>> i don't worry about it. if it happens, it happens. it's sort of interesting. the beautiful thing, again we'll go back to twitter and facebook and instagram. somebody -- instagram, somebody says something about me that's false i will hit them hard. a lot of times they disappear. amazing. i have these wise guy reporters, probably members of the national press club, they always say, trump filed for bankruptcy. excuse me, buffet has used bankruptcy, it's a tool. it's a tool. when i use it, i buy a company, i throw it into a chapter, i then negotiate the hell out of loans and all the problems they have, it comes out, it's a good company. they say trump filed bankruptcy. they don't say that with these other guys. i let people know, it's not right when you're saying. they attack my hair. my hair. it's mine. come here. would anybody like to inspect --

[applause] >> is there a nice woman that would like to inspect it in the audience? it's actually my hair. they say, you wear the worst hair piece i have ever seen. what a horrible wig. so i put on twitter, i don't. it's funny, when people want to keep -- but i like to defend myself. and the beautiful thing about the new media is that you actually can. if you have enough followers, i certainly have a lot. many, many millions. you can protect. it's interesting. sometimes i'll be attacked. then i'll attack back really viciously. i never hear from that person again. especially if it's a famous person. if it's not a famous person, they continue because what do they have to lose? i was attacked like by cher. she didn't like my politics. i hit her so hard, she still doesn't know what happened. the last i heard of her. i don't know. rosie o'donnell has gone around

saying the worst thing i ever did was to attack donald trump. she attacked me. a young woman of miss u.s.a., lovely young woman, she had an alcohol and drug problem. she was going to be fired from miss u.s.a. they came into my office to get the final blessing. there was a news conference downstairs which was packed, it was a big event. and i met the girl, she was a nice girl. i said, don't fire her. you'll destroy her life. it never happened where we fired the winner. they are going to take her crown away, humiliate her. she's already got a problem with drugs and alcohol. don't fire her. rosie o'donnell's on "the view" who is he who give somebody a second chance? i get a call from entertainment tonight, and i said, did you hear about rosie o'donnell? i have other things to do. tell me. they told me. and i hit her like nobody's ever hit her before. and that was it. and she goes around telling people that was a mistake. but you know when somebody attacks you, attack them back.

stop it. get it stopped. it's so important. in my opinion, it's so important. so that's the way it is. go ahead. next question. >> personal question, mr. trump. what do you do for relaxation? >> i build buildings. it's funny, ivanka said the other day, do you ever go away, daddy? i do a thing in dubai, but we are doing a massive job, phenomenally successful, i was in scotland where we were doing something big, in ireland where i bought property. different places. that's for me relaxation. when you love what you're doing. if somebody said you are going to take an enforced vacation for two weeks and go to some beach and can't use your phone, it would not be good for me. it would not be healthy for me. so what i do and what i really like doing is working.

it's been a lot of fun. the great thing, i put a lot of people to work. i have thousands and thousands of people that work for me. health care, education, they are not worried about obamacare because i take so good care of my people. but so many different people are working because i love to work. so that's the thing i like doing the most. [applause] >> we are almost out of time, but before asking the last question we have a couple housekeeping matters to take care of. first of all, i'd like to remind you about our upcoming events and speakers. tomorrow, dr. ben carson, neurosurgeon and author. june 11, hollywood writer-director m. night shamalan. --will discuss his canteen campaign to close the american achievement gap. we have other ones before august 1, but let me tell you we just finalized on august 1, the president of the republic of

congo. we'll discuss peace, security, and stability of the central african region and oil investments in the country. next i want to have for the first time that i can recall a double presentation of our brand, the national press club mug, to ivanka and donald trump. [applause] thank you. how about a round of applause for our speaker and ivanka. [applause] >> thank you-all for coming today. i'd also like to thank national press club staff. that's the last question, and jerry always reminds me of that because i skip over the script.

i want to finish with the last question. but like to thank national press club staff, including the broadcast certainty for organizing today's event. for our last question we have two minutes, you can make it short or take the full two minutes, if you had the power to fire one person on the planet, who would it be and why? >> this is such an easy one, isn't it? but i won't do it. i won't do it. too corny. look, we are a great country. we have great potential. let's live with that potential and let's make that potential come true. we need fantastic leadership. we have the people in this country that have the potential to be fantastic leaders. let's use our great minds. we are smarter than anyone. we can do what nobody has ever done before. but we need great leadership and we need it quickly before it's

too late. thank you very much. thank you, everybody. [applause] [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] [applause] >> if you would like to get a copy of today's program, please check out our website at press.org. thank you all. we are adjourned.

