after two decades as a pediatric nurse, she began working as a free speech advocate for students, touring nationally as a speaker at schools and youth centers. and eric jaffe with experience at the supreme court including work on more than 100 cases. he clerked for supreme court justice clearanarence thomas. join the conversation. our hashtag is landmark cases. follow us at c-span. we have resources on our website for background on each case. the landmark case's companion book and the podcast. the president of the federal reserve bank of new york, william dudley, talked about the future of financial regulation as a result of the creation of

fake accounts at wells fargo banks and other recent issues. he spoke at the u.s. chamber of commerce center for capital markets competitiveness. this is about an hour. >> good afternoon and welcome to the u.s. chamber of commerce. we appreciate you coming this afternoon and listening to our guest president bill dudley of the new york federal reserve bank in new york, the preeminent central bank in the world. the fed sets monetary policy, an important tool in combatting inflation or deflation and is an important policy maker for employment issues. the federal reserve and the new york federal reserve bank were critical players during the 2007-2008 financial crisis.

the try -- managed the crisis and took the extraordinary measures necessary to prevent the shutdown of the global financial markets. with the passage of the dodd-frank act, another member, the federal reserve has taken on a larger role both in terms of bank regulation supervision as well as the regulation of systemic risk. it comes as no surprise to anybody in this room that the chamber has at times had quibbles with the fed and other banking agencies in terms of regulatory process. a little over two years ago we issued a federal reserve reform agenda and have held extensive meetings with the fed on that subject and i think we've made some progress. but make no mistake, the chamber believes strongly in the independence of the federal reserve. we sent a letter opposing an

amendment to the recent bipartisan regulatory reform bill that would have adversely impacted that independence. political super feerinterferenc ends well particularly for american businesses and their workers. that's why we thought it was important to hear from new york fed president bill dudley today. he has run the new york fed since january of 2009. he's been a major participant in all of the post financial crisis developments. before joining the new york fed, he was goldman sack's top u.s. economist for over a decade. worked at the federal reserve as an economist. he is also unique in the regulatory world. he listens. at his request, we have brought

in several groups of corporate treasurers to meet with him because he wants to know how regulations are impacting the overall economy. we have also worked extensively with his staff on the small business survey that the federal reserve releases annually. despite his recently announced retirement from his current post which is well deserved, he will be missed. with that president dudley, let me offer you the podium and we'll have a chance to have a little discussion after. thank you. [ applause ] >> so quibbles. that's much better than differences, i think. [ laughter ] >> it's obviously a pleasure for me to be here to speak today. i'm going to discuss financial regulation and the way in which proper incentives can help ensure resiliency in the financial system. as always, what i have to say reflects my own views and not

necessarily those of the federal open market committee or the federal reserve system. i think we've come a long way since the global financial crisis in building a more resilient financial system, one that can better support the provision of financial services to american households and businesses such as those represented here today, both in good times and in bad. but i think there's still unfinished business. on the regulatory side, there's more work to be done to ensure that a systemically important bank can be resolved effectively on a cross border basis in the event of failure. additionally, the efficiency, transparency and simplicity of the regulatory regime could be improved without weakening the core reforms to capital liquidity and resolution that i think have made the financial system much stronger. most importantly, i think we need to recognize that an effective regulatory regime and comprehensive supervision are not sufficient. we also need to focus on the

incentives facing banks and their employees. after all, misaligned incentives contributed greatly to the financial crisis and those incentives continue to affect bank conduct and behavior. today i'm going to address this issue of incentives with the emphasis on the complimentary roles that regulation, supervision and bank culture play. each of these, i think, is necessary to ensure that we have a robust and resilient financial system, not just today but also in the future. the financial crisis was a watershed event that exposed severe deficiencies in the financial system, including the inadequacy of bank capital and liquidity buffers, poor risk management and internal controls and bad bank cultures. many financial firms took on excessive amount of risk and they did not always act in ways that were consistent with the

