along with it, but i wish i hadn't. what happened was, the bank was closed by the primary regulator a few hours before its normal closing. there was a loop on some of the cable network shows showing a woman banging on the door trying to get in. i was just horrified. the irony was, we arranged for a press conference, a telephonic press conference friday after indy mac was closed to explain the process. we didn't have a buyer, so we set up a bridge institution, so the fdic took control. hardly anybody called in, but you probably remember this, that woman knocking on the door really scared people. so i was annoyed with some of the networks that they were hyping this up so badly. but i regret we did not wait. i got to tell you, the rule was, we don't close any of these

institutions until after closing hours. one thing we did do right is we started a public education campaign in 2008 in conjunction with our 75% anniversary. we thought it would be a good catalyst for having a fairly aggressive public education campaign. we had this benign period in banking for so many years people forgot that banks fail. so we did start that early, and i think that did help us, and we ramped up those efforts. we had ads out and psas and ramped those up after indy mac. but since that was happening, it really helped. the other thing, there was a lot of controversy whether nontraditional investors like hedge funds should be able to get a charter and bid on a

failing bank process. we put our toe into that. in 2008, we really needed bank buyers. we needed new capital coming into the system. it wasn't like we were going to be choosey about who could come in. if you have capital, you've got good management, you should get a charter. nonethele nonetheless, it's not a regulatory culture, so we started letting them bid. and i really saw some things that were quite troubling. particularly part of their proposal being they would flip the property very quickly. flip the bank very quickly. i wanted bidders but not people coming to the banking system that were not looking at this as a long-term investment. so a few of them slipped by.

and i got some guidance out and a three-year lockup, as well as other restraints. but there were a few that got through first. those are the two things i would have done differently in retrospect. we closed about 350 banks, about $800 billion in assets while i was there. it really, with exception of that blip with indy mac, it went quite smoothly. "60 minutes" did a piece of a bank failure. i had faith and in our process, so we let them accompany our resolution bank failure, and it went just as smooth as silk, they all did.

a gentleman and his wife came in to a bank with his suitcase, with his wife, and he was going to pull all his cash out. so we had greeters at the door talking to him. after they talked with him more, he decided i'm going to leave my money in here and "60 minutes" filmed the whole thing. when he was leaving, he was just saying how wonderful the fdic is. so it was worth a lot more than all the paid advertising and public service messages we had done. it turned out to be a very good thing to do. >> what's your sense -- i don't know if peter schiff is still in the audience, but peter, is he here? are you here, peter? i'm going to ask a question he would have asked. larry lindsey said this is probably -- and i don't know how he figured this out -- but he

felt this audience might be center of left audience. but you certainly didn't come from the center left, and yet you are a strong regulator. you believed in more regulation and however you want to coat it, you're still talking about things that are a good amount of regulation for the banking system. how do you square that with a world that is talking about less regulation for financial services? we are in a world s messed thi loosen the reigns to allow these banks to make some you need sto reagan -- i'm a republican.ubli philosophies. reagan once said the role of government is not to protect us from ourselves, it's to protect there's a difference between free markets and free for all

markets. if you don't have common sense rules that are enforced, innocent people will get hurt and innocent people got hurt in this crisis and government fundamentally failed in its responsibilities there. that's not to absolve banks. so much of this occurred in what's called if shadow sector, but that's not tonars from what. they get paid a lot of money to examine banks, but government does have a role. i like regulations that are based on reinforcing economic incentives. make people put skin in the game. if they take risks and lose e ney, make it hurt, make it

government. risk retention for securitization, making people who securetize loans maintain some down size risks. if i'm going to have a rule that says you can only make mortgages, where the borrower can repay the loan. that's going to get you into a thousand questions. what does ability to repay mean? what about an adjustable rate? there's lots of difntask. but if i say to that person, if you originate this loan and put it in a securitization, for every dollar of loss, you're going to take five or ten cents for yourself, they're going to say okay, this person has an adjustable rate mortgage, what is my chance of having to take a loss? i think those regulations are