[indistinct conversation] >> that was great, thank you.

>> thank you all. >> good meeting you again.

[indiscernible conversation]

>> on the next "washington journal" "new york times" correspondent peter baker discusses president obama's foreign and domestic policy goals. doris fuller the executive director of the treatment advocacy center talks about the recent calls for an overhaul of the nation's mental health system in the wake of last weekend's california shooting spree. and "wall street journal" reporter amy harter looks at the new climate change initiative which the administration is set to announce on monday. and we'll take your calls and you can join the conversation at facebook and twitter. "washington journal." live at 7:00 a.m. eastern on -span.

former senate banking committee chair chris dodd and former house financial services chair barney frank recently took part in a discussion about the financial regulation law that bears their names. the dodd-frank law. the office of the comptroller of the currency and boston university hosted this event. it's just over an hour. they di. it is just over one hour. >> i want to introduce the moderator for this session but before i do, i want to point out that everything we discussed this morning and after this because theoot dodd-frank act rose alt all of those issues and we don't really have to do with those anymore. i also want to thank barney frank for begetting with the spirit of the program. he knew we were going to heaven abraham lincoln look-alike contest so he grew a beard. we are delightful for that.

take no offense but if you read "an act of cong larsonhe and jim siegel -- are as responsible as that statute as dodd and frank. amy is the senior deputy comptroller of the currency and chief counsel. ats is her second session the occ so you can see she is -- say she is occ through. seriously, if you get to read that book, you will have great admiration for somebody who acted in congress in the good old days when people acted as though there was a tomorrow. when they had to deal with the same people the next day and sadly, those days are gone.

hopefully just temporarily. i am not going to occupy any more of your time other than to say welcome, amy. welcome, senator. welcome, barney. >> thank you. it is really my pleasure and privilege to be joined by senator chris dodd and representative barney frank. they are well known to his audience for many reasons but particularly as the architects of the sweeping financial reform bill that bears their name -- the dodd-frank consumer protection act or dodd-frank. today, we have dodd-frank on dodd-frank. it is a real treat. having worked so closely with both of them and enacting this legislation which is truly historic. senator from a connecticut and he was the chairman of the senate committee on housing and a ring affairs --

urban affairs all through the years of the crisis and through the passage of dodd-frank. barney frank is a former congressman from massachusetts and the former chairman of the house financial services committee. fromnow them well dodd-frank but also as the chairman of the banking committees in the house financial services committee. they were responsible for the tarp. for the credit card act which open-heart -- overhauled the credit card industry. passedso worked on and the housing and economic recovery act which created the federal housing financing agency. forrovided the authority government backstop but beyond that, they are rate legislators. on forsman frank worked

housing, equal treatment and antidiscrimination issues. was the author of the family act and work on a number of children's issues and latin america. it is really exciting for us to have you here today. and having worked with you on committeese banking issues, felt i had a front row to history and got to see your skills in action. we are six years to the month when it collapsed. in september of 2008 was when the crisis really came on full force. we are close to four years from the passage of dodd-frank. i am wondering if you could talk about whether the confidence in the u.s. financial system that we saw that great really quickly during the crisis whether it has been restored. >> well, first of all, thank you for inviting us. it is a pleasure to be with amy and jim and the introduction is

appropriate. we were blessed to have remarkable people on our staffs that did a tremendous job in putting this together. the names are on the build of the reality is a lot of people, including our colleagues, contributed significantly to the legislation. the staffs deserve a lot of attention. thank you. i think it is coming back. i still think we have a long way to go. it was shattered by the events beginning a lot of earlier than 2008 with bear stearns. as well as jack reed from rhode island held hearings in 2005 on the residential mortgage crisis. while people paid attention to what happened with bear stearns and september of 2008, the problems began a lot earlier.

the difficulty was getting people to pay attention to the problems. the shattering of confidence -- i will tell you one quick anecdote. i recall having a conversation before these events with the manager of a fund -- i. i was curious why he parked much of his nations wealth into the united states. he said for two reason -- one, no other country in the world is as good as making money as u.s. financial institutions are. he said the second reason for doing it is more important in the first. he said he never lost the moment sleep worrying about whether or not the integrity of the financial structure is sound and safe. made bad betsnd along the way but i have never lost sleep over the confidence in the financial architecture of the country. that was shattered. it is coming back in my view but we are still not there.