interests of their customers or with the broader public. the crises revealed woeful shortcomings and as a consequence was really bad for the economy and millions of people. over the past decade the official sector in the financials industry has made considerable progress in addressing these problems. i think the banking industry is much sounder in a number of ways as a result. first banks are much safer. they have much bigger liquidity and capital buffers and the quality of capital is much improved. moreover, the capital regime now has a forward looking element. also constrain the amount of capital that a bank can return to their shareholders via dividend and share repurchases. strengthened liquidity standards have given the market greater

confidence that banks possess adequate resources to weather temporary storms that might arise. at the global level has helped to level the competitive playing field in a number of ways including by containing bank's internal models to meet their capital requirements and by introducing a leverage buffer for systemically important firms, similar to what we already have in place here in the united states. new regulatory standards have also been complemented by a supervise supervisory network. i think these efforts have led to considerable improvement and risk management at banks which i think will help better sustain the flow of credit to the real economy throughout the business cycle. second we made considerable progress in terms of bank resolution. systemically important banks now have living wills that provide a

road map for how these firms would be resolved in the eevent of failure. there's now a well defined mechanism for how to revitalize a failed systemically important firm. the single point of entry resolution places the company into receivership, transferred its subsidiaries to the new parent company and takes total loss absorbing capacity of the old company to absorb the losses and recapitalize the new parent company. but the task of operationalizing resolution for large global banks, including full clarity on what the appropriate role is of the home and host supervisors is still not complete. it's key that work continues on this front to ensure that a systemically important firm can fail without threatening to topple the rest of the financial

system. i think this is an important step to truly ending too big to fail. third, some of the obvious systemic vulnerabilities that we were exposed by the financial crisis have been remedied. we've made important changes to the mandatory clearing of standardized over the counter derivatives through central counter parties. we have more intensive supervision of systemically important ccps and we've reformed the repo system and the money market mutual fund industry. even as we reduce or eliminate old vulnerabilities, we can't rest on our laurels because new vulnerabilities will inevitably take their place. i have no doubt that the current regulatory regime could be improved. indeed, the official sector should assess the efficiency and effectiveness of regulations on an ongoing basis. i agree there's more we can do to make the regulatory regime

more efficient, transparent and simple. that includes relief for small banks, greater tailoring based on the firm's level of systemic importance and simplifying the rule. some of these changes have already been adopted or are in process. but i think we must take a broader view of characterized a resilient and robust financial system. we have to carefully monitor the influences of the behavior of the financial firm and of their employees. the record from more recent years shows how powerful incentives can be in driving individuals and firms to do things that are imprudent and/or unethical. bad incentives can lead to conduct that not only generates large risk exposures and market excesses, but also erode trust and confidence in the financial

system. for example, the precrisis housing boom would not have gone so far for so long without the widespread breakdown that we saw in mortgage underwriting practices that were driven in large part by poor incentives. some examples of the bad incentives that contributes to the financial boom and bust include compensation practices at financial firms that rewarded volume and short-term performance over longer term, sustainable results. the willingness of credit rating agencies to designate traunchs of sub prime mortgages aaa in exchange for fees paid by a small number of issuers of mortgage backed securities. the willingness of fannie mae and freddie mack to take on large amounts of mortgage risk with very little capital banking. the willingness of aig to use it rating to provide credit protection to banks and security

firms against complex mortgage obligations with little direct capital support or an adequate liquidity backstop. and pegging money market money funds at par, which led investors to have an incentive to run at the first sign of trouble. through rate setting submissions that were not actually based on transactions. in contrast, a new u.s. treasury repo reference rate that the new york fed is involved with introducing will be based on actual transactions in a deep and liquid market and it's designed to be compliant with the principles set forth by the international organization of securities commissions. in the foreign exchange market, bad incentives helped encourage rate rigging at particular rate fixing times. reforms there were subsequently

introduced including recommendations from the financial stability board's report on foreign exchange benchmarks and the recent publication of an fx global code which was developed by central banks working with market participants. the creation of millions of unauthorized accounts at wells fargo also reflected bad incentives. bank employees were compensated on sales volume with aggressive cross selling targets without customers actually receiving beneficial services. in response, the fed reserve board enter into a cease and discydi desist ordinary we are wells fargo that requires the firm to improve processes. these recent cases to me are particularly disturbing in terms of their scale and flagrancy and the case of the collusion that occurred by employees across different firms. i'm particularly struck by the fact that the manipulation of

