we are apparently hurdling towards a post-antibiotics age. >> my honorable friend raises an extremely serious problem that is global in its nature and could have unbelievable that consequences in terms of and try microbial resistance leading to quite minor ailments not being properly treatable. one of the problems is the current ways that research is done by pharmaceutical companies is not necessarily bringing forward new antibiotics in the ways that we need, or solving this problem. i've met with the chief medical officer to discuss this. it was -- there are a number of steps we can take. i hope to be saying something about it soon. yesterday, the secretary of state for business innovation and skills said that he was

working with civil servants to ensure that any assurances given by pfizer during the proposed takeover of astrazeneca could be made legally binding. as the prime minister back this? >> as i said, the more we can do to strengthen the assurances we are given, the better. the only way you'll get a assurances is by engaging and getting stuck in with those companies, which is what we have been doing. i find it extraordinary that the labor party chooses to criticize us for that. >> last but not least, dr. huffer. hough aan >> pfizer mentions the patent box as a positive reason for wanting to invest in britain, and actually to examine whether

they could increase manufacturing in britain. the way the patent ox works is you only get the low tax benefit if you make your investments and thenrch in the u.k. and exploit that research by manufacturing in the u.k.. i agree with him, we should be incredibly hardheaded about this. it is an advantage that written is a low tax country. we used to stand and bemoan the fax -- the fact that companies were leaving because of our high taxes. they now want to come here because of our tax system. i agree, that is not enough. lucky investments, jobs and the research that comes with that tax system. >> question time is live every wednesday at 7:00 a.m. eastern. c-span.org,me at where you can find video past prime minister's questions another british public affairs programs.

>> next, a discussion of the dodd frank law's impact on institutions are too big to fail. after that, a house hearing on the state of college athletics. then a house hearing examining new laws decriminalizing marijuana. >> the issue should be handled differently. original philosophy that i am approaching always. it is a basic premise with which i approach everything which is economic freedom is my guiding principle. from that comes for facts. one, does the commission have authority to act on a particular issue. what authority has congress given us in the statute. in ais a harm to consumers solution which we can actually remedy any harm that has been brought forth heard three, is a solution tailored to the particular problem that we are addressing. fourth, even with the three elements, do the benefits of regulation outweigh the cost? is

how i am approaching each issue individually. you tend to take each issue as a, for you with that overall philosophy. >> michael riley, monday on the communicators on c-span2. >> >>, discussion about so-called two big to fail financial institutions and the effectiveness of the dodd frank regulatory law. former minnesota governor tim plenty is joined by fdic vice chairman thomas hannay at an event hosted by the office of the comptroller of the currency and boston university. this is an hour and 15 minutes. >> thank you for what i guess i would call a gracious introduction. many of you have probably watched me on mute, so now you can probably watch me talk.

these two gentlemen certainly need no introduction. these are two of the most influential voices on the current state of banking. many of you probably thought he would hang up his hat into thousand 11, when after 20 years at that -- at that as the head of the kansas city fed he stepped down by law. your back and better than ever, i think we should say. i think we should start with some prepared remarks. i will ask a series of questions and then we will open it up to the audience's questions after that. >> well, i didn't know until this last panel that some people

wish i had hung it up. [laughter] detoured is my model. knows what i'm good to talk about today, but you will learn that i may not be in agreement with some of the comments from the previous panel or panels. the concerns issue too big to fail. before you get started, i want to join those who also congratulated the comptroller of the currency for 150 years of service to the country. it has been an interesting ride through changes as was noted by others. i'm also very much looking forward to the discussion and will try to keep bar marks to point. in doing that, i want to give some context for principals from my comments that will follow. say in with those who

the aftermath of this crisis and its effects that reform must be pro-market and not row individual firms. i am in agreement with those who say capitalism works best when the business outcomes are symmetric, allowing for both success and failure and without regard to which firms are involved. i agree with the congressman that the rule of law must drive our actions. avoidcrucial to discretionary application that ecb -- that easily becomes crony capitalism. finally, as senator shelby likes to remind the world, institutions that are well and arezed will manage

unlikely to require taxpayer support. me move toaid, let the idea of too big to fail or the issue to be difficult in my mind. the largest, most companies are banks in the u.s. and globally remain, despite some people's opinion heard in my opinion, too big to fail. too big to distort the market and its performance. in 2014, no less than in 2008, the largest banks cannot fail without bringing down the entire u.s. system, which means too big to fail remains a factor affecting decisions and performance for the us economy. the largest u.s. bank, went off balance -- holds equivalent of 25% of our national profit. the largest eight banks hold the