based on economic incentives. if you need activities based restrictions as well, but i like the skin in the game requirements. >> i want to invite those of you who have questions to go to the mikes. i want to ask you, some weeks ago, you were on a show with me. ed clark was on, as well. he was crowing about the canadian banking system. is there a banking system that we can take lessons from? is canada it? >> they've never had a banking crisis, as far as i can tell. i think the regulatory culture in canada is stronger. not all innovation is bad. there are good innovations, too. but we clearly went too far in one direction. so i think we have some things

to learn and a stronger regulatory culture and stronger acceptance of regulation and better industry support, i think is something that we could import here. >> paul volcker said earlier, forget financial innovation. it didn't do any good for us. sir, identify yourself. >> warren cotes, retired from the international monetary fund. market discipline of banks relies in part on depositors caring which bank they put their money in. the coverage limit was raised recently and was high to begin with. do you think it's too high in terms of getting the right balance? >> that was raised on your

watch. >> that's right. congress sets the deposit insurance limits. so i was supportive of the temporary hike, and i think that the permanent hike can be justified. i'm not sure with people less than $250,000, especially these days, that the folks that are under those insured deposit limits are going to add a lot to market discipline. certainly the average main street family, they're not going to go to the fdi c-webb site and download call reports. you're not going to get a lot of market discipline from main street to depositors. i think it's important for them to have peace of mind. i think there's a good public policy for that. and deposit insurance has provided that and it's worked very well.

i think that large uninsured depositors need to have a lot of skin in the game. this is one of the reasons why i'm so vigorously opposed to too big to fail, because that says bondholders, you're not going to take any losses. if you mess with a big guy, the government is going to come in. and these large bond investors are quite capable of getting answers from large financial institution. so we do need market discipline from that sector. and if we don't, we'll really in the soup. and quite frankly, this was the driver of this crisis. so we fought for resolution authority to make sure the fdic would the tools to impose losses.

>> final question. [ inaudible ] >> i'm a business reporter at the huffington post. my question is, do you think that the financial industry in its current form is curting economic growth in any way, and what do you think the government needs to do to make the financial industry a more sustainable form of growth? >> that is a really good question. look, we did what we had to do in 2008 and 2009. i think perhaps in 2009 we could have done a better job of forcing banks to clean up their balance sheets. even if we're going to bail them out, forcing them to shed bad assets. we didn't do that, so that's water under the bridge. if we had had the resolution tools to put the insolvent institutions into a resolution process, our economy would be stronger now, too. when you prop up the inefficient

players, you have a bloated sector. there is a correcting mechanism in the market and financial services got too big. and we left it big with the bailouts. nobody except for lehman brothers and wamu were allowed to fail. so you prop up the inefficient, you still have a very large financial sector. if you look at the bank balance sheets, i'm delighted that banks are getting healthier, but if you look at their balance shoots, the revenues are going down. they went down last year. it's a smaller pie and there's still a lot of them competing for it. so that is going to continue to be a hindrance to the economic recovery. >> that's all the time we have. thank you very much. always a pleasure talking to you. >> thank you. [ applause ]

>> ali and sheila, thank you so much. now we have gene sperling here. and we have our editor in chief james bennett. james this morning told you a little bit about our coverage issue. i think the deals we're trying to make is gene said i'm not supposed to be on that cover. so gene sperling and james bennett. [ applause ] >> thank you. >> gene, as many of you know, has been in politics for more than 20 years now and served in the same capacity in the second term of the clinton white house, if memory serves, was the

negotiator of the budget deal of '97. i think that cheryl sandberg, formally of treasury, now of facebook, said i've seen heads of state cower before this man. maybe you can tell us a couple of those stories. and "the washington post" referred to you as obama's jobs creator. which is a pretty mighty responsibility. so i thought we might as well start there. there have been signs lately of what seems like a slow and steady recovery. i think that's been the view on this stage today. yet we remain in a very deep jobs hole, consumer debt remains very high. what is a realistic range for

