economy scenario, is that they do have the potential to deal with the failure of an individual, large financial institution without requiring a bailout, or triggering widespread economic damage. we must acknowledge the largest bank can fail. even then we won't know how effective these tools can be. i'm far more skeptical that these tools will be useful to policymakers in the second

scenario in a stressed economic environment. jobs, lost lost income and lost well, no rational policymaker would risk restructuring large firms and imposing large losses on creditors and counterparties using the new tools in a risky environment. let alone, let alone, it crisis environment likely experienced in 2008. they will be forced to bailout failing institutions as we were. we were even forced to support large bank mergers, which helps stabilize the immediate crisis, but that we knew would make too big to fail worse in the long term. the risk to the u.s. economy and the american people were simply too great, not to do whatever we could to prevent the financial collapse. i believe that we need to complete the important work that my colleagues are doing so that at a minimum, we are as compared as we can be to deal with an individual, large bank failure. but, given the enormous cost that would be associated with another financial crisis, and the lack of certainty about whether these new tools of the effective in dealing with one, i

believe he must seriously consider bolder, transformational options. some other federal reserve policymakers have noticed the potential benefits of considering more transformational measures. i believe we must begin this work now and give serious consideration to a range of options, including, raking up -- breaking up the large banks into smaller, less connected, less important entities, turning large banks into public utilities by forcing them to hold so much capital that they virtually cannot fail. with regulation at a nuclear power plant. tax leverage throughout the financial system to reduce systemic risk, wherever they live. now, options such as these have been mentioned before. but, in my view, policymakers have not yet and legislators have not yet seriously consider the need to implement them in the near term. they are translational. -- they are transformational, and that can be unsettling.

the financial sector has lobbied hard to throw out endless objections to fundamental change. in the immediate aftermath of the financial crisis when the dodd frank act was passed, the economic outlook was perhaps too uncertain to take old action -- bold action. but the economy is stronger now, and it is time to move past parochial interests. the risks of not doing so are simply too great. many of the arguments against adoption of transformational solutions are that they societal benefits of financial benefit -- giants somehow justify the exposure to another financial crisis. i find these arguments unpersuasive. finance lobbyists argue that multinational corporations do business in many countries and therefore need multiple banks. but these same corporations managed thousands of suppliers all around the world. can't they manage a few more banking relationships? many argue large banks benefit

society by treating economies of scale -- scope and scale. no doubt this is true. but cost benefit analyses must weigh the cost also. i don't see the benefit of large banks outweighing economic collapse. some argue if we limit banks in size our scopes, they will be a disadvantage relative to banks and other countries with looser regulations. if other countries want to take extreme risks, we cannot stop them. but the united states should do what is right for our economy, and establish one set of rules for those who want to do business here. given the complexity of this issue, any bold plan will be imperfect, and there will be unanswered questions at skeptical experts can point to. how can we precisely define which are systemic and dangerous and need to change? how can our plan at advantage

-- how can our plan adapt and as ther -- endure financial system evolves over decades? what if strict you were regulating some friends pushes risk on other firms? how will the new rules impact families and businesses' abilities to make important investments, and what will that mean for employment and economic growth? experts also correctly point out there is always a possibility that an economic shock that hit us in the future that is so large, or so different from anything we have considered, that it overwhelms all of our efforts. in that scenario, only the balance sheet of the federal government would be strong enough to stabilize the financial system as was required in 2008. these are all important considerations, and there are many more. we must work to address them. but if we are serious about solving too big to fail, we cannot let them paralyze us. any plan we come up with will be imperfect. those potential shortcomings must be weighed against the actual risk and costs we know

exist today. perfect cannot be the standard we need before we act. otherwise, we will be left under incrementalism, and the risk we will someday face another crisis without having done all we could to protect our economy and the american people. as david said, the federal reserve bank of minneapolis has been at the forefront of understanding the risks and challenges posed by large banks for a long time. this goes back to the 1970's, with work on too big to fail beginning in the 1990's. as david noted, one of my colleagues, ron feldman, and one of my predecessors, authored the original book on this topic, arguing in 2004, three years before the crisis -- that policy makers would not stick to their no bailout measures. they were right.

building on this important work, the federal reserve bank of minneapolis is launching a major initiative to consider transformational options, and develop an actionable plan to end too big to fail. starting in spring, we will hold a series of symposiums to explore options from experts around the country. we will also invite leaders from policy and regulatory institutions, and yes, the financial sector, to offer their views and test one another's assumptions. we will consider the likely benefits, costs, risks, and implementation challenges of these options. we will invite the media and livestream them so the public can follow along and learn with us. following symposiums, we will publish a series of policy briefs summarizing our key takeaways on each issue so that all can provide feedback, and it can begin now. we have established a website

where anyone can share their ideas on solving too big to fail. if you are a researcher, if you work in the financial sector, if you have a good idea for solving this, wherever you are, share it with us at minneapolisfed.org. we will use this to inform our plan to end too big to fail, which we will reach by year end for legislators, policymakers, and the public to consider. congress created the federal reserve system to help prevent financial crises from inflicting widespread damage to the u.s. economy. doing everything we can to address systemic risks from large banks will an important step to fulfill that. seven years after the crisis, i believe it is time to move forward and and too big to fail -- end too big to fail. thank you very much. [applause]

mr. wessel: thank you very much. you certainly, starting your tenure as president, you give us something to think about. it will take you a long time to learn how to get a speech when no one understands what you are saying. [laughter] i want to start by asking a question, and then turned to gary and don. the dodd frank act begins, to

promote the financial stability of the united states by improving accountability and transparency, too and too big to fail, to protect the american taxpayer, to protect consumers from abusive financial practices, and other purposes. your argument basically is we did not go far enough. mr. kashkari: that is correct. a lot of dodd frank has done good, and the financial system is stronger, but i do not think we have gone far enough. mr. wessel: so the boston fed gave a speech the other day. he said, we have reduced the probability of failure, and also we have reduced the cost of failure by enforcing the banks to have more capital and have in. debt that can be bailed do you disagree with those? mr. kashkari: i agree with the first that we reduced the large banks running into failure. but with trouble it is not just

the bailout. it is the economic damage that is inflicted across society. think about an analogy, the nuclear reactor. the fukushima disaster. they built a wall so high. to try to present -- prevent a tsunami from flooding. the question is, is the wall high enough? second, how devastating is it to society if the reactor floods? i don't think the second point we had dealt with that adequately. mr. wessel: ok. what do you think, do you agree? mr. kohn: no. i certainly share the objective of ending too big to fail that is allowing any large financial institution to fail, with minimal damage on the financial system and economy, you absolutely have to do that. that is part of a market system. you have to be ready not only to reduce profits but to fail. and knowing that you are -- your

shareholders and creditors have to be ready to lose money. we share a goal. you start from the premise, as you answered, that we have not done enough. i guess i am not sure. it is possible, but i would like to hear more of your arguments about why the authorities want to use the new tools they were given. one of the lessons was one reason that we had to intervene the way we did, i say we because we were on the same team trying to save the system -- because we did not have enough tools. the system was fragile. you have the resolution regime, title ii of dodd frank. you apparently don't think that is going to work, and you don't think people, are the authorities will use it. the congress has attempted to

certainly wall off the things that the authorities did to save the banks before. i don't know why those won't work. i assume the authorities would have to go back to congress for another tarp. i think it will be several generations before that is possible. this thing better work. i think -- i think the authorities will use the new resolution. or i would like to be convinced about how they could get around it. i think the new resolution's regime, once it is fully in place, probably will work. the probably is big, but i think there is a lot of baling in the -- bailing and that creditors, capitalizing the systemically important start -- parts, i would like to hear why you would

think that would not be sufficient in the next crisis. if there is more than one institution threatened at the same time. i don't know. there is a lot of stuff being done, but i think it stands a good chance. before you say let's break up the big banks, use government to intervene in the private sector in a way that's pretty major, which is taking a private entity and breaking it into different pieces. i think you have to convince me what has been put in place won't work. mr. stern: i think i largely agree with don. i think the key in the current legislation to effectively dealing with too big to fail is the process. -- the living will process.