equivalent of 100%. the largest most complex banks rely disproportionately more on the presence of the federal safety net and they do on strong capital to instill public confidence in the banking and broker doing activities. thus, the industry runs with too little capital in life -- in my opinion, not too much. in the so-called global capital index that i would for you, there is a column that looks at the leverage ratios for tangible capital, that is total assets at take into account the off-balance sheet items. his numbers give you the true loss absorbing capacity of these institutions. main better capitalize in 2008, but not so much so that we should feel safe or comfortable. , thever, the advantage subsidy of too big to fail, has

facilitated the increase in size and complexity of these largest banks, making them unlikely to be well managed or supervised in a sustained manner. the complexity, as john reid noted earlier, is overwhelming. , and youannual reports will begin to appreciate just how difficult, perhaps impossible for most, to understand their operations. as an aside, i would note that i am a supporter of making living wills public so that people a more general sense can judge for themselves how prepared we are for bankruptcy too big to fail status has facilitated the growth of the largest most complex firms and the consolidation of the financial industry. it is not the only cause, but it has facilitated. these trends have turned the structure the market toward that of and all a couple he -- of a d

oligopoly. we have to change course in my opinion. the doddthat, although frank act under title i requires bankruptcy as a resolution , is not a viable option. that is what i am told. i'm told that bankruptcy is to meet problems are for these firms to be satisfactorily resolved in bankruptcy. fdicmplication is that the can use the so-called title ii or single point of interest -- of entry that has been talked about. leaving the taxpayer aside for a moment, it is a fact that within the dodd frank act, single point entry is an exception to bankruptcy, it is not the rule. the single point of entry is allowed to become the principal

this alreadylve unfair advantage to the largest and most complex firms because it institutionalizes too big to fail. giving waytion than to special treatment for these firms would be to simplify the structure and pull back the safety net to its original coverage, that is the payment system and intermediation andess that companies that away from that non-bank -- a simpler structure would aid transparency , it would aid accountability for those largest, most complex banks, and the regulators. it would encourage the market to more actively discipline these firms'actions. it would lead to reliance of

creditor confidence on the balance sheets. it would rely on the safety net to safeguard their sources of funding, greater specialization and services within the capital markets as they are again simplified to some extent. more efficient financial conglomerate markets. as others havey, noted. i make no pretense that it is. finally, simplifying the structure will not end all crisis. i also acknowledge that. it will improve our economy's ability to withstand crisis. it will facilitate are more level playing field. it will encourage a better capitalized industry. it will allowed an effective management and facilitate more accountable supervision. ultimately, it would facilitate economic growth far better than what the current structure has so far shown us. i look forward to the conversations that follow and i'm happy to take your questions when the time comes. thank you.

>> thank you, tom. tim? good afternoon and thank you for the opportunity to be here and share a few thoughts at you about these important topics. my comments, i ine to add my voice celebration of 150 years of great service of the comptroller. service and meaningful to the nation's financial industry and infrastructure that goes with that. we know that public service mission,h an important it also comes of important sacrifices that are made by people who do it day in and day out. i know you personify that, you have a big team. you have many colleagues that brought that ethic forward. we appreciate your service. thedelighted to be part of discussion with you and thank you for your many decades of service as well, including your current role as vice chair of

the fdic. i think we are here today to talk about the future of national banking broadly. this panel is focused somewhat on the so-called phenomenon of too big to fail. i think important question to ask each other is what problem are we solving? what problem are we fixing? of course, the framing experience for much of the aftermath of the crisis was, the crisis itself. one of the premises that comes out of that debate is, well, there are certain institutions that are so complex or so large or both that they present systematic risk and therefore have to be addressed in some fashion. i think there's important agreement on important principles. the first one is this, there is no institution that should be deemed too big to fail. all institutions should be allowed to fail. where are here to debate, nor should other forms debate whether institutions should fail or not. of course they should be allowed to fail.