the foreign exchange markets occurred even after the libor scandal was well known. these under score the tremendous power that incentives have to influence and distort behavior, potentially leading to massive damage to bank cultures, reputations and finances. so some of the lessons on incentives that stand out for me include the need to guard against technical design flaws that can be manipulated and exploited for profit, ensuring that incentives are aligned and consistent with desired behaviors, recognizing that rules, however well intentioned, can be gamed. and lastly, having appropriate mechanisms in place so that firms can identify problems early and ensure rapid escalation and amelioration of those shortcomings. i think they are particularly important for financial

institutions, especially those institutions that are systemically important. the scale of such firms magni magnifies the impact of bad incentives on the financial system and on the economy. at the same time that same scale also makes it more difficult for senior management to properly control a firm's activities and monitor the conduct and behavior of its employees. for these reasons, we need strong internal and external checks on banks and that's an area which i want to turn to now. a strong financial system is one which is safe and resilient and can support the provision of financial services at a reasonable price to the real economy in good times and bad and one that promotes confidence and trust among its customers and counter parties. financial institutions could be p prudently managed and subject to

external checks. meanwhile, an effective financial regulatory and supervisoory regime should be a transparent as possible. the relationship between supervisors and banks does not always need to be adversarial. indeed, a healthy dialogue between the two helps make this supervisory process work better. for example, it's important that firms are proactive in revealing their problems to their supervisors. individual institutions can benefit from the horizontal perspective. this can highlight where the firm stands vis-a-vis best practices or where there may be important vulnerabilities in terms of its operations. i would admit there's an every -- irreducible amount of tension built into the

relationship between supervisors and banks. banks are naturally more sensitive to the constraints on their profit opportunities or on their dividend policies and they're much more sensitive to the cost of regulation. regulation. you always may question how much protection is really necessary, for example, how severe should the stress test assumptions be? these are areas that i expect the perspective to differ. supervisors are focused on compliance with laws and regulations as well as issues of safety and soundness and on the financial stability that may not match the narrow interest of a particular firm. for example, supervisors seek to address the externalities created by the failure of the systematic appointed firm. the firm will select the it wif

left to its own devices. the financial crisis is a reminder there can be many risks to financial stability. here i think there are three pillars. regulations and supervisions and bank cultures play an effective rule. regulation establishes what is legally permissible for banks to do. supervision helps to reenforce those rules and evaluate whether the banks control in other processes and can do what safety and sound is. bank culture sets out the norms of what is appropriate behavior. the same time these pillars are mutually reenforcing. supervision attempts to address various market failures and banking that can contribute to akpa excessive risk taking. so in this way, regulations and

supervision and bank cultures are complements and deficiency of any one of the three can be problematic. for example, as we have seen in cases of unsafe and unethical behavior in recent years and strong regulations of supervision cannot substitute for divisions and banks. rules are inherently limited in their ability to constraint conduct and behavior. much of our regime is written overtime. regulation is reactive in this way and may not keep pace with the evolution of the financial system of the broader economic environment. we must recognize that actions will be taken of the rules that are in place or rules simply

violated. consider, for example the use of so-called repo-105 transaction. they did this to mislead investors. these transactions had the benefit of being recognized as sales even though they were nearly identical to standard repo transactions that said on the balance sheet. the other example following the introduction of bozzle three, this occurs even when the current prices does not provide any additional resources to absorb potential losses, either because they did not have enough capital or affiliated with the bank in question.

i would also note that the established of two many bright line rules may actually be counter productive to the goal of encouraging good bank cultures. details rule can be construe and the speedometer responsibility rest with the authorities. when bank works to define creative ways around rules, it is going to have an insidious effect on culture. as i see an organization, cultures get into trouble when it equates what is right with what is legally permissible and what is wrong becomes viewed as what is legally i mpermissible.

