarter appeals in virginia and he's been practicing law here in north carolina for over 20 years. we are going to start off with ed who will make a couple of remarks about the book which i will say is for sale and he will be happy to sign copies again. then we are going to turn it over to our panel to make some comments and we will leave plenty of time for audience questions and answers as well so i will turn it over to ed. >> thanks so much david. the books that i have written are about business fraud in the united states from the early 19th century right up to 2016 and it's filled with individual stories. there are lots of stories of specific business fraud,

marketing scamsters, in the consumer marketplace. it's also filled with stories about how difficult it is in many contexts to distinguish outright fraud from enthusiastic promotion and puffery and exaggeration. an example of that is the case of the sears roebuck company which all of you are familiar with. you might not be familiar with it if the first office had shut it down under allegations of deceptive practices in its marketing. the book also provides a great number of stories which is the key theme of the book about responses to the problem of commercial deception by americans. some of those responses are market responses like the

emergence of advertising to warn people about deception in the marketplace. some stories are about ngos, nonprofit organizations that are heavily focused on the problem of business fraud but the lions share of the stories about government. a chart in the book the long movement in the united states to set policy according to the principle of buyer beware which was big in the 19th century outstanding data protections for consumers and investors in many different sectors of the economy that moved policy more in the direction toward let the seller beware. i also pay that back to the

1970s associated with broader dynamics of deregulation and many different areas of our policymaking and what the consequences of that have been. i argue that that shift has gone along with a dramatic increase in the scale of fraud and movements from the worst fraud in the tens of millions to billions or tens of williams and also a shift in the focus where we find it to the scandals in the last 30 or 40 years the biggest and most important corporations in our economy whereas before that point in the 20 century most fraud involved marginal firms or small corporations. i've written a book for historians and political scientists but also the broad public in perhaps more importantly than any other constituency i have written a book or policymakers for those

who have to deal with the problem of perception in the marketplace on a daily basis. that's why i'm so thrilled that we have congressman miller and senior deputy attorney general anderson with us tonight. i would like to start a conversation just by inviting them to reflect on what the value of historical perspective is the policy particularly what they found in the book that helps them see the issues they have been grappling with for years and perhaps even decades. >> i will jump in on that. one of the things that struck me about the book is that i think ed makes the point that some of these scams have been around for a long time in their core form that they may change on the nuances and the details may change but the core framework of a lot of these scams has been around for a long time. we see it in practice.

for instance there are scams that you all probably, if you haven't received these phonecalls you probably have friends who have. the irs scam phonecall, the scam where someone is posing as the utility company and they are calling and saying your power is going to be cut off unless you send in an immediate payment. it can be by wire or can be by prepaid card. sometimes it's an itunes gift card that the whole scam is creating this emergency situation and trying to get someone to quickly shootout money somewhere. that type of scam has been going on for a long time. again the details change and every time there is some new event the details may change. it is i think both important to note that the core principles of some of these scams have been the same for a long time.

it also comes through in the book and i can confirm this that a lot of these scams are very well thought out. there is a lot of brain power behind them and we all have to be wary of how much intelligence is behind some of these scams and how some of these phishing e-mails that people get where someone is impersonating e-bay or the logo looks exactly the same. it's not often a misrepresentation but they do a really good job of impersonating the logo and it's very sophisticated hacking techniques that they use these days to reach information. to me that comes through as well as to how we really have to be

vigilant about how intelligence some of these scams are and they target vulnerable people whether it's elderly people or people with some sort of ulnar ability and it's important that people are educated of these scams and it's important that we as a society know of them and try to educate our parents were vulnerable. a lot of that historical perspective comes through in the book as well. >> this is not an unimportant topic but it is true that it's an unimportant topic. fraud is a factor via con them is hardly mentioned in economic textbooks. if any kind of political history. the public image of academics and scholars pick some

