he made a right decision. the president followed with a stimulus program that i wish had gone further. the economy had led up to this tragic event as a result of, in my judgment, the failures of a deregulatory congress, which so hampered the regulatory mechanism, so distorted our capital markets by the manner in which they did away with glass-steagall that a was predictable, inevitable. and once again we see the efforts at regulation, including dodd-frank and almost everything

that surrounds it so hampered and bitten away by a congress that i believe is shirking their responsibility that it absolutely could happen again. not precisely the same way but in other ways. i think that the capstone of all of this was a bipartisan effort to create a bill called a jobs bill, which i believe is the most investor unfriendly bill in the history of america. >> a bipartisan bill. >> a bipartisan bill, supported by members of both parties and hailed as a means of creating jobs. and i would argue with you that it is going to destroy jobs and every member of congress that voted for that bill within two years will regret that vote, either secretly, openly or

publicly as the case may be. >> we happen to have a member of congress right here with us. let me get your take on the jobs act. let see if you have any regrets. >> give him a couple of years. >> i have some regret. that is absolutely not one of the regrets i've had in my term in congress. when you mention members of congress who are shirking their responsibility with regard to reform, i assume you're talking about the senate who basically has not had a meeting over there in the last 14 months to deal with any of the forms that both sides of the aisle says we should be doing -- >> no, i'm talking about the house. >> i'm mistook that. they cut their budget by 30% -- >> that's not quite the way. there's -- a way things could

have been different is if there was some degree of certainty in the marketplace today. we came to the edge of the cliff i was going to say, he was one of the leaders, even though it was our own party, he was one of the leaders that led to the uncertainty in the first place. why did we have the situation back then? it's because wall street, the businesses across the country just up to '08 saying what is washington going to do? and there we had hank pauls i don't know come right to the forefront and say we're going to go in this direction. and shortly after that said, no, we're going to go 180 degrees in this direction. what is wall street going to do when the hero of washington is coming out saying we're not sure washington is going. >> neal, you weren't there when hank paulsen was treasury secretary but you've been there since geithner happens -- if a bank were to fail like lehman brothers today?

>> no -- back in '08, '09, congress passed legislation that closed loopholes, makes it clear that banks need to be better buffered for risk and better protected from the rest of the economy so we don't all suffer when a financial institution fails. every day as dodd-frank proceeds clearer and clearer what our new financial structure looks like and our system is much safer, much stronger, much more resiment and being capable of being buffered from stress. you know, on the one hand critics of this say it's very uncertain, we don't know what the rules are, we should, you know, we need to put the rules in so that people understand

what to do and how to run their businesses. on the other hand all over the congress there are people trying to delay. >> what percent of dodd-frank will be implemented? >> i think the whole thing will be done. i think there are efforts in congress to roll back and delay and i don't think they are likely to succeed. but i think what they do is to create uncertainty. just last week the house financial services committee passed an amendment that would eliminate title two, the whole liquidation authority of dodd-frank and leave us with the great unteern at the that we had before, and critically to make

sure when a bank fails, it's much less likely with the higher standard and the living wills that these firms will have to file that they will be insulated or the economy, rather, will be insulated from that failure in an orderly way and to make sure when firms fail, they fail and but the rest of us, taxpayers, the broader american economy, do not suffer the consequences. i think if we go back to the old days, we will not have thatis a big problem. >> if a lot of this happens, i probably would agree with you. if i had to put a number on how much of dodd-frank will see the light of day, i'd say it would be south of 50%. >> well, i would say, arthur, if you look for example at these provisions, the liquidation provisio

provisions, the so-called too big to fail provisions, the fdic has gone an awfully long way in implelting those. >> that's true. >> the rest of them are coming into play. there's still lots of work toing done. we would like to be going on completing the work without -- >> what are your concerns? that was something he was supportive of. and he thought congress could go even further in this area. what are your concerns further that? in fact wouldn't it make the changes for government intervention in the future? >> basically this t goes off to created a so you have this much of a marketplace, you have a

consolidation in the industry you didn't have answer '08 so we've doubled down as far as that's concerned. now we basically have codified government intervention into the marketplace. before '08 maybe the market was a little unclear as to exactly where the federal government would come. whether it in housing, whether it's wall street or a bank. now we passed a 2,300 page bill and an and we basically have codified it and said these businesses are too big to fail. we had the slugtss and answers to these problems before the straight did she recalls. back in '308 weerl waiting secretary geithner to come forward with his white paper. we came up with our proposal. we talked about it being an

