that was an unbelievable episode. >> barnett, did you fear it was ever going to go down? [laughter] >> i will not be attending. >> foreign policy in syria -- >> health care -- >> barney, did you feel that tarp was going to go down any system with it? >> i disability system -- if we had to do target would go down by the way, bill had mentioned people said this could be as bad as the great depression. it could've been worse for this reason. seven years ago, you had geographic particularly cared things can happen in one part of the world that would not necessarily destroy the other. by 2008, we were on one grade. so people afraid that they would not get paid -- i mean, that had a global shock. that is why we knew we had to do it, though we had some differences about relief and

compensation. when we lost on the floor of the house, i was sure it would be turned around. two factors. first of all, bill knows this, when a measure is coming up, the people who are for it tend to take for granted that it will happen, and the people who are against it scream and yell. you hear disproportionally from the antis. we heard from all the people who thought it was terrible. after the vote, people started hearing from other people who thought that not doing it was terrible. and of course -- and i would say this is not purely hindsight here. hank paulson will verify this. we talked that night, and hank, who had done a great job, was in despair. the day the vote was going on, there was a gathering in the well of the house of the bipartisan leadership ready to go into the usual drill of trying to change members vote. i will take credit for going to steny hoyer and others if they do not do this, this is too

serious, don't win this by these kind of tactics. we will pay a big price. i called hank that night and he called me and i said -- don't worry about it. sometimes the kid gets really mad, you have to let him run away, go a few blocks away, get hungry and cold and scared and then he will come home again. >> what is the alternative? >> when the market drops 700 points -- but i was at the airport the day after the vote, and a couple of people from north carolina came up and said that was terrible. i said, how did your representative to vote? he voted no. they got right on the phone. he voted yes this time. the people who are opposed, you hear from them more. so i knew we had to do it, and i was confident it was going to pass. >> you gave an interesting economic history lesson earlier,

and i wanted to see if you would be amenable to my amendment to that, which is we talked about innovation, a kind of lurch forward, and in a need for regulation to catch up. there is often a piece of that, which is innovation, lack of crisis, and the regulations get lax. you look at it for a long time, and suddenly disappears, it is not there, you cannot see it. there is something that economist call a ulysses act, which is the idea that ulysses strapped himself to the mast so he will not heed the call of the sirens and orders the shipment not to listen to anything he says. there is a big of that any legislation, there is a bit of that in any legislation. and bill was getting at this earlier. this notion that ultimately politics determines the quality

of regulation. what stops us next time when the markets are booming, everybody is feeling at this good times are here again, and as happened somewhat during the pre-crisis period, regulators come forward, try to slap on the banks, they get slapped down again by congress, and are told back off, these guys. what keeps that from happening again? >> nothing. memory will retard the process, but memories fade. part of it is this. i think -- there were ups and downs, but there was also a trend. clearly, intellectually the 1980's and the 1990's, regulation became credible. academic theory was to be

critical. it has made something of a comeback, but nobody can predict that going forward. i do think now there is more of a sense of regulation and how to do it well, but that is the problem of democracy, you will always have the people most rectally involved more engaged than the general public. >> i do not think it is a democracy necessarily. >> america is not a democracy? i'm talking about in america. >> that is not the problem. to me, the problem is -- i think a lot of people, you talked about the desire to deregulate. it was an understanding of relationships over things. deregulate the railroads. in this situation, we all spent a lot of time looking at booms and busts in history, and we lived through a dot com, and i

heard people talking about, can you imagine the stupid dutch? they started buying tulip bulbs, and it is that crazy, they were paying enormous amounts for a tulip bulb. i said maybe they're not crazy because of their athletic turns worthless, at least they can eat it. and that is not the case with -- >> i agree with some of what you said. there was a good case we may for deregulation where the government had committed -- had created monopolies. and airlines, where the government had interfered with the market. what happened was deregulation became non-regulation, as i said, because we did not deregulate derivatives. we had not regulated them in the first place. what happened was the whole philosophy of the regulation or not the regulation got so strong that a kind of jumped the

phenomenon where it was not as reasonable. many people make bad mortgage loans and sell them off and having no responsibly for it is not the famous as opening up airlines to competition. but there was a philosophical kind of semantic carryover. >> i agree completely on that, and especially when you have people who are paid to estimate the value of it, and they give you a value that is not accurate, and then they flip it. there was so much blue sky involved in everything that everyone was doing, i and all the fun, they will go to the blue skies. >> i have one quick semantic difference -- >> hold on, barney, if you pick the panel, -- >> one sentence to bill. i think you are right about the

word, and it begins with a "b" and an "s," but it is not blue sky. [laughter] >> a couple of points. number one, the history lesson i think is important. a lot of the stuff is just the same as before in new clothing. here is the thing we learned on the commission that is the most striking. the dot com bubble destroyed welcome and we remember that in the late 1990's, and there was a little recession afterwards. the housing collapse destroyed wealth. the decline in the housing rate and the decline in the dot com were the same. one produced the great recession because it was deafening, the other one with equity finance. the lesson is control levers, and you should never forget that.

that is important. that will inflate in the future. >> didn't the great depression have something to do with leverage? >> i will stop there. you can integrate a little bit with smart design, and mistakes still being made in the u.s. and elsewhere are too much arrogance about our ability to identify specific risks and somehow hedge against them. that is going to be impossible. i prefer stress tests, which are on the bus tests, and too much institution specific stuff because financial institutions work all the time, and the labels on them are not important. i do not think we are out of the woods yet -- >> on the institution specific way, what would be your example? >> we still have labels for things that are banks -- >> i said this what you want to have risks. >> basil 3 goes a long way. >> if you look at what we do -- >> a lot of legacy -- >> i understand, but in the bill, we regulate this and that any other, no matter who does it, precisely -- >> ok, i will raise your grade. >> government institutions were created for a specific --

>> i really can't think of any. which ones? i can merge the sec and the fdic >> one that comes to mind is the credit agency. >> the government editions. >> 12 fed employee to suffer greater oversight in the money market. >> that is not what i asked bill. by the way, what happened, one of the problems we had, a ghost of his west of how do you deal with the regulators. i wish there was some way to tell the senate that appointment of the commissioners on the sec and the others was not part of their charter. we had a system that were the president gets to appoint the chair of the commission, but then the senators of the committee of jurisdiction get to appoint the democratic and republican other members. there is a quote that said you do not have any chairs the directing ability, and too many of those commissioners are now there as special interest representatives to the senators >> yep, barney and i will agree on anything to say about the sense -- >> it is a time-honored tradition in the rayburn house building.

system where the president got to appoint the chair of the commission. democratic and republican other members. there is a quote that said you do not have any chairs the directing ability, and too many of those commissioners are now there as special interest representatives to the senators

>> yep, barney and i will agree on anything to say about the sense -- >> it is a time-honored tradition in the rayburn house building. >> we have about 40 minutes less, 38 minutes or so. i have questions that have come to me over twitter. if you want to send questions, it is #5afterthefall. i am monitoring it here. let me start with the audience and ask questions here. >> i am david christie. my question has to do with the title ii of the so-called bail and policy. i understand as you guys have admitted, the ballot is lyrically hard -- bail out is politically hard. before, the bailout was enforced by a threat of martial law from the bush administration. so i see the political difficulties in it. i guess my question is as terms of the bail in, as we have seen in now, and cyprus and detroit, the financial institutions where the deposit can be included to

bail in the derivatives. given i had just came from the pro-glass-stegall, though you dig it would be better that we enact it, bank of the wall street instead of fleece the american citizens by stealing their savings under the liquidation authority of just being able to bail in the derivatives of the -- >> the question makes no sense. >> normally, i would think that is a radical question, but i do not think he is too far from the public and how they think about what is happened. >> i understand that. >> and there are factual issues >> let me start with this nonsense about martial law. i do not care what the chairman thought he needed to do to get reelected, but this notion about

martial law, that is a very serious thing. there is no threat to democracy. that is a silly rhetoric that drives people -- secondly, as far as the glass-steagall is concerned, we are not the anti- glass-steagall panel, most of us thought it was not relevant. aig would have done it everything it had done whether there had been glass-steagall or not. glass was a lot smarter than steagall, but that is getting into the senate there, bill, but they had never heard of derivatives. derivatives did not exist in 1931. they never heard of the subprime loan. so it was a relevant here the notion that an acting glass- steagall would somehow bankrupt wall street is nonsense. it is not make any sense. you may feel that things are too big from the political sticker say why, and there's an argument to be made, but it is not relevant to what happened. i voted against the repeal of

glass-steagall for a number of reasons. country right was a -- countrywide was a bank. they could've gone all of their loans if the glass-steagall was in effect or not. as far as getting rid of the pensions of people, no, that is now we do. all the liquidation says if the bank -- if the financial institution cannot pay its debts, we will put it out of business. the first people to get hit are the shareholders, the executors, the people below the money. and that, i think, if the alternative than to have it come from the taxpayers, and we don't want to do that. >> a quick response, and i do want to get these out because one of the fun things of focusing on this five years after the crash is that there have been some publications talking about -- here is one, what has changed since the

lehman failure five years ago, the crisis, the response, and the responses since? carolyn bowman, this is a really a fun one, five years after the crash, what americans think about wall street, banks, business, and free enterprise. the appendix is a whole series of an examination of past polls from the 1970's, 1980's, 1990's. and the fact is that virtually no opinions have been changed about the role of business, labor action went down a little bit, and government and the rest. you heard about barney's -- i just want to say, for the record, i have two children, and the treatment of the child in my opinion is not to let them run off unsupervised and it will come back. i guess your position is that if a runoff, you should lock the door. and that would guarantee they don't come back. when you talk about all these people who are victims on the

sideline, i may be point briefly, i want to go back to it. the old pogo, we met the enemy, and he it is us. it is not wall street -- it is mainstream. it is not the bank, it is the people writing the value of the home. it is not those people, it is the people who believed that in buying shelter -- it is their greatest investment and it will always -- a multitude of reasons why it happened. it is always fun to gather around those people who over the years have been the ones you pick on. wall street, banks, business, free enterprise, as though the enemy is a masked cartoon of this overweight banker with his top hat on with the dollar bill signed and a big cigar and if we could just stop that, then we could deal with it. it is far more fundamental than that. for more difficult. i will turn my time back. >> in the free market, you want the government to back up the wall street derivatives behavior. >> it is exactly the opposite.