>> in my mind, i agree. i think there is more confidence in fact reflected by people's behavior than there is in their opinion. the financial structure, i don't see people sending the money elsewhere are putting it under the mattress or any kind of mediation. there is still this perception and part of it -- there are two reasons for this. the main one i think is self-fulfilling prophecy on a particular issue and that is on the question of the too big to fail banks. onm convinced chris worked bipartisan things with dic k shelby. i believe the maximum you can do legally to make clear that if a large financial institution had

debt that it cannot pay, it is out of business and no taxpayer money will be used. the most interesting critique i hear these days and tim geithner repeats it in his book which i saw an early copy of and others is is that we were too tough on the anti-bailout. we didn't leave the successors enough flexibility to bail out the system in general. what we have is a self fulfilling prophecy. we have people that argue that somehow our system for putting these banks out of business will not work. they then point to the fact that they still enjoy some people argue a kind of edge in financing but to the extent that they do it is because people denied that they are there. i look at the reasons why it won't work. one is one of the stupidest arguments i have heard. it is that if a large financial

institution got into trouble, despite a law that in maine to will be felony for the secretary of the treasury to use public funds, there will be overwhelming public pressure on the administration in power to bailout that institution and keep it alive with public funds. i have only one question to those people. in what country? anybody that lives through what we had in the united states, how they would argue that is an expectable. --inexplicable. people's behaviors are coming back. if you ask them they still say they are worried, etc. i think the behavior is more important than the attitude. >> just to make a point on the too big to fail. there was an amendment as we began integration of this legislation and dick shelby offered the legislation. it carried 92-5 on the floor of the senate.

it was the first of 60 amendments on that debate over it. clearly, that bipartisan effort on that language that was designed -- today, but we did in the fall of september 2008 is against the law. not only is it against the law, i would defy anyone to stand up and offer on the floor of the to give of the senate billions of dollars the financial institutions. >> the secretary of treasury is now against the law for him to use public funds. he has to recover them. secondly, the statutory authority that ben bernanke no longer exists. thehe argument is that chairman of the federal reserve and the secretary of the treasury would he pressed by overwhelming political pressure to violate the law to give more money to a large failing bank. no.

>> do you think that congress would support something right now? >> they would impeach and convict of impeachment any official who did that. we had a hard enough time getting -- we had a republican president, a democratic congress. that was before bipartisanship ended. what ended it was the election of barack obama and the republican response. orked hard -- we w on something that was essential. i think it is very clear. history will record that the tarp program was the most highly successful, widely unpopular thing the federal government ever did. the notion that you can do it again is bizarre. >> we have definitely had a conversation this morning about too big to fail and the remain some skepticism. one of the things that has been

discussed is raking up the big banks, restoring -- there were amendments to the nature during dodd-frank. now, there are bills in congress. i am wondering if you can talk about why they are making traction then and why we should be discussing that. >> breaking up the banks is entirely a reasonable idea. i do have questions for those who ask it. aid to what side? breakare going to institution so no one institution is big enough to threaten us, then they all have to be no bigger than lehman brothers was in september of 2008 because that failure was one of the precipitating causes. secondly, how are we going to do it? who is going to buy them? i don't understand what the mechanism is. there is the vocalcker rule. this,ook at the causes of

i think 100% securitization is a big part of the problem. nothing would've prevented it country wise from making all those lousy loans and securitizing the 100%. nothing would've stopped a idea from screwing up as badly as it did -- aig from screwing up as badly as it did with derivatives. if people want to break up the banks -- they may be too big to manage. as i said, there are things that shrink it. warren who is a proponent of putting back class repeal was not the cause of the crisis. saidagree with barney just as well. is not is that the issue so much the size of the institution but rather the risk that institutions take on.

to that extent, whether it is capital, liquidity -- other measures determine whether the institution is in good shape. making the assumption because of the size does not hold water. i am inclined -- first of all, the banks and neighboring countries of ours that are much larger than u.s. banks. i think we need to focus on the attention of risk rather than size. if you are that interested in doing it, we have provided the authority to breaking up the institutions and the belt. the -- in the bill. the authority does exist. it ought to be very rarely engage in my view but nonetheless the power does exist in the legislation that we adopted. >> there are people here that can tell me how small is not too big? what is the biggest we can let them go? i assume it is below lehman brothers.

if we wereimum size going to take deposition should we allow a financial institution to be? >> i agree with barney on this. as did 90% supported of the congress. the issue on that bill had to deal with the community reinvestment act. it was a huge debate during that bill. there was general adoption of the notion that somehow we can create firewalls in the 21st-century and we didn't need to have the kind of separation. my own view is you don't want to go back.