the end result may not only be a loss of trust but burden and regulatory regime that would otherwise be the case. so while regulation supervision are a robust and financial system, i very much they are sufficient. they need to be supplemented to banks. as i previously said wilhelmsin drive conduct. the first step is evaluate incentives that they have in place with respect to personal evaluation and conversation and emotion to make sure that those incentives are consistent with the type of behavior that they want to encourage. for example, how are compliance violations treated in terms of compensation and promotion decisions. our incentives are in place to encourage people to speak up early when problems with smaller and more manageable.

when employees do speak up, how are they subsequently treated. my colleagues and i commented on the essential role of good culture and fostering customer confidence in trust. we argued cultural capital through its ability of misconduct risk. culture is viewed as a soft topi topic, i disagree with this. the financial that's disassociated with misconduct are anything but soft. ba bank firms have paid $3 million of penalties through year end 2016. the representation of misconduct can be -- cultures should be

about concrete incentives and behaviors that help achieve specific goals. it should not be viewed as a soft issue. i have argued on several occasions that bank leaders can get a better view onto their firm's progress on cultural and conduct by doing things collectively. with the results to encourage responses to be candid in their acces assessme assessment. these results will create a better picture of help banks how they are doing and underscore how much work is needed to help improve bank cultures. another idea is the creation of database of banker misconduct to combat the problem of rolling bad apples. this is a case where employees

are dismissed of proof of conducts or unwittingly hired by other firms of the industry where they had the opportunity to repeat their actions. firms are concerned of legal risk if they share information with other bankers and others but there maybe ways to address these concerns through legislation. once again i invite the industry to take the initiatives and look to the public sector for support. i believe supervisors have a role played and possible implications for bank behavior and misconduct. sup viper vis-- supervisors can mitigate misconduct. that can be done from the firm's board of directors. ultimately, establishing and maintaining an effective culture with appropriate risk governance

in control is the responsibility of individual firms and industries. the official sector can help by highlighting best practices and addressing collective action problems and other market failures. so i would like to briefly touch on some areas where i think further work on incentives maybe warranted including some regulatory changes that may address certain incentives and first mover problems. let me say that i don't think i have all the answers and i don't to suggest of the areas that i discussed are the only areas where there is room for improvement. these issues were ones that were more investigation and possible solutions maybe warranted. i believe it would be worth value to evaluate other changes of our capital regime to encourage early actions by banks when the economic environment

deteriorat deteriorates. we saw over and over again as we worked our way through financial crisis. bank management are prone of the outlook of their firms. there is also externality problems. now other supervisors do have some tools and circumstances available. these often require a safety and soundless bases may not come in a timely manner. changes of the 2018 c-card program do enable banks to avoid a board rejection based on the quantitative assessment by raising new capital. that's a step in the right direction. the current regime may not be sufficient to ensure that banks

will raise capital proactively as we go into the next economic downtu downturn. conversations also a par from se incentives. currently senior bankers are paid in cash and deferred stock grants. this structure create incentives to take action to maximize bank shared price rather than to m maximize of the risk of bank failures. it features a larger and longer component. it may also be recognized as tee lack can better align senior's management interests with the

long-term safety of their firms. as i see having more conversations in the form of deferred debt would have two benefit, one, reduce risk taking and another if -- i think senior bankers would be incentivized to cut dividends and raise capital earlier to reduce the risk of failure. it would be better for one which management has incentives to rising risks. i would encourage more to do so. this type of reform may need a push from the regulatory side. banks may be reluctant to opt these types of pay structures on their own for competitive

reasons. another possible reform can involved putting a grea great -- other legal liabilities rather than placing this on the shareholders alone. shareholders should not be shield from such costs and fines because they profited from the associated gains. but at the same time it does not seem to be fair or prudent to share decision makers from cost of break down to the degree they are shared now. liability may be a partial incentives. this will cost senior managers to encourage their staff to speak up earlier of emerging risks and be attentive when red flags are raised and respond earlier and forcefully. the many form introduced may

create vent activiincentives of. such incentives may alter nature and risk taking and they need to be close limon ly monitored. risks can be put outside the banking system or it could lead to different strategies or different models or product offering that introduce thnew risks. off balance sheet instrument rose sharply in the 1980s in response to the introduction of minimum primary and total capital requirements that were based on balance sheet size. more recently in some jurisdictions of the use of leverage ratio that's based on assets rather than period averages which is how we do it in the united states, that's encouraging window addressing behavior by some banks at the end of the quarter. the other four that we put in place that had the intended effect of safer institutions,