it requires them to put margins. we try to put them on exchanges. we do introduce competent and in the derivatives in the industry. >> and i believe in free enterprise, and i believe in what ronald reagan said when he said trust, but verify. it is the verification of the relationships that really makes free enterprise work. it is not darwinian. >> point that are grounded in the facts. >> here we go. >> i think good policy has to become good politics. number one, size of and institutions are not simply a political choice -- they are driven by economic forces. we have large banks, small banks, a whole range of scopes of activities. those are economic forces at work, and to pretend otherwise is a mistake. second, i 100% agree that glass- steagall had nothing to do with

this. there is no evidence that proprietary trading with the problem. indeed, if you want to look at risks and what is risky out there, it is making loans. everyone has this beautiful vision we are going to go back these banks just make loans to their customers. that is where the risk was. that is where we lost money. mortgages went south. >> i think everybody forgot the savings and loan crisis -- >> sure. >> everybody says we needed to hold again -- >> we did that. >> during that time. >> the last please, let me just finish this, i understand all the concern about the solvency and the wind down these largest it was more a - liquidity problem than anything else. when the fed stepped up the flooding of the quiddity, it returned to financial health pretty quickly.

i think the bigger threats are liquidity. >> it was the role the fed played with the money coming in that created a comfort level. the old western where the banker will only loan money to people who don't need the loan -- if we had continued to practice that, we would not have the problems we encountered but we also would not have the economy and the lifestyle and quality of life. >> one of the arguments against our view that we have done away with too big to fail. we have done away with the legal ability of officials to keep alive an institution that is in fact insolvent. some of these arguments are that won't work if one institution has that problem but the pattern is for them all to have it and that is not the pattern. that was not the pattern in 2008. most of them were not in that situation. >> the payment system, the system by which money travels within the country and around

the world is in private hands. even though it is effectively a public utility in the sense that the public requires this to go to the atm to get their money back. as long as that is the case, there is going to be a nexus for government involvement. the body politic will not stand for the payment system to shut down. that is where the quandary is. it is a bit like how private tenure water company be? how private tenure gas company be?-- can your gas company be? the body politic demands the service at a cost that is reasonable. >> and they recover it from the

large financial institutions. >> this first question on twitter -- very simple -- why is no one in jail? >> because being stupid is not illegal. >> even worse, being an moral is not illegal. -- immoral is not illegal. we had to pass a lot of laws because some of the things that people did were not illegal. one argument i heard from the administration is you don't want to prosecute an institution but i accept that, go after the individuals. some of my friends need to remember that one element of due process is that you cannot be criminally prosecuted if you did not have good reason to know that the activity was illegal. ambiguity is the enemy of due process.

you also have to be able to prove beyond a reasonable doubt. a guards of the law is no excuse. if the law was there and you did not know about it, that does not help you. if the best informed person in the world could not have known that was a legal, it is hard do a criminal prosecution. that's why insider trading is what you see in criminal prosecutions because it is illegal. there was great ambiguity and going forward now, we have made some things illegal that i hope will lead to greater prosecution if those things are done. >> an example of something that was done during the crisis that if it was done now would be criminal? >> some of these subprime loans that people made. >> giving the loan to somebody who you know does not qualify. >> the falsification of some of the documents. you would think it is illegal,

but in our system of law, things are not illegal just because we think they suck. somebody has to write down it is illegal. a lot of these mortgage practices were not terminally prosecutable but will be in the future. >> a lot of people run for office on the part that sucks. that will be their platform. >> my platform -- i knew people were unhappy but you don't get credit for disaster averted. i wanted to make a big bumper sticker that said "things would have sucked worse without me." >> which is true. >> i wanted to counter a little of what has been said about the orderly liquidation authority. in fact, it does insure for the stealing of depositors accounts and is completely unconstitutional and has been cited by the bank of england and

the bis as the model for the global approach to the systemic crisis. the point that senator warren has made about glass-steagall is that for over 60 years, there was no major financial crisis and since 2007, the large banks have increased their indebtedness and only glass- steagall would create the firewall where derivatives would have no federal insurance allowing for an actual reorganization of the system and allow for human progress. what's being done now is an attack on human creativity saying there is no way to the future and no other solution and these are lies. just as obama is lying and should be impeached. depositors be -- >> no, this is totally wrong. deposits are not only protected but the legislation increased the amount of deposit insurance from $100,000-$250,000 for the smaller banks.

there is nothing in our legislation that in any way weakens deposit insurance. if you deposit in any fdic insured institution up to 250 thousand dollars for any individual, you are completely and legally protected. that's what the public might think. you mentioned glass-steagall and the savings and loan crisis which was a terrible problem. it cost the federal government ut.h more than this in terms of that happened while we had glass-steagall. there is just no rationale to this argument -- the shareholders lose. >> the shareholders are not depositors. >> the shareholders lose, the the alternative is maybe they want the taxpayers bail them out. the notion that depositors are at risk is completely and totally not true. depositors came out of this legislation that are protected because the amount went from

100,000 - $ 250,000 permanently. >> in terms of the actions of dodd frank and how it changed the legal landscape, the most important thing it did was it nationalized a lot of the rules. people forget that much of the mortgage origination was state regulated. the states were very different in their oversight and different in their standards and we had very different housing problems as a result. >> i'm glad you made that point. yes, the states were the ones that had dealt with this and in 2004, the comptroller of the currency, gated a regulation preempting the regulation of national banks not by saying this is a bad regulation but they tempted it with field preemption. some of the states started to regulate mortgages and in 2004,

the rule came in that said mortgage practices of nationally chartered banks are none of the states this was and that was part of the problem. >> to other areas we need to cover -- fannie mae and freddie mac- and the international aspect. barney, i think people would say it is a huge failure five years after the collapse. i guess it's five years in one week that fannie mae and freddie mac were taken over by the treasury department and there is still no plan and they remain wards of the state. they are doing better, obviously they are not bleeding money and returning some money to treasury. fundamentally, we have not come up with a plan for how to resolve fannie mae and freddie mac and get it out of government ownership. and then getting the subsidy

right for housing in the united states. first of all, why hasn't this happened? are there any prospects for to happen soon and how would you do it? >> first, nothing had happened with fannie mae and freddie mac for a long time. the house passed a bill in 2005. the senate under republican control rejected that bill. oxley said george bush gave him the one finger salute. put in thete ever times."e financial paulsen in 2006 become secretary of treasury and says, we have to fix it. he says if you become the chairman, will you do that? i said yes. i knew we needed to do something by 2004. in 2007, we gave the bush administration most of what it wanted with regard to fannie mae

and freddie mac. paulson use that power in 2008 to put them into receivership. we were then planning to do something about it and then the financial crisis hit and we made the judgment in the congress that trying to restructure housing, finance going forward at the same time as you are doing all the other financial reforms which were more backward looking, it was too heavy a lift. if we had maintained the majority, i promised we would look at fannie mae and freddie mac going forward. the republicans took over and this is the dilemma -- there is a genuine split ideologically as to what we would do. there are a large number of people who believe, including people in the housing business, that you cannot have 30 year fixed rate mortgages unless the lender who was ultimately responsible for that can get some guarantee against interest rate fluctuation. they say people will not lock in.

unless the initial interest rate is so high that you can make money. i think there is a consensus, i hope so, that fannie may and freddie mac, that was not a good model. there were two alternative approaches. one that chairman has and the conservatives have is it is time for them to phase out and let the market do it. on the other side, there is a minority of republicans and the home builders and realtors and others saying that you need to do something. you have the proposal that says somebody should be able to sell a lender who is a 30 year fixed rate mortgage a guarantee against interest rate fluctuation, a hedge, which should not be a bad word in general priced to breakeven.

my own view is the flipside of banning the bad mortgages which we did is to put more money into rental housing. we should get poor people into rental housing and not homeownership. there are two conflicting views. one is to build a house and get the government out of the business. the alternative is getting some kind of guarantee again to -- against interest rate fluctuation. >> the problem is, and it's one of the reasons it went worldwide, other places that used to rent got into buying and picked up some of these securities. when you take a social desire like everybody should go to college and you create a system in which everyone should go to

college and therefore everyone gets to go to college, and you then say what good is it to go to college? if you start out believing everyone should own their own home and it turns out to be the primary asset which generates money, and then congress passes the tax code change that says certain interest cannot be deducted and so you play gimmicks and that is your mortgage was being paid down. the lending institutions provided you with a sample check of what you could cash out from your home ownership to use to pay off the suv and the other things. you never built up that equity. in the old days, you built up the equity to wait for the burning of the mortgage. now you whittled it down every bond to pay for those things that the government used to

excuse on the interest deductions and it does not. the problem for me with fannie mae and freddie mac was they tried to play both sides of the street. if it's focused narrowly on a social policy -- the whole savings and loan came from people who did not have money to get into a home. at some point, we have to reassess homeownership, its value, and its cost. frankly, i don't know why a rental cannot get a deduction if somebody who can afford a mortgage gets the payment of the interest deducted. if somebody wants to live on a boat, why can't they get a deduction? why does a mobile home or manufactured housing depreciate and homes don't? it just needs to be a fundamental reassessment. freddie mae and fannie got carried away playing the market to make money and still wound up holding the bag on those 30 year mortgages.

they made money on their multifamily housing. the other disadvantage is you can build up a good credit score by making your mortgage payment but you can pay your rent faithfully every year for 40 years and you get zip in terms of credit. >> first, i get to say we told you so. in 2003, there is a study that said the structure of these gse's will cost the taxpayer a lot of money. we testified and it happened faster than anyone dreamed. it was a known problem. fannie mae and freddie mac did a couple of things. they provided a guarantee. going forward, you could provide that guarantee but it should be explicitly charged. that will raise the cost of mortgages. or you cannot have the guarantee and that will raise the cost of

mortgages. one of the thing stopping this is going back to the good old days when mortgages were that cheap. the whole housing industry will have to come to grips with the fact that mortgages will be more expensive. the second thing they did is they had a large taxpayer backed hedge funds and we all lost our shirts. they should not be allowed to do that again. it was a disaster. the third thing they did which is a source of disagreement is affordable housing goals. essentially, off budget activities to promote shelter whether it's multi family or single-family. >> i think i have been the biggest for rental housing. no more goals are telling the private sector what they need to do. >> i'm with you. >> what we had in the bill and

worked on it in 2005 and 2007, we created an affordable housing trust fund on budget. when you are building housing, you don't do on annual appropriation. it was to be funded out of the profits of fannie mae and freddie mac. fat chance. we talked about pricing that guarantee per home mortgages 50 basis points would give you enough money to build the affordable housing. it was a mishmash and it should not be off budget. it is an on budget appropriation. >> not everyone is with you. >> one of the goals of fannie mae and freddie mac was the concept of promoting homeownership and that was something that contributed to the crisis. >> very much so. "the new york times" had an appalling article a couple of weeks ago on the front page of the business section. it said that rental housing is

ruining neighborhoods. it was this vicious attack on renters saying look what is going on in the financial crisis and investors are buying these properties and letting them be rented and isn't that terribly unfair to the owners? that was beyond what i would've expected. homeownership is a good thing. when we were younger, you expected to pay 25% of your income for shelter and then it became make 25% on the appreciation of your home. it should not be the way that poor people built up equity. for many low income people, rental housing is a better fit for their status than all the questions of homeownership. >> we come full circle to politics because that defines any number of areas where desired social policy gets under government control and you lose complete site of what you are doing.

look how long we paid farmers subsidies to grow crops based on parity. some magic amount they made back in 1914. >> that would be still. >> we knocked a lot of that out. i come from non-subsidy state. we are currently in this mess of subsidizing the making of ethanol principally from corn. ethanol has a lower btu rating than gasoline. cows eat corn. the price of corn has gone up because government is subsidizing the making of ethanol.

it turns out, e-85, anything more than 10% corrodes many working parts of cars. you get into these policies that are written into government determining what the outcome should be rather than the market and housing probably is the single best example of how much we got carried away believing that home ownership is so important. >> i partially agree with you. we have all agreed about glass- steagall. all of us agree that one of the things that did not contribute to that was the community reinvestment act. >> i agree with that. >> i want to make that explicit because some say that's what you got out of the cra. >> it goes back to the business that if you want something, incentivize it.