>> dodd-frank deliberately pushes risky activities out of the banking system like the volcker rule. we have seen some assets move out of the banking system because of higher capital which is directly aligned with dodd-frank and compelled. does the act sufficiently address the buildup, the potential buildup of risk outside of the traditional banking system such as through the up stock? is it the right way to go in the long haul? >> i believe so. the idea that every time something emerges, new product line emerges or some youinstitution emerges, cannot go back and pass legislation every year or two. we are talking about a global marketplace. .e care deeply about this

someone is going to lead on these issues around the world and if someone -- and if we didn't, someone else would. i want to play by someone else's rules. the united states once the lead on this matter. we are getting some compatibility. it is a harmonization of rulemaking in the european market particularly as well as here. the idea of pursuing that approach may tremendous sense to me as we went forward. so, again, my hope would be that what we have done was provide the ability to look over the horizon where he can watch -- where you can watch product lines and respond to it in a timely fashion. is amazing it took legislation to create it. it should have been occurring naturally. we had regulators meeting up periodically with each other and talking about what was occurring.

ofdid become the crisis september 2008. me wasr protection -- to stunning in a way of the objections of having a way of consumer rocks -- products. in this day and age, the fact that was such hostile opposition to the creation of a place where consumers of financial products could not find some grievance was stunning to me. deal did actually specifically with to important risks -- two important risks. we are pro-market. i found myself more pro-market that some of the people we were regulating. we affirmed my view. enter warned magnusson -- center warned magnusson -- senator warned magnusson once

said it is competition. i talked to to insurance company executives -- two insurance company executives. it required the companies to make derivative trading more transparent. the other was says you cannot do that. we have a deal. we have to publish our price. somebody can come in and undersell us. his older colleagues said that is not our position. banid only one thing did we and that was giving residential mortgages to people who could not pay them back. i believe the mortgage thing -- the other great risky area we rules was substantive requiring derivative trading to be moved from almost all one-on-one into and more marketplace situation.

one of the people would've been implementation was gary gensler and did a very good job of it. areas wen those two did some substantive things. we don't regulate institution so much as activity. even though the activity is moved out of the bank, they are still regulated. you can't be sure of all this. particularly -- there is one thing i'm worried about. one part of the implementation that worries me. i think what one of the most important things we did was to say there has to be risk retention when you securitize. that was the transformative thing. the lender to borrow discipline was done away with. to get the bill through, one of the things i would hate to hear was when chris called me and said somebody has decided that he or she was the 60th senator.

there were a lot of people who became the 60th senator. we had to weaken so much of the requirement for risk retention. section that had superstate mortgages to adopt risk retention. the regulators at one point were proposing to have the exception enough the rule. -- eat up the role. mortgages could then be made without risk retention. that troubled me. if we could get some risk retention in there, think we could build systemic retention -- protection. >> that is alive debate among the regulators. is in the middle of a pending rulemaking with some on the other side expressing concern that that may impact credit availability. >> that is one of the things i want to talk about.

transitions are hard. to transition -- of the tionsition -- the transi from having hundreds of thousands of people aggregate you to private life is a good transition. [laughter] that was not hard. have a lot of mortgages made in america before the results a thing as securitization. you have to people who are convinced that they had to do any risk retention, they won't get mortgages to those people. i don't believe that. i know it is uncomfortable now but i believe if we have a 5% risk retention there would be a demand for mortgages. there will be a supply of mortgage holders and you would get over it. now that i comment have changed jobs. a lot aboutked that transition. i left one group of bad actors.

[laughter] now.ansitioning during the formulation of dodd-frank, there was some discussion particularly in the senate about regulatory consolidation. senator, you at a proposal that would have taken the supervisory authority from the fed and the alongnd consolidated it with the occ into one federal supervisor. congressman, i think that was something you decided not to pursue. can you both talk about why you went there or why you didn't and what were the impediments? division.abolish the they were the regulator of aig. i had an alternative proposal. one was to abolish them. if we could not do that, change the name to the office of dispensation.

