that good feel and we are working to get that good feel that either way there will be changes from a government point of view. the brexit secretary gave a pledge that freedom of movement would be preserved for bankers and other members of the financial services industry. why can't the same pledge be given to other key economic sectors like manufacturing and agriculture? keen tovery take into account the needs of our economy. i've asked my home secretary and my migration advisory committee to look into this issue and make recommendations to the government or it. >> we are going to leave this remarks from

attorney general jeff sessions, one of the speakers at the national lawyers society federalist meeting in washington. later there will be a keynote speech by white house counsel gahn.d mc live coverage, here on c-span. [applause] host: good afternoon, ladies and gentlemen. it is a great pleasure to be with you and to look at this overflow audience here. particularly, it's an honor to me to introduce a gentleman .hat i have known for long time he's a good friend and certainly a person i have great admiration for. as lawyers we all appreciate the

many responsibilities of the attorney general. he is, of course, the chief law enforcement officer of the area easedernment area eased the legal advisor to the executive branch. and he has a special responsibility to the people of the country to be sure that the constitution is preserved and protected. sessionscareer of jeff could not have been better to make him such an ideally-qualified person for this responsibility. jeff, of course, as you know, started his career after private law practice. an public service was as assistant u.s. attorney, and then he was appointed by ronald reagan, in his first term, as the u.s. attorney for the southern district of alabama. he later on was elected attorney and had a alabama, distinguished body of service in the united states senate.

a person we could always depend on to put the constitution first, as he was considering the legislation before them. beeng the time that he has the attorney general of the united states, he has already, in this relatively short time done a great deal and achieved remarkable results and accomplishments in the department of justice. during this time he has restored integrity to the department of justice, he has reasserted fidelity to the constitution, he has adopted or changed numerous regulations and practices in the upon soundbased principles, common sense, fairness, and particularly, reaching a just result in the many cases and other legal activities of the department. has beene things that most impressive is the way in which he has reestablished

cooperative and collaborative relationships with the law enforcement community throughout the country. i don't know how many different groups he has addressed but it seems like almost one-a-day, among the police organizations and other law enforcement agencies in all three levels of government, state, local, and federal. and he has done this with a dignity and professional skills, that has been characteristic of his entire career. despite sometimes-partisan opposition, jeff has persevered calmness, grace under fire and a sense of humor. when the attorney general is introduced it is always appropriate to say the honorable jeff sessions. well, with jeff, this is not merely a protocol courtesy. with him, it is an are depiction

of the man himself. and so, ladies and gentlemen, i ask you to join me in welcoming the truly honorable jeff sessions. [applause] host: thank you. what a fabulous group you are. thank you. thank you, so much. heart, thermed my cockles of my heart. is that what churchill says? and thank you, general meese, for those special words. i wanted to ask you, is room,ador kislyak in the

before i get started here? [laughter] host: any russians -- mr. sessions: any russians? [laughter] mr. sessions: anybody been to russia? [laughter] got a cousin in russia, or something? [laughter] i was so honored meese. for general i was given an opportunity to hang certain ag pictures in meey conference room and you can bet his picture went up. i work for him and know the leadership he did and they still remember, the law enforcement community. we are part of law enforcement, if anybody wondered. andd it to protect america have the back of our police officers. the so the solution to

problem of crime, not the problem, and we need to know that. [applause] i told general needs more than once, i feel like in this sense, at this time in history, it's a lot like when he took over after the 60's and 70's and we had a serious problem of morality and lack of respect for police. fight,d the nation's general, against crime and actually reduced murder rates over 30-35 years, by half of what we had when we started in the department of justice. it's an important achievement, for sure. leonard leo, you have had a fabulous run, wherever you are. [laughter] make no mistake,

being able to celebrate with justice gorsuch last night was certainly a remarkable thing. trump delivered on his election and he delivered on his commitment to the kind of judge that we all will leave is the kind of judge we need in this country. admired and appreciated the federalist society from the beginning. when i was ack young united states attorney in my early 30's, when you got started. your two faculty advisors were a pair of doj veterans, robert bork and scalia. and a good thing that was, i remember that in joining and following your work. me,ver met a group around to go and attend meetings, and i read the materials, you can be sure. sometimes we felt like a voice, like a voice in the wilderness. i remember cheering as an assistant united states attorney when rehnquist wrote an