i'm comforted by the fact that none of those proposals have been improved yet, because i think they are very difficult to do well. if they had been approved, i would be suspicious that they work with adequate quality, and they wouldn't be effective. i think it is a big mistake to dismiss that or -- personal, they are mandated by congress, and the regulators have to approve them once they are acceptable. it doesn't require any additional legislation. it doesn't require getting into political battles about who bought to do what you're it. -- ought to do what. if they are in place, they are designed to limit spillovers from a problem that one or more major financial institutions, so that the contagion effects on the overall economy are manageable. that is what they are designed to do. therefore, you don't need the government to intervene.

the jury is out. it is not obvious that this -- that the proposals, once in place, will be adequate. but i don't think there's any reason to start with the presumption they want to be. after all, regulators are on the hook to get this right. i think that is absolutely critical. i think there is a lot of promise there. i think the jury is out. if it is put in place appropriately, and if it is communicated to the public appropriately, in particular to uninsured creditors and shareholders, then you should get different pricing in the marketplace of risk-taking, and institutions going forward because you have a credible plan. i think there is a lot of potential. if i were still playing in the policy game, that is where i would start, and that is where i

would put my emphasis. mr. mr. wessel: neel, you don't think the jury is out here at what makes you so sure the system will not work? mr. kashkari: it comes back to what contagion is. imagine you are in a stressed economic environment, and several big banks are under stress at the same time. and you are a creditor of one of those banks. that bank owes you money. another bank that looks just like your bank all of a sudden, their debt was converted to equity. their bondholders are not happy, and the last thing they want is the equity of that bank. they want their money back. if you are a bondholder of another institution that looks like the first one, what are you going to do? get out, if at all possible. the contagion risk is the thing that was so devilishly hard to

deal with in the last crisis -- i'm not suggesting we will come up with a plan that will solve every economic scenario, every shock, no matter how big. but look at the environment we're in today. there is stress and increased volatility. bankshares, especially in europe, have come under trouble. donald, remember when you were there, did you think in 2008 if you had the ability to say, we are going to haircut on holders from one bank, you would have pulled the trigger? i don't think so. mr. kohn: i think if the system had been put in place a number of years before, and on had been -- bonds had been issued with the explicit promise that they would be haircut under these circumstances, i think we certainly would have tried at first -- it first, and then the bonds become equity, so the rest of the organization is much safer. the runs were on overnight

bailing in long-term creditors protect the short term creditors. that is where the danger was. i think if there are ways of doing that, i think the market is beginning to believe this. look at what is happening in europe and the prices of those. the turmoil that nearly is l ishe turmoil that nee referencing in banking markets in the last couple of weeks, the risk premiums on bank bonds, and the prices of these convertible bonds have really been affected. it feels like the market believes the authorities will at least to some of this, the creditors to increase the equity of the banks. as you said, and your speech, we

are not all the way there. the living will process needs to work out. the total loss absorbing capital, how much of the credit should be out there that can be converted, is it high enough to protect the taxpayers, are there systems in place at the fdic, the bank of england, the european central bank, to wind down these institutions and put them in receivership in a safe way -- those are works in progress. mr. kashkari: let me ask a follow-up. i like the conceptual context of the act. why be cute about it? why not just raise capital requirements? why not just make it equity? i look back in 2008, the big banks issued the structured investment vehicle's. they ended up having a

reputational obligation to build those out. it became irrelevant. it became what customers expected. how do you deal with that? mr. wessel: do you think even more capital on the big banks is a good idea? mr. stern: i don't find that by itself to be obviously sufficient. let me put it this way. it doesn't take advantage of other improvements we can make. i wouldn't put all my eggs in just one basket. i think there are a number of things that can be done. we have already talked about some of them. another thing we have not talked about, and i'm sure this will sound mundane to some people, in my experience senior bankers are willing to push back and or ignore regulatory pressure. they're much less likely to do so when they are getting it from the boards of directors.

i think that is an avenue that has been underutilized to date. i think there is something that can and should be done there. for example, you use to have an independent chairman, the ceo of the institution should not also be chair of the board of directors. you should have a fair number of independent directors. you should probably have a term limit for directors so they don't get captured by managers. etc., etc.. this is all corporate governance stuff. but is what in my judgment ought to be done, because it has the potential to improve the situation at relatively low cost. i would go down that path as well. another path, in neel's remarks, he talked about parochial interest. those are obvious in a lot of

places, one of which is battles among regulators. paul has been working on this for decades. i'm tempted to say i will exaggerate the situation a little bit, because i don't mean it, but our current regulatory structure with the fed and the occ and fdic, and i can go on and on, it is inefficient. it is not as effective as it could be, and it is indefensible. why don't we fix it? we could come up with three or four reasons why we don't. will it top too big to fail? no. will it help? yes. does it illustrate parochial issues of the difficulty of dealing with them?

yes. mr. wessel: how do we know the problem is solved? what indicator would tell you we have pretty much gone far enough to deal with too big to fail? mr. kashkari: one-way, and this is a hard thing to know for sure -- i want to reemphasize that we could never eliminate all risk. there's always a risk that a shop comes that is large. mr. wessel: you are saying we have not eliminated enough. mr. kashkari: as i was preparing for this, i was reading, and i think the fukushima reactor is a a decent analogy. wessel: i'm sure the banks appreciate that. mr. kashkari: i'm sure they appreciate the whole discussion. they were saying, there has been a tidal wave this large in the last 1000 years. that's report i just read. there has been evidence of one. i'm not saying we have to prepare for a shock that comes one every thousand years, but we just had a big shock. 80 years ago in the

great depression. those are two big shocks. its ambitious, but i would like to go for it, even if we can't get to it. mr. wessel: how will we know? we have seen rating agencies, beginning to believe that the governments will not bail out the banks. we are doing stress tests. if we make the stress test scenario more severe, how will you know when we have gone far enough? mr. kashkari: i wish i had a precise answer. this is the nature of risk. another analogy that i'm sure the banks will love, is think about airport security. we are always evolving airport security over the last terrorist threat. we take our shoes off when we go through the x-ray machine. does it make us any safer? no, because the next attack will look different. it requires judgment. i'm sharing with you based on my

experience, in 2008, looking at what we don't with, i don't really we are doing enough. another analogy, remember the general who ran the first gulf war? i saw an interview with norman schwarzkopf where he said, preparing for war is like planning and orchestra. you have all the instruments i need to, everyone knows -- finely tuned, everyone knows their parts. and then a madman goes up and starts chasing him around with a machete. that's what he said were was like. all of these things in place are sensible, but what happens when something hits us unlike anything we have seen? we should be honest with the american people and say, this could happen again. we are doing things, sensible measures in the right directions, but we want to be honest that it could happen again. mr. kohn: we have all been expressing doubt, and what i think he has is

thought-provoking -- and provocative and worth consideration. but if this effort going forward is effective, at least it provides a sense of urgency for dealing with the issue. we are six years past dodd frank. it doesn't strike me as entirely acceptable that we are still working on the details of all of this. i know what the reasons are, i know what the stated reasons are. but if there was a real sense of urgency here, i think we would be further along. mr. wessel: i should remind people, we have some questions in a bit. the colleagues in minneapolis are monitoring twitter. you can ask questions that way. neel, so congress that it does

not want more bailouts. congress has limited the ability of the federal reserve to do what it did in 2008. it has given the fdic, for better or worse, powers. are you saying that in a crunch, the fed lawyers and treasury lawyers are so good they will find a way to evade the rules that congress set up? or are you suggesting that we will be once again in the middle of the night, chair of the fed, going to congress on bended knee, saying i need tarp 2.0? mr. kashkari: i know many of my fed colleagues has said this, the idea, we all hate forest fires so let's take that houses away from firefighters -- that is not the solution. the tools we used were crucial to stabilizing the economy.