authorities and financial institutions should be fimindfu of unintented consequended cons. while we should do more to make the regime more efficient and transparent and simple. there are outstanding issues that requires additional work such as a cross board revolution of large global banks. we should focus on more incentives which can help us assure that regulations are dynamic and work well and banks have the right incentives to steer away from trouble. regulation and supervision, they have necessary but not sufficient. they also be supplemented by bank cultures that encourage ethical behaviors. thank you for your kind attenti attention, i think we'll take some questions.

>> let me ask you a few questions as we go to the floor, anybody if you are going to ask your questions, identify yourself of your name and organization. president dudley, you headed up to the new york feds since

january of '09, you are the vice chair of the federal open markets committee. you have been there for a really dynamic period of time and people are going to write about 100 years ago so the financial crisis and the after math of the financial crisis and the wine down of extraordinary measures and probably some of the volatility that we see. what are your observations from such an extraordinary period of time? >> the most obvious observation is we need to do better. the financial crisis was horrible for millions and millions of households and businesses and i think we need to do better job in terms of how we regulate and supervise banks and assess the financial stability risk of the finance right lane system risk system so we don't have a financial crisis in 2008 and 2009. that was the worst of my

lifetime, since the great depressi depression. the number one thing is make sure we keep in place all those changes that we made that makes the financial system stronger and more resilient. so the new york fed traditionally have been the banking leader within the federal reserve. >> i think the board of government. >> the new york fed has had a special place in that. dodd frank changed that a little bit and other changes. how do you see the role of the new york fed evolving and what is it today? >> we have important roles, number one, we are the bank that executes contrary policies. the new york fedex cut executes on behalf of the committee. second, we are two of the big

financial centers around the world, new york and london. and so we really have to do a good job of assessing what's happening in financial market and take the information back to our colleagues on the federal market committee. third, we have a strong international orientation and we run operations called central banks which had contact in business with central banks all over the world. i actually go to bosnia every two months and sit on the board of director for international settlement which is important of the outreach and coordination across the central bank and the committee. i am biassed but i do think the new york fed is special because of what new york city is what some of the operational rules that come to the new york fed. >> you talked in your speech of more to be done in terms of cross board and resolution, and

you mentioned your role, how do you see the global financial regulatory system involved or is that process or structure that we have today is the right one or does that need to evolve further? >> i think we made it a lo lot -- look, i look at the work that's done in the banks and the stability board, all able raising standards around the world to have a safe global financial system and a level plain field . i think it is very much in the u.s. interest of participated in those forum and to push for sustainable routine around the world. on the issue of this of the financial board, we do a lot of work of the resolution to try to make sure this could be done effectively. one of the things we'll take up over the next incoming months in

bosnia. i am the chair in the financial system, we'll look at how well the stability board works on resolution is actually going to work on across board bases. we'll take a look at the effectiveness and try to identify strengths and we weaknesses. i think we are making progress. what i worry about is declaring victory mama immaturely. >> and you spent a long time in the private sector and involved of this extraordinary period of time as the fed. how do you see evolution going and what are the good and the bad that you see coming with

that? >> we benefit around the world and we have efficient broad, deep capital market. we have some very large system events that operated across the country and we have thousands of community banks. i think that's pretty unique around the world and each of those pillars are really important in terms of satisfying the flow of credit and household and businesses and to enable corporations that are not financial firms to be able to hedge and manage the financial risk that they incur. the regime is a pretty good one. we have to recognize that we got three pillars and we need to make sure we keep it strong and viab viable. >> the united states, you make that with those three pillars. >> i think so. from your international perks, does that create any issues in terms of the american system

verses others or is that something you don't see with other regulators? >> there is no question, institutions are set up in every country is a little different different. when you try to take laws and apply it, there is something lost in translation. that's why prescription internationally of what we want the outcome to be and it is up to the country to decide what kind of regulatory system do they need to put in place to achieve the outcome. so rather to say you should do it this way, you need to do it in a way that it sees this outcome. i think it works effectively. good example of a big project that i worked on in my ten year as the president of new york fed is the financial market infrastructure. we are clearing the derivatives to the center counter party which is good. this makes it much more