opinion, 8-1, and he stood firm for some important law enforcement principle and i wondered, did we ever change this world we are on? whenember those days original is him was about as fashionable as disco. believe in theep belief in this constitutional order and the role of judge in the constitutional system. next to you we are no longer a voice in the wilderness. some 70,000are federalist society members across america. they are in the academy, in the courts, in the law offices, in congress, and once again in the white house. and in the department of justice, you can be sure of that. [applause] so there is no

historic thing, there is no doubt the federalist society has made in the norma's, positive difference for our legal system. instance overone the last 35 years, to my recollection, that has come close to the influence of the federalist society on a single important subject facing america. it is unbelievable, really, how much progress has been made. your work has been the core of our relentless effort to restore the rule of law in this great nation. rule of law, the it is really the fundamental, moral order of a created so ably that is advanced by our constitutional system. so, what a difference a year makes. elections really do have consequences. president trump is appointing extremely well qualified, highly-respected judges.

if national, skilled, brilliant. who will be neutral, calling balls and strikes, not taking signs in the games. he is not appointing politicians are activists looking to advance an agenda, but faithful jurists seeking to apply the law who serve, as their oath says, under the constitution and laws of the united states, not above them. i know that is one reason the american people voted for , and like ronald reagan he ran on a law-and-order and appointing restraint judges and has always been popular with the american people. it is deeply ingrained in their vision of what the role of a judge should be. generally on the high side, on the side of the american people, when we talk about this. people well know that activist judges effectively invalidate votes.

wantncipled ideologues unelected judges to do for them that which they cannot win at the ballot box. this is not a partisan question. it is a question of fairness and fidelity to the judicial oath, and adhere to the constitutional role as assigned to the judicial branch of the other branches. judicial activism puts the prejudices and politics of a judge above the law, and makes him into a continuing constitutional convention. inactive list judge sits in judgment not of the case, but of the law itself, deciding which laws to apply and which ones not to apply. activistst is that insist, it is not law. activism is especially disturbing in our country because we have inherited and

advanced the most magnificent legal system in the history of the world. indeed, the anglo-american system is one of the greatest achievements in civilization. we have the oldest existing constitution in the world. it's an achievement we've been blessed to inherit and that we've been able to advance. so many of you have helped advance it. it's one of the main reasons is that america is exceptional. history teaches us that such a system as ours, such a legal order as ours, is precious. it is rare. i have traveled the world. i have seen how hard it is to a constitution in undeveloped countries and expect them to be able to carry it out. it is fragile. civilization gives us a bill that is sometimes easy to destroy. as abraham a constitution in lincoln said, if we except a small violation of the

rule of law than these violations will only become more frequent and more serious. and if that happens it will instill in the people contempt for law, and eventually for the republic itself. at the department of justice we thecommitted to preserving people's respect for the law by carrying out the law fairly and impartially. i'd like to tell you about some of the work we are doing, including on the topic of this conference, the administrative agencies and the regulatory state. much i want you how to express my appreciation for the staff that we have assembled, to help us accomplish these things. i could not be prouder of them and i see attorney general rachel bar sitting in the front row. [applause] did i say bar?

rachel brand. last month, the department finally settled 22 civil cases with 90 plaintiffs regarding the previous administration's improper imposition of a contraception mandate. their claims were just. they had been improperly constricted in their right to freely exercise their religious believes and we were pleased to try to bring an end to that matter. [applause] we've also agreed to settlement terms with nearly 500 plaintiffs in cases brought by groups who were targeted by the internal revenue service, when they apply for tax-exempt on inappropriate

criteria, criteria like this. name, tea, in your nine/12, policy questions about spending or taxes, educating the public about making america a better place to live, that was , or statements criticizing how the country was being run. they don't like that, either. it is also clear that these criteria, disproportionately impacted, it's clear, conservative groups. the irs should absolutely never be used as a tool against political opponents. [applause] mr. sessions: these wrongful

policies made settlements necessary. the department has also provided inal counsel to agencies this administration, in favor of ending subsidies to insurance had nots that congress appropriated, pursuant to the affordable care act. i'm proud to say president trump end to this unlawful practice. theexecutive branch, executive branch, has absolutely no power to spend money not appropriated by congress. [applause] similarly, andnd secretary has the power, through guidance, letters, or otherwise, to wipe out entire sections of the immigration law. but that is what the previous administration did with its deferred action for childhood arrivals, the daca policy.