that is not the right solution. the right solution is to take action and make sure that the system is stronger, and to take bold action now in advance. when i ran for office, i used to joke that the first thing i would do as governor was banned traffic. it is easy to make a declaration, we ban this, there can be no bailouts. there can be no traffic. that is not how the world works. today, we need to be honest about what risks we face. mr. wessel: do we have anything to learn from how other countries are handling the situation? the swiss, the british and so forth? mr. kashkari: i would be interested in donald's views, since he is involved in the u.k. my assessment is they seem more comfortable having major risks in their economies. their banking sector in many cases, their percentage of gdp is larger than our percentage of gdp.

i think of that -- mr. kohn: this list has required much more capital from their banks. the british, after they got done nationalizing all the banks, have talked about restricting what the banks can do. mr. wessel: don is on the financial committee, because the british think you can learn from foreigners, which does not seem to be an american tradition. at least not since the revolution. [laughter] mr. kohn: in the u.k., we have increased capital requirements, including in the process of increasing them on the globally systemic, globally important banking institutions. a sidebar, if anything, the fact

that the banks are a much bigger proportion of in the u.k. than the u.s. makes the u.k. more intent on dealing with this. the second thing that has happened is ring fencing. they said the independent commission on banking, which was convened by parliament for five years ago after the crisis, said one way of dealing with this too big to fail issue is, let's take the parts of the bank there really systemically important, the ones that take the process and make loans to consumers and small businesses, payments run through, let's ring fenced them. let's take them apart, make them separate institutions within a bank holding company, and hold them to higher capital requirements. that is in the process of being implemented. i would note that is kind of like the u.s. system.

we have bank holding companies, depositories separate from the investment banks, and the federal reserve board has put higher leverage requirements on the depositories then on the holding company. there are considerable similarities. i think the other thing that the british are doing is taking this resolution thing very seriously. the living wills, and also, we own a financial policy committee are considering how much of this total loss absorbing capital is required. we are trying to run cost benefit analysis about, to your point, how much equity, and we came out with a number for equity. we thought, balance the cost of benefits, and then put that on top of it. basically, the british are doing the same things that are happening here, but i would say if anything, they are more concerned about this then maybe the u.s. should be, given how big the banking sector is.

mr. wessel: you correctly observed that the cost of another financial crisis is enormous. therefore, the benefit to avoiding one has to be pretty big. one hears quite a bit these days that one reason the u.s. economy is not doing better is because we have made the banks too risk-averse, that the proliferation of bank regulations that gary stern partially listed, is causing us -- is hurting us. do you think they are outweighed by the risk? mr. kashkari: i'm very sensitive to the fact that small banks and community banks are being caught up in the regulatory net that is focused on largest banks.

if we took more aggressive actions to make the large banks safer, perhaps we could relieve some of the burden across the system and free up some of the community banks and regulations so it is easier to lend to families and small businesses. i take that seriously and i think we can address that as part of the solution. mr. kohn: i would like to pick up a point that gary made. gary's point about fragmentation organization of the regulatory structure. i used to think that we kind of live with it, and people were -- i don't anymore. i think it is a very serious problem. one reason it has taken so long for the dodd frank rules to be put in place is it requires cooperation among all these agencies, and they each have a slightly different perspective. finally, i think the

organization, one big way in which the u.k. is organized differently from the u.s., is the financial policy committee. there is a committee, a little bit like fsoc, but doesn't have 10 agencies sitting around the table, focused entirely on the systemic risk and the resilience of the u.k. financial system to a tidal wave. to a serious tail event. we have been given the tools, including in residential real estate, which are not really here in the u.s., and capital, liquidity to do this. whether we will be successful over time, only time will tell. but i do think the u.k. is much better organized to keep the system safer than the u.s. with warring agencies. many don't have an explicit financial stability mandate. mr. wessel: do you take

seriously the claims of the banks and others that all this regulation and the cacophony from regulators is hurting the economy? mr. stern: only partially at best, for a couple of reasons. i agree that it does not make a lot of sense to me to include community banks, and banks that are clearly not systemically important in the same umbrella. that is a waste of resources in a lot of ways, and we are smart enough to fix that. but we see after every recession, a reaction from the regulators, which is to tighten things in the financial services industry. that is always followed by concerns that many in some cases, now credit is not available. and then people get over it, and life goes on.

we have seen that before. i think we are seeing that again. i think the best way -- they are not mutually exclusive, but the best way to understand what is happening to the u.s. economy in the wake of the financial crisis is --they wrote a book. i think it is called "this time is different." that is tongue-in-cheek. have a sense of historical researchers, across time. the message of the book is economic recovery following serious crisis turn out to be disappointing and substandard, etc. not wholly independent of what policymakers do, but largely independent, and it is the hangover of the financial crisis. if i were trying to understand the performance of the u.s. economy in the last six or seven

years, that is where i would start. mr. wessel: one final question before we turn to the audience. that is about the politics of making a speech like this now. there are line senior speech -- lines in your speech that i can imagine bernie sanders or elizabeth warren saying. it is not what one expects from a goldman sachs republican who is responsible for ripping off the taxpayers during tarp. [laughter] i'm curious, what is going through your mind? what led you to decide a couple months into the job that you wanted to lay in the sandbox and be this provocative? mr. kashkari: i was interesting in -- interested in joining the minneapolis fed cut that wanted to take on the biggest economic and financial challenges we had in the country. i did not know what they would be. when i got there i found a lot of expertise on too big to fail, and large banks and regulation. when i talked to my expert colleagues about my concerns -- when i wrote about this, i gave a speech at the chicago fed in

2011. after. bank was passed, i said -- after dodd frank was passed, i said, we have more work to do. those were my ideas. as i got into the bank, i started turkey to the experts, and i realized there are still -- i started talking to the experts, and i realized there are still big risks. one of the fed submissions is financial stability -- fed's missions is financial stability. i wrote the first draft of this in december before i even had started at the bank, and i wanted to get my colleagues reaction to it. here we are. mr. wessel: let's take questions. i have a microphone and i want people to stand up as they say a question. tell us who you are. why don't we start over here.

