on the democratic side, it will be interesting to watch how the republican chairman deals with a president trump. statementn issued a saying you cannot cozy up to putin and that says we are not going to see necessarily a rubberstamp depending on what trump does when he is in office. does defense spending stand? reporter: they still have to resolve this year's hill and is not going to happen until president trump is inaugurated. authorization policy bill should be wrapped up in december but the bill that funds what is authorized is not going to wrap up until the new year. that will give the trump administration a chance to put their own stamp on it as they prepare their budget. i think early on in the year, we will see a big fight over spending.

what are you watching for from this new administration? reporter: i'm watching to see how the entire campaign theme of being an anti-elitist and anti-washington plays out in national security, especially when it comes to washington. i think if he wants that, a he will get the american people to turn on congress. by not passing this will until six months later on, if that kind of business as usual goes on, trump will have a lot of ammunition and these members of congress will be scared into years. is't forget, donald trump fighting that and if they want to take their part and push back on him and say this is the reality of governing, this is not the campaign trail, this is real issues and serious divisions and it takes time, they might score some points and

they will make life very hard for donald trump and it will be concerning. reporter: i'm watching for how serious he tries to put his promises on defense into action. he's promised a lot of things, don'tefense spending, trust social -- don't touch social security -- something's going to have two give. the defense industry is happy with the promises he's made that we will see whether they actually come to fruition. reporter: will he let it continue the way it is or will he change it dramatically? host: thank you for being on "newsmakers." the transition of government on c-span as donald trump becomes the 45th president of the united states and republicans maintain control of the u.s. house and senate.

we will take you to key events as they happen without interruption. watch live on c-span and watch on-demand at c-span.org or listen on our free c-span radio at. app.ee c-span radio i have always been a great admirer of america, a student of american history. specifically the history of its african descended people. >> tonight, a memoir -- the making of a nigerian american. this uncle formed impression from watching cinema where cowboys would get together and change a few words and i never understood what they were saying but at one point, they

would stare each other down and start shooting. my uncle formed the impression that that is what america's would do -- shoot you if you look them in the eye. >> thus tonight on c-span's "q&a." hurdle ceo street council hosted its meeting in washington dc. among the speakers were daniel truelove who gave his views on the future of financial regulation and monetary policy. [applause] >> good morning. let's talk about the economy. you talked secretly about some desire to see it run hotter or at least it's not running all that hot. i think you might be of a slightly different mind over

what has transpired. what is your basic sense of the strength of the u.s. economy? >> we've had an unusual recovery from what was a very unusual recession, one driven by financial crisis rather than by the normal pattern of inflation moving up in the said hitting the brakes. never that time, we've had the nike recovery where there was a steep, upward trajectory. steady and has been modestly above trend for some time. my perspective for a couple of years had been that there was more room to run, there was more slack in the labor market, there was more utility in getting demand strengthened by having incomes up and more people having jobs and, we were not close to our inflation target and had not been for some time.

over the last three or four months, i have seen some changes in that pattern which had prevailed for a long time. core inflationn, has been up some, which was welcome and different from what we had seen previously. relativelyg time of non-increasing growth of wages over the increases they had had, one of the measures had shown some upward movement and was seeing actual labor force participation rate approach and even slightly exceed the trend of labor force participation. all of that suggested to me we are in a somewhat different situation than i thought we were six, 8, 12 months ago where i thought we had more opportunity to create more jobs and get more

production in the country. i think the discussion of when is the appropriate moment for raising rates in order to prevent the economy from from mying too much is point of view more on table than it may have been before. i think there are grounds for caution. we have fewer tools to respond fromrecession for to come an external source than we do the ability to control inflation. some slack inis the labor market, though not as much as there was before. reasons to be cautious and moving forward. we don't want to be pushing harder on the brakes than we need to in order to continue to trend of moderate growth, but i think it's a different

discussion now. an unemployment rate of 4.9%. what would you consider to be maximum employment? could access the point. i don't think we know in real natural ande television -- national unemployment rate would be. it has been around 5% for over a year now, during which we have orn creating at least twice three or more times as may jobs needed to deal with new entrants into the labor force without pushing up inflation. that suggests there's a good deal of slack in the labor market. in anticipation of full haveyment at around 5%, we

taken several interest rate moves and i think almost surely we would have foregone some of the benefits of that job creation, which particularly affects in a favorable way those who are less profiting from the early part of the expansion, , groupscome workers with traditionally higher unemployment rates. ,e would have lost something and i think the real answer is we don't know and that is why i have taken the position to proceed pragmatically, look and see what is going on in the labor markets and at an appropriate moment, take the next step and then sit back and say what impact does that have? >> you mention the whole lack of tools to face the recession. there's a historical pattern of new president dealing with recessions or inheriting recessions.