>> i just wanted to make it clear that we all agree that the community reinvestment act was good. >> let's see if the panel can go further. if these government incentive programs created distortions -- fannie mae and freddie mac admittedly came to the game later but they propelled it further -- would wall street have done quite as badly as it did in the absence of the political incentives that were out there? >> qualitatively, yes, quantitatively, no. fannie mae and freddie mac help them do it more but they did not do it because they were told homeownership was a good thing. they did it because it was a good way to make money. >> they existed because we thought homeownership was a good thing and a people could not finance it -- >> how much of this blame from

the beginning of the conversation goes to the government center -- a sector and how much goes to the private sector? it seems the government sectorio some of its excesses. >> fannie mae and freddie mac were propelling that. >> let's go another step. >> the mechanics of that -- one of the great ironies is that fannie mae and freddie mac were created to securitize so we could get away from the regional mortgage markets that were supposed to be good. >> if the government political process propels the private sector to access as it would not have otherwise gone to. is dodd-frank too tough on the private sector and somewhat unnecessary if we don't have

these government policies that propel the private sector to its excesses? >> you don't get to go first because you are biased. >> you respond first. >> the root of all evil is money. bright people get attracted to money. wall street is a manufacturer of a way to make more money. some people resent that. if we come back another five years years for the 10 year reunion and then the 15 or the 20, dodd-frank was not a shot in the dark at a shot in the misty evening. like all the other stuff government does to stop behavior, if it is not on oversight and review and adjustment as what we per pose to regulate continues to change, i imagine some french thought them maginot line was a good buy. it constantly has to be reviewed.

vigilance and the willingness to be transparent and educate people making choices is our only alternative and from an historical point of view, we will make the mistakes over and over. >> i'm glad you asked that question. fannie mae and freddie mac got off. the first thing we got under my being chairman was to put fannie mae and freddie mac out of business and put them into receivership. we shut down the problem and stopped the bleeding. what you do going forward is still there. you are too pessimistic about fannie mae and freddie mac. once we stopped it, there is the value of the housing inventory. i don't that will not -- i did not think it would cost as much as you predicted in 2003. >> putting him out of business was a good idea. >> it now will be a breakeven. >> so far. >> it looks that way.

had we done it we would have been better off. nothing that we did in the financial reform bill whether you approve of it or not was punishing them for fannie mae and freddie mac. someone would have to tell me specifically what we did. we made it illegal to give bad mortgages. that's the only prohibition in the bill. there were other things that we said to increase your margins and capital. i think it was market oriented. >> you also saw wasn't institutions but the leadership and the direction it takes under the rules they play had changed. you had some go-go guys running the place making money. you were too tough on wall street is one question and none of them went to jail. can i debate the winner of that argument? >> we will have semi finals. >> nothing we did i think

penalize them for fannie mae and freddie mac mistakes. the harshness of it essentially said, except for the subprime mortgages, we did not stop them from taking any risk they wanted. we try to increase two things. the people who took the risk should bear the responsibility and they should have the money to back it up in terms of capital. >> that's after the fact because that's all you can do. >> we have just a few minutes. doug? lee's go out with this question what remains significantly undone and do you emerge optimistic about five years on now or are you as scared as you ever were? >> i certainly think we are in far better shape than we were in

2006. part of that is simply cultural and memories will fade. one of my striking observations from the commission is markets failed the price risk. spreads were notoriously narrow. internally, attention to risk management fell apart. the number of times we had hearings with executives and talked to them about internal risk management, it was a disaster. some of it was dealt with legislatively but most of it was cultural. i am very worried about the future of housing finance. this remains untouched and on

unresolved. it is a terrible thing in my view. it is the single biggest domestic peace (the international coordination remains problematic. it is way too expensive and complicated for what we are getting so we are exposed there. when i worry, i worry about the europeans banking system and the ills it can visit upon the u.s. >> do you want to take this? >> to come full circle, many times we look at the symptoms and don't deal with the causes on a fundamental basis. dollars times politics, who gets what, when, and how and one of the fundamental rule structures is the tax structure. just as we outdated the earlier laws and you could repeal them but they almost don't apply anymore is the change. i think we need a wholesale reevaluation of what we have in no way in which we separate people from their means in the

tax structure and begin an equitable rewarding of investment in various ways that people can utilize their dollars and to let somebody put it into a mortgage expecting it to be building equity is crazy. to tax things that should not be taxed -- i think it is a good step but i think a lot of the problem is that this society is not addressing fundamentals in terms of a safety net or the tax structure or how people and the government coordinate pay for their senior years. you've got social security as a financial structure and medicare as a senior healthcare structure. nobody looks at the fact that the healthcare structure is primarily acute-care and is not long-term and we should combine combine social security and medicare to create a long-term assistance to health care. we need to look at fundamentals because the world has changed. >> i have another question. 70 years from now after the next

financial crisis and whoever has managed to water down frank -- down. frank, will they say we should go back to dodd frank? is a piece of legislation that you're proud of? >> a quick semantic point. the way from which we separate people from their meanings, that is why we are called the ways and means committee. [laughter] the international one -- whatever we think about what we have done, we have done a better job than most of the rest of the

world on the international side. one of the dangers is the business community -- and going back to our family analogy -- the business and financial community has come to some extent, adopted the mode -- adopted the mood of the teenage parent -- the teenage child against most parents. daddy. mommy off "england let me do it." [laughter] we have to talk to each other about this. here is why i do think -- if you have been to a national airport legally there is a racist quote from carter glass and he was in the constitutional assembly, explaining why it is terribly important not to use the -- not to let those "black people" -- i don't think that's the word he used -- don't let them vote.

we are going to use these regulators to do with the problems we don't know about yet. he have a margin for this, risk retention there. i believe we have given the regulators the broad powers that are going to make it work. on the other hand. -- on the other hand, i don't think it is going to be all that relevant. then again, neither will i. >> i would like to exercise my prerogative and thank my fellow panelists. [applause] >> this could have been something completely different but it was fascinating. >> what does that mean? [laughter]

>> generally in the television business, the viewer clicks the channel between financial and reform. what is interesting about this from my perspective is this is not something ordinary people had to listen or think about five or six years ago. now what happens to the banks and bank regulation is a matter of public policy debates. >> some of our former colleagues will probably want some record of you telling me when we could talk. [laughter] >> what you don't know, can't hurt you. >> exactly. >> thank you very much, folks. [applause] [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute]

>> the obama administration now said gene sperling lance to leave in january. he will be replaced by jeffrey zients. zients is a management consultant. he joined the white house in 2009, heading efforts to streamline government and cut costs. on the next "washington journal" former cia operative michael hurley will discuss u.s. arrest from al qaeda related terrorist groups. followed by a discussion on

immigration policy. university areon faster talks about people in washington who moved between careers and business consulting, politics, and government. "washington journal" live every morning at 7 a.m. eastern on c- span. let me focus on something called advanced persistent threat. it relates to what i was talking about. that are footprints indications that something is going to occur. one of the reasons that changes need to be made in the cybersecurity posture is that it continues to be looked at in the consecutive order. we need to move to continuous monitoring. we need to move to a continually -- continuous look at the precursor contact that is being

set for an attack. we know what those are. towhether we are going defeat its to cyber -- defeat a cyber enemy by having the avid bytor check the combine -- having the private sector check the compliance box, we have done everything they have asked us to do. has to be timely and continual information sharing. particularly the dhs and onto the state and locals and the private sector. the federal government relies on the private sector to function. >> this weekend on c-span, the sun home and security committee -- the senate homeland security committee. saturday night at 11 p.m., book

tv on c-span 2. on c-span 3, american history tv beginning at 11 a.m. and throughout the day. president obama had a meeting at the white house. after the meeting, they spoke with reporters about the syrian condos and other issues for about 10 minutes. it is a great pleasure to kuwait our friends from to the oval office. kuwait is one of the most important parts of the region.

we are working together on a whole range of economic and social and security issues. speaking]r >> we have the opportunity to discuss a wide range of issues. [translator speaking] >> at the top of the list was what is going on in syria. the use of chemical weapons in syria is a criminal act. it is important for the international communities to respond and not only detouring -- detering the use of chemical

weapons, but getting them outside of syria. [translator speaking] i shared with the emir my hope that the negotiations currently taking place between secretary of state kerry and the foreign minister in geneva fair truitt. -- bear fruit.

[interpreter speaking arabic\] but i repeated what i said publicly, which is that any agreement needs to be verifiable and enforceable. [interpreter speaking arabic] >> and we agreed that ultimately what's needed for the underlying conflict is a political settlement that allows ordinary syrians to get back to their homes and rebuild and to relieve the enormous suffering that's taking place. [interpreter speaking arabic\]

and i want to express our appreciation to the kuwaiti people for the support of the syrian refugees. [translator speaking] we also had an opportunity to discuss other regional issues, for example our continued efforts to to facilitate negotiations between the israelis and the palestinians and arrive at a peace deal in that part of the world. [interpreter speaking arabic] we appreciated the emir's wisdom in engaging with the

government of iraq in helping to improve and create peaceful relations between kuwait and iraq. [translator speaking] and we also discussed ways that we can improve the economic process for people in the region in countries like yemen, for example, that are experiencing great challenges. [translator speaking] so we appreciate the strength and leadership of kuwait and its friendship, and we are looking forward to extensive cooperation in the future.

[interpreter speaking arabic] >> i would like to thank president obama. i am happy for the constructive

discussion between myself and president obama which included topics related to our bilateral negotiations where we will use determination to achieve what is the best for the mutual interest [speakingth countries. arabic] we also discussed the continued detention of the two kuwaiti detainees in guantanamo and asked president obama to speed up the process of releasing them in

line with closing down guantanamo. [speaking arabic] we also stress our satisfaction with the positive developments related to the kuwaiti-iraq relations. we also discussed the subject of the security of the gulf region, and our combined efforts to achieve security, stability, and -- in this important active region, especially given the current developments arabic]egion. [speaking

additionally, we've also discussed the suffering of the syrian people and the continuation of the on going deterioration of the situation in syria and the suffering of the refugees. also the need for a speedy solution and keep the region free from the danger of war. [speaking arabic] we also discussed the importance of achieving stability in the region.