>> hello, thank you very much. i would like to ask regarding the relation between debt and deflation. [indiscernible] global debt from $150 trillion, is it a new environment where we are seeing inflation in many countries, do you think this will be a challenge for the financial sector? mr. wessel: so you are asking, if we are in a time of falling prices and deflation, does that make the debt problem even worse? mr. kashkari: there's no question if we were in deflation.

that's part of the problem. it makes the debt overhang so much worse, because the debt grows in real terms. that is why i think central banks around the world are committed to, achieving their inflation targets in the fed's case, it is the 2% target. >> all you call for is more study, academics will always be in favor. let me see if you agree with this. there are a lot of people who think interest rates up to be managed in part to avoid financial instability. it strikes me that decision to move arbitrary policy in ways that are inc. stint with the near-term -- inconsistent with the near-term inflation mandates is a very big cost, that people are undertaking because they are worried about implications of that build up. -- debt buildup. would you agree, that structural changes better potentially than monetary policy? mr. kashkari: absolutely. some of my colleagues ran a scenario, imagine if there was a dry bubble, what tools with a use?

they found themselves very limited to try to deflate the bubble, which is a very difficult thing to do because you cannot target it. if we can make the financial system stronger on its own, you are releasing burdens on monetary process. some people argue we have too many mandates, instead of just an inflation mandate. now we have a dual mandate. and a financial stability mandate. as you said sometimes they are , in conflict. so i do agree with that. >> sometimes i worry about the macro policy that could mean

against buildups of imbalances in the financial system, because i think it would put more pressure. i prefer to do that before monetary policy, but i think another response to your concerns would be to do something about the regulatory system build up, the capabilities in the u.s., and organize them better. mr. stern: for better or for worse, i don't necessarily agree with that. one of the last things i wrote when i was at the minneapolis fed was trying to raise the issue of should you use monetary policy to deflate asset price bubbles, recognizing that identifying a bubble is not the easiest thing in the world. i suspect don's quite uncomfortable is that, but it is a cross benefit. given the cost of the financial

crisis and looking back at it, it seems to me it was worth asking the question, should monetary policy have a more restrictive, prior to the crisis? the cost of the crisis turned out to be so great. i don't think you can just dismiss that. there may be better ways of addressing it, although frankly, i have yet to hear a clear definition of what macro prudential regulation is, much less how effective it might be. i don't think you can just dismiss it, because the cost benefit and the last financial crisis -- mr. kohn: i think it is not that it should be dismissed, but it is not a good place to be if that is our first option. it would involve raising interest rates so much in order

to burst a bubble, that we would have other ways to do it. mr. stern: i'm also saying we don't know how much it would take to raise interest rates. one of my former colleagues were sitting here. i don't want to put words in their mouth, but i think they would say, it is, a surprise increase in interest rates would have a big effect. the fed has worked very hard at transparency, and helping market participants understand what is coming, and if possible, when it is coming. but that is not the only policy. let's have the cards on the table. mr. wessel: i think there is a question in the back. >> thank you, sir. i really like the metaphors you use, nuclear reactor. i have to ask a question about where we still are since 2008. do you leave the economy is still on my support, because we

are still having to keep interest rates low, and we are still having money being pumped into the system? do you believe that is still the case, or do you think it will be changing soon? mr. wessel: let's take another one, over here. >> it took four years for real estate prices to drop by a third, because there were so much time and thought we were able to build paper on paper, and it created a huge worldwide economic crisis. the banks proved they could do it again in six months, where they were lending aggressively to the oil patch, at $100 a barrel. six months later, oil dropped 75%. because they did not have enough time to build that into a huge worldwide thing where there was paper builds on paper, and so on, it seems like the crisis is

not quite the equivalent. my question is, about the only thing we have seen out of congress is that they took the slush fund money the fed had that helped stabilize the last time around, they took the money and used it for the highway bill instead. i'm wondering how important do you think losing that emergency tool may prove to be. mr. wessel: one more, the gentleman here. >> i speak as a laymen. on the street, we still believe the big banks will be better. dr. frank is still fighting the last war -- dodd frank is still fighting the last war. mr. wessel: maybe you can help clarify this. does the fed have the financial

capacity to deal with the crisis if one occurs? >> i would not characterize the fed's capital as a slush fund. the capital itself did not really play at role in any of the things that the fed did. i don't agree that taking that was a great idea or a good way to finance highways. there are better ways to do that. i don't think that by itself doesn't affect the fed's ability to do other things, make loans in particular, in a crisis. i think congress has constrained that, particularly loans to nonbanking institutions.

they have to get permission from secretary of the treasury, there is a lot of emphasis on security, and a lot of transparency, that i worry about the restrictions already on the fed's ability to take loans, and it has nothing to do with the highway bill. mr. wessel: neel, do you think it is correct to characterize the u.s. economy on life support? mr. kashkari: no, i think we have come a long way and the economy is stronger. if you look at the statement in january -- that was my first meeting. mr. wessel: did you say anything? mr. kashkari: i did. can you imagine me being quiet? the economic outlook is for moderate economic growth. if the reality ends up at the outlook, i think we will be heading in a better direction.

mr. wessel: over here. >> thank you, very much. a lot of interesting points here. i'm going to go one step further. i think the regulatory agency has failed us miserably in the last crisis. do you believe they have been rehabilitated enough to get us there another one? my real question is, are we over engineering these regulations? it seems to me that maybe people should have looked up the on their computer models -- beyond their computer models and actually see what was going on on the ground. prices went up, wages were flat, mortgage rates, nobody questioning that. maybe we have to inject more common sense than regulation into the equation. mr. wessel: the gentleman behind you.

>> thank you, i am from the japanese embassy. you said that the transformation options are necessary, if they include also breaking up banks. i think the dodd frank act already gave regulators authority to break up larger banks, in case they are insufficient. but do you think further legislation is necessary, and could you explain the measures? mr. wessel: you are saying regulators already have authority to write up, that brings are you suggesting --

break up big banks? mr. kashkari: my view is to do anything transformational, we would need new legislation. i agree the authorities have the ability within a living will framework, the fdic and fed, to target individual institutions. but my personal opinion, i don't think the intention of congress was that dodd-frank was meant to be a tool for transformation of the financial sector. i think it is absolutely appropriate and necessary for congress to weigh in on and take an active role in deciding what did transformation looks like, rather than using one little tool and using it across the whole system. mr. wessel: we have some questions from twitter. >> one theme being talked about is the difference in treatment between the large banks in the small banks.

a question that, isn't there still contagion risk among small banks if a number, if many of them are involved, have those risks weighed against the risk by the large banks? mr. kashkari: when you look at the savings-and-loan crisis, you have a thousand small loan sales. i was devastating for communities. that was a bad thing. but there was no broader risk of economic contagion or broader collapse. if we can get the financial system -- system where we can take on major shocks with out requiring -- without triggering downturn, that could be our goal. >> there was a recession, and the recession was prolonged, and recovery was damped by the

credit restrictions that occurred after that. so i guess, if you took a big bank that was systemically important, and broke it up into eight smaller banks, but each had the same balance sheet, and the same strategy, you wouldn't be doing anything. mr. kashkari: agreed. if you break it up and there is no change in behavior or model, but when you have corporate governance with different ceos and boards, with different geographies, that will probably not be the situation we will end up in. i'm not saying breaking up the banks is one of this -- is necessarily the solution, it is one of the solutions. >> i'm not persuaded that even a large number of community banks would pose a systemic risk to the settlement -- financial

system. community banks sometimes like to invoke that for liberal playing field considerations, but i don't find it convincing. mr. wessel: the woman in the brown? >> full disclosure, i was one of those regulators along time ago, not in the most recent crisis, but i was certainly involved in the new england commercial real estate crisis. mr. wessel: which regulators? >> the occ. i think one of the things that needs to be addressed is banks failed for two reasons, liquidity and capital. capital is assets minus liabilities. when you -- in terms of systemic risk, when you have assets that are concentrated, you have systemic risk, whether that it

across a variety of small institutions or concentrated amongst large institutions. i think one of the things you have not addressed, you mentioned it and kind of slid through it, was if we look in the united states, you don't have to look at it globally. but the thing is, our economy has changed. we are in a much more fluid, much more global economy than ever before. i wonder what would be the implications, if we make a regulations, if we look and say, let's make them smaller, or more controlled through taxing them or requiring massive amounts of capital requirement, wouldn't that funding move overseas anyway, and therefore wouldn't that create the extra -- negative externalities you are talking about before?