congress,e consent of or individuals here illegally met certain criteria and were granted not only lawful , but work authorization and the right to participate in social security which unlawful immigrants are not entitled to have. so no matter what one thinks about immigration issues and policy, it cannot be defended, in my opinion, lawfully. so, once again the department advised and the administration put an end to it. and it is being ended, now. the department is also restoring the rule of law through litigation. lur solicitor general, noe yes, he's a member of this group. restoringment is also the rule of law through litigation.

the solicitor general has filed an amicus brief in support of the colorado baker who was sued for refusing to bake a cake for a same-sex wedding. although public accommodation services, important they cannot be interpreted to undermine individual freedoms guaranteed by the first amendment. that includes the freedom not to provide creative expressions for ceremonies that violate one's religious beliefs. policies at the department that support our mission of doing justice by executing the law. for example, we are no longer so-called sanctuary city jurisdictions to nullify federal immigration law. if they want to receive , we havenary grants placed conditions on these grants to encourage elected leaders of these states and cities to comply with minimal cooperative requirements, to assist in removing terminal

aliens from the country. in june i ended the practice of third-party settlements. under the last administration the justice department often required settling parties to pay settlement funds to third-party organizations that were not directly involved in the harmed by the defendant's conduct. we believe that when the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then the united states treasury. [applause] mr. sessions: it's not to bankroll third-party, special-interest groups on the political fringe of whoever is in power. nowhere does the constitution even unelected attorneys,

doj's wonderful, sainted attorneys, or political appointees the power to effectively appropriate and statesute united treasury funds, based on political alliances and friendships. it doesn't give them the power to issue regulations outside the congress' regulatory authority. rather than going through the long, slow regulatory process provided in statutes, agencies make new rules through guidance documents by simply sending out a letter. public fromf the the regulatory process by skipping the required public hearings and comment. comment periods and this is simply not what these documents are for.

are not tocuments change existing law. from now on at the department of justice that is what we are going to do. i'm announcing today that this process is over. [laughter] [applause] we have prohibited all department of justice component from issuing any guidance that purports to impose new obligations on any party outside the executive branch. we will review and repeal existing guidance documents that violate this commonsense principle. we will also now honor a directive that has been on the books at the department of ordained bye it was the man sitting at my right, and mise, when he was attorney general.

when a special interest could sue an agency and then get the agency to agree to a settlement to impose, in effect, new regulation to advance an agenda, is over. [applause] mr. sessions: the department of justice is duty-bound to defend laws as they are written, regardless of whether or not the government likes the results. our agencies must follow the law . we are not entitled to make it. ,udges in our courts must apply but as we know too well, some judges fail to respect congress and the executive branch. one particularly striking , in mycroft, i will admit, is a federal judge in brooklyn who heard challenges to the federal government's wind down of the daca.

outside its legal distraction, the court said to government counsel, you can't come into court and espouse a position that is so heartless. not unlawful, heartless. with respect, it is the province and duty of the court to save i knew youw is, would get that. [applause] they already apply and follow the law, not advance an ideology or express political beliefs. we cannot allow unelected judges to set policy through an abuse of the tw the adjudicated process. comments on policy like these from a judge, are offensive. they unfairly criticized an attorney that was effectively doing his job. judges have a solemn responsibility to examine the

law impartially. we are going to resist this tendency. the judicial branch is a coequal superior ors not a a policy-setting branch. it needs to know its role. this --o ignore it ignore this duty and seek to advance their own policy views ignore -- policy views he rode the rule of law. they set bad president and theicly undermine confidence necessary for courts to function properly. an increasing number of district courts are taking the dramatic step of issuing nationwide orders the block the entire united states government from enforcing a statute or an executive-branch policy or order nationwide. we have not found a single judge