elaboration, explanation or enhancement in the bankruptcy provisions in this country to deal with those institutions and also by doing so, it would be codifying and maintaining the existing rule of law in this country, as opposed to the direction believe kbon through in the last year and a half, the business people learn it's the tlit political time the government will intercede in her, where they're in a union -- >> i see arthur eagle to way in here now. >> the law of the land now is that when firms fail, they will fail. their government will not bail them out, the key feature of the

new statute is the government now has the tools to help make sure that that failure, which is very market oriented, if you fail, you fail, does not affect the broader economy and the broader financial system. that is incredibly important point because unless we have the capacity to let firms fail without taking the rest of the economy with us, then we will never let firms fail. that was the old days. we now have a system that's been overwhelmingly implemented that allows firms to fail and guarantee we will not be humity dumbity back there to put the pieces together again. >> i don't think you can be formulaic about it. we have the ability to respond quickly to situations which are unpredictable. i think that the savior of the automobile business was one of the high points of the economic history of america.

and i think that we're better prepared today than we're then but there are structural problems that lead me to believe that we could once again see the problems that we saw several years ago. we are by no means out of the woods. >> what about the notion, arthur, we've heard it from the banking sectors, that the regulatory pendulum has swung too far to one side again, whether it's the volcker rule, the rule about two-party risk, that it's holding back the u.s. economy and to some extent american banks may be losing out to international competitors. what do you make of those arguments? >> you know, once again the principal argument put for the by the deregulatory forces is give us cost evaluations. and on this jobs bill, again,

we're are the cost evaluations of what that bill would cost? i don't buy that. i think that the lobbying pressure on congress to emasculate the principal regulators is so great that they have grievously hurt agencies such as the sec and the cftc on issues which are terribly important in terms of systemic risk. i think a key issue here, who's sitting in the desk? who are the people with the cftc or any of these agencies, a good leader can make an enormous amount of difference. >> a good leader can make a difference but it goes back to the uncertainty.

the fact you have rules promulgated first and rules coming out after the fact raises questions for a lot of people. how can you promulgate rules and the industry knowing what it's dealing with if that's the course of events. the pendulum has gone too far. it's typical of washington through these times. sometimes it does swing back too far the other way. case in point is what led up to this, the reasons that we got to '08, one that we've touched on already and that is for the marketpla marketplace. but the other was the failure of the government regulators themselves. >> i would argue we've gone too far in choking the regulators and giving they responsibilities and then denying them the funding to carry out those responsibilities.

i think the interference from congress with the regulatory system has clogged our economy, has impeded it and has hurt the ability to create jobs and restore us to markets the public can have trust in. >> let me get to respond to that question, the budget question. dodd-frank is the law of the land, though you and a lot of republicans voted against it. shouldn't those agency be fully funded to implement dodd-frank? >> ask him if he'll repeal it? >> go ahead. >> will you vote to repeal dodd-frank? >> we've tried to look at dodd-frank and realize which portions need to be modified, changed, improved upon, reform if will you and do so in a bipartisan manner. your opening comment with regards to the jobs bill was case in point. it wasn't a republican initiative. it became the senate the house.

i was in the conference committee, i saw how that went through and anyone who believes that bill is perfect the way that it is and should not be reformed, i think it would be remiss in understanding how the legislative process works and was it good for the marketplace. >> what part would you repeal? >> as much of the part doing damage to the economy you talk about the volcker rule. i don't know where anyone made the comment that pro pry tree trading was -- i've not heard any expert come to the panel and say the fact we don't have more consumer protection is we have a lack of '08. these are all things out there that said how can we add to to a bill and they threw it in to a