the unemployment rate in six, seven months now? >> it's a great idea for people in government jobs like mine to make projections where the unemployment rate will be. it always works out well. and there are never any unexpected consequences that get in the way. so it's a great idea. but i'll probably take a pass. so here's what i would say. i think people here know the basic story, which is basically this is a story about climbing out of a very, very deep hole, and, again, as this audience would know, when you are doing that in perhaps certain types of recoveries where there's been defined by perhaps higher interest rates and inflation, creating pent up demand for houses and cars like we saw in '83 and '84, a recovery can be row bous. -- robust. when you are coming back from

this type of a recession, a financial meltdown, a bubble, you're -- people are still deleveraging, and that's frustrating because you can't get the bounce that you would like when you are inheriting such a deep hole, unemployment that's been -- that was bordering on 10%. that said, i think we've come a long way under the circumstance. and i think in terms of jobs, we have made significant progress. we just have a long way to go, because of how deep the hole we inherited was, and the nature of this recession and type of recovery. but just a couple of points. if you looked at last year, the amount of private sector jobs created in 2011 was 2.1 million. 2.1 million private sector jobs is a fairly solid year

historically. why did it not feel so good? because the whole is so deep, because people are still hurting, because our country is facing a significant amount of long-term unemployment, which is more difficult on the economy, more difficult for our labor force in the future. and most importantly, most difficult for families to be unemployed for a year, year and a half, two years. all those things make it more difficult together with still trying to get the housing market coming back. but when you look at that 2. 1 million, you realize in the last two months of this year, we've seen over 500,000 private sector jobs created in the first two months of 2012. so i think when you look at private sector jobs, you do see progress. again, it doesn't feel as good

as it should. not because it's not progress or not because we haven't come a decent way, but just because the hole we inherited was so deep. >> let's take the particular date of the election out of this question. you are in this extremely important position, leadership position. try to give us some sense of what lies ahead for the country. how long do you think it will be before we see 6% unemployment again in the united states this >> you keep going back at that. he told me, i might also ask you to compare president clinton and president obama. and i said, do i love mom or dad more. so those are other good questions to ask. >> actually, it's going to be hillary clinton and barack obama. >> let me make a very serious point, which is we talk about

certain of the events in the economy. there's certain head winds that you have to deal with, like the fact that you were coming off a deep financial recession and you're deleveraging. you can't control things like the arab spring that increased gas prices, some of the tensions in the midwest that are increasing tensions, the tsunami's impact on the global supply chain that slowed the recovery last year. right now there are things we could have been done that could clearly and directly have had a greater impact on job creation. there haven't been a lot of things wrong with the last two job numbers, but in january, you saw 9,600 teachers lost their jobs. that got better in february. that's not an act of god. that's an act of public policy. and president obama, as part of

the american jobs act, called for a $35 billion fund for teachers and first responders. there's no reason that we should not have passed that. there's no reason that we want to have larger class sizes or be laying off teachers at this point. so instead of losing 9,600 jobs, you could have been gaining. that could have helped the unemployment numbers significantly and helped our schools. secondly, construction jobs was weak in february. this president has proposed accelerating $50 billion additional beyond the current transportation baseline for infrastructure. he called for $30 billion in modernizing our schools. a third of all of our schools. and a project rebuild proposal. now, these are all important proposals. most of them are dealing with

deferred maintenance. you don't get points for not doing deferred maintenance. if i eliminate by direct tv nfl subscription, we save $230 of consumption in my family. if i tell my wife i don't want to fix the broken pipe in the basement, i don't get any points for that. you don't get frugality points, it's just something you're going to have to pay for and it will cost more later. there will never be a better time for us to be dealing with deferred maintenance of our schools, of our roads and bridges than right now. they will never be more construction workers out of work, looking for jobs, eager to get back in. and it would never have a stronger benefit for the macro economy. 17. 1% is the unemployment rate for construction workers. so i think that had you passed