incredibly obscure topic. an expert of some remarkably obscure topic. this is not that. it's not a medical study of pickups so if you have that rare patient who has continued for months and months. this has been something that has upset the economy and sets out some of the ways that it doesn't undermines investors. it's hard to raise capital for legitimate business enterprises. it undermines consumer confidence. they are reluctant to borrow and reluctant to buy things because they are afraid they are going to be cheated. it's a significant factor in our economy and a significant factor in our history. we have just had a major

financial bust and you have probably read about it. it was caused largely by fraud. it was not a perfect storm. the explanation is who could have known? it was rooted in fraud. yes there was a bubble and asset that was inflated with borrowed against and there was a great deal of debt that had that as collateral and when the bubble collapsed, it's roughly the same thing that happened in the great depression and the stock market collapse. mortgages themselves and what people were told in the mortgages and what investors were told when they were buying the securitize mortgages, the way that they have mortgages were packaged and sold, someone

argued in the book of course the banks had every incentive because they had the numbers on their books and if they were foreclosed upon they would lose money. they weren't on the books. they sold those mortgages to investors and they had very little to lose either from a the fraudulent representations to me to the homeowners of the fraudulent representations they made to the people who bought them. the response another point that ed makes that i think has been continuous throughout our history is the political power, the economic power of the bad actors not to be held accountable. it's probably why our nation's politics is where it is right now. there is a strong sense that there is an economic elite. what is good for them is not good for most people and that is

fundamentally correct. i think the response to it is fundamentally incorrect but that basic popular sense that the people in charge aren't helping me and they don't understand my life and they don't care about my life that's fundamentally correct. something is happening and europe with far right-wing populist parties invite populist i mean an elite that is not looking after you and isn't looking after ordinary people. that's not an inconsequential thing. that's not a small thing and it's been true throughout our history. i also was struck by the continuity of the arguments. i served in congress for 10 years but more to the point i introduced legislation like academics who pick an obscure

topic. they picked an obscure topic to make it their issue and an issue that i had taken on that nobody else had taken on which would lead me to this path. the sub-prime mortgage lending. that was in 2004. it was not seen as a career enhancing position to take on. they knew me through friends and i was brand-new and i was from the financial services committee. the only way they approach their then senior senator john edwards about being the champion of that issue and he said no, he was trying to run for president in trying to position himself as a centrist. that is what everyone knew what you needed to run for president

to be elected president as a democrat. one must wonder he did everything short of its -- at the campaign rallies to move to the left or the time he was positioning himself as southern centrist and he thought this was an issue that would not help him but would hurt him. the arguments, it's my bill. the arguments have been exactly the same for the course of our history. the argument is why not regulate it was the same in 2004 1h doucette dylan was the same in 2001 in 2010 when we are working on dodd-frank in creating the consumer financial protection bureau. let me start with a couple of questions and we can certainly open it up to the audience as well. i want to pick up on something that kevin said because it's historical and an occupational hazard of mine did one of the things that resonate with me is

when he said the core of a lot of these scams don't change. one of the things in your book add some of the things were quote unquote modern. you showed a version of that in the 1830s. in other cases i thought that thing died when the automobile came in and you showed it in the 1830s and the 2000 tens. can you think of a couple of examples of one with staying power and why you think we are facing the same all of the time are what? >> i will give you one example. one comment is the pyramid scheme which involves promises of profitability and then

initially delivering on those promises by taking the money that investors put in and using that to pay off dividends to early investors. of course that can't last forever because eventually you run out of people at the bottom of the pyramid. so the form of that is very consistent but so is the mode of marketing. in almost all of these types of schemes the approach you have to look for, to have someone in that group of schemes are perpetrated by those who can expect to have trust because they are selling this thing to people like them who are distinct from the rest of society so they example is the ponzi scheme and that's why we call it a ponzi scheme. he focused on the a tiny

community which is where it came from. the best example i know of is by a woman in the 1870s in boston. she focused on unmarried women on trust. i am unmarried, you are unmarried. the quakers have given the resources that have enabled me to make good on my promises of wild investment returns at once that starts going the cheap markers of the scheme it's not advertising, it's word-of-mouth. that is a pattern that has recurred are time. >> i was struck by the persistence of affinity fraud which you just mentioned without calling it that. that ponzi marketing to italians when italians were very much a ethnic minority someone isolated and was not particularly well served by the institutions of society. even made off.