123 page bill to the mels of the committee. >> a couple things. first of all, last week they voted to repeal title 2. if that's not core to what we just experienced in '08 and '09 and if that wasn't one of the critical reforms necessary i'm not sure what it s. if you're talking about uncertainty and the question of what's going to come out in all the implementation, then the work that's about closing loopholes and looking after things that have not been looked after strikes me is not a way to enhance certainty. i think, you know, we forget where we were in '08/'09. but i think this idea that you asked about earlier about whether the regulatory environment is choking off growth, i think there is

absolutely no evidence in the financial services sector that that's the case. there is no evidence. the markets are back, they are strong. these firms are highly -- >> the market is back you belie believe? >> across the financial services market, you have much more active services than before dodd-frank. people forget the cost of efficient regulation, which was trillions of dollars are lort wealth, lost homes and jobs and an economy that was brought to its -- i think the consumer protection pieces of this were core because the causes were multi-facetted but that they

didn't understand, where they didn't have fair disclesh your around, where they are didn't understand their essential choices and what happens was people got themselves way overextended and way overlevered and millions and millions of american are paying the price for that. what we need and now have is someone who will make sure that disclosure is clear, that people understand the choices available to them and will not be taken arrange of that are bad for them but as we've experienced horrible for the system overall. >> i ran a broke ran firm. the industry feels they're better off with n a well regulated environment with a strong sec and strong cftc. the efforts to emasculate those institutions do grievous arm to our markets.

it's as simple as that. >> i'm not sure we're going to get total agreement on that issue. let's me raise this one. five banks held the 8.5 trillion in assets, equal to 56% of the u.s. economy. arthur levin, is that a good thing? >> it's neither a good thing nor a bad thing. there are a lot of other aspects to that. i think that in and off itself is not a bad thing. >> for those recalling for the rrl of glass stegall, breaking up the business banks, your message then is what? >> i think that community banks are part of this process. i think that i would feel that we had a much healthier environment if we had more banks, more investment banks and i wish we hadn't broken up frank i lp. >> peter if you look across major economies in the world, if you look at the oecd countries,

you're banks are smaller by a lot than the banks relative to gdp, relative to of our we have many, many more banks than any other major economy in the world. so i think that's the first point. the second point is, you know, the dodd/frank statute includes a whole range of things that include new kinds of concentration limits and a set of disincentives for banks to grow bigger and to do riskier things that are about making sure that the regulatory system, which it hasn't been very well in the past, is calibrated toward making sure that if you're bigger and if you're more complicated and if you're doing riskier kinds of activities, you will have to hold more capital, you will have more onerous requirements that apply to you. and this is, of course, a disincentive to growth or at least a way to make sure that people who do do those things have appropriate protections in place to safeguard the broader financial system and the broader economy. >> they've got to be coordinated internationally or it won't work.

we can't have regulatory arbitrage. we've got to work with other domiciles in a globalized electronic market. >> congressman garrett, you want to weigh in here? >> this may be a point we do agree on, as far as whether they're good or bad, the fact they're all as large as they are. where we continue to disagree is where we're going because of dodd/frank. because of the 2,300-page bill, dodd/frank and the burdensome regulations it is imposing not necessarily on the big guys, the smaller guy, the community banks, the regional banks. we've had panels come and testify and say i cannot afford to put another loan officer on or commercial loan officer on, i have to hire a regulator -- i mean someone to deal with compliance instead. what does that mean? we're actually basically going to have more consolidation, more of these small banks being put out of business and more money and more consolidation in the larger banks not because of the market effect at all, which it

should be directed by, but rather because of regulatory impact. >> my colleague, mike riley, has some questions from the audience. >> we do have some questions from the audience out there. this is directed to all three gentlemen. do you see money market mutual funds posing systemic risk to the financial system? >> arthur, want to tackle that first? >> yes. i do. i believe that the abortive effort of the s.e.c. to have the money markets mark to the market is a real danger point for the future of the economy. i am very sorry that regulation is unlikely to see the light of day. secretary wolin? >> yeah. i think the s.e.c. made important improvements with respect to money market mutual funds last year, the collateral they hold, the quality of it, the kind of liquidity they're required to maintain. we think there is more room there and we worry that runs on money market mutual funds in a stress circumstance could be the start of something that's very dangerous, and we think it's

prudent to start to look for safer ways to make sure that those are not a source of a stress and contagion for our financial system. >> very briefly, i agree with the first part. i think the secretary -- the commissioner has done a great job as far as the initial regulations they've laid out there for them, and i think we need to give that appropriate time to see what the impact and effect of that would be and a cost-benefit analysis to be done before we go any further on this. >> my time is up. maybe we'll sneak one last question in? >> one last question. we'll move quickly on this. how would you evaluate how well mary schapiro has done as chairman of s.e.c.? this is to chairman levitt, but i'm sure any of you can chime in. >> i think she's done a fine job under very, very difficult circumstances. she's not had the support of those parts of government that should support her. she's had constant harassment