mr. kashkari: i understand your concern. my focus is, we have to control what we can control. in it ideal way, everyone would share regulations and there would be perfect harmony. but we have to control what we can. we have to make changes in the u.s. to make the u.s. financial system sound, let's have one set of rules, so if foreign global banks want to do business here, they have to follow the rules. i expect small and midsize banks in the u.s. to grow and fill some of the voids that may be created. the other thing is, we have to implement it gradually over time. i expect to see the banking sector evolve and adjust to fill whatever gaps may be created. >> thank you. you and the chairman talk about

the possible interaction and interference of monetary policy in macro prudential management. i'm hoping you can discuss using ways in which the most recent innovation helps or hinders financial institutions. mr. kashkari: i will refer back to chair yellen's testimony. just on negative interest rates, i think it is something the board of governors and fed loan says they have the authority to use if necessary, but the current outlook is for moderate economic growth, and largely increasing interest rates with inflation going back up over the medium term to our target. i would leave it at that. >> i don't think it is necessarily affect the ability to regulate. interestingly, the federal reserve board is stressing the banks against negative treasury bill rates, anyhow. in the most recent stress test, the one they will be doing this

year, they are asking the banks to tell them how their capital would be affected if interest rates went into negative territory. >> part of the selloff we have seen -- [inaudible] i'm not just asking the economic question, but clearly in imposing negative interest rates to whatever degree on banks, affects the ability to operate. i'm curious whether, from a regulatory perspective, that helps or hinders or has no impact. mr. kashkari: i would say, i think these are things that are looked at very carefully.

those are factors that would be considered as the committee moves forward. mr. stern: you used the term transformational change because of the risk -- >> used the term transformational change because of the risk. and then you go on to list others as potential transformational change. as soon as you -- my thought is, as soon as you mentioned breaking up the big banks, nobody hears anything else, and writes off the whole idea. therefore, some of the other ideas that you mentioned, and that have been mentioned by your code panelists -- co-panelists, like corporate governance change, and regulatory consolidation, these are transformational in their own ways, and they do not conjure up

i appreciate your comment and i think there's a lot of wisdom in what you said. we are not announcing a solution or a process to bring together solutions. there are a lot of bold transformational ideas already out there from experts across the country. in my view, that we have not given them consideration they deserve. i'm trying to bring them together to give those options series consideration, and then figure out what the best combination may be. mr. wessel: man in the orange shirt. >> i wonder if the panel agrees capitalism is dependent on economic growth, for suitability as the basis for the economic system. if we are in for a prolonged period of economic stagnation or even negative territory, my capitalism be replaced by a system that isn't dependent on you three -- usury?

you >> most of the models used by central banks in decisions assume little things. one is the risk is time varying and [indiscernible] in the assumption that -- [indiscernible] does monetary policy have a role? mr. wessel: what risk are you talking about? >> the risk assumed to be endogenous. the event that it actually is exogenous, does monetary policy have a role?

premium depends on the risk appetite and that might the affected by things outside of monetary policy like geopolitical risks. at the same time, monetary authorities recognize what they do and how they are perceived to be operating, what the future what the future has as far as an effect on risk premiums. -- is what we are talking here the end of capitalism? that we can't kept a market economy with banks that are privately owned? we need have a market economy

where we can have the prosperity and innovation and take off some of the risk and collapse off some of the table. briefly, why now and why you in terms of your leading on this issue? >> i just started at the minneapolis fed, so i'm moving as fast as i can. feel like what i bring to the table is a unique perspective as being one of the few people on the front line responding to the financial crisis and that colors my views on the various reforms that have then implemented. the minneapolis fed does have a lot of expertise and bringing these things together so that we can do more -- the last thing i will say is there are a lot of

experts around the country who have strong opinions about this. we are trying to create a process to bring those together and say let's find a better solution. not'm surprised you aren't seeing the single point of entry approach. enoughs if you have total loss of capacity, it was hard for any bank to run through it. using the single point of entry, you are able to resolve them either through title i or title ii. why haven't we solved the problem? why are you wanting to do things that might come up the gears

more. why not recognize the innovation for what it is? is --shkari: mike concern my concern is if it is really that credible and is not going to trigger contagion, it will be price like equities. why not raise the equity requirement incident adding all this interaction? all this -- i will give you an example. freddieout fannie and in 2008. they were technically never supposed to be the responsibility of the u.s. government, yet we had to put the taxpayers behind fannie and freddie. fannie and freddie also had subordinated debt to recapitalize the firms. there specifically to -- ide protection

do points. you are saying that basically we can't take the government at its word? they would never allow bondholders to take the hit. that is a separate question -- what is the answer? what is the advantage of that having them hold more equities? is it cheaper? appeals diversified, it to different investors. it will pay interest until it converts to equity. these are new types of instruments, particularly those convertible bonds we were talking about earlier. in the u.s., they are not

issuing those. they are issuing more equity but more preferred shares and other subordinated debt at the holding company. there are different investors, --ferent characteristics and there was no legal requirement -- ine banks to bail out the midst of a crisis, they look healthier until the management said we have a reputational requirement to stand behind. is theseg the lesson very clearly goal frameworks telik clear today are not so clear in the time of a crisis.

mr. stern are you going to go to market to market accounting? it seems to me that is critical here. otherwise regulators, the losses get delayed. until we find out it is swamping capital. i know a lot of people and financial services, there was a rat running around the room. it takes a model to lead a model, so what is better? mr. kohn: i think regulators have been pushing more than they have in the past. the market to market is very useful but is tricky on the liability side of the balance sheet. it can -- when these bonds a selloff, the banks have more equity.

it is a tricky issue. recognizing the value of the assets, and the impairments, it's absolutely critical for the health of the system and the market discipline. mr. stern: the gentleman in the front that will call it a day. >> i wanted to go back to the announcement of the minneapolis initiative. you look knowledge is that it will eventually require congressional action. that is probably the biggest obstacle given that a lot of members of congress don't agree with your initial premise. how does your initiative address this impasse? >> we are seeing variations in

the global economy right now. do you think it's possible to next financial crisis could be triggered not from here but from a foreign market? mr. wessel: are you going to fix congress while you're at it? mr. kashkari: we could go disappear into my closet and come out to nine months and come up with our answer. the reason we are having a public process with bringing the experts in is to also educate the public along with us. hopefully, we can get members of congress in both sides of the aisle to pay attention and take this seriously. we have to do it if we can to try to get there. >> will it have its origins somewhere else? mr. kohn: i think that is pretty

high. many of the weaknesses we are hearing about is less in the u.s. and more overseas. but also anchoring systems throughout, and to agree on resolution regimes, to agree on higher capital. to agree on a framework that will make the system much safer and more resilient to shocks, wherever they come from. everyone is very aware they could come from anywhere. neel's point it's absolutely true. whatever trigger something bad coming down we probably won't see it until it is right about the less. earlier, somebody mentioned oil prices.