we had the votes to do the first. ris next big thing -ch talked about. alan greenspan always argued if you did have some regulatory authority over the fed, you would not be able to have monetary policy. rate, that was not the major problem. and ther problem came representative of one of the objecting groups is here. this state chartered banks and the small banks came to us and they said we do not want to be regulated by the occ because you will be throwing us in the same arena as the big national banks. one of the things i should say -- the big national banks had very little political pull. the political problems with the deal with game from the credit

union's from the insurance agents and the retail banks. the community banks way out way to the big banks and the community banks said we will oppose any bill that puts us into the same regulators. that was the reason. that is what stop that and we could not have overcome that. it was something i thought about before but it was just no way that you can pass a bill over the strong objection of the community banks. they refused and were ready to lobby hard against bidding -- getting put in the occ because they want to be put with the big banks. 2009, i proposed a draft, a discussion draft of a bill that did basically consolidate and provided a single attentional regulator. -- potential regulated. or.

in the midst of all of this, the political considerations. you have to get enough votes to pass anything and the reaction to the single regulator was overwhelming for a number of reasons. the regulator didn't want to be out of the job so they were opposed to the idea. there was no constituency interest in the matter at all. i say respectfully of our knowagues, they didn't what they were talking about so the idea of consolidation -- we got rid of it. we actually grew the regulators. one had a magic wand consolidation we would've done no rational world would you have a security change commission and the commodity commission sharing jurisdiction. tim geithner, was reading his book and he reminded me.

yes needles possible to consolidate the two -- he asked me if it was possible to consolidate the two and i said yes but not in the united states. the notion that they will be thrown in with the city slickers, it never made sense. >> other countries have done it. brazil consolidated. it was under a general. [laughter] >> it means something. the supervisory function. we tried to find where you can fedally point to minutes in conversations where the supervisory function had never been a part of consideration on monetary policy. the all due respect, supervisory function, i can never find anyplace i can exercise so why would you keep in a place that doesn't use it?

the idea of moving that off to get better supervisory activity seemed to be a natural inclination. the bottom line -- i think i got three votes for the idea of all of these ideas at the time. the whole idea is at some point someone needs to look at the fed system in a way. you go back 100 years to woodrow wilson in the creation of the federal reserve system. regional banks, yet to win missouri -- you have two in missouri. the whole idea of going back and re-examining that role. there was no support for these things which is an important point in all this. is something barney and i have dealt with everyday. i've been asked a million times since the summer of 2010 why did we end up with 3%. i gathered the smartest minds in the world to sit down and talk about proprietary trading, with a long discussion, in the end i

had a hot -- at a people -- i had a bunch of people that wanted zero and 10 but i could get 60 votes for three. uf to keep in mind if you don't get the 60th vote in the senate, everything dies. --se numbers are on magical these numbers are not magical. they are based on the reality is that if you don't end up with a con of support you need. we had to do things we were not overly and uzi astec about. -- not overly enthusiastic about. you have to be mindful all the time. if you're not able to keep the majority of the house and a super majority in the senate, this is nothing more than a nice discussion. bille gamble to me was the giving the federal reserve system, which it hates having, the authority to cap the amount

of credit card issuers in charge retailers -- can charge retailers. it got 60 some odd votes in favor of it in the senate. you mentioned the two federal reserve's in missouri. hadpresident of one of them been a fairly vigorous the center -- the center -- the dissenter. when you were many things, how about a law that once they cannot have to federal law -- federal reserve presidencies? >> like senators. when i ran for senate, jim buckley decided to running connecticut having served in the senate for new york. the constitution is rather clear on that point that each state gets to senators not each senator gets two states. [laughter]

>> i am going to take you back a bit before i do, have to say on behalf of the occ that we regulate over 1500 community banks. >> barney was terrific on this. the community banks were tremendously constructive and helpful in putting this bill together. at a not been for the banks working with us, this bill would not have been passed. >> we can have a dual banking system, you have dual regulators to reflect the state federal. >> even at the federal level. timet to take you back in to september 18, 2008. it was the day you both were to the speaker's office. ben bernanke came in to tell you about what was happening with the financial system. i was wondering if you describe what happened in that room and

what your reaction was. >> it was one of those days that become seared in your memory. that evening at about 7:30 when 14 of us gathered in that room. the respective chairs and ranking members of the committees and jurisdiction. there was quite a conversation. the moment i remember most clearly was ben bernanke sailing the following -- saying the following. i can tell you word for word what he said. ben bernanke is not the type to engage in hyperbole. he does not raise his voice. is a low-key individual. he turned to all of us midway through the meeting and said the following -- unless you act, speaking to the speaker and john boehner as well as harry reid and mitch mcconnell -- unless you act in a matter of days, the financial system of this country and a good part of the world will meltdown.