madoff -- the sub-prime mortgage lending was affinity fraud directed specifically at communities of color. african-americans. it was low were middle-class homeowners generally that the african-american community and the latino community. mortgage brokers who look like them and they did not feel they had been well served over time by traditional financial institutions, banks. they didn't trust them and when someone came to them and they needed to borrow money and the only way they could borrow money goes to borrow against their home but someone who says you can't trust the people that you

otherwise have to deal with. i know this stuff and i can help you. that was a well trodden path in this type of fraud. >> to echo some of these things a lot of these scams are based in some way, there's a story behind them and a psychological element. they are targeting people who are susceptible to certain types of scams. there are scams that try to take advantage of people's desire to hit it big. there's a scam where you are told you have won a sweepstakes but you have to pay a small fee to get your winnings. that's been around for a long time. only now you get it in an e-mail on the internet as opposed to somebody in person telling you that. or there's the one that tries to prey upon people's desire to help other people so hence the e-mail if you get from the nigerian prince or it might e. a

different type. again an earlier version of that type of story would have involved a different story with different details. again it's premised on prying -- trying to prey on people's desire to help other people. it's very sad that that's where a lot of these things come from. it's frustrating for someone who works on a daily basis in the fraud world. the scams that are disheartening are the scams that are disaster related scams. whenever there's a disaster like hurricane matthew. we know that these things happen in the wake of a natural disaster. we know that there will be false charities that come out trying to get people to donate money. one of the first things we do is try to get the word out and try

to warn people to do the research and not fall for scams like that but those are some of the worst types of scams they think. people are really hit hard. they are in trouble and out comes a scam to take advantage of them and makes it even worse. it seems like that has been going on for a long time. the details change of the technology changes. sometimes technology makes prevalence of these scams and fighting them even more difficult. then it becomes harder sometimes to track down the scammer because they might not even be in your community. they might be overseas in the scam is being conducted over the internet or over the telephone. it's great in a lot of ways but it can make it easier for the scammers to perpetrate their scams as well.

>> let me mention one other pattern that is persisted and that is the tendency to blame the victim for being foolish. a fool's money but that would never have happened. you should feel smug and superior not feel sympathetic because he was not careful in the way that you would have been. >> he was a. >> you mentioned in the first chapter the tendency barnum who noted himself as this enduring scoundrel with his tales of how we suckered people but wc fields and let me make sure i can get these right. you can't cheat an honest man

and never smarten up a trump. the person who was cheated would not have been cheated had they not been trying to get something to get something they were trying to get and known better that they were being cheated and it was their own fault. and also people feel more ashamed of their financial circumstances than anything else and if being hoodwinked makes people not come forward. victims of fraud complaint about it. tonight this is a key element of the long-standing centuries-old argument. all of those principles wc fields are the public policy to create incentive to look out for yourself. if you protect them too much they won't do that and that's

the best practices to help people wise enough. be careful and vigilant. the problem with that argument and this is i think why we see more stringent predatory protections for consumers and investors since the late 19th century and well through the 20th is that in a modern capitalist society the gaps in information between sellers and buyers are often so great and it's just a structural problem. >> and the argument was they should have known what kind of mortgage they were selling. if you have a. >> of documents like this saying sign here here it's like the tv ad by one of the insurance companies. did you read page five?

