have. for once the debt has become very concrete in people's minds and it will affect -- it is affecting them and more importantly going to affect the prosperity and future of their children, their family. and you take that in with obamacare and you have three big things that people are going to be willing to hear something talk about. >> joe? >> i think what's -- it is fascinating what is going on is in europe where they did austerity. the people are all screaming, it didn't work, let's get out of this. in the elections they are having. here, we got to get to austerity now and clampdown and in their argument, it's the wrong time to do it. i think that's what is happening in europe will have an impact in our elections. how does that -- how is that read by the truck driver in

aurora, colorado? in other words, are they seeing it, as got to get our house in order? and it's me -- you know, someone like bill, treasury secretary, that just says, we are going to do this all different. but that's not going happen. you don't have to worry about that. but i'm just saying, like i think there's like, this economic issue right now is the president is saying, look, everything else is falling apart. we're not. we're stronger than anybody else in the world right now. for and we got keep building that and keep moving forward. the more everything else falls apart, it either can make people here feel like, geez, wear next. or not again. or we're doing better than -- at least we've got our footing

solid and moving forward. which i think is the campaign, they are right about that message. >> i hope they do keep that message. because i think the american people say that the stimulus bill failed and what they want it do is keep us from becoming europe. they still see america as different than europe. europe is going through problems over austerity because they are spending a lot more of their gdp on government than we are. what americans want to do is keep us from becoming like europe. they are willing -- look, it is not about cutting. what we are talking about is restraining the growth of spending. we are not yet under europe where we have it say, we got to cut our budget by 15%. we've got to restrain the future growth. we have a battle between the ryan plan and obama plan. if you look at both budgets, they say we spent $3.6 trillion. the ryan plan doesn't call for 3.6 trillion or less, it says the budge net ten years will be 4.8 trillion.

should be 4.9 trillion. obama says 5.8 trillion. so we're not yet in a battle where the europeanes have to do, where they are literally saying, we are spending a trillion euros or a trillion slot nicks and we got to cut it to 8 trillion slot nicks. we're not there. i think people are saying we want somebody who will keep us from getting there. >> i want to open it up again to anyone in the audience. yeah, right here. >> karl, i know you don't like to attack obama -- >> well, i like it attack him, just the right way. >> when romney puts forth his economic program, don't you think it's essential to criticize obama for making a priority, obamacare which may be over -- >> absolutely. >> -- for leaving uncertainty, threatening tax increases, overburdening business with regulation. and just saying that, this man has done everything he can to prevent growth in the

employment. >> look, i don't want it say he has done everything to prevent growth. i will say his policy prevented growth. the things he has done is given us the weakest recovery since world war ii recession. we would have about $4500 more per capita gdp and 13 million more people working. that was a study done in february. if we had average growth. i want him to be critical of the policies. i don't want him to criticism -- look, it's like -- i've got this in the rougher drafrt. my column. god knows if it will survivor the editors. it is touch and go. i always submit my columns early in the day so they have plenty of time to go over it. ? the kick off speech, president obama said two things. he said, you know, i believe we're still -- i still believe that we're not republicans or democrats. we're all-americans.

and then he goes later on to say, well mitt romney sincerely believes that as long as millionaires like him are doing okay then everybody else will do all right. well where did he say? where did he sincerely say if i'm wok everybody else will be okay. he didn't say a that. i want it deal with the impact of what his policies have done. >> i think that again, this is -- it gets down to a fundamental difference in terms of how people interpret fairness. i think what gets lost is how many -- the truck driver in aurora and other folks view what the president is doing is fighting for fairness for the middle class. and if he puts it in that context and romney falls into the trap of butting motives on

it, it'll be a trap for romney that puts the debate in a way, that hurts romney and doesn't give him an opening. so i think -- and i think the president is -- the message is completely correct for what they got to do. for what democrats have to do or i've got to do. to move the country forward. and i think it's going to be interesting to see if romney can get back to that fairness issue the way he should be talking about it. because i didn't think he has articulated, like i said, correctly a couple times. but he tends to fall into this trap. of ascribing motives, the campaign gets, both campaigns have gotten way too personal. not just the obama campaign. >> all right, way in the back there. yes, sir? >> yes, good morning. wayne paladino. as we were reminded at the very beginning of the presentation