that is the chairman of the federal reserve of the fight -- of the united states saying to the leadership of the congress about the significance of the moment and the importance the act. the oxygen left the room. in may of been just a few seconds. i left that room with a sense of solidarity and working together. awas fortunate to have counterpart on drafting the legislation. we were able to put together a bill. hank paulson sent me a 2.5 page bill that said give me $700 billion and no court or regulator could intervene. the country erupted when that became public information. we were operating in that environment. we were trying to come up with wrapping around ideas such as the votes. a greater sense of security

about what we were about to do. we went through it. 40 days before the national election, we passed in the senate 75-24. ted kennedy was the only missing vote. never forget that night because i went around to democrats and republicans 40 days later. i said to them, i have the votes to carry this and this is the kind of opec and end your career. -- and this is the kind of vote that could end your career. oustand if you felt yiou needed to. gordon smith, republican senator from oregon, i went to him and said you were up in 40 days. need to take a pass on this -- his colleague was going to vote against the bill of the time. i was never forget his answer. he said he has the face the constituent tomorrow morning.

he is not sure how to explain the vote. he said the constituent is the mirror. i have to believe this is the right thing to do for the country. he cast a vote for it and 40 days later he lost his seat and in the senate. the point is that was a tough vote. i couldn't agree with barney more. i will go to my grave believing we did the right thing for the country at that moment. had we not done so, we will be looking at a very different place today. i know historians will talk about it endlessly. resourcescouped the but stabilizing the financial institutions at that moment was absolutely essential. a democratic house and senate with a republican president were 40 days away from a national election to get beyond partisanship and do the right thing for the country. [applause] >> we were not as successful in

getting beyond partisanship in the house. the republicans voted against their president. absolute power corrupts. i have always thought that needed an amendment. in some cases it is impotence that corrupts. the republicans in the minority felt free to vote against it. the first time they voted against the overwhelmingly and the second time after the crash they voted against it still, not by as much. after that night -- asked to night,ght -- as to that in 2008, about every other weekend after the markets close on a friday, i would get a call from paulson. we have this problem and that problem. iny had credibility particular because they were not telling us of this until lehman brothers went bankrupt.

i think they try to save lh ehman. i do believe they were honestly surprised by the depths of the reaction. we all said, this can be as bad as the great depression. it could've been worse in this meltdown. during the great depression, you still had granularity in the world. it wasn't affected. by two dozen eight, we were on one financial grid and the whole thing -- by 2008, we were on one financial grid and the whole thing was grinding to a halt. it didn't occur to us to say no. theulati--hing about initiative and a time like that is inevitably with the exception. we had two choices. either say no or say yes with

modifications. there was no option of that. >> in fact, you gave enough authority that they could change their approach because you remember in tarp they were going to purchase assets and you gave them the authority to add these equity injections and that is what they did. >> they have paid back. >> at some point, you determined that legislation beyond the tarp was needed to reform the system. do you think that providing the emergency relief to the system under the tarp created the urgency to pass reform legislation or did it undercut it? >> i don't think it was either. we were aware of the need before that. educated that we needed to do something more systemic with the bear stearns failure because what paulson and bernanke both set to us was, we were not happy with having to do

this with bear stearns but we had no option. paulson began arguing all during that time until lehman. other people gave him a different opinion but the lawyers of the treasury and the fed were convinced that in the case of a large financial institution faltering, they had two options. either they can let it go bankrupt with no special rules, just flat-out bankruptcy or intervening and profit -- propping it up. also need an alternative, a way we can put it out of business but not bankruptcy. we also, as chris noted -- this is one of the great historical misunderstandings -- we had both been working on the question of trying to curtail the responsible lending -- the responsible lending -- irrespon sible lending.

i know there's his argument that the liberal democrats were ning in 1994,begini liberal democrats were trying to slow down loans. the free-market guys were defending them. the data committee i chair that was going to pass, the wall street journal attacking my name and said subprime loans are really good. 80% of them have paid off on time. that seems like an odd statistic. they said i was trying to great an obsolete for subprime lending. we were aware of pieces of it but i think at that point we decided we had to get it done. i take the opportunity to reiterate. the more conservative free-market people who are trying to blame us for this

crisis never had any problem with subprime loans in theory or practice until the crash. >> i became chairman of the banking committee. the senate is not a meritocracy. you have a lot live in hope your friends get defeated. i was on the banking committee for 30 years and when paul trains decided to retire in january of 2007, i became the chairman of the committee. the first hearing was in the first week of february of 2007 on the subprime lending. hank paulson testified that he wanted to testify only about china. he didn't want to talk about the subprime issue. i said fine. i knew my colleagues didn't spend a lot of time on china. we got on the subject matter of the mortgage, the growing problems of mortgages.