important in terms of key points of -- these are key risk points of failure in the system potentially. we develop international and this is how your financial market infrastructure needs to operate. we are not telling you how to achieve those goals because it depends on the regime that you are in but you have to be in the level of resiliency. >> the common theme have been about culture and you talked about it again today and you talked about the need for culture to change at financial institutions. have you seen culture changing? >> i think a lot of banks are making effort on this and a lot

of efforts by senior bankers that are pushing down on the conversation and culture and conduct are really important. here is the goal. we made part of the journey, i think more can be done and i give a couple of suggestions in my remark today and most notably and in the u.k., there is a history wide survey of banks, i think it will be really great to have something like that in the u.s. getting a set-up information allows you to benchmark relatively to others and it is truly itemized that they can respond exactly how they see fit and improves the quality of the information and the information you will be able to apply the information where you are strong or weak relative to your

competitors. >> unof thyou also talked about regulations of laws and good or bad and people are becoming too reliant -- let's say whether regulations are said in that, can you flesh that out a little bit more of what you are trying to -- >> the example is repo-105, permissible but of the spirit of the rules and used to design to distort people's assessment of the balance sheet. if you have a good culture, i can do this but it is misleading and unethical so therefore it is inappropriate. you don't want to be in a regime where basically the banks look to the regulars and look at the set of rules and say whatever permissible in this set of rule goes. the regulatories would not be

able to keep up and the people in the firm will be clever in finding ways around regulations. that environment, you are going to have this horse race between regulars trying to bolster the regulations and firms are trying to get around regulations and you are going to end up with a lot of complexity of your regulatory regime and not effective and not a place or a direction you want to go. >> do you think that in enhance dialogue between regulators and regulated would help with that? >> i think we do have that dialogue. i think important when you are a regulator talking to the regulatee, you can have an important conversation. the best conversation that i had is they understand my perspective and i understood theirs so we can identify the

case where there is common sense interest and we can understand why we have area of disagreements. that allows you to have common ground of how we can make their firm and the financial system better and safer. >> well, you are in washington and that means you are not going to get away with talking about some legislation. we had a little banking bill that was passed recently and that includes of change of systematic threshold of 250 -- and doing away with some programs of some of the smaller banks. you talked about this in the past how some of these regulations should not have been imposed in large committee and regional banks. do you have any thoughts that you can share about the legislation or those efforts. >> yeah, i am sympathetic of the

legislation in the sense that it maintains of the key pillar of dodd frank that i think are really important, capital, liquidity and supervision of financial market of utility by the federal reserve because they are systemically important and liquidation authority. when a big bank is in trouble. the changes they made in terms of providing relief for smaller banks, it makes sense and the changes. do i agree with every last period incentives, probably not. i think it is legislation that goes in the right direction. we have been supportive of that because in some of our travels from around country and obviously we represent this type of business that there is and in size of business. when we go out particularly in the heart land of the country, there has been a disconnection between small business lending or lending for small businesses.

bank aggregate lending has gone up but it is going to places other than small businesses, do you think it is an appropriate way to maybe right size some of those impacts and is that a way that we can help to incentivize some growth but make sure reasonable risk taking is under taken? >> i think if it goes in that direction. community banks are really important to local businesses and so it is really important that they continue to be vibrant. my great grandfather is a bank communist so i am biassed. i saw his banking book during the great depression, it was a series of large debits. so i really do think community banks are very important revenue of small businesses.