of issuing any type of these extreme remedies before the 1960's. it was never competent -- it was never competent to say was never contemplated, apparently, by our founders. but now judges are making themselves super-legislators of the united states. we now have 600 district judges in america. each one, with the ability to an overreaching, nationwide executive order the delay, the power of the president of the united states, for example. the supreme court has consistently made clear that courts should limit relief to the parties before them. continue torts ca precedent, thenen the supreme court should remind them again. of ake that step because political agreement would

absolutely be unacceptable. the constitution gives judges no presidentialo a action because they disagree with him on policy grounds. let me know, it only focuses on decisions that go against of the department of justice but we also have some important wheins. the supreme court has vacated both of the appellate court rulings against the president's travel ban. on the meritsg it but they have vacated the injunction. we have also successfully obtained before the second circuit a rare order stating that a premature end abusive discovery order in a case that stopped the wind down of the daca program. this is an overreach.

know how many times you have seen this granted but this one was and we appreciate the appellate court. although some district courts have initially ruled against us, i am confident our positions will be vindicated in the court of appeals and if necessary, in the supreme court area president trump has the statutory authority to suspend immigration, in the law, of any individual or group of individuals he thinks, he deems are contrary to the national interest. narrowional, proclamation of a pause from countries that are dysfunctional and provide risks is justified within his powers as the chief executive, who has the responsibility to protect the public interest. and we are proud to vigorously defend him.

so before i conclude, let me say this. there are those in this room and maybe more than a few in this room, who get frustrated about, when you turn on the tv at night you now, and you have to take rolaids. everybody's got an opinion about what the attorney general should do or what someone else should do. i get frustrated, too. a lot of things i would like to be able to say and explain, but the rule of law is not always about getting the outcome you seek. same, fair the process, pursuing the truth wherever it leads area we can never allow any part of our legal system, and least of all the department of justice, to be reduced to a tool for a political agenda. this department will not make decisions based on politics, ideology, as long as i am attorney general.

i believe this is what the american people expect. [applause] mr. sessions: i think this is what the american people expect and deserve from the department of justice, and we will not confirm investigations or leak sensitive law enforcement information to get a few cheap headlines. i am determined, we are determined as a team in the department of justice, to reestablish proper discipline in these matters that has been eroded. [indiscernible] so in the long run, i to fulfill this responsibility can only , really, can only result

in a perpetuation and a further decline in the respect for justice in america. when anybody asks us to investigate a crime we will take that seriously. that is part of our duty. we consult with the appropriate law enforcement agencies, we evaluate the evidence, we use that to make a judgment and an appropriate decision. and recusals, recusal's happen throughout the department of justice. that furthers confidence and justice, it doesn't he rode it. when the history is written about this department, it will reflect that president trump appointed one of the finest teams ever assembled in the department of justice. [laughter] [applause] mr. sessions: the man at the top, not in the group.

and we remain faithful to his charge. so, i am so proud to work with you and to work with people like leonard leo, whose counsel in judgment i have always valued. i'm proctor work every day with great people we have selected. a lot of great career people, also. and i'm proud to stand with you as we defend the rule of law in this great republic. and you, so much. you, so much. [applause]

>> thank you very much, for joining us. we will proceed with our programming momentarily.

if you missed any of what attorney general jeff sessions had today, you can go to c-span.org and type jeff sessions in the search bar. we will be back shortly as the panel posts a discussion -- panel posts a discussion on financial regulations. >> we have the former deputy assistant secretary of state for asian affairs from 2013-2016 and the senior fellow from the

center of american progress. this returning from asia, is what he had to say about what was accomplished. established a new framework for trade that will enforcement actions and reform of international organizations and new fair trade deals that benefit the united states. we have a pathway for peace and security in our world, where sovereign nations can fried -- thrive. this is our beautiful vision for the future. future, where this vision and dream is only possible if america is strong, proud, and free. as long as we are true to ourselves and faithful to our founding and loyal to our citizens, there is no task to