today, ideology is important, platform is important, but my gosh, getting the votes out might actually make the different here. and my question relates to maybe a third party operating within the republican party. i don't know if rick santorum is the embodiment of that. ron paul. but how do you see that whole dynamic affecting the future of the race through november? >> look, santorum i think is now a nonfactor and the people that were supporting him will sort of -- are in the process of getting energized into the network. the ron paul thing was a different deal. i mean, this is about the most unstable political coalition i've not seen. you know, ron paulyum. at war with itself. it has two different wings to it. sort of young anti-war types, you know, 50% of the people who

voted for ron paul in new hampshire approve of the job president obama is doing. he hasn't gotten us out quick enough. anti-war, anti-imperialist sort of, so far right they've shown up on the left wing. and then, people are deeply concerned about the actions of the federal reserve and have been six months worth of survival food and a lot of cartridges in the basement. and this is -- you know, this is a group -- and they are going -- their focus is can be caucus states like maine and nevada and minnesota and get, you know, get six dell gdelegations so they cn place his name and try to influence the platform. there will probably be something in the platform on audit the fed. we already audit the fed, but okay, fine, put it in there. this is a weird movement. i suspect a lot of ron paul people or a significant element of the ron paul people part of the anti-war moverment won't be there for either party in the

fall. but whether or not the, you know, fed haters and survivalists are there, i suspect they will be there, but we will see. >> i just want to say, i still think that there is a 10 or 15%, 20% chance that we see a third canned -- a ross perot kind of candidate in the race. who americans elect is still out there trying to qualify a third spot on the ballot. i think they've succeeded in like 18 states or something like that. >> we will have libertarian, jerry johnson will be on the bl ought in 50 states. this will be a problem in a couple close states. >> that's what i mean. you could have a situation where that person gets -- gets 3% of the vote and where that cups from -- is the wrong place, ohio, florida. >> 1% of the vote. >> yeah. we could have a situation that did happen in florida with nader and getting enough and making a

difference in how the vote goes in some of the states. i think that's really a real problem. and we don't know yet who that will be a problem for. is that somebody who's pulling more out of romney or somebody pulling more, an anti-war candidate perhaps pulling more out of -- >> anti-war, an i pro drug. >> the types with a lot of cart wra cartridges in the basement -- >> yes, sir, could you identify yourself? >> i got more than you do. >> being the people's republic, i don't want it comment on that. what i would like to see if you could explain, is this could theoretically be a slam dunk for the republicans, theoretically. given the economy.

given what's happened and how it's been approached. why isn't it, and what makes people not comprehend what going on? from your perspective? i don't understand the logic in some ways to this. >> yeah. we're at a point in american politics where nothing is a slam dunk. i'm a follower of the sainted michael ba reason in this. i believe we are a narrowly divided country. 50/50. where the number of true independence is shrunk to, depending on what election it is, 8 to 12% of the electorate and everybody else has thrown themselves into a camp. now i have a slightly different view of why we are stuck in those camps and why it is so lard. not because we have a vigorous debate twen tbetween two partie have a different ideological view, i think it is two parties, like two exhausted boxers in the ring who just pummelled each

other. and each side has won victories. democrats won on civil rights. and a question of do we need more, you know, fairness. ifairness, in terms of outcome or opportunity. winning over limited government, albeit not in practice but in theory and markets more in practice than -- more in practice than in -- or excuse me, more in theory than practice. but markets more in practice than theory. we sort of exhausted it. we face big challenges. what do we do about entitle hements. what did we did about def knits and america can's role in the world. what do we do about the war on terror where each side has not got answeres it allow it to break the stalemate one way or the other and one party or another will break the stalemate and move it its way and dominate american politics for, you know, whatever, 15 years, 20 years, whatever.

but we're dead even, 50%, 50%. and nothing is a lay down. the economy is bad. it stinks. people feel it instinctively. but if you're a democrat, you're willing to make accommodations for the president. and if you're republican, you're not. >> joe? >> i think that -- first of all, i agree with karl. like dead heat out there. regardless of party right now, it is more incumbent. and so you could see republicans take significant losses in the house and democrats lose the presidency. those kinds of things could happen. where it doesn't quite gel the way we normally would think of it. but if there is blow out, it is

more likely to be with obama than romney. the power of income bancy, karl knows what that is right, to have that power behind you in terms of what you can do. the lead he has with the demographic groups that are out there right now, the way the electoral map looks in terms of what romney has to -- romney somehow doesn't get there. in terms of, just doesn't appear to be an acceptable or somehow messes up or just something goes wrong. it could really go wrong. i don't see that happening on the president side. fundamentally, they have been through it already. which is a very big deal. you know, i think romney may have a great team but they haven't been law that a general election as a team before and they could stumble.

