>> i did a great job with it. the league was failing. i came in late when the league was failing. got 18 for peanuts. -- got the team for peanuts. it was a failure. people don't know that. when it became hot, people started noticing it. if i'm doing this, it will be first class football. audiences -- i learned a lot through the apprentice. the television audience disappears. i said to them that i will do but i think the nfl owners -- there aren't too many around that remember that.

i think they gained a lot of respect for me. i have been told by a couple of them that it was amazing the job that i did. i got more and to sign a contract is one of the great linebackers of all time. i think that they respect what i did and respected a lot. . don't see that as a problem we got out of atlantic city about five years ago. we sold and the timing was good. re. not too much in thei >> do you ever worry about your brand becoming damaged? --at could damage it is to what could damatge it? >> to go back to facebook, twitter, instagram.

something about me that is false, i will hit them hard. they will disappear amazingly. somebody's real wiseguys. -- many use bankruptcy. it is a tool. when i use it, i buy a company compact outlet into a chapter, i negotiate the hell loans and the problems it has, they say that from house bankruptcy. they don't sit with other guys. i let people know that it is not right what they are saying. they attack my hair. it is mine. come here. [applause] is there a nice woman that would like to inspect it in the audience? r. is actually my hai what a horrible wig.

but people keep going. i like to defend myself. about the newg media is you actually can if you have enough followers. millions. it is interesting. sometimes i will be attacked and that i will attack back really viciously and i will never hear back from that person again, especially if it is a famous person if it isn't, what do they have to loose? i was attacked by cher. she did not like my politics. i hit her so hard, she still doesn't know what happened. o'donnell has gone around saying the worst thing i ever did was to attack donald trump. she attacked me. i had a young woman of miss usa. lovely young woman. she was going to be fired from miss usa.

they can to my office to get the final blessing. there was a news conference good it was packed. i met the girl. a nice girl. i said, don't fire her. crown away in her fire her and humiliate her. she has a problem with drugs and alcohol. don't fire her. says, go easy to give someone a second chance? i get a call from entertainment tonight. did you hear about rosie o'donnell? i have other things to do. they told me. i hit her like no one has ever hit her before and that was it. she goes around telling people it was a mistake she made. when someone attacks you, attack them back to stop it. get it stopped. it is so important. in my opinion, so important. that is wait is. go ahead. -- way it is. go ahead.

[applause] >> a personal question -- what do you do for relaxation? >> i build buildings. [laughter] ivanka said the other day, do ever go away, daddy? i was in dubai, but we are doing a massive job. ares in scotland where we doing something big. we were also in ireland. different places. that to me is relaxation. as someone said you are going to be in a location and you're going to go to some beach and can you share phone, it would not be healthy for me. what i do and what i like doing is working. it has been a lot of fun. but a lot of people to work. thousands of people that work for me. health care, education. they were not worried about obamacare.

i take good care my people. so many different people are working because i love to work. that is the thing i like doing the most. [applause] time.are almost out of we have a couple of housekeeping matters -- matters to take care of. i would like to remind you about our upcoming events and speakers. tomorrow, dr. ben carson, neurosurgeon and author. june 11, hollywood rotter and director ni schama lawn -- m. nightd director, shamalan. peace andsing security and the african region. ixt, for the first time that can recall, a double presentation of our brand, the

national rest club mic to ivanka trump.ald >> thank you. >> how about round of applause for our speakers? [applause] thank you all for coming today. i would also like to thank the national press club staff. yes. we will asked the last question. jerry always reminds me of that. i always skip over the last question. i would like to thank the national press club staff and the broadcast center for organizing today's event. the last question -- you can make it short or take the two minutes. if you had the power to fire one

person on the planet, who would it be and why? [laughter] this is such an easy one, isn't it? [laughter] but i won't do it. too corny. we are a great country. we have great potential. let's live with the 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. great ones.r we can do what no one has ever done before. we need great leadership. we need it quickly before it is too late. thank you. [applause] if you would like to get a copy -- [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. [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute]