great, no dream too large to go beyond our reach. citizens, america is back and the future has never looked brighter. >> what the president was talking about was something that was a little bit divorced from the reality of his trip. let us step back. played ad states central role in upholding peace and stability and prosperity for decades through alliances, partnerships, dealing a nice -- frank and straightforward way with adversaries like north and with competitors like china, trying to make sure that everyone was able to benefit. that is a relatively fragile peace these days. it takes a tremendous amount of diplomatic work to keep that going. what president trump did in the was received tremendously

profound anxiety about credibility of american state power in asia and the priority whether or not donald trump will continue to prioritize the same things we have in recent decades. >> in what way? >> he has completely dropped human rights from the priority list of the united states when it comes to asia. in china, he did not take questions. president xi did not take questions from journalists during their press conference. this is something that american officials have fought for. >> obama didn't during his first trip. president obama has done it on other trips to china. american officials repeatedly fight for that's right to do

that, to show this is something that is important. whether or not it is important for china, it is important for the united states. he was in the philippines and warmly embracing the strongman leader of the philippines, there was no sign of any tension, concerns raised by the president, especially in public, and no signs raised in private about the deadly campaign that the president of the philippines has gone on when he took office. or the thousands of people that were killed against drug use in his country area these are things that show -- raising issues like human rights shows what america stands for in the world and region, and it is sending a different single -- signal when we don't directly reference these threats. >> was strategic decisions do

they make -- what strategic decisions do they make or do you see the making? -- them making? trump, there was the transpacific partnership trade deal in the region. president trump has withdrawn from that. happened is a number of things. the other 11 countries will move forward without us. the rules --tate walls of the road in trade in asia and we will not benefit -- rules of the road in trade in asia and we will not bneefit -- benefit. china is pushing forward with a broader regional trade agreement. -- everyone else is

moving forward with trying to figure out how they benefit from trade in the region and is withdrawn the united states. >> he wants to rewrite the deal? >> he has talked about starting bilateral deals with countries like japan in vietnam. this is a good place for him to unwind. those negotiations. he didn't do that. effort has been made in certain quarters with japan, vice president mike pence has begun a dialogue. his counterparts in japan have tried to start a dialogue.

there is a real lack of interest on their part in engaging the united states in a substantial way, is there is concern about the credibility. the president withdrew the united states from an agreement we had spent the better part of a decade negotiating. and we're going to go back on these promises. >> what do you think is the benefit of japan and china? >> the countries of asia are integrating rapidly with one another. economically. it is becoming more difficult for the united states to make certain we are getting what we need to get in terms of advantages on trade and investment that can help create jobs here at home[at our relationships with these countries. -- out of our relationships with these countries. we need to fight for our interest and by withdrawing with

these multilateral discussions, we can have a real seat at the table. the united states is not going to have the same leverage. when it comes to security, we are another side of the coin, which is that the united states has played a very important role scenes scenes,ind the in trying to keep business in the region.

here to listen to our extinguished -- distinguished, experienced, and insightful panel.

please contact me if you are looking to get involved with the federalist society. thatportant duty besides is to introduce our moderator baez.day, judge carlos he serves on the united states court of appeals from the ninth circuit. spain, and in emigrated with his family to cuba in 1939. in 1952, you might end the second-most he stands up. he served on the cuban national basketball team at the helsinki olympics. i wish i could do that. he became a naturalized citizen of the united states in 1958.

from 1990-2003. he served as judge of the san francisco superior court. by presidentted george w. bush to than night -- to the united states court of in 2003.nd confirmed please welcome him. [applause] >> thank you for that kind introduction. required to give disclaimers at this point. i played in developing games in 1952, that i was a 00 un -- in the olympic games in 1952, but i was a tourist.