[speaking arabic] we also discussed the peace and the importance of focusing on the effort to advance the planned negotiations to create a positive difference in this regard and to include the united states of america in the peace process. thank you. >> thank you very much, everybody. >> thanks, guys. >> thank you. >> some news about syria. secretary of state carried met with the russian counterpart

over proposals to disarm syria. secretary kerry said we both agreed to do homework and meet again in new york around the time of the un's general assembly around the 28th in order to seem as possible to find a date for a conference which will depend on the capacity to have success of the subject of chemical weapons. russian foreign minister commented, "now that the assad government joined the convention we have to engage our professionals together with the chemical weapons prohibition organization is agree with united nations to design a road which will make short that this issue is resolved quickly, professionally, and practically." >> american history tv will be live from birmingham, alabama. the 50thmark anniversary of the 16th street baptist church bombing. african-american

girls and injured more than 20 other people. here's a brief reflection from september 15, 1963. >> we were in church that sunday. and all of a sudden, the pastor note. at the pulpit. he was preaching. us, our sister have beenre relatives bond. -- bombed and did i know how bad it was. it was just a shock. he said, please, do not rush out. it was the first time we had seen it. it had to be bad. father took us home because we do not know if the

next church was going to be bombed or whatever. out, i out back -- thought that. one was cynthia. and i had seen her on friday. i remember so well. she was always very kind to me because i was younger than the other classmates. she was always very nice to me. i was 12 and she was 14. freeman, o god, we said goodbye. it seems that it was she who said see you on monday. see you on monday. and i knew she went to that church. she was one of them.

when one of the girls had been given a ring that morning by her father and they were not able to find it. everybody knew that hand with that rank. we had nightmares. for years. it was light war. -- like war. it was just awful. on c-spann history tv three. live coverage from birmingham, alabama starting at 11:00 a.m. eastern time. >> a look at stand your ground loss which have been acted in more than 25 states across the country. it is part of public hearings.

hosted by the american bar association in san francisco. his 2.5 hours. >> i am the chair of the coalition of racial and ethnic justice. michael hyman and i am from chicago. the coalition works with aba and non-aba groups on social justice issues involving equality, inclusion, and tolerance. our major effort was facilitation of the task force on "stand your ground" laws. the task force came about because we felt it necessary to look deeply at the effects of stand your ground laws across the nations following the national conversation under merits and under consequences.

i want to thank the dedicated co-chairs, leeann buchanan and jack middleton, for their leadership. leeann is often sending e-mails at 3:30 or 4:30 in the morning. i wish to thank rachel patrick, our executive director, i want to thank you on your conscious and your work behalf of the coalition. this is the fourth public hearing. we have had successful hearings in dallas, philadelphia, and chicago. the hearings have solicited voices from all sides to ensure the critical examination of perspectives without regard to political ideology. ultimately, it will be the citizens of the state that have

various versions of stand your ground laws, to decide the fate of their own stand your ground law. it is my hope that the task force reports will be a catalyst for a reasonable discussion of the issues and be able to make reasoned decision making. before we begin we have the honor of having the president of the american bar association, a mentor of mine, laura belos, with us. i would ask you to step forward and welcome everyone. [applause]

>> now that the important things are over, this is quite a serious event, as you all know. the aba and our country have a responsibility to scrutinize any law with life or death consequences. this is such a law. thank you judge michael hyman, not just because i can root for chicago and say we are there, and again rachel patrick for leading this from the inside to make certain that we are including the right to people -- that means everyone -- into this discussion. and jack buchanan and leeann for being cochairs for the stand your ground task force.

as judge hyman has just told you, the aba has no policy on stand your ground laws. that is exactly the point of these hearings, to hear from the community. we want to examine the impact of stand your ground laws on public safety. we need to talk about the impact of stand your ground laws on criminal justice systems. and what the impact is? these are not easy questions but we have brought the experts to the table from all over the country over the last year. we will be issuing a report in 2014. meanwhile, the task force is expected to look at the terrible violence that we have seen in newtown, connecticut, aurora, colorado.

this stand your ground examination also gives us a chance to have a national conversation about gun violence. we know that three people are killed every hour by a gun. several people are injured every hour by a gun in this country. it is time for us to look at stand your ground laws, it is time for us to have a national conversation. this isn't an issue to be talked about only by lawyers. this is not an issue to be talked about only by our legislators and congressional representatives. this is a community, national, opinion leader conversation and a conversation that has to take place within our community. that is why this is so exciting. on an upbeat note, we have jumped into this conversation with all the aba could muster and all the experts we could bring to the table. we hope to have a resolution to a problem that is touching every person in this country as of this minute. thank you, again, to the task force and a particular thank you to jack middleton and leeann

buchanan for leading this task force. i look for to hearing the results of this hearing and reading your report in the near future. thank you all. [applause] >> this is leeann buchanan. this is the fabulous co-chair. she is not afraid to take on the tough issue. not many people are willing to jump in an issue that we know is controversial. those are the issues that the aba is more powerful to bring a voice and on. leeann is upfront. i congratulate you. go for it. >> thank you. welcome, everybody, to the

western regional hearing of the aba national task force on standard ground laws. as you heard, my name is leeann buchanan and i am cochair of the task force. first of all, i would like to thank all of you present here today. your presence demonstrates that you are committed to addressing and participating in the dialogue of a very important issue. indeed it was just last month that president barack obama and attorney general eric holder called for more attention and scrutiny and analysis and assessment to be paid to the stand your ground laws in many states across the united states. until recently, little to no attention has been paid to stand your ground laws. these laws are self-defense laws, which expand the parameters of self-defense and protections that can be used when one uses deadly force against another. these laws exist on the books in over 25 states across the united states of america.

the indeed have in -- have ignited a national debate and forced individual communities, scholars, policymakers, and even the aba to grapple with many very important questions. questions such as, whether the policy concerns which underskirt the enactment of stand your ground laws were justified -- underscore the enactment of stand your ground laws were justified? whether they strike a balance between public safety and individual liberty? what impact, if any, do stand your ground laws have on the criminal justice system? have we lost, or altered, you know perceptions using force? do stand your ground laws and courage or his courage violence? do they make communities safer? these are very important questions and issues that the aba coalition on racial ethnic justice and the entity that

forced -- that formed the task force thought the aba should look into by holding public hearings and embarking on a national comprehensive study of the impact of these laws. you will hear testimony from a variety of experts and stakeholders, community leaders who will offer their perspective. before i turn to the speakers i would like to acknowledge the task force members and members of the advisory committee who are present today. i would like to acknowledge joshua harris, who is an attorney from philadelphia. our task force reporter, a professor of law at saint jonsson university in florida. my cochair, jack middleton. and i would like to thank rachel patrick. she is the staff director of the coalition and she is putting

countless hours in time and energy in making this project a success. i hope that you enjoy the testimony here today. i hope the questions and issues raised by her speakers causey -- by our speakers cause you to think more about the loss. i would like to introduce our keynote speaker, edith patterson. she is a civil rights attorney and cofounder and president of the equal justice society. she is a leader of a national strategy group that focuses on reclaiming the 14th amendment and its constitutional safeguard against discrimination. she previously served as the executive director of a lawyer' committee of civil rights. she was part of a rod coalition that -- a broad coalition that faced gender discrimination. i am very pleased to present you

this patterson. -- eva patterson. [applause] >> good morning, how is everyone doing? welcome to san francisco. the weather will clear up by afternoon. don't worry. i'd like to say thank you to president bellows, to justice hyman, to the other presenters who are first rate people who know a lot of things about the law and justice and the like. i think it's fair to say that the reason we are here today, because of the murder of trayvon benjamin martin -- that was very disturbing for many reasons. it raised the issue of the great racial divide in this country. it has highlighted the notion of standard ground laws. many people wrongfully say that's dan your ground was not an issue in the murder trial -- wrongfully say that stand your ground was not an issue in the murder trial.

the judge did mention it in the jury destructions -- jury instructions. if you listen to the reporting, some of the jurors said stand your ground did enter their mind in terms of whether or not to determine if mr. zimmerman was guilty or not. you should get a raise -- usually get a raise for commenting on cnn. he helped me a lot on his presentation. my summer intern did a lot of work for me as well. i want to acknowledge their help. stand your ground laws were first passed in florida in 2005,

i was listening to msnbc. there was a man in a trailer during hurricane isaac and he shot an intruder. it took months to determine whether or not to prosecute him. this single incident led to the passage of standard ground laws in florida. they are now apparently in 30 states. there are over seven states were they are pending but after the murder of trayvon martin everything came to a screeching halt on the advancement of these misguided laws. i hope that will give the aba some firepower in terms of stopping these laws and the subsequent acquittal of george zimmerman as people think twice about this. these laws make legitimate the use of deadly force if you feel threatened in a place that one has a right to be. i think the important term for what i am going to talk about and the important phrase that i include a focus on later is "if you feel threatened." instead of having a duty to retreat from a dangerous situation, a person is justified

in using deadly force when he was she recently -- he or she believes they should do so to prevent bodily harm. there are lots of problems with this type of law. there are people more in tuned with law enforcement to give more protects -- give more context to the problem. here are a few of the problems. it encourages vigilante law. george zimmerman was the judge, jury, and executioner of trayvon martin. and the stand your ground laws allowed that to happen. i was listening to msnbc this morning and apparently there was another incident where there were is a bunch of people -- where there was a bunch of people who threaten someone with a stick. most of the people left and one person stayed and ended up shooting and killing the threatening person did he will

not be prosecuted for murder. one of the critical problems of the stand your ground law is before, that person would have had the impetus to leave. he could have safely got away. stand your ground laws allow people to stand, shoot, murder without consequences. another problem with the laws is the apparently do not have a mature affect. a study was done by texas a&m that found that standard ground states murders and manslaughter is actually increase i seven percent to nine percent. it doesn't deter crime at all. it actually results in more crime. another problem is that self- defense laws were adequate before the passage of the stand your ground statute. you are able to use lethal force in self-defense if you felt pinned down or cornered but you had the obligation to leave if you could leave safely.