should we have seen that? mr. kashkari: i don't know anybody who said there was an oil bubble and we need to take action to protect various sectors of the economy. things happen. we need to be humble about how well we can predict them. >> i don't think we will identify the next source before the crisis happens. i think that is highly unlikely. the best thing we can do is be as prepared for it as we can. to me, that means getting and straightening out the incentives. mr. wessel: do you think we're better off the day before this all started in 2007? mr. stern: yes, i think we are clearly better off. we may be on second or third base. but, we know where home plate is. at least, i think i know what home plate is. we have to get there. mr. wessel: with that, please join me in thanking our panel. [applause]

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] about 45 minutes, c-span's road to the white house coverage a marco rubio campaign rally in south carolina. he will meet with supporters and joining him will be republican governor nikki haley who is inspect third -- who is expected to endorse the senator. tonight, remarks from national security council counterterrorism director, attorneysenthal, and thomas wilner on the potential closing of the guantanamo bay prison in cuba. represented guantanamo detainees in court and talked about why he believes the prison should be permanently closed. is terriblyo

important to this country and i'm worried about the people there and i want them treated well and i want them home. but i'm worried about what it means for the country. guantanamo was established to avoid the law. whole purpose of guantanamo, the bush and ministration considered the law and impediment that it had to avoid. if we put foreigners in a place outside our sovereign territory, we can avoid review by the courts and deprive them of legal rights. although we won the case with the right to abs corpus and they have the constitutional right, the d.c. circuit says they do not have the right to due process. if the government can put them there, they are beyond the reach of the constitution and that's a country.thing for this i find it reprehensible. i not only want the people home,

i want the law corrected so the united states can stand by its principles and not avoid them. event onas part of an guantanamo bay held at fort of university in new york. you can see the entire event tonight at 8:00 eastern on c-span. journal, on "washington " a discussion on the impact of antonin scalia upon death on the 2016 presidential race stop then 2017harrison examined the defense budgets. then mark morreale looks at the role african-americans will play in the 2016 elections. plus your phone calls, facebook comments, and tweets. >> american history tv on c-span

three presents programs that tell the american story. we continue our story on the vietnam hearings. we will hear the special johnson,t to president followed by committee member questions. >> our purposes equally clear and defined. of 1865,ltimore speech president johnson did so in the following term -- our objective influence from south vietnam at its attack. we want nothing for ourselves, only that the people of south the it be able to guide their country and their own way. been our basic objective since 1954 and has been pursued by three successive administrations and remains our basic objective today. >> next saturday, dean rusk gives his testimony defending johnson's the anon policies. for the complete schedule, go to c-span.org.

c-span's coverage of the presidential candidates uptinues this week leading to the south carolina gop primary on saturday, february 20. live coverage starts at 730 eastern with candidate speeches and your reaction to the results. >> earlier today, texas senator and republican residential candidate, ted cruz, held a news conference in south carolina. he addresses the ongoing legal feud with donald trump and discussed saturday's south carolina primary race. this is 35 minutes. mr. cruz: this letter, i will say, having practiced law is one of the most remarkable letters

i've read. mr. trump's lawyers contend that advertisement you just saw is an attempt to materially mislead the public and he provides more detail. ad is notis attack only completely disingenuous, ,ut replete with lies, false defamatory and distractive statements and downright fabrications. the letter goes on to say that add blatantly misrepresents to the public that mr. trump is pro-choice and nothing could be further from the truth. concludes by threatening that if we will not pull down the ad, that mr. trump

will seek immediate legal action to prevent the continued broadcast of this ad and to hold me jointly liable for any damages resulting therefrom. trump yousay to mr. have been threatening frivolous lawsuits for your entire adult life. even in the annals of frivolous lawsuits, this takes the cake. so, donald, i would encourage you, if you want to file a lawsuit challenging this ad claiming it is defamation, file a lawsuit. contentionarkable that and had that plays video of donald trump speaking on national television is somehow defamation.

the operative words in that bad come from donald trump's own mouth and i understand if a candidate has a record like , how he could consider anyone pointing to his record to be defamation. if donald trump files lawsuit he threatens in this letter, that anduit will be frivolous, it will result in both donald trump and any lawyer that sciences name to the pleadings being sanctioned in court for filing frivolous litigation. ends inre the lawsuit sanctions for mr. trump, it will be important to try the merits of the case. any first year law student can tell you, and a defamation case, truth is an absolute defense

which means the substance of the case will be whether or not donald trump has been pro-choice. i would note in the ad that we don't say donald is pro-choice. we simply play video of him saying he is very pro-choice and he is pro-choice in every respect. but, if mr. trump follows through on his threat to file a there are atwsuit, least four data points that will be relevant in litigating this lawsuit. number one, the tim russert interview. his own words on national television are a matter of public record and by definition, repeating someone's own words cannot be defamation. one again, what he said national television is that he

is very pro-choice, he would not been partial-birth abortion, and is pro-choice in every respect. a second data point that would be relevant as mr. trump's 2015 thatin august of he believes his sister would make a phenomenal supreme court justice. who is his sister? his sister is a court of appeals judge appointed by bill clinton. an extremehas left-wing record on the issue of abortion. his sister is an appellate judge who struck down the new jersey -- banning partial board partial-birth abortion. new jersey is not a red state, yet donald ross sister concluded it was irrational to ban partial abortion.artial-birth

that's a fringe legal of pinion on the x -- a fringe legal opinion of the extreme left on pro-choice. donald trump, not 10 years ago, not 20 years ago, in august of 2015 said he thought his sister would make a phenomenal supreme court justice. i suspect there are a lot of pro-choice democrats who might disagree. a third data point in any litigation where i would remind trump's lawyer said the ad of blatantly misrepresents to is pro-choice, there can be nothing further from the truth. that donald trump has been pro-choice for the first 60 years of his life are his

contributions to democrats. donald's clinical contribution history is truly remarkable. this is a republican presidential candidate who has given money to jimmy carter, to joe biden, to hillary clinton, to tom daschle, to ted kennedy, to chuck schumer, to charlie wrangle, to anthony weiner, to john kerry. seeing a panoply of pro-abortion democrats that donald has supported not just once, but for decades, devoting his own money to helping elect and reelect those candidates. carolina who south cares about the service of

supreme court justices, we know as a fact that donald trump does not care about conservative supreme court justices. why do we know that? because nobody cared about supreme court justices would make contributions to these democrats. that is fundamentally incompatible. you cannot be funding the democrats fighting for liberal judicial activists on the court and claim you actually care about having conservative supreme court justices. the people of south carolina should know if donald trump ever became president, we would see consistent with his lifelong pattern of who he supported, that his sister, a radical pro-abortion judge would make a phenomenal supreme court justice. the dailywould note

caller reported that between 1989 and 2010, donald gave --4,300 to, craddick groups even in donald's world, that's not chump change. if you look at the 2006 election cycle, when the democrats took over congress, donald and his son donated 77 thousand $200 to the democrats versus only $27,000 for republicans. his excuses he has two by influence because he's a businessman. he's putting his money overwhelmingly demoed a -- on the democratic side. a large share of trump off donations were given to congressional committees dedicated specifically to

gaining majority control of congress. that is not buying access, that's not being a businessman of playing the game, that is helping fund the democratic takeover of congress. the people of south carolina think it was a good thing harry reid and nancy pelosi became majority leader and speaker of the house. you can think donald trump for helping fund the political effort to make that happen. i would note that if donald had been unsuccessful in helping democrats get majorities in both houses of congress, we would never have obama. donald trump is a direct cause of obamacare passing. because if either house had in republican control, obamacare never would have passed and donald trump helped fund the democratic takeover of both houses of congress.