no, only lawyers do that and believe me it's much worse for mortgages. and it's an opportunity by society everyone is reading their mortgages than their mutual fund statements and their credit card bills and insurance contracts and on and on. >> i read a book recently all about disclosures in one of the authors in the book on youtube printed up the terms and conditions from an internet company and he printed it up physically as something normally you'd be looking on the internet and scrolling through. it says you read all the terms and conditions. he printed it out and it stretched from the second or third story of the library and is building and numerous feet long. again, who reads back? the laws bombarded with information on a daily basis. life is complex and most people

just don't have the time and there's a lot of legalese. it's hard to understand to begin with. >> is one key reason my fraud is a very hard problem to solve. often in the last 150 years and even before that one common response to the legalization in the marketplace is to think about disclosure regimes. we have to make sure when people provide information that it is disclosed honestly and in a way that enables people to reduce this gap between buyers and sellers and yet if that means an avalanche of information that's not necessarily useful or salient. >> information asymmetry but there's also inequality of bargaining power. i don't care at all about a commercial lease between two multibillion dollar corporations or a surplus lines insurance policy, something that is not

routine that covers 17 factories. those are mainstream policies that have drafted from people sitting across the table from each other at least metaphorically if not literally. that's not something that -- try to go into a bank with a laptop and say i want to borrow money but i don't want to use your forums. they are going to say we only make loans on our forms that are lawyers drafted. there's an enormous disparity in power as well. >> there is another point i wanted to make. you can continue. >> eddie made a point at the beginning that i thought was worth discussing and that is

some of the pattern of who is doing the fraud seems to shift from more marginal and shady fly-by-night operations and at least that's the perception and maybe it's only a perception but a lot more fraud today is committed by quote unquote reputable corporations. there does seem to be the sense of fraud a hundred years ago seemed to be more from the shady dealer and now at least the public thinks you know the fortune five hundreds are that the frogger's. >> there are scandals and enforcement actions that would suggest all too often in the last couple of decades that has been the case. you have had major contract fraud against the federal government in the defense and health care industries. we had a series of banking scandals that culminated in the savings and loan crisis.

congressman miller made reference to the misrepresentation and outright lies of wires loans that were at the core of the mortgage market in the run-up to the financial crisis of 2008. these kinds of events and episodes were not going on at fly-by-night firms or even small companies. these were actually members of the fortune 500. i think we are going to get a lot of careful thinking about how to explain this. it's related not just to deregulation but also to the rise of culture with corporate america premised on short-term financial results and federal costs. ..

>> and also one that is hitting eastern and central corporations and our economy. >> the financial crisis. the people who were actually mortgage brokers set all those cultural stereotypes of the fly-by-night people. that was the infinity for all of them. but the people who were directing and knew what was going on at that level, in the

making of the mortgages, and the selling of the mortgages to the investors, that was done by people who went to all the right schools, belonged to all the right clubs, they have perfect social graces -- all of the cultural cues of ethical people showed they were not ethical. they were crooks. it is engrained in our culture of who we thing of being the better people, the ethical people and the people who were not. you mentioned richard whitney in

the book just once but you don't mention what happened to him later. richard whitney was the president of the new york stock exchange and the early new reels in the crash, of the new deal, he is a spokesman for wall street saying the security laws are overreaching and unnecessary. he was the perfect picture of a patrician. everything you think of as a patrician. he looked like he came straight out of "trading places" the movie with eddie murphy. perfect patrician. and now, i assume all of the cultural queues in society was that of someone who was very tru trustworthy. he was indicted, convicted and served an active prison sentence for embezzlement. i think that incident was

actually a big part of why the new deal was able to get their reforms through, because that incident, his conviction for embezzlement from his firm, i think undermine the credibility of our patrician class and made americans realize yes, we do need to regulate stock clusters. >> they used the trustees for the new york yacht club that provided money to widows and orphans and he embezzled from them as well. this is actually another common tale in fraud. he got in over his head with trades, wanted to cover it up, was just going to barrow the money for a little bit and make other trades that would enable him to backfill the losses.