something could go wrong. and if it does, anything goes wrong. you could have a -- the president had such a electorate last time, if it all falls back in place, virginia goes with them too, it start to be -- look like a blow out the other way. >> wow, a blow out the other way. >> more than what people predict it will happen. >> in your dreams. [ laughter ] >> i think we have concluded today that we will have a close election one way or another and i want it thank my panelist, karl rove and joe trippy for their wonderful contribution. [ applause ] in particular, i want to thank all of you for coming to kick off our even series and we hope to see you at another event soon. thank you so much for coming.

>> republican presidential candidate mitt romney will address liberty university student. he will address their president, jerry falwell junior. it starts saturday at 10:20 eastern on c-span and c-span radio. >> this is c-span 3 with politics public affairs programming throughout the week and every weekend 48 hours of people and events telling the american story on american history tv. get our exceed uls and see past programs at our web sites. and you can join in the conversation on social media sites. a former chairman of the federal reserve defended the financial regulation that bears his name. he told a banking panel that the vulkar is a solid step towards

ra reigning in banks that are too big to fail. this hearing is about two hours. >> come to order -- thank you for joining us. mr. vulkar, nice to see you. we have three panels today. opening statements. i always give moderately short ones. it'll be even shorter today and senator gives thoughtful and even shorter statements. we will begin beliefly with that. i want to thank everyone involved for helping pulling to in important hearing. getting excellent and qualified individuals to discuss such an important but admittedly broad set of topics wasn't easy so i appreciate the cooperation of all of you who are major players

in your own financial system. i said i will keep my message brief. i will simply say it is vital we take the necessary steps sooner rather than later to end government policies and support and encourage large complex institutions. that's why today i'm introducing a legislation, the safe banking act, known normerly as the brown-kaufman act. i think there t will have traction on both sides of the aisle. senator shelby voted both against the bliely act and in favor of brown-kaufman when it was an amendment to the dodd-frank bill. thanks again to the witnesses. >> thank you, mr. claireman. and dr. vulkar, thank you for being here. enjoyed talking to you prior to. enjoyed reading your testimony yesterday evening as it came in. i think we all agree we need a safe banking system and we want

one that also meets the needs of 21st century economy and that's the balance, i think, that we're all looking for. so i want it thank new particular in your testimony for pointing to the fact that congress still hasn't dealt with the gses. i know as a man wh was under extreme stress during early '80s and made a lot of tough decisions that caused you to be highly honored by people across this country, he must look at amazement on a u.s. congress that fails to deal with an evident, huge problem in our country. but has lacked the courage it deal with that. so i appreciate you pointing that out. and you know, i was thinking as we read a lot of materials getting ready for the hearing and i appreciate all of the witnesses that have come, you know, the most dangerous thing that a bank does is make a loan. and at the enof the day, without sound underwriting, all of the things that we do here, don't

make a lot of sense. but i sure thank you for your testimony. i look forward to hearing it orally, then the questions, and we are honored to have you here. >> thank you, thank you senator corker. senator merckly. >> thank you, mr. chair. very briefly, welcome, it is so good to have you mr. vulkar, and for your leadership in helping establish the concept that there needs to be a firewall between ordinary bank activities and hedge fund style investment activities by banks in order to create safer and sounder banking system. not and certainly look forward to your comments. >> thank you, senator merckly. our first panelist, and i don't normally do cliches, but he is a man who needs no introduction. i appreciate senator vulkar joining us. he has made sure the american financial system is safe and sound. first the bank of new york then chair of the board of governors, federal reserve system.