nobody who cares about conservative judges would help fund turning the senate over to the democrats, putting harry reid in charge. evidence that of would be relevant in any defamation actions trump might comment not a year ago, not 20 years ago, his comment four days ago on the debate stage where mr. trump said planned parenthood does do wonderful things. planned parenthood is the nation's largest abortion provider. they are responsible for the deaths over the years of millions of unborn children. supportingife and

planned parenthood are fundamentally incompatible. nobody who is in fact pro-life would utter the word planned parenthood does do wonderful things. i look forward to any lawsuit. one of the things i look forward to most of all is deposing donald trump. endeavor, iticular may well not use outside counsel. i may take the definition myself. awill say this -- whether in position or court of law, getting donald trump under oath under penalty of perjury answering these questions, i will point out it did not work out well for bill clinton. does not want to be under oath answering questions about his own record because his position quite amply is quite simply that anyone who points to

his record is somehow lying. threatened lawsuit is the very definition of frivolous. donald has had a long career of using great wealth and power trying to bully others and threatening lawsuits has been one tool he has used. the bullying is not going to work here. i will note in addition that both donald trump and marco have followed parallel strategies in this campaign built on two elements -- number 1 -- whenever anyone points to their actual record, the responsive both donald trump and marco rubio is to yell the word liar. as this adyone does

does and plays the actual words of donald trump on national television, his responses to yell liar. whenever anyone does as i did at the debate to point out donald still supports funding of planned parenthood, his responses to yell liar. when donald continued and send when that i support that, i said -- to which donald responded by in ating on the stage republican primary that he thinks planned parenthood does wonderful things. i would ask each of you in the media, have you ever once in a republican presidential campaign seen a republican candidate for president praising planned parenthood on a national debate stage? mind you, he had just called me a liar for saying that was his record stop marco rubio does the same thing.

marco rubio is behaving like donald trump. i made three marco -- number one, that supports granting citizenship to here2 million people illegally. it's a fact he said on the debate stage that he currently supports it and he acknowledged this may not the majority view in my party, but i, marco rubio, supported. he said on meet the press with chuck todd where he said he would grant citizenship to illegal aliens with criminal convictions. the first point i made about immigration is a fact. it is his own record, his own words.

observation is in florida, he supported granting in-state tuition to illegal aliens. that is a fact. there's no gray area, no interpretation, it is a legislative fact. , is marcopoint i made went on univision in spanish and said on his first day in office, he would not resend president obama's illegal ads. he said this on national television. this bizarre notion that words said on national television don't exist. marco's response was exactly the same -- to yell liar, liar i'm a liar. teded, to respond how would

know what i said on univision, he doesn't even speak spanish. as the debate demonstrated, that false thing. but he did not answer the substance of anything i said. .he fact were true and accurate instead, marco and donald, their strategy is to simply yell liar, liar, liar. i will say it has been even more unfortunate that both donald and marco, in addition to yelling liar when everyone points to their actual record makes true statements about their policy positions, the second strategy both donald and marco have relied upon is utter fabrications. yesterday, donald trump retweeted his own social media director who claimed senator tom

had said i was dishonest. amplified thehis attack donald is making. he's been screaming liar anytime someone points to his own record, so it was great to be able to point to someone else someone saying the same thing. there's just one minor detail -- the quote was a complete fake. within a few hours, tom coburn went on the record and said the fabrication."tter donald deleted his tweet. his social to me -- a social media director deleted his tweet. then donald went on a run cast and repeated the fabrication after he deleted tweet, after tom coburn said it was a utter

fabrication, donald sat on repeating things that are simply made up, that have no basis in truth, that are utter fabrications. that is a new level for presidential politics, and i would note the rubio campaign is doing the same thing. now, in theght closing time of a campaign, not focused on a positive policy agenda, not focused on a sensitive difference between his record in my record, not focused on any accomplishments that mr. rubio has, but instead, devoting all their energy to screaming liar and focusing on two fabrications -- number one, the fake facebook post that was

allegedly put up retracting trey gowdy's post. the facebook post was fake. we did not design it. yet the rubio campaign has over and over claimed we did. with zero evidence. attributing misconduct to us with no basis whatsoever other than it did he narrative they would like to drive. secondly, the rubio campaign is talking about the suppose it push polls that have been going out. i have no idea if there have been push polls or not but our campaign has had nothing to do at that. what is a push poll? a poll not is conducted to measure public opinion, not did -- not

conducted to determine where are the candidates in which messages are resonating. as a typical poll. a push poll goes out very widely and designed to push negative messages to reach lots of voters. often, push polls are pushing information that is nasty and false. have't know whether there an push polls in this campaign, but i know our campaign had nothing to do with it. campaignmarco, his without 500,000 robo calls a major campaign surrogate of his. campaign of being behind the push polls. he was asked today what evidence he had. he had no evidence for that, no basis, whatsoever.

unfortunate -- his campaign has not gotten the traction he wants. rubio campaign is disappointed with the third-place finish in iowa and a fifth-place edition in new hampshire and the consultants running his campaign have apparently made the decision that they are one hope of doing well is to make false attacks with no basis whatsoever -- i will note the one person we know who has done a push poll is senator marco rubio. callsou send 500,000 robo , you are not trying to measure public opinion, you're trying to message. what message was the rubio campaign trying to push? was the cruz campaign unethically driving these push poll.

know be clear -- how do we it's marco rubio? with this was paid for by marco rubio for president. someone responds pointing to evidence. ethics matter. when you have donald trump and repeatedly putting forth fabrication, just trying to throw mud and attack, i get that candidates want to tell voters that everyone is dirty and everyone is unethical, but that's not true. screaming liarof whenever anyone points to their record and relying on

is not indicative of candidates running an honest campaign. with that, i'm happy to answer questions. >> [inaudible] mr. cruz: from the beating of this campaign, we have taken the high road. you have seen attack after attack and i do not respond in kind and i'm not going to. i'm not insulting anybody here. i'm responding with simple fact. mr. trump has sent me a cease-and-desist letter saying stop telling the voters my record. objectively legally frivolous. substance,t to

policy and record and say that should be the bread-and-butter of politics. and falsehoods and fabrications have no business in politics. it is incumbent on all less to speak the truth. i cannot change and impact what i do. my record and the record of donald trump, marco rubio any other campaigners. [inaudible] is notreality tv show the presidency, do you agree with the president? mr. cruz: i think a great many south carolinians are concerned that donald trump is not prepared to be commander-in-chief. have the basict

judgment and temperament to keep this country safe. as we have seen the rise of radical islamic terrorism, that has become the most important determination the voters must make. when donald trump, at one of the prior debates, evidence he did not know what the nuclear triad problem for a real someone who wants to be commander-in-chief for someone who has no idea about the basic to defend yourselves from nuclear aggression. likewise, justice scalia up a passing this weekend elevated the stakes of this election, that the people of south carolina are asking a very simple question of who do i trust to nominate principled supreme courtist justices. there's a reason donald trump is attacking this.