that only craters further into the hole and there is no way out. you are absolutely right. that prosecution, baker evidence, broke the unwillingness of many people on wall street to actually engage with financial regulations. >> and we could have but we never had that in the financial crisis. we didn't have anything like the indictment and conviction of richard whitney. we didn't have anything by government that pointed fingers at who had actually done criminal or at least blamed worthy things. i think that -- part of that was the people in government didn't really want to just didn't want to do it and didn't want much more ambitious reforms. >> it pointed to what per tained for several decades after the 1930s which was not the coziest

relationship between corporate america and regulatory state around consumer investment and protection but a more constructive engagement rather than outright antagonism or an effort to make sure the regulatory environment was as minimal as possible. >> eddie murphy and dan acroid. >> yes! >> i am wondering if he should open to up to questions from the audience. >> absolutely. >> there we go. so, i think we have sort of been dancing around a lit but perhaps the panel can comment on the co-opting of the regulatory environment and scheme by campaign finance contributions,

the repeal of the -- you know, the division between investment banking and -- >> everybody expects me to answer that question. >> no, i said the panel! >> i will make one comment but i will leave it maybe for congressman miller to add on there. in this arena of investment and consumer protection, often the era of deregulation has meant not so much uprooting rules and institutions in other domains of policymaking but it has been a disinclination to put in new roads with new markets like derivatives. in the case of proposal to do so out of concerns for things like misrepresentation and the potential destabilization of the financial system. that is one thing it has meant and the other is a mix of appointing people to regulatory agencies who are disinclined to have really stringent postures

and a cutting of enforcement budget so fewer cops on the street overseeing what is going on in the given markets. the question of what the role of campaign contributions is to that i will leave for congressman miller. >> there are friends i meet with frequently and the role of ideology or political philosophy or as i will frequently call it dogma of not regulation, the market will take care of it all versus the influence simply of money. i don't think many people actually look in the mirror every day and think i am a crook. i am going to use my position. they do convince themselves that broader public good-bye the position they are taking but i think sinclair lewis said it is hard to convince a man of

something that his salary depends upon not believing or understanding. it is hard to make a man understand something that his livelihood depends on not understanding. that was st. clair lewis right? >> i think he had a reference to the stummiomach as well. >> it is hard to get a politician to understand something the campaign budget requires him not to understand. it is hard not to notice the confluence of self interest and the dogma. the dogma explains what you are doing and frequently requires that you ignore how life works. like you really think someone is going to sit and read all their mortgage documents and sit and read all their insurance contracts and sit and read all their mutual found contracts or statements or whatever.

and the variance with equality of information and loitering power that makes a market work. you can rely upon market forces because market forces will work when there is enormous differences in information and enormous differences in economic power. >> and of course, if you rely on market forces it only creates new kinds of potential for deception. if you rely on accounting, then you are reliant on the accountants being honest. if they get skewed you have a new sense of problems. >> let me throw out as well on this topic. you will see different approaches by different agencies as well and sometimes the issues can be complicated. the state and state attorney general offices before the crisis hit even were taking action in the predatory loan states and trying to get federal authorities to do more and some of the battles we had to fight

was the office of the comp controller was trying to prevent that. they would always talk about safety of the banking system but they were both not doing a whole lot in terms of consumer protection and trying to prevent others who were trying to take consumer protection action from doing anything. so, you know, they are very different approaches among different agencies and that will happen. >> hi, i have some perspective on the last 40-50 years. in the mid '60s i was a wet behind the wheel young attorney on wall street and a couple things i think have changed sense then. people complained were the most regulatored industry but it was accepted. the other thing that has changed

is the securities and exchange commission was considered to blue ribbon or gold standard of regulation. i haven't read your book so i don't know if you mention anything like that. but it understood there were two man dates and they were not in conflict. they worked together. one was to keep the capital markets open and thriving and the other mandate was to protect the investors which some people say you can't do one without the other but they were very good at doing both. walking that very fine line in making sure. now their philosophy, something mentioned disclosure and as i am sure you know, the fcc philosophy or its dictate was disclosure rather than you don't do merit regulation and say we won't let this. in fact in theortheory, the the was that if somebody tried to