the american jobs act in its full form, i believe most people would be projecting that we would soon be heading into -- under 8%, into the 7s in unemployment rate. and if you just did the two things i spoke of, which are have the $30 billion fund to prevent teacher layoffs and the excel ration of $50 billion of infrastructure, unquestionably we would have -- we would be seeing strong projected construction job growth, which would give this economy more momentum. and i think it's very sad. because the last time i was here, there was nothing more bipartisan than infrastructure and the fact that the republicans in congress have chosen at this opportune time not to work with this president on doing so i think is very unfortunate for those workers, but for our economy at large. >> you made fun of me before we

came out here, so i might as well give you the opportunity to do it in front of these people. why didn't you propose the american jobs act three years ago, two years ago? >> okay. three years ago, my recollection was the president had just been inaugurated. and on february 17, he passed the largest recovery act that our country has ever seen, $800 billion. so three years ago, he passed something twice as large as the american jobs act. he passed by one vote. on february 17, less than a month after he had come into office, the president signed the american recovery act. $800 billion. it was a two-year plan. and he did it, again, by a one-vote margin in the senate. having gotten two republican

senators from maine to support it. though they insisted on bringing down some of the spending. so this was the most that was possible to get, boldest proposal you could get in a swift and quick period of time. i just want to remind people how important the speed was. i see endless articles and carping, which will be the new definition of always make the perfect the enemy of the very, very, very good about could it have been larger or not? in the fourth quarter of 2008, our economy was losing growth at 8.9%. i know you hear a lot of numbers, but take that in for a second. our economy was contracting an annualized pace of nearly 9%. in the first quarter, it was contracting at 6. 7%. so over that six months, our

economy was contracting at nearly 8% pace. that is the worst six-month period other than the demobilization after world war ii since the great depression. we were losing 800,000 private sector jobs a month. our economy lost 3 million private sector jobs in the first four months of 2009. the stock market went as low as 6,500 in march and people were betting, many were betting it would go below 5,000. there was little demand anywhere else in the world. so the president comes in and passes into law the american recovery act on the 17th, less than one month after he's inaugurated. the idea that one should have waited months and months to haggle over whether you could get a little more here or there would have been tragically irresponsible. we absolutely faced a potential

spiral down that could have been -- could have led to another great depression. instead, we returned to growth in the second half of 2009 and returned to job growth one year after we were losing 800,000 jobs a month. so that's $800 billion. that goes for the first two years. yes, in 2010, some people were hesitant in the congress to do more while such a significant amount, particularly infrastructure was still being put into place in 2010. in december of 2010, when most people would say congress would come in and check their mail and go home, this president fought for $232 billion, which was a payroll tax cut, which was 99 weeks of unemployment insurance, and then the extension of every

low income tax cut. that $230 billion he did then ended up being vital insurance for 2011. we did not know at the time that gas prices were going up $1. had the president not put an extra $1,000 in every family's pocket with the payroll tax cut, i think that we would have faced a much more significant chance of a double dip recession in 2011. the things he did then and his insistence on extending the payroll tax cut and up employment, i think provided a significant cushion to this recovery to absorb the external shocks that our economy took and help keep our economy resilient enough that we are in the position where we see the potential for more momentum in our economy. >> i would like to come back to gas prices for a second. but first, staying with the question of jobs, moving to looking ahead again and to a subject that you have thought a lot about, which is not just the

quantity of jobs but quality of jobs. in this recession, what we particularly lost are middle school jobs. could be good jobs that could be held by people with high school educations. and what we've seen is a lot of lower skill jobs being added in food preparation and other areas. challenge that if you would like, but i would love to hear you look ahead. i would love to hear you talk about where you see the growth areas of particularly middle class jobs in the united states in the coming years. >> laura and others can correct me, but i think the largest job growth has been in professional and business services by far. if you look at the 3.9 million that have been addeer