nobody looking at donald trump's record could believe for a moment that donald would appoint principled, conservative justices. look over the past decades, any time a republican judge with a proven conservative record on the bench, you had a nasty, not down, drag out title. courtmocrats care about and will invest all their energy defeating a proven conservative. it is why republican presidents have decided the court didn't matter that much and they would go with a stealth candidate with no record because they are not willing to invest the political capital. the democrats are always willing to invest everything they have in confirming far left-wing justices. president,ver became we know for a fact he would not

invest any political capital in confirming a conservative justice because he's been supporting left-wing democrats, ofting them checks, many whose core missions was preventing conservatives from getting to the court. no one who cares about conservative justices could write those checks. i would note the stakes -- we are one liberal justice away from losing our fundamental away frome justice losing our religious liberty, one justice away from the second amendment being written out of the bill of rights. for the people of south carolina, a vote for donald to erase thete second amendment from the bill of rights. i would note donald's response is to scream liar

because that is his response for everything. not basingtance, i'm this on a specific statement he has made. he claims he will not, but i am basing it on his lifelong record and reasonable inferences anyone can drop. the secondupport amendment. he did not support the second amendment when he supported bill clinton's assault weapons ban. take donald at face value, that he has had a , there is non reason whatsoever to think he would spend the political capital needed to appoint a conservative. which means the only reasonable go force is donald would the stealth candidates other republican candidates have and they have turned out to be disasters on the court over and

over and over. ethics, butoned donald trump has called yours into question. [inaudible] >> that's a result of the fact that both of those campaigns, the only thing they can do is engage in insulting attacks. with regard to iowa, a national cable news network reported on that carson was suspending campaigning. be clear -- that is what they said on television. itir national anchors set was highly significant and highly unusual. they point to a tweet from an individual

reporter that day which was to the contrary. goodfense to the many reporters here, but on election day, our campaign was not sitting with bated breath following every campaign. we did have the television on and that is what we were watching was the tv news broadcasting. nobody saw this tweet from the reporter that in the aftermath, the news network's relying on to say they corrected the record. is what they put on tv and here's the important piece. what that network reported was true and accurate. not go, mr. carson did on to south carolina, he went home to florida. the first public event he did in either south carolina or new hampshire was the day before the new hampshire primaries. what they reported was true and accurate, and passing on a public news report that is true

not remotelyis unethical. i would note that it is particularly rich that the rubio campaign is attacking us on this, given there have been public reports the rubio campaign was doing the exact same thing. it was not unethical for the rubio campaign anymore than staffers on my campaign. all of this is the product of candidates who don't want to talk about their own records. republicana candidate and you have a liberal record, if you're record does not match the platform you are running on for president, the last thing you want to talk about is your own record. try tou do instead is

change the topic and engage in insults and attacks. you try to go to the mud and make it personal because actually talking about the record is precisely what you don't want to do. for example, one of mr. rubio's of orders was asked on a tv news he has to name anything accomplished and he could not do so. part of the reason he could not do so is because he did not want to answer truthfully the biggest accomplishment he has had is passing the rubio-schumer amnesty bill through the senate. not even close. i would note the biggest accomplishment i have had in the senate is defeating the rubio-schumer amnesty bill in the house and preventing it from passing into law. i understand why his surrogates do not want to talk about that. joining with

barack obama and pushing for amnesty is inconsistent with what they are saying on the record and on the campaign. but, campaigns ought to be about issues and substance and records and that is what our campaign has been about. >> [inaudible] would you vote to confirm him? mr. cruz: i would not. i have been very clear that the senate should not confirm any nominee in a lame-duck session. it has been 80 years since the senate confirmed a supreme court during anminated election year. particularly when the court hangs in the balance, it makes no sense whatsoever to give barack obama the power to jam through a judge in the final election year.

voting for a candidate for the d.c. circuit is very different from confirming someone to the u.s. spring court. -- u.s. supreme court. we should make 2016 a referendum on the supreme court. if the democrats want to jam in a liberal activist to undermine the second amendment and take away our religious liberties, we should make that an issue for the american people. and just a few months, the american people are going to get to vote and i will tell you, i cannot wait to stand on that debate stage with hillary clinton or bernie sanders and make the clay -- make the case their vision of the constitution is fundamentally inconsistent with the vision of the american people. >> [inaudible] mr. cruz: those are the president's talking points.

i understand their standard -- justiced not confirm a during election year, particularly with a lawless president who has undermined the constitution at every stage and we had an election, let the people decide. that ought to be something folks in the press would stand for. in 2014 theycided wanted a republican senate because of the lawlessness of president obama. elections have consequences. we have a republican senate and to senate would be foolish confirm a left-wing democratic nominee in an election year which has not happened for a nomination made in 80 years and now is no time to start. >> coming up in about five minutes, c-span's road to the

white house coverage continues with a marco rubio campaign rally in south carolina. joining him will be republican governor nikki haley. she is expected to endorse senator rubio at this event. you can watch it live starting in about five minutes from now on c-span. this weekend, as more from the campaign trail with live results from the nevada democratic caucuses and the south carolina republican primary. bring you speeches from the candidates followed by your phone calls and reactions to stop it all get started at 7:30 on c-span. here's a look at some recent ads least i the candidates beginning first with republicans. >> my father was a postman who told me johnny, you stand on euro and two feet. go out there and change the world. my parents were killed by a drunk driver, but my parents did not die in vain.

transformed. i discovered my purpose by discovering the lord. i believe the lord put us on this earth to give us the gifts to bring about the healing. that's the motivation for me. i'm john kasich and i approve this message. >> who is jeb bush relative to the other conservatives? >> i'm the most proven conservative with the most proven conservative record. i do believe life begins at conception. past 15a member for the years, from the sound of our guns is the sound of freedom. i'm the most pro-life governor on this stage. i had one year where i signed six rogue gun and hunting bills. that was a record for florida. >> it is morning again in america. today, more men and women are out of work than ever before in our nations history. pay more in taxes than

they will for food, housing and clothing combined. nearly $20 trillion in national debt, double what it was just eight years ago. this afternoon, almost 6000 men , andomen will be married with growing threats and growing government, they will look forward with worry to the future. it is morning again in america and under the leadership of barack obama and hillary clinton, our country is more vulnerable, divided and diminished than ever before. ever want four more years again of that? >> i'm ted cruz and i approve this message. >> i'm capable of changing to anything i want to change through. >> i am pro-choice in every respect.

parenthood serves a good function. >> south carolina cannot trust donald trump. >> i'm very capable of changing to anything i want to change too. trump and i'm donald i approve this message. >> he was a 17-year-old football star gunned down just outside his home. his killer, an illegal immigrant gang member who just got out of prison. sayingp is the only one you are going to be dealt with. we are going to enforce that. that's a beautiful thing. toelieve donald trump wants make us great again and he loves america. ♪

a clinton never needs to explain why it is what they've done or with who, a real clinton knows that they are entitled and you don't get to know what they do ♪ >> what difference does it make? plays the victim of promotion, a clinton kills it off with a smile. a server full of secrets ain't no thing. damn it feels good to be a clinton. ♪ >> i am adamantly against illegal immigrants. >> i voted numerous times to build a barrier. >> we need to build a wall. they need to begin a chance

to do whatever they want to. >> killings, murders, crime. >> people need to stop employing illegal immigrants. youre difference between idea and donald trump's -- >> we will make america great again. >> yes we will. >> during campaign 2016, c-span takes you on the road to the white house as we follow the candidates on c-span, c-span radio, and c-span.org. >> three days before the south carolina republican primary, we take you live to chapin, south , for a campaign rally with senator marco rubio, presidential candidate. he will meet with supporters. we expect to see republican governor nikki haley of south