and if you could retreat that if you could retreat from easily us capable situations. it now allows people to stand, fire, shoot, murder, and be out on the street with no consequences. another problem with the stand your ground laws is in some states it immunizes you from civil litigation. apparently in kentucky and other states, if you say you are standing your ground you cannot go after the perpetrator of the crime or the murder. people said that there is a lot of controversy around the case. one person speculates the reason they did not use it as a defense was that zimmerman would have gone on the stage and stand and explain what he did. even though he did not use it as a defense, the judge gave it credence in the jury instructions. what i really want to spend time on -- there are going to be two amazing speakers later today who

are going to go into more detail in this. john and jennifer who are incredible scholars in the areas of racial bias, unconscious racism, and the like. i want to talk about racial bias and the impact that the stand your ground laws had. what i want to do is commend the aba and this task force. one of the things you're looking at specifically -- explicitly is the impact of standard ground laws on communities of color. i am not a criminal lawyer, i am a civil lawyer. all of us were riveted on the trayvon martin case. we were heartbroken and angry and upset and the implication and connections and racial impact is why we are here today. when i come to speak at events like this, i feel very privilege because i feel like i get to be in rooms where a lot of my community are not. i get to tell you things you're probably not going to get here--

hear in polite conversation. as i was thinking about this today, that is what i really want to do, touch your hearts and minds and activate you all in your continued effort to do something about the standard ground laws. a researcher, who is a senior fellow at the justice policy center at the urban institute, released a report last july. here are the statistics on stand your ground states. as i was rehearsing my remarks to myself to make sure i did not run over time, i found myself pounding on my desk with anger. you will understand why. in homicides where the shooter is white and the victim is black, it is found to be justified in 17% of the cases. white shooter, black victim, justified in 17%.

black shooter, white victim, justified homicide 1.4%. in non-stand your ground states, white shooter/black victim, it is justified only by nine percent. where stand your ground laws, 70% justified. nonstandard ground states, only nine percent. here is the other statistic that had me very angry. this is fbi data that was provided by paul henderson. when an older white man kills a younger black man, it is deemed to be justified 49%.

but if an older black man kills a younger white man, it is seen justifiable nine percent of the time. it is not black people feeling sensitive and victimized as we often hear in these debates. i don't feel like a victim. i'm talking to lawyers and judges. these statistics are galling and troubling and why probably most of your black friends and people who care about black people were so devastated after the trayvon martin situation. basically we felt like the government verdict gave a license to kill black people. i wrote a piece about how i had been with a bunch of my black friends in a reading group and we heard the verdict. i was upset that i felt very safe. i came back down to the greater society, looked at a bunch of folks and said today not feel like they can shoot me and they are going to get away with it? if i am a young black man or an older black man, i'm going to feel that more poignantly. why is this happened?

the two scholars i referenced -- a lot of this has to do with how black people are perceived. there is science that is out there that says if you look at my face -- the association you have is with criminality or aggression. apparently if you are walking down the street as a black person, people who look up to you will associate you with that of an ape. this is verifiable. the part of your brain, i'm going to go a little bit over, the part of your brain that lights up when you see a snake or spider is the same part of your brain of lights up when you see a black person. jesse jackson sid when someone hears footsteps behind him and

there are black kids, he is the he is nervous. this is not about you white devils. this has the association we have enough brains with black faces, black men, and the like. it is research that shows that not just -- it doesn't just happen with -- that black people. veronica, john, and i were in a conference in chicago in april. our friend showed very disturbing video where police are looking at a simulation of a person who is threatened. the person has a stick and the police officers tell the person to stop. when the person is white police officers is talk talk talk. when the person is black, the police officers unload their guns into the person.

this is like stand your ground laws. if you are allowed to use deadly force when you feel threatened, and when most feel that when most people feel threatened by a black person showing up, then stand your ground laws are going to result in the loss of black life. how many of the black men in this room feel like they have been stopped for no good reason by police or other people or profiled in stores? is there any black men who does not feel that has happened to them? these are some of the most distinguished black people you're going to find. imagine how young boy in a hoodie is going to be treated. this information is what has me pounding my hand in anger on the table. in florida, less than 30% of the victims of justified homicide were armed.

less than 30% of the victims of justified homicide were armed. less than 26% of the victims were committing a crime that led to the confrontation. in more than 63% of these cases it was deemed an indisputable opportunity for the attacker to retreat. despite these facts the homicide was still justified according to the law. those statistics were born out of a horrible reality with the murder of trayvon martin in the stand your ground laws have that effect. once again, on msnbc and other incident happened in florida. many of us felt that this legalizes a form of lynching against black people. i want to return where i started. it is so important and we are grateful that the aba is taking this on. i feel like we are not out here by ourselves as black folks. there is a larger issue. and that is the judicial system

and legal system that black don't have. the pew study, which i am sure you have heard, says that only 30% of white people were dissatisfied with the zimmerman verdict. 86% of black people were dissatisfied. we are often told we live in two different americas and that statistics, though statistics bear that out. to just go to another level of this affiliation and bad feelings black people have of the justice system -- two days after the state came down texas rushed to pass more restrictive voting rights laws. we know the supreme court basically sanctioned moves that will keep us from voting. the aba, in part, is to give people confidence in the legal system.

we don't have confidence in the legal system. we feel that stand your ground laws were used against us, george zimmerman is free, but alexander, who fired a gun in the air because she was being beaten got 20 years. they were also prosecuted by the same person. as we move forward and out talking to the civil rights commission, you need to be very strategic about what states you go after. it is clear after the trayvon martin case people's continents have been changed -- people's consciences have been changed. we have a formidable enemy on this ground on the national rifle association. we saw very little happened after the sandy hook because the nra is relentless. we hope the aba is as well. one bright light is the fact that many artists are using it to perform in florida -- are refusing to perform in florida

until the stand your ground laws are revised. young people actually started the whole heightened consciences of trayvon martin. somebody sent via an e-mail about it and i thought, ok, i know a lot of this goes on. young people understood this was a problem and they mobilized and got people going. thank you for having me here. i didn't curse or cry like i thought i might when i was repairing. -- preparing. i am not an expert in this but i am an expert in being black. thank you very much. [applause] >> eva, thank you kindly for your presentation. we appreciate you highlighting the important consideration that the task force has taken to when looking at the standard ground laws. as you mentioned, am

for not mentioning the president. i would like to acknowledge and thank him for being here. the commissioner is leading the u.s. commission on civil rights efforts to investigating the potential impact of stand your ground laws on racial and ethnic minorities. our next speaker is the president of the national bar association, which is the largest organization of african- american attorneys. patricia is a former staff attorney for the u.s. security exchange commission and also the current general counsel for american general is 30 -- american general authority. i am really looking to oversee debt to hearing from her now. -- i am really looking to hearing from her now. [applause]

>> good morning. >> thank you. ms. patterson, she described and told a lot about the facts that i was going to testify on the and now i am going to offer my testimony to really let you know how the national bar feels about the standard ground laws. in case you don't know, the national bar celebrated its 88th anniversary. among many of our missions, we primarily have an administration of justice as a protection of civil rights of all citizens. we are very very disturbed by the standard ground laws. as you know there have been many

people who have been killed and the killers used the free stand your ground defense. it wasn't until the trayvon martin case that your loss came to national attention. -- these laws came to national attention. we view these laws as a license to kill. mainly because the reason to establish the law is totally subjective. meaning if a person feels threatened -- how do you quantify that? if you feel threatened you can just kill someone and say you feel threatened?

during the trayvon martin case, there wasn't a stand your ground defense but instructions were given and the tree testified -- and the jury testified and made statements afterwards paid -- afterwards. it is interesting no one talked about trayvon martin's right to stand his ground. george zimmerman followed him and did all these things and then he was attacked or somebody got into an altercation. if you were walking around and someone was following you and then approached you, maybe you may want to defend yourself. it never has been considered that trayvon martin has had a right to stand his ground. these laws legally allow -- kind of like a bully law. "you are going to hurt me so i am going to kill you.

so that is totally wrong. so that is totally wrong. we believe the stand your ground laws have to be repealed and amended if they are allowed to stand. there are no problems with the self-defense laws every jurisdiction has. the obligation to retreat is now what is the problem. you don't have an obligation to retreat. you can be like the superhero -- provoke someone, get them to engage, and say you are afraid for your life so you will shoot them. it is much worse than the lynching that happened earlier in our history.

now it can be openly done, more than likely, when it is racially mixed between victim and aggressor, if the aggressor is white and the victim is black, they are more than likely going to have a justified killing. not true on the other side. we believe the civil rights of all people are adversely affected on the stand your ground laws. we will do everything that we can to have -- to help, command, or repeal these laws and have equal justice. this is a very fortunate thing for all of us. that's very important thing for all of us. -- this is very important for

all of us. we are singled out as black people. once we are allowed this type of racial profiling and discrimination to occur against black people, it is just a matter of time that it is going to start affecting other people. we have to protect all people. these laws are the exact opposite of giving an allowance to civil liberties. the national bar association stands with you. we applaud your efforts in having these hearings and addressing what policies may come out of the hearings. thank you very much. [applause] >> thank you. the next speaker is yolanda jackson, who is the adversity director of the bar association of san francisco. ms. jackson is a seasoned litigator, mediator, arbitrator, trainer, and facilitator.

she has also served on the board in various legal and professional organizations throughout the court tree -- throughout the country. >> thank you for coming out so early for dealing with such a complicated and important topic. i am proud to be here on behalf of the bar association of separate cisco, which is 141 years old -- of san francisco, which is 141 years old. we have always been involved in controversial issues that are important to preserve equal justice, equality, and diversity, not only in the legal profession but in society more broadly. that is why we are here today, to be a part of this hearing. i would like to think the aba coalition on racial and ethnic justice. just by the nature of its name, they are a group that focuses on race and ethnic justice. thank you for being brave enough

to have this conversation on a national level in front of a mixed crowd and a lot of thought leaders. my remarks will focus on four things. the first being race. we must recognize that is a huge factor in these discussions that we are having. the second will be on the unequal application of the laws that exist throughout the country. the third will be to make a very strong statement that we need to study this problem and not shy away from it. and the fourth is that we need to solve the problem. those will be the framework -- that will be the framework for my comments. as you have heard a little bit about, the united states has historically had a duty to retreat. that includes a person facing an

immediate danger. what stand your ground laws did was revoked that rudy to retreat that duty to retreat. in many states standard ground laws offer immunity from prosecution and in fact a person can avoid trial altogether under stand your ground laws. the law states no arrests can be made unless it is proven that force was unnecessary. talk about having to prove a negative. there are 26 states that have either stand your ground laws or doctrines. since the trayvon martin case, as the one that sparked this discussion and the need for this discussion, i think it is important to note that they were

the first state to have standard ground laws back in 2005. the impact of these laws has been to send a message to our society that in our communities someone who is armed potentially has the right to use firearms even if there is a way to exit from the situation. setting a more relaxed standard of self-defense encourages or-- poor judgment and even vigilantes him. -- even vigilanteism. as eva mentioned, it is important to look at the notion of what is needed to feel threatened when you are analyzing these laws. i think it is also equally important to look at where these stand your ground laws apply. it used to be ok that if you protected yourself with force,

if you were in your home or in your car in your space. now these laws have allowed people to respond in deadly force and reaction by taking it to the street. that is where we are seeing a lot of our problems. in 2010, 5 years after the first stand your ground laws were --acted in florida, is to file justifiable homicide by civilians using firearms doubled in states that have stand your ground laws. whereas justifiable homicides remained the same in states without these laws. the top law enforcement officers of this country, attorney jerry attorney general eric holder stated, -- by allowing and

encouraging violent situations to escalate in public. such laws undermine public safety. president barack obama said it best. it is time to see and encourage the types of altercations and tragedies -- and discursive types of altercations and tragedies we saw in the trayvon martin case. -- discourage the type of altercations and tragedies we saw on the trayvon martin case. we recognize that many of the problems with standard ground laws -- stand your ground laws are in how they apply. what actions can we take? although this is not a practical problem, our recommendations are very practical. first, we need to study the problem. state-by-state, we need to consider whether certain laws need to be repealed or modified and amended. review the impact along racial lines, study the problem.