my son was a silver medalist. [applause] also, a gentleman said to me at a cocktail party, i aspire to write. he was operating under a case of mistaken identity because i only write to cents on the night -- write dissents on the ninth circuit. [applause] cial regulation is the apotheosis of the administrative state. on state focus on -- focuses institution structures and legal doctrines. arguably, these formal constraints are only the tip of the iceberg regarding the issues

of individual liberty and the rule of law raised by concerns of the regulatory state. distinguished set of panelists today, knowledgeable about the financial industry, financial regulations of the effect of the administrative state. your programs will have extensive biographies, so i will give you name, rank, and number. scott, professor of international financial systems and the committee on capital market regulations at harvard law. contagion, aon nicer word than panic -- >> [laughter] that can cause a run on economic system as being the heart of the financial recession in 2008. this can act as a resort to banks and nonbanks and how the

dodd-frank legislation may impede future actions. next, will be professor of law at george washington law school, described as a conservative with a small c. he will discuss the need to prevent the creation of government-sponsored enterprises. and measures that allow the creation of firms to big to fail. how we should limit federal safety nets and federal subsidies, and how we should take another look at universal banking, a combination of banks, security firms, insurers, and consider the merits of the legislation. watson,have peter

senior fellow at the american enterprise institute who is writing a book on the growth of the administrative state. he will discuss the system for the designation of firms as systemically important financial institutions. >> i call them cp's. t hase dodd-frank ac created the financial security oversight council to include banks and nonbanks. the lack of standards used to designate firms and effect such designation is an example of the growth of administrative power. last, but not least, professor richard epstein, a professor at nyu law school, senior lecturer at chicago law, and bedford senior fellow at the hoover institution. concernsrecent book

the quest for unlimited government. he will center his remarks on the recent case of phh versus the consumer financial protection bureau, which was in the d.c. circuit and was granted review, and whether administrative agencies can be insulated from judicial review. he will talk about the guarantee budget of the bureau from the federal reserve, and how this bureau fits in with independent agencies. that, we give way to professor scott. we give way to professor scott. [applause]

professor scott: it is my pleasure to be here today. contagion was the heart of the 2008 financial crisis, which was halted by the test provision of lender of last resort assistance to nonbanks and banks. layman's failure generated a run on the money market funds, but they quickly spread to all short-term funding in the financial system, including commercial paper issued by non-financials and funding major investment banks and banks. creatingesponded by consolidation under the desert acts that led to these institutions. the fdic raised insurance $250,000om $100,000 to and to demand accounts so

crucial to the payment system. it also guaranteed senior debt and depositing of institutions, further assuring their access to funding. the treasury used exchange stabilization funds to guarantee money market funds and helped congress refuse capital injections into the banks. these measures stopped the aftermath, in the there was criticism of bailing out wall street and propagating moral hazard. i do not regard the use of a lender of last resort, where there is collateral when needed, and a penalty rate as a bailout. no dual -- nor do i regard deposit insurance as a bailout. both are clearly government support, but highly desirable, in my view. available ifnly be the financial of many large

important financial institutions at the same time with heavily impact the economy, where there resolution as a group would be a satisfied will auction -- s atisfiable option. in the case of lender of last resort and deposit insurance, this is small. i did not see how institutions, which are victims of panic runs, subject to contagion, as opposed to decisions that will take more risk as a result of such support. new homeowners expose their buildings to the threat of fire from neighbors because of the existence of the fire department. ctly, topt, imperfe minimize the moral hazard from deposit insurance by charging premiums, based on the risks to the insurer. due to bailout concerns, major

restrictions will placed on the measures -- were placed on the measures we took during the crisis, including the measure authority to use it stabilization to guarantee money markets. based on the federal reserve act, assistance was provided to but the tempering of the federal reserve act continue to be available to banks without major restrictions. by the way, nonbanks today, in terms of long-term and short-term liability, are about 66%. grow as we seeto more disintermediation from the banking system. the ability to lend the nonbanks support in 2008 may be more important in the future. what are the restrictions the

fed put on this? the fed can only do this with the approval of the secretary of treasury, definitely limiting fed independence. part of amight be program, which implements that it must wait for five institutions to be in trouble. third, collaterals required for all loans -- loans had to be collateralized to the satisfaction, which allowed them to buy unsecure, highly rated commercial paper. that can only lend to a solvent borrower, a sound principle, but difficult to determine in a crisis, where acid values are uncertain -- asset values are uncertain. loans must be disclosed to the

chairman of the senate banking committee's and has financial services -- houe finan -- house financial services. banks can no longer freely pass on to the dealer loans obtained from the discount window. they are subject to 23a of the federal reserve act. fdic authority to raise deposit insurance limits in a crisis were taken away, only to be restored by fdic to a joint resolution of congress, making it impractical in a timely way. the authority to make new loans at the top has expired. let me say a few words about lender of last resort.