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clark's c-span's new book, sundays at eight includes journalist and applebaum on the fall of the soviet union. of the problems that we saw at the end begin at the very beginning. i spoke already about the attempt to control all institutions and control all parts of the economy and political and social life. when you do that, when you try to control everything, you create opposition and attentional dissidents everywhere. if you tell all artists they have to paint the same way, and one artist says he wants to paint another way, you have just made him into a political dissident. if you tell boy scout troops they're not allowed to be boy scouts, and now they have to be young pioneers, which is what happened in a number of countries, and one group decides they don't like that and form a secret underground boy scout

troop which absolutely happened. underground scouts were very important in poland through the communist. , you have created another group of political opponents from a political teenagers. >> read more of our conversation with anne applebaum and other featured interviews from our interviews. now available for a father's day gift that your local bookseller. >> former senate banking committee chair chris dodd and former house financial services chairman barney frank took part in a discussion about the financial regulation law that bears their names. comptroller ofhe the currency and boston university hosted this event. it is just over an 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 session is moot because the

dodd-frank act resolved 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 -- to have an abraham lincoln look-alike contest so he grew a beard. we are delightful for that. amy friend -- take no offense but if you read "an act of congress" she and jim siegel are as much responsible as that statute as are messrs. dodd and frank. amy is the senior deputy comptroller of the currency and chief counsel. this is her second session at the occ so you can say she is

occ through with a brief stop off at the promontory group. 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 congressman 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 wall street reform and 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. chris dodd is a senator from connecticut and he was the chairman of the senate committee on banking, housing and 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. you know them well from 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 overhauled the credit card industry. they also worked on and passed

the housing and economic recovery act which created the federal housing financing agency. it provided the authority for government backstop but beyond that, they are also incredibly accomplished rate legislators. congressman frank worked on for housing, equal treatment and antidiscrimination issues. senator dodd was the author of the family medical leave 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 all of these banking committee issues, felt i had a front row to history and got to see your formidable 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 evaoprate 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 bill, but 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.

jim bunning 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 was curious why he parked much of his nation's wealth into the united states. he said for two reason -- one, no other country in the world is as good at making money as u.s. financial institutions are. he said the second reason for doing it is more important in

-- than 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. i lost money and made bad bets 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. as i look at the financial structure, i don't see people sending the money elsewhere are -- or 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. i am convinced chris worked on bipartisan things with dick 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 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 looked at the reasons they give 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 bail out 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 inexplicable. people's behaviors are coming back.

-- show that confidence is 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, what 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 congress of the senate to give 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. so the argument is that the 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 the tarp passed. 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. we went to -- we worked hard 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 -- and there does remain some skepticism. one of the things that has been discussed is breaking up the big banks, restoring glass-steagall -- 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? if we are going to break 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 volcker rule. as i look at the causes of this, i think 100% securitization is a big part of the problem. nothing in glass-steagall would've prevented countrywide 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. elizabeth warren who is a proponent of putting back -- the repeal was not the cause of the crisis. >> i agree with what barney just said as well. my view is that the issue is not 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 its 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 break up institutions 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. to what maximum size if we were going to take deposition should -- to take that position should we allow a financial institution to be? >> i agree with barney on this. i voted and supported as did 90% 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.

i think it is a mistake. we need to have 21st-century ideas on how we deal with these matters. even if you did today what we went through in 2007, 2008, it would not have done a thing. >> 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 by basel-3. does the act sufficiently address the buildup, the potential buildup of risk outside of the traditional

banking system such as through the fsoc? is it the right way to go in the long haul? >> i believe so. with fsoc, the idea that every time something emerges, new product line emerges or some new institution emerges, you cannot go back and pass legislation every year or two. we are talking about a global marketplace. we care deeply about this. someone is going to lead on these issues around the world and if we didn't, someone else would. i want to play by someone else's rules. the united states want to 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 made 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 you can watch product lines and respond to it in a timely fashion. it 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. it did become the crisis of september 2008. consumer protection -- to me was stunning in a way of the objections of having a way of consumer 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. >> we did actually deal 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. senator warren magnusson once said it is competition. i talked to 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.

we did only one thing did we ban 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 did it was substantive rules 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. i think in those two areas we 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. we adopted a section that had superstate mortgages to adopt risk retention. the regulators at one point were proposing to have the exception eat up the rule. 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 protection. >> that is alive debate among the regulators. it 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. the transition from having hundreds of thousands of people aggregate you to private life is -- aggravate you to private life is a good transition. [laughter] that was not hard. we used to 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. >> i have a comment now that i have changed jobs. i've been asked a lot about that transition. i left one group of bad actors. [laughter] >> transitioning now. during the formulation of dodd-frank, there was some discussion, particularly in the senate, about regulatory consolidation. senator, you had a proposal that would have taken the supervisory authority from the fed and the fdic and consolidated it along 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? >> we did abolish the division. -- the ots. 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 fig leaf dispensation. we had the votes to do the first. the next big thing chris talked about. alan greenspan always argued if you did have some regulatory authority in the fed, you would not be able to have monetary policy. at any rate, that was not the major problem. the major problem came and the representative of one of the objecting groups is here.

the 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 we had to deal with game from the credit union's from the insurance agents and the retail banks. the community banks way outweighed 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 getting put

-- being put in the occ because they want to be put with the big banks. >> in 2009, i proposed a draft, a discussion draft of a bill that did basically consolidate and provided a single potential regulator. 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 other 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 colleagues, they didn't know what they were talking about so the idea of consolidation -- we got rid of it. we actually grew the regulators.