what sort of threats do you see that come about? >> there's always some risk of recession. if you ask an economist what is the risk of a recession, you might think you are in the middle of the best economy imagined and they will still give a positive integer. think the risks are particularly high and they are probably more external than internal, things that may happen in other parts of the world and would have a deleterious effect on us. those factors which apear more acute have receded bit. >> the new administration -- we have heard some of the talk in ais room, talking about ,epublican version of stimulus the repatriation of corporate profits and some kind of burst

in infrastructure spending without huge amount of concern for the debt, how much might that change the feds outlook? fiscal policy is one of the important considerations thinking about the appropriate monetary policy and price stability. we are sensitive to the impact fiscal policy has. the newve administration time to get its program and congress to decide when it's actually going to do. thatthe fed will react to in the economy. just as i did not want to anticipate just because in the past there has been a correlation between unemployment and inflation, i did not want to

say that's going to hold now. there is going to be some fiscal stimulus, we know that's going to translate into such and such an increase in inflation. we want to watch inflation and react appropriately because we don't want to choke off further growth to achieve more priced ability. we will be moving presumably at more of theo remove accommodation that exists but there's not an enormous amount of accommodation right now. it's pretty low right now. >> you voted for the rate increase last december and there will be one next month. market's reaction would give a bit of a tailwind for that. i don't know to what extent you see rate policy is going through

next year. only speak for myself and i don't want to comment on any particular meeting. i think the important issue is the one your question identifies which is what is the policy? one inicy ought to be which we respond to the incoming data. i think it's more likely the next response would be a tightening rather than accommodation. the trajectory we have been on for some time now, i think at that juncture, we watch carefully to see what the impact of that rate increase would be. monetary policy operates with a lag. as threet is as short quarters, it takes time to see what happens.

that is why people have the debate about when you need to move in advance because they don't want to wait until it is on top of you. you don't want to take too many tightening steps before you have had a chance to see what the impact of the first or second as. >> we see a rising of long-term rate. i'm curious why you think that is happening and the implications of that. >> there some expectation of higher growth, higher spending and higher inflation, some of -- some accommodation of those. we willmething that want to watch and see how it manifests itself in actual movement and change in fiscal

policy. the increase in the longer-term yields and strengthening of the dollar has affected financial tightening in the economy right now. andit has only been modest as we have both said, probably an expectation of future policies. >> no one has mattered more than you have when it comes to expectations since the financial crisis. eight days after president obama did. the four-week talk about potential changes to dodd frank, i'm curious about where we are now and is it in your mind sufficient to do the regulatory work the whole thing has been designed to do? >> we have made an enormous amount of progress.

we do well to remember and wehough we sit here in 2016, have a strong and stable system compared to any other major economy in the world that still leaves open the question as to whether there is an optimal configuration as far as has there been enough on as far as short-term wholesale funding. on the other side of the ledger, have the regulations designed to deal with the things that cause the -- cause the crisis trickle down and affected a broad swath not by any stretch of the imagination are systemic. we are in the process of putting of changes with

respect to the biggest institutions which have substantially increased their resiliency, which is important. they would be bailed out by taxpayers only eight years ago and were put in place and make them resolvable and subject to market disciplines in the event they still get in trouble. but as i said before, we need to do things to make sure the smaller banks, and i don't just mean community banks. that they are not being inhibited in their own business models by rates designed to deal with those risks. we are in the process of changing our stress testing expectations for almost all the banks with less than a quarter

trillion dollars in assets. aboutre was a lot of talk dodd frank during the campaign assumption thee republican majority will go after it in some fashion. what are your thoughts on going after something that would resemble dodd frank? >> i don't want to speculate as so ift may happen, changes are made, we will implement whatever changes the congress makes. but i do want to return to the theme i struck a moment ago and that is to remember why we started down this road in the first place. when we started the first stress testing process, it was because

of a financial crisis which followed an extended time of unsustainable lending and other business practices. widespreadited a bipartisan call to do something precisely because neither party wanted a regime in which the government would be called again to inject capital into large financial institutions. how the regulatory responses are to be shaped and realized, there may be differences on that, but i don't think there are widespread power -- widespread oppositions on what needs to be done. to get less hairtrigger funding structures in place moving forward on the resolution plans. elements of assuring