look at various levels where the prosecution has applied equally across racial lines or whether they have a disperate impact on african-americans or other racial minority groups. this includes reviewing anecdotal outcomes such as the case that eva referenced. reviewing the impact of these laws on whether or not they increase homicide, and you can call them justifiable homicides if you like. look at the impact they have had on killing. mandate the gathering of data in order to assess whether these laws have had an increase on justifiable homicide. conduct a national investigation, have the department of justice or other appropriate u.s. commissions, such as the commission on civil

rights. thank you for taking a leadership role on that. i am very happy that mike rented out to me before we started our panel this morning that they believe they will be effective because they have subpoena power and they can get the information that they need in order to make the right decisions. where appropriately modifying stand your ground laws restrict or prohibit. in wisconsin, it does not extend to public spaces. possible modifications would severely restrict or prohibit where individuals have the right to defend themselves. finally, where appropriate, repeal standard ground laws in those states where it is found that stand your ground laws led to an increase in homicide or where the application of the laws across racial lines exists.

thank you very much for inviting us to speak this morning. i hope we can get to the core of where the issues are and start to solve the problem. thank you very much. [applause] >> thank you for highlighting this very comprehensive plan of action. we will take your comments and suggestions into consideration. our next speaker is judge arthur burnett. he is the national executive director of the national african-american drug policy coalition. he is the former judge of the district of columbia's superior court and also a former adjunct professor of law at catholic university and howard university. >> good morning. i come before you this morning after 55 years as a lawyer at the bench -- 55 years as a lawyer, four of them at the

bench. -- 40 of them at the bench. i have a disclosure to make. as a busboy at howard johnson's restaurant, i was suspected of being a burglar, a kenyan at 11:00 at night when i was a bus boy -- breaking in at 11:00 at night when i was a bus boy. the officers took me to the home of the owner first. he said i was the best employee he had. if i had been belligerent or reacted in an oppositional matter i may not be here today talking to you.

i was placid, compliant and i lived to see in other day. -- see another day. the story is told in a book. my second story is a scavenger hunt at a fraternity at howard university. i was on a scavenger hunt at 1:00 in the morning. a friend borrowed a car from his father's garage. they would not take black boys words, even college students, that we were pledge ease -- were pledgees. we were released from police custody until 4:00 in the morning. i tell that story when i talk across the country. to youngsters not being oppositional or defiant and

belligerent. we collaborated with police authority. i was the first general counsel to put a lid back on washington following the assassination of martin luther king. i hope i am not biased because of my own practical experiences, but i tell you that i ended up in the justice department on the honors program. i ended up being advisor to barbara kennedy and monitor the martin luther king movement. to make sure it was not sabotaged. i try to teach young black boys about how to react to police authority across this country. for 10 years, more than 10 years, i served as a prosecutor for the u.s. attorney's office and justice department. at age 34 i became the first african-american united states

magistrate judge. i look back and say how many young lack boys died -- young black boys died who could have had a young -- could've have had a promising career? after 10 or 11 years on the superior court i was persuaded to retire to become the judge in resident. i then went on to find the national african-american drug policy coalition, to create a conglomerate of latin american organizations -- of black american organizations working together in unison. we are 25 organizations strong,

representing over one million professionals to deal with substance abuse in america and criminal justice reform.

please stand by.

in large organizations, anybody that is at a senior level in a large organization, the difficult thing is breaking through the cultural barrier. the first thing to do is understand what you do, your special sauce. i am studying this historic example to make sure that i gauge where this organization is at today and where it will need to be 10 years down the road. we were at roughly 6000 people in the early 90s. jim broke it into three centers.

analysis, collection, and support. we are about four times that size and it is what it is. we are about two thirds more countries in the world today. certainly, stability and doing the intelligent thing. we have to come to grips with that growth and the operational environment. and if you look back in that era of the 90s, the results of desert shield, this is coming out of a decade more that we are still in. we are a nation made more secure at becoming a fully integrated intelligence community. the key word is integrated. it is not a natural act. people want to own stock and control things. we have enormous potential of using technology and that is why i am such a fan of eyesight. we have to use our technology to provide global leadership and virtually collaborate because we can't have ownership of everything. that is the evolution of where we are today. i think as we talk about integration, this is a journey. future directors are going to look at it. i have every intent to do this and i will be hated with effigies out there. i don't even like this word, but i want to instantiate this idea of integration so it is ard to reverse it. that is where i am at.

that's a personal mission of mine. and this is not about d.i.a. this is about the national security of our country. i have a responsibility to make sure this organization fits that model. > how is it going? >> it's going fine. [laughter] how many people in here are from d.i.a.? [laughter] you know, hopefully -- everybody tells me d.i.a. is going fine. yes, sir, it's going great. you was a young person, get asked this question when you're a young person. what is more important, the mission or the people? the answer is the mission. that doesn't mean you don't take care of your people.

now that, doesn't mean you don't take care of your people. if they love their mission, they will love what they do. >> you mentioned syria a minute ago. the recent russian proposal and the possibility of a diplomatic settlement with respect to chemical weapons, if those weapons are given up, what is your role in this process? >> our role has been intense. it has been continuous. it has been from the beginning. the experience that dia employees and intelligence officers have, we have over 6000 civilians that have served

in a combat environment in the last decade. those that served in iraq and focused on the al qaeda crowd, certainly focused on the middle east military and the kind of capability that they have their, they are worth their weight in gold right now. we are deeply involved, but as a member of the community. we are supporting central command, european command, frica command. certainly cybercommand. and we are also supporting military planning that is going on at every level including the joint staff. in terms of the policy side, we are deeply involved.

we have provided what i would call the nation's expert on chemical warfare to the state department. today, they are helping the secretary negotiate that issue. and they were called on a dime, and the individual that i'm thinking about in this case was absolutely, are you kidding me? he jumped right into it. >> it's intimate -- that's not a word you will hear a lot with it buts the -- me, but it's is an intimate relationship with the customers that we have. they want to believe in what you provide. >> a follow-up on that

question. how confident are you that we will be successful getting those weapons out in e -- out? >> i don't have a level of confidence to get through this first iteration. as i stated in my remarks, it is an interesting foray that we are finding our way through. i would say that i am encouraged as a military person, that we did not have to apply military force. asked a few of our folks. about our own chemical system

we're pretty accountable. but how long did it take us to get rid of everything. those that have been out to the dead great proving ground, i have been out there. it took us about seven years. it will take a while. i hope there is clear and coolheaded longview thinking and decision-making done. i am not confident it is going to happen overnight. >> thank you, general. let me read some of the questions from our audience. >> how does the administration's pivot to the far east affect intelligence priorities? lou we plan to future change selection? >> everybody asks that question because you feel the sucking sound in the central region of the world.

middle east, central asia, east africa. and yet, we want to have this pivot toward the pacific. t will challenge us and i will tell you, without getting into classified information, if you were to look at what the president has directed the intelligence community to do, and he does that fairly routinely, where are the majority of those resources prioritized? i think you would gain a better understanding of what the usic has done to achieve the stated objective of the white house. of the president. i think we are actually in pretty good shape. we're not where we need to be,

and we're still transitioning from afghanistan, and with that will be some other decisions that are going to have to be made with allocation to resources. but i am confident that we have the right set of resources right now. it is in our national security strategy and military strategy. documents worth reading talking about partnership. i spent a month or so with 29 ations in indonesia. they were all my counterparts, directors of military intelligence for 29 nations around the world. mostly in the asia-pacific theater to focus on that theater. countries from south america showed up for the first time. partly why is the economic

reason. secretary carter talks about the pivot not about the military. an economic and diplomatic djustment. 90% of the worlds resources are projected to be passing through the pacific around the timeframe of 2030. whether or not that is exactly precise, i don't know. >> another question from our colleagues. could you speak to the level of integration between eyesight and the joint information environment? >> i think my chief technology officer and chief innovation officer, if you know him, just incredibly talented

individuals. talk about giving them the long rope to get out there and move this thing along. orion is not a tool or a database. it is the defense intelligence agencies and termination strategy -- information strategy to implement eyesight. when you hear the term or the acronym orion, it is an implementation strategy. for those that don't know, we ave, on a scale of a platform, 230,000 users around the world.

on "jay-wick." there weren't that many five years ago. it is very secure, a good ystem. and why we are doing the milestone test right now, it will be the platform. sort of the desk top that we will use. he integration piece, we are sort of beyond this good idea discussion. we are deep into breaking down cultural barriers, echnological barriers, and certainly agency barriers. i think we will be moving in the right direction. y the end of this calendar year, we will have some very positive results.