from appropriators, from congressional overseers. and i wish she had more outspoken support from the administration, as well. >> let's hear from the administration. >> she's done an outstanding job under what i think are by any account, very, very difficult circumstances. >> congressman garrett, you have oversight over the s.e.c.? >> and i think she's done an admirable job, as you said, in a difficult time that she came into the position. and i think she attempts to be responsive to the demands of congress. but -- and i think she also understands that that is the role of congress, is of the role of oversight and that it's appropriate that we have her before congress. i think we heard 42 or 43 times already. but that's the role of oversight and that's -- >> i don't think any chairman of the s.e.c. has ever faced the problems and the issues, the harassment, the bedevilment that mary schapiro has faced. >> it's congress performing its elected -- constitutional responsibility. >> and on that note, i want to

thank the three of you very much for a lively conversation here. very much appreciate it, congressman garrett, joining us, deputy secretary neal wolin, and arthur levitt, as well. thank you so much. >> and as they are descending, let me introduce the next panel. my colleague, susan goldberg, the executive editor here in washington of the local, state, and federal government will be the moderator. we have steve case, who needs no introduction, the chairman and ceo of revolution now, the co-founder of america online. we have carly fiorina, who is the chair now of carly fiorina enterprises and the vice chairman of the national republican senatorial committee. and we have edmund s. phelps, mcvicar professor of political economy and the director of the center on capitalism and society at columbia and is also a nobel prize laureate. thank you. >> thanks, mike. good afternoon, everybody, and thank you all for being here today. this panel is about jobs, so why don't we start out talking about

the latest jobs report. in march we had a very disappointing jobs report, only about 120,000 jobs created, which was worse than even the most pessimistic forecast. and the jobless rate is stubbornly remaining at 8.2%. now, friday we're going to get another jobs report. it's supposed to be a little better, but most people think that the unemployment rate is going to remain at 8.2%. so professor phelps, i wanted to ask you, in the '90s, at some point, the unemployment rate was as low as 5% or 6% and we sauf this doubling of practically to 10%. how do we get back to a 5% or 6% rate? is that even possible? >> well, it's probably a bridge too far right now. that's something we have to work on for at least a decade or so. but let me say by way of preface that i think the economy has a pretty good head of steam. i think the short-run dynamics

are all in favor of expansion. if we had a little more time, maybe i'd explore that with you. but i think the crux of the problem is that the recovery is not going to go very far. 5.6% unemployment was the old normal in the middle of the '90s before things got a little dicey with the first internet boom and then the artificial housing boom, and we scarcely know where the normal is now. but my seat of the pants feeling is the new normal is in the neighborhood of 7%. could be 6.5%, could be 7.5%. of course -- and who knows what -- extraneously, who knows what exxongenous events might strike. but we're not looking at an economy nearly as healthy as it

was i think in the middle of the '90s and on the eve of the internet boom. >> carly, let me ask you, if there is a new normal at around 7%, that is going to leave an awful lot of folks out of work. and right now we've got about 40% of the people who have been unemployed have been unemployed for more than six months. what are the things that government should be doing to fix what looks to be almost a structural problem? >> well, i think there are three things. first, my own view is one of the principal reasons that our economic recovery isn't very robust and i don't think we should accept a new normal at 7%, but i don't quarrel with his assessment, is that small business is doing poorly. and small business is critically important because they create virtually all of the net new job growth in this country over the last 40 years, they innovate at 11 times the rate of big business, and, if you looked at the data, you would see that we

are forming fewer small businesses now and more small businesses are failing now than at any time in the last 40 years. so the engine of job creation and innovation in this nation is not humming along. secondly, the second structural problem is i think in large measure that is because we have a tax and regulatory structure which is not only uncompetitive as compared to the rest of the world, we now have the highest business tax rate in the world, but it's also so complex that it is causing small businesses, risk takers, entrepreneurs, innovators to say, oh, my gosh i can't get through this. and finally, and i think this is also a structural problem, we have an education system that is failing, in the quantity of the education we deliver, the quality of the education we deliver, and therefore we're sitting in a situation where companies have positions to fill and they can't find qualified people to fill them. when we have 5.5 million unemployed people, tha