the debate really focuses on what is the best way to allow them to fail so that if needed they can fail in an orderly fashion in a way that is least harmful and corrosive to the larger economy and the important infrastructure of the financial services sector. we have broad consensus in that regard. our u.s. attorney general not too long ago also suggested, although he later modified the comments, that some institutions were too big to jail. no institution should be deemed too big to jail. no one associated with those institutions should be deemed too big to jail. again, the rules of the road should be that we have a playing field that is fair and appropriate and accountable. with that in mind, as you look at the crisis, i think everyone in this room is well familiar an equale was opportunity distraction and an equal opportunity bad behavior this institution, risk

profiles of institutions. you can look at the united states congress, fannie and freddie, long-term capital, countrywide, very small banks, verse that says x, various banks, other non-bank institutions, bear stearns, lehman brothers, and conclude ha, there's one distinguishing feature around wrist or complexity that we can now drill into that as a panacea in response to the concern and then control the debate going forward. the crisis clearly reveals that it is more comprehensive in that regard, so we cannot just make a dent -- a declaration. it is an important combination of all of that and there is nuance involved as to how to best approach that. of course, the response to that at the time was the dodd frank

legislation. you just heard from the authors of that legislation. the best policy thinkers of the time, or at least those charged with the responsibility of responding to the crisis -- that was not dispositional inclined to be generous to the industry came up with the dodd frank approach. the paint is not your drive on that framework. it is not even fully implemented, so we can certainly have a debate about what it six -- about what it six facts might be, but the matter of fact is that is not yet complete. any deliberations at this point are partially speculative in nature. i think it is premature in some cases to be making final declarations about what might or might not work or what does or doesn't work under dodd frank. regulatorssaid, the have looked at this issue many times and has essentially said,

we believe we are making good progress in addressing these issues of concern area before needs to be done we will do more. do? does dodd frank it provides first of all more capital, more oversight, more regulation. if you reach the point of alarm or concern or the need to dispose of an entity, an orderly liquidation authority, a wide-eyed provision, living wills and more. there are some folks look at that and say yes, i know what it says, i see what it says. it is supposed to be like.ptively bankruptcy there is a special circumstance. by the way, if it spills into title to, there is no public bailout involved. it is supposed to be funded through other means. by the way, there's a difference between liquidity and bailouts. at thaticymakers look and say yes, i see what it says, but it'll believe it. that is the fundamental divide here. isis not that the law

ambiguous about whether there will be future bailouts or not, the law is not ambiguous in that regard. i think its policymakers, for right or wrong, and looking at that language in the construct and saying i choose not to believe what is written on the paper. that is a legitimate difference, i suppose, a basis for different opinions, but it is not unclear with respect to the possibility of future public bailouts. with that, i look forward to the discussion in order to talk about more than just too big to fail. i'm delighted to be here. thank you for attention to these issues. good facts and good debate fosters good public policy which is in the best interest of the entities in this room and at large. [applause] >> thank you, both. it is a debate. it has become a very loud debate

recently. it is clear that no one in this room would be served by the financial sector bringing us back to the brink of the point we were in in 2008 and had to get to the point where on one hand this so-called suppose a phenomenon of too big to fail, no institution is too big to fail. point? >> et to this >> i represented organization that has big institutions in it. if they fail, let them fail. you want to minimize collateral damage. you can look at dodd frank and say that a biggie will work, believe is -- i don't it is a default mechanism, it will be the main mechanism. i don't believe they won't mail them out with some extraordinary subsidies in the future. there is no dispute about what the law says about bailouts in

the future. the law says there's not going to be public funding other than the possibility of temporary liquidity being made available if there is a failure. >> arm misconceptions about the effectiveness of the orderly resolution plans. itthe misconception is depends on who you're asking and what you expect. the fact of the matter is, if you are a bank and banking organization, and the creditors know that they're going to get paid, they're going to act differently. as a major point. doesps a stink it -- temporary liquidity, the fact of the matter is, it will take government cash to come in, and everyone knows that will be there. it will give others time to escape the losses that would otherwise come in a normal bankruptcy where they would be part of the solution.

they would take a haircut and lose. you've got this concept of too big to fail from the perspective of not just the stockholder, but the creditors behind that in these operating units. plus, if i'm trying to compete with the largest banks in the country and i am a regional bank, i'm not going to win that battle, because creditors know that they're going to be safe with the largest banks and not save me, especially under stress. so, that is issue around to begin fail. that it will work, it nothing but saying we will be in the government's hands. they can create a bridge bank

terry gou capitalizes the bridge bank? supposedly it is the debt holders which we have not even defined. these debtholders are going to come in and capitalize. in doing that, we are promising the world that the operating -- will remain open. we are preserving the largest and not giving equal treatment to the smallest, and that's what people object to about this. >> you object that this is moreing the playing field than clarifying the law? >> if you are talking about temporary liquidity as one tool, temporary the quiddity is available to all sides of the institutions. liquidity is available to all sides of the institution. there's