that needs to be recognize inside terms of the regime. one of the challenges over the last deck daades is some of t the the - the -- it really hurts by the financial crisis itself. a lot of small businesses funded by family and friends and home equity lines and credit cards. we go to the financial crisis, home equity lines and pull back and credit cards pull back and friends and family, it has been a long road back for small businesses because those sorts of credits were constrained. the most difficult lending decision for banks is really to small business, it does not have much to attract records. the hardest thing for business to get the initial capital so they can develop the track record to give bank confidence in terms of how to go forward. that's how we have small business and administration and

that's how we have community development and organizations to help small business and get over the hurdle to start. it is very important. >> shifting gear a little bit of c-card. we were talking about this during lunch. c-card is something you see as being an important tool. it allows feds and regulators to determine bank can issue dividends. can it still be used with a tool taken into account of other concerns that have been raised? >> i guess i will step back one step, stress testing is really valuable. if you look at the turning point during the financial crisis was

when we did the stress test for the large systematic firm in the spring of 2009 and they reviewed as credible by the market participants broadly. that was really the turning point of the financial crisis. people understood that it is not sufficient to have enough capital today. it is important to have enough capital in the future under adverse environment. the stress test is very important because they create a forward looking element to the capital standards so we can argue precisely of the formulation of c-card or how severe the stress test is. it is important to have these because they increase the degree of confidence in the viability of our financial system even under economic circumstances. i think c-card, the federal reserve is continuing to look at c-card and refining the process. i think we'll continue to do so.

i think regardless of what we do in terms of c-card at the margin, it is really important to have stress tests that are severe and make sure that firms have enough capital on a forward looking basis. >> do you also so we are eight years passed dodd frank, we are nine years passed the depth of financial crisis, and now we are hearing of randy corrals adjusting something and we just talked a little bit about c-card. do you think it is an appropriate time to look at some of those issues? >> you should always be looking at your regulatory regime to see whether you will get the dials right in terms of how simple transparent and efficient it is. what randy is arguing for is common sense. you can imagine and obviously following the financial crisis and we knew the financial regime was inadequate so there is a lot

of regulatory work that had to be forthcoming and much of that is in place. i think it is an appropriate time to take a look at it and ask yourself a question, can you achieve the same outcomes more efficiently and more simply and transparently. that's what we'll be looking at. >> okay, let's see if there is any questions from the floor? >> hello bill, thank you for your service. the question is, you emphasized two particular points in your remark of the importance of incentives and the importance of capital. can you speak to the tension of the leverage ratio which has negative or proverse incentive, the binding constraint and architecture by nature is some

what imperfect. >> the leverage ratio is, you know, capital divided by total assets so the leverage ratio basically treats risky assets as the same as not risky assets so a treasury bill is treated the same as a second mortgage. and you can argue that's not the greatest capital regime. why was the leverage ratio put in place? it was put in place because it was viewed on a risk based capital standards may lead to gaming of capital standards and inadequate level of capital in the system. i think and in an ideal world, it is a little bit of a safe ty net. the federal reserve is looking at the ratio to see if it is calibrated and it is not as

binding. we see there is some relieves of custody banks in terms of reserve -- bank reserves so that leverage ratio becomes a littleless binding. the the lever rage ratio is usel to have as a safety net but you don't want it be the dominant factor. i don't think the leverage ratio is the dominant regime. what's really the dominant regime is the c-card and the stress test, i think that's okay as that's being the constraint. that's the constraint to ensure that the banks will have enough capital to operate under adverse economic environment and that seems like the exact capital regime that you want to have in place. >> another question from the

floor? >> how to international capital drives domestic standards. >> i think everything is negotiated is by consensus and completely voluntary. it is not like the process imposes in the u.s. tougher capital standards or tougher regulatory regime, in fact, i would argue the direction goes much more the other way. we have a set of capital regimes in the united states and we want to make sure the same regime are implemented across the world so that there is a level plain field and a safe global financial system. so the idea that bozzle is doing the wrong thing -- it is us

using the process to raise the standards around the world and level of consistent standards that we have in the united states. with that, do you -- i agree with you that the united states have historically been tougher on capitals. the united states -- you know is going to have tougher capital rules and you have other jurisdictions under the same system have a system. as you take a look at it, u.s. may see bozzel as floor seeing a ceiling. do you see any congruent of bozzle three? >> with the newest changes and putting constraints on the

bank's stability driving their capit capital requirements does level the plain more than what we had before. i think we are definitely moving to a better place and every country is different and every institution is different. you go to different country, how risky is tmortgage in the netherlands than the u.s. the institutional set up is so different in different countries. so i am not -- i don't think we'll achieve the thing where capital regime is exactly the same across every country because the institution set up and financial system how it is constructed are different country by country. i think we can get through a place where the system is small and it does not impede on a relatively fair plain field across border. i don't think we have anything