we had 90 hearings in 2007 on the subject matter. some of the first witnesses were people actually cap lady what they thought this could result in in terms of foreclosures in the country. the first witness talked about having one million foreclosures. they were highly really fueled -- ridiculed as being engaged in hyperbolic political talk were nothing like that could ever happen. we learned millions of foreclosures happened over the coming years. despite that activity, it was a refusal to it knowledge the growing problem -- to acknowledge the growing problem. in 2008, you have bear stearns. many thought this was a on e-all problem. a ludicrous proposition when you think back. with the book talked about was a wonderful in september of 2008, everybody rallied and save the country. where were they?

there was a lot of information about what was occurring. people unwilling to would knowledge this -- to acknowledge this and get ideas. had there been an intervention early on, we wouldn't have had a crisis at the magnitude that we saw. never the 26 million jobs that were lost. never the 4.5 million homes that were for closed. not to mention what happened to some of the finest financial institutions in the country. failing, consolidation that occurred, insurance companies. it was a disaster. it didn't ever have to come to that had people but willing to see the growing problem that was clearly the evidence of. being paidve instantaneously and adjustable-rate mortgages when the banks knew well those arms that never the consumer can

afford it. they were selling that mortgage and eight to 10 weeks. there was no liability. all of that was occurring and unwilling to step up but it could've been stopped earlier on if people were able to see the magnitude of the problem was growing. >> let me build on that. the republican who told congress from 1995 until 2006 during which time nothing happened. no legislation passed. -- in 2006, iac hank paulson told the president he wanted to try again. the president people said it was too much trouble. he got the right to do it. fannie maeo us and and freddie mac award in reform and he was given the authority he wanted in the first two years of democratic and troll. -- control.

you have is general deregulatory view. in 2006, as we were about to become shares after the 2006 election, i was asked to go to a chamber of commerce conference at which they were discussing the serious problem facing the american financial community. overregulation. people go back and look at it. they were complaining that they were never be again initial public offerings in america because we were too stringent. schumer and mike bloomberg commission and report -- commissioned a report. as we took office, there was a staunch defense on the part of people who said they were the market defenders of an unrestricted subprime regime. i claim that we had to cut down further on deregulation.

we started below zero. >> there clearly came a time where you agreed you had to move forward. people like hank paulson -- people have been talking about reforming the financial architecture of the country for a long time. it is a classic case. congress never ask until there is some sort of crisis. just sitting back and recognizing. they probably needed to do something. it is awful to do. you can never today -- you couldn't pass dodd-frank today. you couldn't pass in 2006 or 2007. the one time you could do it was when we did it. andy view, to come to tarp to walk away as if you had dealt with the issues would've been a travesty. you had to make an effort. others have talked about for a long time, how do you this in a way that makes sense?

that stabilizes and strengthens the financial institutions, provides the kind of protections and transparency needed. to have some ability to look ahead. to provide institutional framework in which future institutions can respond to emerging product lines or institutions that people cannot even imagine today might exist. my feeling was had we not moved when we did, we were just functioning as that of the world existed as it did in the fall of 2008, we would be in a mess. -- the dynamics of politics and the voters who sometimes are part of the problem. the tarp was very successful and very unpopular. but, the success didn't factor into people's opinions. in doing the tarp, we did something unpopular that staved off.

here's a this advantage to politicians or economists. they can do analysis in which they invoke the counterfactual. they can talk about why this was a good thing because they can talk about the counterfactual -- what would've happened. politicians are not allowed to use counterfactual. any elected official and goes up there and says i understand you are upset, but i saved it from getting a lot worse. slogan rented a up which -- printed up which i was dissuaded from using in 2010 that said things would've sucked worse without me. [laughter] that was my political view. we got all the negative political vibes from the tarp and very little public.