the largest institutions are not going to end up needing to be assisted by the government again , i think their origins were something that command a broad consensus. >> if you are going to be called ,efore a committee on the hill and i can imagine this happening in the coming months, what would be your cautionary words to congress about going down that --h of amending >> i would say what i just said which is we all need to keep our eyes on the reasons we began the effort to strengthen regulation. we need to keep in the forefront of our mind those phrases moral hazard and market discipline and to shape whatever responses we have accordingly. i think there's a

significant difference in how we should be thinking about the largest institutions in the country with complex business models and, on the other end of the spectrum, the $3 billion bank in a midsize city somewhere. i have thought for a long time since i was teaching in this area that we ought to have distinct sets of expectations and rules were different sizes and different models of financial institutions, and that a halfmaybe two and years ago, i proposed publicly we accept -- we exempt committee banks from some of the dodd provisions and raise to 100 billion the current 50 billion systemically important bank level because we came to the determination that the

additional safety we bought with the set of restrictions which is appropriate for the bigger banks, we did not really need to do that to have safe and sound $80 billion bank that range of banks provides a lot of important intermediation to households and small and medium-sized businesses throughout the country. parts of doddnto frank have been a hindrance to economic rose crimped lending in some ways? >> any legislation, you can always look back and see how you can refine it. sides -- i do sound like a central banker, but it should be data driven. let's isolate where the effects have or have not taken place and see if we can shape that some. that is what has led to some of

the changes in our stress test, to sit back and say we have several years of experience here, let's look at where the supervisors are spending time and where the bankers themselves have to spend a lot of resources and then say given those expenditures, how strong do we think the institutions are? the answer we came to was it is not worth the expenditure and supervisory resources. see is what i hope people is where there have been effects and where we can shape things to be more effective in delivering the kind of safe and efficient financial system the country needs. >> i think we are going to move shortly on two questions. you came in in 2009 and your term goes to 2022.

there's some talk of speculation that you might choose to move on. nowhere a case to be made more than ever that you should stay on? in three or four years, people have been asking when you are going to leave. i have consistently is i'm engaged in what i'm it -- what i'm doing both on the regulatory side and monitoring policy side. >> questions from the audience. one wasu are thinking, sent over to the message system -- has in the bond market acted to raise rates across the board? is this the timing of an increase? >> i was alluding to that earlier. the steepening of the yield curve -- i don't obviously know,

but probably based on expectations of what policies are going to be in the future, which is to say next year. been a sense, there's little bit of a tightening on financial conditions, but it is .ased on expectations perhaps expectations of what we are going to do and what the new administration and congress will do. a matter ofk it's missing things. i think it is taking into account non-transitory changes in markets. they tell you a lot. i don't think you want to make policy based on shorter-term moves up and down. >> other questions from the audience before i turn it back?

>> doug peterson, s&p global. during these potential changes to dodd frank, we are also dealing with brexit. how are you coordinating with the brits on regulatory environment and monetary policy that could impact us? >> obviously come in a purely financial stability sense, we are in a close consultation with our colleagues and other central banks, but as most of us expected, brexit did not turn out to be an event. most of us did not inc. it was a high risk and it turns out not to be. the broader question on regulation is a significant one. the discussions going on right now to complete the basel three negotiations, which are the ones that put into place the higher

quantity and quality of capital, it's not going to be particularly significant given what is on the table now. in capital change requirements for u.s. banks would be negligible. for the biggest banks, they have capital that would recover the new requirements and encourage them to move in that direction. would favor applying any of this to the smaller banks. the conclusion is really about whether we need to have globally some minimum level of capital based not on the internal model of banks where they are determining for themselves what their regulatory capital is, but instead some floor that is based on a standardize approach

everyone can observe. that is what i think the discussion is and we want to give banks that needed time to adjust to that and build their capital. i think it's very important for the stability of the entire it'sl financial system and a matter of interest to our banks because we don't want to be competing against undercapitalized institutions. i think having a strong capital position as a prerequisite for being a robust lender. banks that are in weakened conditions tend not to be strong lenders because they always have to have an eye on the balance sheet. strongey are in a position, counterparties like doing with them and they are in a position to lend. >> i'm johnny johnson from

protective life corporation, 3 is solvencysel to. you said you don't follow this model with the systemically important life insurance companies or banks or threats and their corporate structure. the fed has proposed two different systems. the question is since the united states is going in one direction and europe in another and there are some very large insurance markets trying to decide between the two, do you see a convergence of global capital standard so the life insurance world is not on one standard because it creates headaches for internationally active groups?

playing out?e that >> it's an excellent question this short answer is i don't know. in your question is the position which i would agree that ideally there would be a convergent approach on capital regulation and other . we are clearlynot there . maybe over time the iais can get to the point where there is a framework that can embrace different models in different countries. i became very much convinced 2 is not the way to go for either of our