2500 people in the process of running this test right now. i am very positive about it. if it were to re-create itself today, we would not create ourselves in the image that we are today. we would not create things like cwe, jnet, fbinet. if you try to do a control on some of these names, forget bout it. on u tried do a control-k any of these names, forget about it. you can't find them. we would have created one system where we can all communicate. and this is the challenge for guys in our category, the advent of technology. facebook did not get on the scene until february of 2005. like tom says in his book.

linkedin was a prison cell. i mean, there's these things throughout today that we just didn't have. the information environment is changing how we do verything. and we don't have the resources to do everything. we have to do things really precisely. it is important to understand where we were last century. and where we are now. i talked to terry, and i spoke to 100 cio's yesterday to talk about what we are doing. the last-century warfare was really defined by firing maneuvers. big things, we would drop lots of bombs and kill lots of people. we tried for information, but it was not as important.

this century, you're already seeing it. in regards to syria. this plan right now, it is precision and understanding. it is a huge difference. it doesn't mean there is not kinetic behavior. and kinetic activity and bombs being dropped and collateral damage. but it means that we have to be far more precise. the burden and the opportunity for the intelligence community. it is unbelievable. the level of detail -- and partly why is because the customers and on assumers we have, particularly the military out there, the commanders, they are so smart. and they came off of a

battlefield where, for the most part, it was pretty good. their expectations -- are far higher. >> relating to your outstanding answer, what is the plan to consolidate? jnet solidate jay-wick, nd others? >> ok. well, you can't just move this box out and move this box and. the discussions that you had here today, everything can connect. so tech any logically, everything can connect. we are moving toward a standards-based approach. in order to enter the stadium,

you have to purchase the ticket. the ticket comes at a price and a cost. the cost is cultural, that means sharing. the cost is fiscal. that means, you have to invest equally or certainly equally based on the size and scale of your operation. you have to be able to use the kinds of capabilities that i have sort of directed. i have made a decision a number of months ago to not move away rom going to the club. not move away from the d.o.d. system. we're going to the club, right? and we'll probably end up with both of them. i mean, off masters in telecommunications but i'm not

a technician. but we have been diving in today -- to technology. are those interns out here somewhere? their generation -- i face time with my grandson who is for. who is four. he is manipulating an iphone. he knows how to turn it on, switch it around to show me his sister. he is for. he is 4. i am passionate about that to a degree, but this is about being realistic for those in our system that will continue to fight. i don't do e-mail. i told that officer that it was irrelevant. i told that officer that they are that they were irrelevant.

that went over ok. [laughter] >> you will not get that answer a bit. he secretary of defense. >> talking about the terror issues, weapons of mass how ction, other things, are you monitoring all these issues? at sequest ration kicking in the next year in a significant way. >> i go to the cafeteria. honestly, gosh, personally and personally, it is unbelievable. i know the leadership that we have in these positions.

i see why people get burned out. you have to put enormous energy resources into it. and stay on it. as an agency, i made the conscious decision -- i am being a bit facetious, but to fix our alphabet soup. my middle east and africa regional enter is the focal point for d.i.a.'s mission for what's going on in syria. johnnie sawyer, who some of you may know, an extraordinary officer with a great team. we see ourselves inside of the agency. johnny is our support for the organization.

for the joint doctrine. everybody piles on at the regional center. in his case, they are a supporting organization. central command. so scotty, rod moore, when they need something from the defense agency, they can turn to one single point and say, this is what i need. and that organization is supported by the remainder of the dia. and not going out to find, based on whatever personal relationship that i might have. that is essentially taking a military application of doctrine and applying it to an 80% civilian agency. 6000 of these civilians have

gone to war. unbelievable level of experience. they feel it. what they feel is relevant, and nergized to respond. their need to respond quickly is built on that experience, and that's what i am trying to tap into. name a place around the world and i can tell you a little bit bout it. what's going on. you may not see it. but trust me -- it is -- i mean, arab spring? summer, winter, fall, we are about to go to another winter. the central region of the orld, the africa region of the world, not to mention areas you

are very familiar with. uiet but delicate. these borderline ready to flare up issues. i will add this to your question because it is our new ormal. when you look at an enemy, what is their intention and their apability. if their intention the to knock you out, do they have capability to do it? that is how you judge your enemy. these days, the shift in the operational environment has done, it has kept the

capabilities and all the intentions have changed overnight. the intentions change radically now. egypt is a great example. syria, strategically, a great example. there are a lot out there. i mentioned pakistan, india, capabilities that exist. if something changes, -- what it is that you think they have an intention to do. when i was on the joint staff, one crisis was an easy day. iraq, afghanistan, we ran that one for a bit. there is not enough space in the pentagon to put these crisis task

forces. e are trying to inform the chairman and the secretary. that is the way i feel. i think you probably feel the same way. >> hearing the general and his omments the afternoon, certainly dia, giving us the ability to protect our homeland. i can't say enough about your presentation and what dia is doing. > thank you. >> watch more from this week's intelligence community summit. rogers and ruppers berger

ere on c-span. >> on the next "washington journal," former c.i.a. operative michael hurley will talk about al qaeda threats. llowed by allan gomez on immigration then george mason janine ty professor wedel. "washington journal" live at 7:00 a.m. now a review of the 2008 financial crisis and what's changed in the past five years. panelists include former represent i barney frank and former congressional budget office hosted by the american action forum, this is an hour

nd a half. >> we can get a still photo of you afterwards. e two gentlemen from my left had that opportunity. s name graces -- is that the right verb? chris' daughter's name is grace. the then serving from house ways and means committee

and specifically with vice chairman. to my left was a member of the fcic, a guy i've known for many years who headed the c.b.o. for many years and was john mccain's economic advisor and was also on the council of economic advisors. and just a guy who for some reason when he calls me up to do these things, i just say yes. >> well what c.b.o. means. >> do you have a funny -- >> no. congressional budget office and barney and i have one thing in common if nothing else. we were frustrated over and over again by the congressional budget office on our plans. based upon what we thought they cost and what they told us.

given the statutory power of cost. >> and never raised enough revenue. >> no, we knew that. [laughter] >> they just didn't say yes. [laughter] >> i, for the record, loved working for these two gentlemen, but i was also 6'4" and had a full head of hear you're. >> so let's begin. we're five years after the collapse of leemire goldwire, and i like to say -- of olympian brothers, and i like to say that there were a lot of important numbers from the financial crisis. there's the 16 trillion in lost wealth and the millions of americans that are unemployed but the most important number to me is around 30, and the reason i say 30 is because it's the number of years it took friedman and schwarts after the great depression to figure out what happened. so these are still early days

in my opinion. everybody looking at this. we're still beginning to understand what happened and why a housing collapse became what is known now as the great recession. >> i want to start before we get to the two former congressmen, doug, what's your state of understanding here? have we relied -- they are polar opposite ideas which is the government caused it all through their houdsing policy, or wall street caused it all through their greed and then there's another that says it was all these things. so give us a sense in understanding what happened. >> well, the two versions you stated are wrong. they are too simplistic. i think we do now appreciate some of the things that were central.

first, it wasn't just a housing story. it was a broad credit problem. number two, it was characterized by instances of underregulation, and also overregulation. it isn't a simple story there on the policy front. and the one i think that's the least appreciatedsits global caveraget >> too much of the discussion in the u.s. is not just what happened in the u.s. but we had large institutions fail and beyond a french firm that got in trouble with liquidity. and those occurred in a whole variety of regimes, and i think it would be very useful to go back and look at the global characterize. >> it's a crisis whose effects we're still feeling today.

where do you put most of the blame? >> well, i agree that those two polar opposites are wrong, and have re-read the accident by the gentlemen and one thing i actually dubbed, they talk about a number of individual things. i counted up four or five of those. they were in fact deregulation were the reasons they were there. so talking about deregulation in general doesn't get you anywhere. but think there were specific instances. i think it's economic history. the private sector knotts. and because the nature of the private secter is you don't participate unless you want to. it's voluntary. if the valuations don't have add valuation to the public,

they don't go anywhere. innovation reaches a critical mass and outstrips the pre-existing set of rules and then it's the public sector's decision to come one things that fit that. so much of what happened is antitrust, the federal reserve commission out of that. then you get the need for a finance capitalism because of the large-sized institutions. so much of the deals was the new rules for that. the rules that came out of that, the banking insurance and exchange act worked well until the 1980's. one, a lot 06 liquidity is available outside the bank then it becomes possible to do things particularly -- and what happens in the 1980's and

1990's is people have come up with ways in the industry to sort of pass the buck on the risk. where there are situations where by people think they can make some money and minimize the responsibility for the risks. it's not to tell people you can't do this or that, but tots try and re-connect risk taking with the responsibility for taking them. >> i mean give bill a chance to respond to that question when you think about the reasons for the crisis, where do you end up now? >> well, i was asked to serve on this commission, and i told them that this is a fairly political device as a place holder, and don't expect much out of it, and i think we lived up to that. but i agree. i agree with the way barney, i always used the example,

because i think people are more familiar with it, when you just say think of the 1920's and the u.s. in terms of the criminal element versus the government and the structure and you've got buttony and -- bonnie and yde crossing state lines and we had to re-think the way we had operations systems and world war i and world war ii to make sure you could actually stop these new mechanisms coming in. government can never be ahead of or outthinked. and what happened was we got caught up with a lot of clfer people, as barney said, utilizing all the new technologies and especially people's willingness to get

something for nothing and the desire to make bucks got ahead of us. ultimately its knowledge and transparency and the ability to understand so that when you legislate you don't complicate the problem, you actually provide society with tools to be able to watch what's happening and monitor and that's one of the concerns i have with the legislation that came out of the crisis. i think the stress tests are good. you can take a look at it, but over time people are going to figure out how to make whatever is currently measured by the stress tests worth less as they are doing over things, so you go back and decide how do you build a new national and stay up with technologies and the changes? but the most important thing that i am really concerned about is the failure of the international government system

to understand it was international. we were ahead of others in addressing directly and five years later a lot of the nternational relationships and compacts and agreements i think are woefully behind us to a certain extent, and therefore there are places that this could potentially break out and in kind of a different structure and not be monitorered. >> i think we want to come back to that as mentioned by. to barney, i guess the criticism bill tomas made is one you hear very often, which is, it's too complicated. it's too long. it's even too difficult to implement. they still haven't implemented the vocal rule so we're going to fast forward to what's happening now and maybe you

don't mind if starting with -- does the dodd-frank legislation make it less possible or guarantee that we will have a next crisis? >> well, never guarantee so it makes it less possible. i disagree with those who say deregulation causing the crisis. think it was non-legislation. non-regulation. but with regard to the -- bill said they are going to figure out how to get around it. i agree. that's why it's not very specific. it's long. but let me deal with length. if you look at the new deal, they dealt with bank insurance. they dealt with mutual funds and the s.e.c. we -- if you look at the totality of the legislation of the new deal that's similar, and i'll tell you why they are in one bill. you gave a number30.

i'll give the number 60 which all of us in congress understand what that means . that is what it takes to break a filibuster. [laughter] we had nine separate markups in our committee and voted on them separately and they stood alone and the senate said to us, look, it's going to be hard enough to get 60 once. there's no way we're going to get it nine times but bill said correctly, yes, if you get 60 votes, you've delegated too much. compare to the sherman act. we're a marveled precision. but the point i make is i agree with bill. they will -- if you -- it's their job to figure out new ways to knott. the more specific you are, the harder it is to maintain it.

so we thought we would deal with some specifics we thought were a problem but also to 'em power for regulators and that's why we didn't write about these things in concrete. they can be changed. but i'm disappointed. i don't think they put enough risk retention in there but at least it's regulatory and i agree with bill's point, you need to retain that ability to move in the future and we did -- there's no aspect of the financial system which some regulator does not now have the ability to deal with. >> and yes, there were whole pieces of the financial system that were -- >> we knew that there were going to be some unknown things in that redid wall power. >> go back to the 1930's and look at what money was and ways in which it was used, and today, it's completely different. >> how do you respond to the criticism that you didn't simplify the regulatory

structure? >> politics. we did get rid of the office of supervision. >> the office of consumer financials, no. we created one because no one else would do that job, but merging that with the o.c.c., that office of supervision was the one that he went to -- mine had two proposals. one was re-named it the office of dispen sation. we went with that -- >> let me -- [laughter] >> if i'm wrong, there were three of three or four agencyings that regulate banks, the fed, the o.i.c. and the -- now there are three, and there was talk during the dodd-frank lynn legislation that they would have it down to one.