to worry about. if i look at around the world and look at how u.s. banks are doing relative to large foreign banks. it seems like u.s. banks are doing fine and the regime that we have in place is making the u.s. bank system safer and resilience and not impeding their ability to be competitive, not just here but around the globe. >> so let me just ask you for people who are in the room today, what's the one message that you want them to leave with? >> one message i want them to leave with is not just regulation but it is supervision and sufficient, you also need to focus on incentives because incentives drive bank conduct and culture and bank conduct and culture is really important for banks not getting into great adulti difficulties. >> thank you president dudley and please everybody, thank you.

tonight we'll show the senate judiciary work on a bill to limit special counsel, robert mueller. the chairman told members he would allow a committee vote. if they got bipartisan support and they did. here is committee chair charles grassley's announcement this morning during the meeting. >> we also have on the agenda for the first time, s-2644, the special consul of independent and integrity act introduced by graham, kuehn and booker. this bill is a product of months of work by bipartisan corespo s

co-sponsors. they were introduced on the same day last august. there maybe members on my side wonder why we are moving ahead of this. i am not sure last fall when i said to the people we are not going to move this bill that there would be a bipartisan compromise put together but there is a bipartisan compromise put together and so when i make my word to the people if you can get together to have a bill. that's why it is on the agenda just in case anybody in the leadership of the republican party of the united states or even on this committee, they'll know why it is chairman of the committee i am moving forward. >> now, what i just told you and i know there is no point of reading it again. >> well, we may be slow, you know? >> okay. well -- so then i everyone reached out -- well, i am not going to read that. as a result, we'll hold the bill

over today as the request of several members of the committee and mark it up next week. i answer this question ten times. the press always tries to put us between me and the president or the majority leader. i don't care to be put in the middle of anything. i just plan of doing the work that this committee ought to do. how do you get things done? you get it done by moving to the pace of the very steps to get there. the views of the majority leaders are important to consider but they do not govern what happens here. if consideration on the floor was a standard for approving the bill in committee or not, we

would not be probably moving any bills out of this committee. t the other side we had slow up for various reasons and there is no point of me being political at this point. the united states senate is moving clearly and slowly. now, i did raise some issues of the constitutionalty of this whole issue. i have expressed of my own concerns about the bill. at our hearing last september, we had different views as to whether the special counsel bill were constitutional. each acknowledged there was uncertainty how the current supreme court would come down on the issue. it is appropriate for members of the judiciary committee to discuss issues of potential legislation but it is important to acknowledge the fact that we are senators and not judges or

president though some of this room may like to be one day in. in the federalist list paper james mathis wrote that our structure is designed so the ambition counter acts the ambition of others. congress pmust consider its constitutional roar. in my view that means congress should at least require the executive branch to issue detailed reports of congress of the appointment investigation or removal of the special counsel and in light of the work done by bipartisan groups. i think this committee should consider the removal of the special counsel is appropriate. these are issues beyond mueller investigation or even the trump

administration. they would affect every future administration both democratic and republican and i will look forward to the discussion that we'll have next week. the committee talked a bit more of the measure to limit trump's ability to fire special counsel robert mueller. you can watch the entire exchange tonight at 8:00 eastern on c-span. richard spencer along with admiral richardson and general report neler on navy readiness on the 2019 budget request. they testified today before the senate armed service committee. sunday, our look back to the year of 1968, focuses on women's rights. the women's deliberation movement challenged american women hood.

joining us to talk about women's rights are debora a. spar and mona charen. watch 1968, america in turmoil, women's rights, live on sunday atro 8:30 a.m. southeastern on c-span and on american history tv on c-span 3. c-span where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court and public policy events

in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. >> after the student led march for a live rally in washington, d.c., georgetown held a discussion on gun violence. stoneman douglas high school student provided the firsthand account of the mass shooting that killed 17 people at her school in parkland, florida. this is an hour. okay. i have a saying from england, my wife is in england, if you are sitting comfortably then i will begin. i am larry gostin, i am the director of the world health