>> if i had a magic wand one consolidation we would've done was -- in no rational world would you have a security change commission and the commodity and futures trading 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. >> that was -- the supervisory function. we tried to find where you can

actually point to minutes in fed conversations where the supervisory function had never been a part of consideration on monetary policy. i couldn't find a single example. with all due respect, the 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 and the creation of the federal reserve system. regional banks, 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.

it 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 bunch of people that wanted zero and 10 but i could get 60 votes for three. you have to keep in mind if you don't get the 60th vote in the senate, everything dies. these numbers are not magical. they are based on the reality is that if you don't end up with a --the kind of support you need.

we had to do things we were 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. >> the gamble to me was the bill giving the federal reserve system, which it hates having, the authority to cap the amount of credit card issuers can charge retailers. it got 60 some odd votes in favor of it in the senate. you mentioned the two federal reserves in missouri. the president of one of them had been a fairly vigorous dissenter.

when you're ammending things, how about a law that says they cannot have two 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 two 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. had it 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. i want to take you back in time

to september 18, 2008. it was the day you both were called 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 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.

he 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 melt down. that is the chairman of the federal reserve of the united states saying to the leadership of the congress about the significance of the moment and the importance the act. -- to act. the oxygen left the room. it may have been just a few seconds. i left that room with a sense of solidarity and working together. i was fortunate to have a counterpart on drafting the tarp 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. i won 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 vote that could end your career.

i understand if you felt you needed to. gordon smith, republican senator from oregon, i went to him and said you were up in 40 days. if you 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 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. we have recouped the resources

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 it overwhelmingly and the second time after the crash they voted against it still, not by as much. as to that night 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. they had credibility in particular because they were not telling us of this until lehman brothers went bankrupt. i think they tried to save lehman. 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 2008, 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. one other thing about -- the 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 toxic 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. i first became educated that we needed to do something more systemic with the bear stearns failure because what paulson and bernanke both said 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 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 irresponsible lending. i know there's his argument that the liberal democrats were trying to -- beginning in 1994, 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 acknowledge the growing problem.

in 2008, you have bear stearns. many thought this was a one-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 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. when you have being paid instantaneously and adjustable-rate mortgages when the banks knew well those arms that never the consumer can afford it. they were selling that mortgage in 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 two dozen sac -- in 2006, i hank paulson told the president he wanted to try again.

the president's people said it was too much trouble. he got the right to do it. he talked to us and fannie mae and freddie mac award in reform and he was given the authority he wanted in the first two years of democratic control. you have is general deregulatory view. in 2006, as we were about to become chairs 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. over regulation. 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. chuck schumer and mike bloomberg 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 acts 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 it in 2006 or 2007 or 2008. the one time you could do it was when we did it. in my view, to come to tarp and 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. >> that a nymex -- 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 disaster. 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. i actually had a slogan 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.

the problem was 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. >> you mentioned the crisis providing the impetus for getting something done. to what extent was it the kinds -- 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 contribute to it. 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 the frank-dodd bill. they said they will think it's one person. you want to reverse the names. the fact is -- i think it is true in the house as well, and barney 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. i invited the republicans and democrats to meet together in the old historic room after a vote one night. i took a democratic and republican of the committee and assigned them responsibility to draft the various subject matters.

i asked mark warner to deal with too big to fail. i asked chuck schumer and mike crapo 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. while their names are not on it and while they don't necessarily have voted for it, they are major factors that contributed to 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 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 were the two factors that caused this bill not to have bipartisan support. >> if you said 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 house and 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 was a major piece of legislation. 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. the other thing -- in the house. 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. we can be a little tougher and 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. chris went to 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 fight came 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 -- chair 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 -- couldn't have had a better ally we plan to work out the compromises than to have barney who understood how difficult it is dealing with the senate. 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] what it really meant was you can count the difference between 59 and 60. that is where we got the 3% and we got to the exception on the question of 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. the banko 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 --