>> which would be the fed. you know why we didn't do that? because people were not ready to deal with the fed and the second was it was political but not in a la -- in a legitimate sense not that anyone was making money off it. but the thought was to give power to one and the state-chartered bavepings said do not throw us in with the big r banks so that you have the o.i.c. regular thrates larger banks and the fed the smaller banthse so they said we'll take the fed's bank supervisery powers away and put it in the o.e.c. the if i had said we need to have some look-see into the actual work to be able to do monetary policy but the state-chartered banks said don't you dare throw us in there with the megabanks. e we could have merged the

s.e.c. and the -- but the problem is if we would have done that we would have seen an outbreak of the shea's rebellion. it's american cultural history. >> like the whisky rebellion? >> you could look at that, that way but shea was different. what mmodities was what you dealt with and then they come out financialized and if you tried to merger, i now found, we tried to do it at that point, everything would have blown up because in the agricultural community you would have had this oh, u going to put those sharpies frat two coats in charge of us. so the reason we didn't do more consolidation was political. >> take us to a 30,000-foot level when you look at the dodd-frankly legislation.

a major bank is having liquidity problems and it's thought they would not survive the weekend. what happens now as opposed to what happened then which was regulators gathering over the weekend on the phone to regular laretsdz in london begging other banks to take them out, the other banks refusing saying what happens when they come for me? what happens this time around? >> well, i think first, last time two things happened that were very important. the first is the initial responses were very much institutionly institutional. a.i.g., they all have problems then correctly the fed turned to running the oldest play book in banking which was pump broadly into the system. the whole goal was, let's get liquidity to anyone who needs it and collateral which is rule

number one in banking so if you're going to have a crisis and it's 2013 and it's friday and the feds seeing that not as an institutional problem but as -- they finally diagnosed a broad-based financial problem, they are going to flood the market with liquidity and that will be the biggest difference is getting there slowly rather than the crisis of 2008. about it and tten dismissed the notion that the fed bailed out its friends. it created a lot of facilities open to anybody and broadly available and were used by everybody. so that's misleading. >> just a minute. because i know the vice chairman and i'll never get another word in. >> he's got it. >> i'm learning. >> the other thing that will happen season there are automatic procedures now to get

liquidity to that institution, and if it turns out that it's not just liquidity but a solvency problem -- >> i thought the question was bogus or -- [laughter] >> yes, because there was nothing in the dodd-frank -- >> you're a politician and everything but you're insulting -- >> not anymore -- [laughter] >> you're done. >> and he was never diplomatic. >> how many votes do you have? >> i got none. i'm just trying to duck. >> the reason it is, though, it's basically after dodd frank, take us back to a scenario that's now going to occur that in fact if you do get a belly up, what happened to the transparency test? what happened to all the other things that are supposed to be in place? in health-care and post obama care, everybody is now looking at the old single pair model.

well, picking the fed as the single governor makes no sense either. but it's always going to be difficult. you have to appreciate that the hings that we did, and i think not withstanding it took two tries to get past congress in terms of the bailout money, that if that wouldn't have had it would have been a much more significant disaster at the time. but dodd-frank said you don't need that power anymore, and barney used the word "politics." and i think he and i probably agree on the definition of politics. it's who gets what, when? and how? and that's what it was in spades in terms of the power they had, the power of disillusion and where and how you can help. you couldn't have that t kinds

of interventions today unless you not only decided you could put money up but you had to go back in the way the law changed. it created a window in the law. >> there's been three substantive changes, as i understand it, to the fed and other changes that were made so that the fed could not act the same way it did. >> right. >> in order to create the broad based programs that doug talk about that were so helpful, it needs the approval of the secretary. i'm going to have a perry moment in i get all three. it cannot do individual bailouts at all so the 13-3 emergency powers no longer exist, period. the third one as i understand it is it can no longer use the economic stabilization fund which was a $50 billion pot of money that was used to bail out the money markets.

now, why was that significant? because it was really hard to find pot of money to bailout the industry. there aren't pots of money laying around in which the president can use to bail out an institution. there for the upshot of the provision fund is in order to bail out major institution today, i believe the administration or somebody must go to congress? >> no. >> no? >> doug got essentially right in the sense that we -- the fed had a power of under 13-3 of the federal reserve act signed into law by herbert hoover which people forgot that was there that said they could give money to any entity in if they deemed it expedient. that's been abolished. instead the fed can do what ug said, set up a facility

but it's got to be one anybody can apply for. and they have to. it's for cases where they beev the liquidity -- but they can only extend noun an institution they find to be solven't. so that's a very important piece of it. so u right. it's been abolished. but here is the other factor. if a large institution now cannot pay its debts or if the money markets funds, there is an alternative pot of money. that pot of money is the power of the secretary of the treasury, well, the secretary of the treasury is empowered to pay off some debts, put some none if he thinks that's necessary to prevent meltdown. but he is mandated under bill to then recover every dollar from an aacceptsment that he is

authorized to assess on financial institutions of $50 billion of assets or more with a form la that basically says to the sense that you're -- to derivatives -- >> i wanted to go to this -- this is title the ii, is that right >> and one other point, the secretary of the treasury does have to sign off and some of the financial people from harvard law school is worried the secretary of the treasury would veto that, i think that's wholly unrealistic. the good relation is inconceivable to me that the secretary of the treasury would say to the fed, oh, yes. you can't do that. >> especially if we keep getting secretary of the treasuries to the fed. >> and vice versa. >> maybe. >> a horserace for most cynical people on the panel but i agree with this. my -- they are so risk averse.

you say to them, this is going to happen and there's a .0001% chance of broad based distress, i don't think that's going to happen. they will do that. i guess the thing i worry about hen you look at the dodd-frank al legislation when you look at this, is a lot of this relies on being able to tell apart liquidity from solvensy and at he moment you can't. your a -- you're a financial institution and you're holding a bunch of bonds and if you take them at face value they are worth more than the shareholders -- so you're solven't. your net worth is positive but you can't sell them off. there's no cash out there. you're vr i will liquid. in the moments where you can't sell, you don't know what the

value is. that's problem. >> central banking doctrine for a couple hundred years is you go in and finance a liquidity fans insolvency -- >> but you can't tell them that. >> i resisted efforts to told fed to too fine a standard there. so basically the answer is if the fed makes a mistake and they extended liquidity to someone who turned out to be insolvent, there's no penalty on the fed for making -- this is one of the key things we were asked to do and one of the debates now, i said in some ases the pot of money would be in getting it back to the financial institution, but where we are talking about institution that are insolvent and not just delinquent, yes,

some of their debts will be paid but only after they are put out of business. we had legislation but they were for all big banks. the secretary treasury, nobody can advance that until the institution is out of business and what we're saying is there's no longer an institution that's too fwoig fail but there are some that are so big that you cannot let them fail without consideration to their debts. >> and what people criticized with olympian and a.i.g., first you let them go bankrupt then shovel money at them. i said those were the only two choices i had. we either pay all of the debts or none of the debts then there was another where you can pay some debts but the institution skies to. -- the institution dies. >> to me, solvency, there's a

difference between solvency and liquidity is think of two pieces of metal to rub together to make things work. they are both solven't but if you don't have the liquid between the two, the ability to make them slide, then you've got problems but if you go back to the two pieces of metal from the atomic theory there's more air than substance there and it turns out they discovered that maybe some of the stuff they were counting over on the solvency side had more air than stuff and nobody was willing to buy it because nobody knew what it was worth. so this is where it really starts to evolve into a very complicated structure where you couldn't tell what something was worth, and you were not willing to risk what people would call something, and if

you can't jump in and dump oil between the two. >> there's a general governing principle which is the fact that some of the questions at the margin are going to be hard too decide, not reason not to try to decide them in general. yes, there's in a lot of cases ou're going to know they are insolvent in liquidity, and the standard errs on the side of the fed misjudging it, but if the fed makes those misjudgments and turns out they cannot pay it they get put out. >> i want to talk about what's in this legislation and one piece, i was talking to a securities firm and they said what barney is talking about is the single best part of dodd-frank and the one solely and completely bipartisan part. barney may disagree with that. >> why would i? >> i don't know if there were other parts?

>> i didn't know there were any. >> title ii legislation, right? >> trying to speed it up was another very bipartisan issue. >> here's what happens. management gets thrown out. that's the first thing. the stock holders are -- the unsecured creditors are come to for losses and i believe also the secured -- >> they can be got on the, to pay off -- now, if all of that is insufficient, there's a callback provision? >> when you go to the industry and you can recover losses from the bank $50 billion so that's now -- it's not technically a bankruptcy because it's not part of the bankruptcy law but people call it chapter two best known as bankruptcy for banks that simply did not exist when they went to go shut down olympian's so here's the question on the table. does this end "too big to

fail"? >> and to answer that question, you've got to put yourself in the minds of the people who were the secured and unscoord creditors i just spoke about. are they now lending to the banks with the mind that if this bank gets in trouble, the government will bail me out? and that's the question right now. why don't you take a crack at that. >> so i don't believe in too big to fail. there are things that are too big to fail quickly. everything can fail. and that was true before and remains true now. that's point number one. point number two is we have ways for people to fail and the bankruptcy code and what we really attempted to create in e dodd frank -- in the dodd-frank is basically for large institutions. >> so --

>> one point make ha clear, you do talk about not paying the secured creditor. the reason it has something to do with bankruptcy is the constitution of power comes from the bankruptcy in the constitution so it's because the constitution sthaze it's legitimate to go to some people and say i know you thought you were going to get paid but you ain't. >> so in terms of too big to fail as an economic and legal phenomenon, the answer is it's gone. we know that. the question is whether market participants believe that. and there's an extraordinarily good, academic skirmish about whether they believe that or not in a variety of tests, that's simply uneinvolved. >> and i get in on this because doug is an economist. and on the fdic, the democrats in a very intelligent way, but six of the 10 members who

nderstand politics and my side put policy wonks on. and so what i was constantly trying to do from the fdic perspective was to explain politics. it is easy. i gave your definition, you go out and look for it. but you hear it in various ways. congress never ask, they only react. well, bureaucracy never ask, they only react. people are not going to stop doing what you have told them not to do unless it is at least equally painful or more painful to stop what you are doing. the idea that somehow obama care is going to solve the health care problem by imposing some nickel or dime fine if you