through your effort, dr. vulkar, though they may have frustrate smed bankers on wall street and some lobbyists in washington, there is no doubt our country is a better place because of your hard work. thank you for your decades of service. you have the floor. >> thank you for holding this hearing. we are on midstream on banking regulation. i think is a good time to review where we are and where we are going. so it is a useful service. i know the there are a series of questions. i won't attempt to answer them all, but you are certainly right in the underlying premise that banking changed a lot in the past 20 years. it changed very broadly from a -- i guess what i used to think of as a profession that concentrated on relationships with its customers and very important ways. it moved toward a much more

transaction-oriented center. concentration. that's particularly true in bigger banks. and has become a lot more complex, opaque, very complicated. for a while, it was thought that with all of the wisdom and engineering and expertise brought to the table, banking is not fail safe, safer, it turned out to be an illusion when we had the great break down. and obviously reform is necessary and i think that reform has to go into structural assets of banking as well as raising requirements, better supervision, all that kind ever thing, is important. but i do think that we need some structural changes. and they revolve very

fundamentally around this issue of too big to fail. and the moral has it that was involved or is involved, in bailing out financial institutions, particularly banks. big banks. that's kind of the central issue that runs through a lot of the structural changes which are incorporated basically in dodd-frank bill. i don't think there's been any legislation in other countries as comprehensive as the dodd-frank bill. they all have the same problem. all regulators and governments are worried about the same thing because this has been a worldwide break down of finance. the united states can fairly say it's been in the lead by national legislative changes. it deals one way or another and almost all of the factors bearing on it, relative

structural changes. first of all, it deal, indirectly, to reduce the risks involved. senator you're absolutely correct that making loans can be the most risky thing to banks and it becomes riskier when they can lose a relationship one on one without credit controls. shouldn't necessarily be all this risky. but you are making sub prime mortgages and farming them off to other people, there is indeed an exceedingly risky proposition. and let's take that, bank must make loans as essential to the economy but look at other activities in recent years. d dodd-frank deals with

derivatives, exploding all over the place. continues to explode after the crisis. it may be a smaller volume, but everything is relative. i'm told that 700 trillion of derivatives outstanding in the world today. 700 trillion. and you wonder whether they are all directed towards some explicit protection with explicit risk that can be dealt with by derivatives or whether they are themselves a kind of trading operation. dodd-frank does call upon simplification in that area, tries to put as much of it as possible through clearing houses an organized settlement arrangement. that's fiercely contested by banks. but that can be done with a great mass of derivatives, it'll be a help. other institutional factor concerning what banks can or cannot do is restrain on pro

proprietary trading and equities fupd funds, that somehow has my name attached to it. i would only say this n that connection that talked about as truly a risk factor. it is a risk factor. no question. but its influence goes far beyond a particular risk involved and particular transactions. it's a cultural issue. hedge funds, equity funds and proprietary trading itself are necessarily involved in big banking conflicts of interest. almost continuously. an traders get to be richly rewarded. that affect the compensation practices and culture of the banks throughout leading to, in my view, unnecessarily dangerous behavior. >> the other part of dodd-frank i just mentioned, because in way, it's the heart of it.

d.o.t. frafrpgs said no failing institution will be rescued. it'll be liquidated, merged, sold, but the stock holders will be gone, creditors will be at risk, management will be gone. that's different obviously from what happened in 2008, 2009, in the midst of the crisis it raised all questions about too big it fail. there is a lot of skepticism in market, as you're aware, as to whatever the law says, when push comes to shove, the government will act presumably against the law to continue rescuing them with government money. i think that skepticism is overdone. but it's got to be dealt with. and in the case of these big banks, failure and management of the banks after the failure by

any is failure internationally. i want it say, while i'm on the side lines here, i'm impressed by the amount of effort going on, particularly between the fdic, and uk authorities on this issue. where there is a meeting of minds as to the general approach, legal assistance may be different, is a meeting of minds as near as i can see in the eurozone generally. but getting that down in a very complicated as authorities who work together, when you have failure, is very important. and i do think considerable progress is being made in that area. so i will just stop there, touching on some of the point that i think are critical. >> thank you, general volcker. i'll take five minutes in questions. turn it to ranking member and

then we will go from there. you talked about the -- you've often talked today and many other times about the moral hazard issue, pattern of government support for the largest institutions, breeds greater risk taking. in december that committee table, sheila bear, who resigned by them, she told the sub committee quote it is important for the government to send all of the right signals that we do not view it as n and of itself to keep the institutions alive just because they are big. your comments a minute ago that the skepticism might be overdone about the view of the government stepping in legally or not, what should regulators do to send messages to the markets that these institutions will not be propped up, especially when these institutions do have an advantage in the money markets? capital mark snets. >> the first point i want it make is that when you talk about the biggest commercial banking