sell interest in a trash pile among the grounds there may be gold in it, as long as they disclose everything and said we don't have any reason to believe there is gold in there, it was perfectly all right. but on the disclosure, i still have some of the perspectives i worked on. they were this thick. now they are this thick. it is not unusual to be that thick. that is a lot of material to try to go through and unless analysts weighed through it, commented and recommended what they think ought to be done. it is just overwhelming. >> a couple quick reflections. you are absolutely right and part of the backdrop for that acceptance was the depth of the great recession. there was a capital strike, no deals happening and almost no

market or secondary market either. there is no livelihood without a degree of confidence to promote trade. >> one of the older attorneys in the firm said he started practicing wall street in the early '20s and he thought he had the hang of it by the '30s and then the great depression hit and the bond documents were coming back to haunt them and both sides were fighting over who should get what. before that, they were ground out by routine just as, i think, happened during the recent trend. >> it is important to keep in mind, though, that there is a process of general amnesia that can happen.

when the great depression is 30-40 years before, there are fewer people like that individual who remembered it and can communicate just what it was like. and other problems come into view. in the 1970s and 1980s there was foreign competition in the markets in a way that had not been attained before. people are concerned about new york loosing ground to london if the regulatory rules are too stringent. i think it is a complicated story as to why there is a movement away from that. there was actually a dsc by the '80s, '90s and 2000s. the goals shaping the trade off of how they should handle issues tilted in a way away from industrial protection. >> if i could add to what you said, i will pull the plug for

history to combat the generat n generational amnesia. in the 1990s under the clinton administration we had the glass siegel act and when that was lifted, i am willing to bet many americans don't know what that act was, including even some bankers for all i know. i can remember talking to three or four colleagues that day and we all no one knows what this law is but it is a really bad idea. i was probably wrong about every prediction i made but that day three or four of us said nothing good will come from this. there is no reason to lift it. the depression is long gone, we can never have any other depression. of course, it can't happen. that sort of thing.

you know, housing prices never go down. >> that is a really nice example. the fed predicated models in the mortgage market on the presumption that was the case. derivati derivatives are the instrument. as if the 1930s and what happened to the housing market was irrelevant to the discussion. >> i am back in the back and they asked me to stand. the three biggest frauds we have seen recently is volkswagen, wells fargo and unc chapel hill as far as publicity. i am wondering how many large organizations has somebody maybe on a vice presidential level that their job is one thank; they report to the president or

chairman of the board and they have more or less freedom to question anything that corporation is doing and their role would be protect the customer, the student, i think you get the gist. in other words, he might get fired because he stirs up too much stuff. the many big corporations have a high gain for the consumer or client. >> well, and i think it is really important not to suggest that all corporations are dishonest because i don't think it is true. corporations with hundreds of thousands, tens of thousands of people working within them, will have a lot of -- even those that engage in marketing practices that we might want to question are filled with many people with deep integrity who are disinclined to engage in that behavior.

there are cross american efforts with efforts and compliance units within every large corporation that has the role of thinking hard about what kind of activities are going on within the organization and reporting the whistleblowing mechanisms within corporation. many are in response to scandals and they are impacted beyond the specific company often. when there is a health care scandal, it tends to reshape the whole industry and not just an individual corporation. >> i think it it is great question. i think part of what ultimately needs to happen and there are a lot of countries with ethic officers or the general council can serve that role but there has to be a culture within the company that is acceptable to question something or acceptable to come forward when you see something that is improper and it is somewhat shocking in some

of these situations, some you mentioned like volkswagen, it is shocking, i think in some ways that no one came forward within the company and disclosed that was going on. it took an independent tester of the emissions to almost randomly -- it wasn't even the federal government that discovered it as i understand it. it is really, i think, the culture needs to change and people within the countries need to be willing to question there. >> before i got to congress, the congressional response to enron and other scandals was solving boxly and that was to make sure things did get to the ceo's