that is why it was tough to get the bill through. crisismentioned the providing the impetus for getting something done. kindst extent was it the -- the crisis, the congress, and the administration that allowed to do it? how much was it your relationships with others that allowed you to move forward? >> all those factors contributed. i mentioned something at the outset of your questions. barney and i feel very strongly about this. our names are there. irony number at about 4:00 in the morning when a congressman from pennsylvania made a motion to call this bill, to call up bill.ank-dodd they said they will think it's one person. nyou want to reverse the names. the fact is -- i think it is

true in the house and barn he can speak of that -- this bill would of never been done if there was nothing done by republican colleagues. one of the things i did early on, i didn't tell my staff i was going to do this. ed the republicans and democrats to meet together in the old historic room after a boat one night. -- vote one night. andok a democratic republican of the committee and assigned them responsibility to draft the various subject matters. to deal withwarner too big to fail. i asked chuck schumer and mike vapor to deal with issues. they were asked to work together on that particular issue. it is just too large a question for the committee itself to deal

with. itle their names are not on and while they don't necessarily have voted for it, they are major factors that contributed to what is and is built. -- what is in this bill. that was terribly disappointing to me because had there been more participation on some of these issues, the bill will look different today. i think we wrote a good bill. i regret we didn't have strong provisions on ratings. i would've loved to have this deal with fannie and freddie. a lot more could have been dealt with. i'm grateful for bob corker in mark warner -- and mark warner. they couldn't do so because of two issues and this is what -- there were two issues that drove people away. the creation of the consumer protection bureau and corporate

governance issues. it wasn't the volcker rule. it had to do with the creation of a consumer protection bureau and what they perceived to be too tough on corporate governance issues. those with the two factors that cause this bill not to have him bipartisan -- to have bipartisanship. was a necessary to have a democratic president and house and senate -- no, but it would've been a different bill. it would've been possible if we had a republican president and a democratic house and a democratic senate. it would've been possible if we had a democratic president and a republican senate. we showed much more willingness to quite right with a republican president. we would've had to weaken a little bit. the one example of that --

that w a major piece of legislationas. . he created the first efforts to try to deal with foreclosure. it dealt with a very large chunk of thanksgiving large authority to the treasury. that happen with the bush administration. it could've been passed it wasn't a republican house-senate but it would've been a less liberal bill. house.er thing -- in the here is the other important point. we sent the bill over to the senate and the norm on things like that has been with a democratic majority on the house, you only need an absolute majority. andan be a little tougher you have to get some compromises to get to the 60. the public wasn't paying much attention with what we were

dealing with. health care was dominating the media. i actually lost a couple of votes on the floor on derivatives. the bill that went out of the house was weaker in the derivative section that i wanted it. the assumption was when they got to the senate, they could weaken it. work and then what i think what was transformative was the passage of the health care bill in april because when the health care bill passed then we became the center of attention. at that point, public opinion which had been sitting out our in on our side and i think that was helpful. >> i mention this in other settings. i was incredibly fortunate to have the barney frank in the house. i am about to get him into some trouble with his former colleagues. house members have a healthy disregard for the senate and for obvious reasons.

you need to have a house share that understands the role of the senate and how it functions. had we not had barney as the chair of the house committee, dealing with the senate may have been much more difficult. i could've had a better ally we plan to work out the compromises than to have barney you understood -- who understood how difficult it is dealing with the senate. i've mentioned this and other for -- i have mentioned this in other forums. you understood that dynamic which unfortunately is not understood by a lot of others. >> understanding is not necessarily liking. [laughter] was you canly meant count the difference between 59 and 60. that is where we got the 3% and we got to the exception on the risk retention and

where we got the one thing where i think the bill went further -- that was the lincoln amendment which said the banks cannot do any kind of derivatives even if it was for themselves. if you got connectivity that is necessary, why is a good idea to move it from the more regulated to the less regulated? those were all things that happened because we needed -- th other thing about the senatee. the senate is a very democratic place. everybody has a chance to be number 60. enabled by the fact we had a couple of democrats who voted no. but, yeah. every other day some senator decided to be number 60 and we had to do something.

>> the numbers changed during that as well. >> it was constantly a moving target. let me mention something else as well to this audience since many of you are involved in the business today. we have left the congress but as ve greatver -- i ha reverence for the institutions i have served in. it is going through a terrible time. something different from those of you who come from the perspective the financial services sector. the days where you have people like howard baker and bob dole are gone. me, theyrowd, believe look at these issues in a very different way. populism in aof a way that is worrisome to me in terms of how they look at the financial services sector. one of the classic examples we when you had rand paul

guam the language of the federal reserve to require an audit from the federal reserve. >> on the open market. on the voting process by which the open market sets the rates. >> had that amendment been adopted, i don't think barney and knight could've gone forward with the bill. -- and i could've gone forward with a bill. oftroying the independence the federal reserve could've easily brought the whole bill down. as a result, they came very close. the amendment was about to be offered by bernie sanders who joined with the most conservative members of the senate. they join together on that proposal. bernie sanders, i talk to him a great lengths and he decided to i and change that. as a result, the amendment was not offered. we dropped the house provision. had that e