desk. he had to sign with criminal penalties if he signed without a good faith inquiry. when jaime diamond, ceo of jp morgan chase, testified with the house financial service committee on the london wale's debacle he layed in the risk control. ---laid. they were going to fix that. and i said, i asked, just a month before this you signed a quarterly certification required by law with criminal penalties that you had adequate risk controls in place. i don't remember doing that. i don't remember that discussion. well, tell me what you do

generally? tell me your practice? what do you do every quarter? call in your staff? write you memos and sit and brief you? behind them, all the rows of lawyers, jp morgan chase lawyers, were having facial ticks at the very least because the questions were about things for which he had criminal liability. that is something congress tried to do to make sure it got to the ceo's desk with no apparent affect at all. some do the right thing. we have had companies come to our office and say hey, i hate to tell you this, but we had someone make a mistake at our company and there was a billing error and we overbilled all these people and we want to provide refunds and you are the

entity in the state that enforces unfair practices and we wanted to tell you what about it and see what we can do to make it right. that does happen and we treat that situation differently from a situation where someone is aware of fraud and sits on it and does nothing. we would much rather have someone come forward and do the right thing when something like that happens. >> and almost every anti fraud reform has a business constitue constituents that has business fair. >> we hear businesses say we want the playing field to be even, we want you to go after fraud. we don't want there to be a benefit for engaging in unfair behavior. we do hear that and there is truth to that. >> you bring it up in your book and i think you are tapping into that scholarship that dates back 50-60 years.

there has always been a wing of the business community that wants to play fair and actually welco welco welcome. right now we are having a debate over the workers. i happen to be a worker historian. there seems to be some employers who say we want these laws because i cannot bid on a job because the person cheating workers illegally is undercutting me 30% and that is the percentage he is skimming from the employees. >> that is not nearly enough of it now has been my experience. there are a couple thing. the anti regulation dogma is persuasive and everyone in business thinks they cannot call for regulations.

it is almost genetically coded along business leaders. and the second thing is particularly with respect to national organizations, the people who are most active in the national organizations and who control the national organizations are the ones who are active and doing the bad stuff. the ones on business, providing needed goods and services on a pretty honest basis, why spent a lot of time on a national association. why are they going to get involved? why are they going to give to the pack? why make sure they are on the executive committee or whatever else. i think that is a big part of the problem as well. >> we have time for one more question, joe. >> okay. well we have an issue of not only deregulation and of course now it is happening at warp speed. but we have a situation where

the regulators are not effectively regulating either. and they are doing wink wing, nod nod. i will give a perfect example of that. that is reg zig truth lending. i would dare say, and i have done a fair bit of research on this, i would say everyone in this room that has a mortgage, that their mortgage, if it is a fixed-rate mortgage is not in compliance with reg zig truth and lending. i spent many years trying to bring this to the attention of the senate banking committee and i was told by the chairman of the senate banking committee, if we insisted upon strict enforcement of this you would up end the lending industry. so, there is regulators not paying attention.

>> that was an issue raised earlier. but yes, this is established between the regulatory agencies and the result has been extraordinary disappointing. they may be democrats. they may chuck a lot of boxes. i think the chairman that just left is a latina. that is two boxes. i think she had been a partner of a big law firm.

well you can become part of the culture of that firm and there is an assumption that your clients, maybe they did something a little wrong but you know boys will be boys. what they are doing is useful. the fees they are paying us is they are paying for us to be defended. the result is an unwillingness to take on a lot of those practices. cftc had good leadership i think under gary ginsler but disappointment elsewhere. ftc, fcc, all these regulatory agencies that require three votes come from the -- they have the same resumes and that means you were very smart. if you went to harvard law school and did well you probably

have a high iq but you don't necessarily see the world through the eyes of anything other than the environment you have lived. >> my last comment very quickly at the end here is if you turn out to be right, if we are going to turn our back on a whole host of investor and consumer protection, we can expect to see more corporate scandals and an erosion of public confidence in the markets. >> thank you on behalf of the panel. thank the audience, too. [applause]