am i happy with how this is set up? no. we need better coordination between fiscal authorities, treasury, and lending bodies, reasonableis a possibility that the borrower may be solvent or insolvent. we should regard any investment and equity by the fed as outside their authority. should be a fiscal decision, reserved for the treasury. inneed more of a rule of law the operation of the fed as the lender of last resort, in the sense the fed should articulate general policies as a matter of facilities and programs, how they determine solvency, what a broad program really is, velti rates, collateral, -- penalty rates, collateral, etc. the only is ambiguity harmful, with the weapons deployed, the

lender of last resort may not be necessary. this comes after draghi's declaration that the ecb would do whatever it takes to stop contagion. critics look at the fed as operating without constraints that are particular and doing so in a non-transparent way. this is not critical if the fed operates with the powers they need. this law should articulate the principles for exercising such discretion. i would require those institutions are from the central bank -- borrowing from the central bank do so at a sensible price, particularly when their own losses triggered the need to sit -- the need for support. this could have to do with the replacement of management. the failure to impose a cost on institutions and a fitting from public support is a major factor

for popular opposition to the use of these measures is so successfully employed in 2008 -- we so successfully employed in 2008. thank you. [applause] i would like to thank the federal society for inviting me to participate in this discussion. conservatives, among whom i would classify myself, i think professor epstein's reference to classical liberals fits the same group. conservatives should and hopefully what embrace the four principles of financial regulation. we should stop allowing privately owned financial institutions to operate, in effect, as government-sponsored enterprises with implicit federal guarantees. freddieabout fannie and

, privately owned government-sponsored enterprises, very costly experience. the too big to fail financial conglomerates are today's government-sponsored enterprises. to achieve principle number one, we have to end government policies that encourage financial institutions to become too big to fail and reward them for doing so. we must strictly limit the scope of the federal safety net for banks. that banksagree reform essential social accepting deposit from savers, providing payment services, and making loans to small and medium-sized this is firms who were not able to sell securities in the capital markets. those are legitimate and important functions. banks are substance -- subject to deposit runs, partly because

they have a security mismatch between their short-term liabilities and longer-term assets. the great depression and recent , if you look at the northern rock episode in the united kingdom, we need deposit insurance for chartered, revised banks. we need lender of last resort for chartered and supervised banks. i will differ with him on whether nonbanks should be able to have that same privilege. any additional forms of federal support for banks should be carefully scrutinized, because support means subsidy. impose --, we should shouldn't impose any subsidies for non-big financial institutions and nonbanks federal activities. federal subsidies will distort

marketplace mechanisms, provide unfair federal advantages, and undermine market discipline. if nonbanks want to have the benefit of the federal safety net, they should become chartered as banks, and except the sameand accept kind of supervision, and shouldn't expect that kind of help when they don't have the same regulation and oversight. which allowsking, banks to combine with security firms and insurance companies and to engage in a full range of capital market activities, violates all four of the principles set forth. youlast crisis showed us cannot contain the federal safety net to banks when they are affiliated with all these non-bank capital market activities. you will save the entire conglomerate to save the banks. the federal government provided

$850 billion in combined support to save two big bank centered financial conglomerates, citigroup and bank of america. this adds up their capital assistance, lender of last resort assistance, and debt guarantees they received. this is for two of them. only a small part of the bill we paid. the problem with. frank -- dodd -frank is that it did not change the universal banking model.

unlikeunlike the glass-stegall , institutions

as systemically important financial institutions.

as systemically important financial institutions. and then to regulate them.

the precisely wage of section 113 of the act says that the financial firm may be designated if the -- if the material financial distress could pose a threat to the financial stability of the united states. -- leeman'sn bankruptcy in 2008 caused the financial crisis. ,arge firms are interconnected and leeman will drag down others. specialnt this, stringent regulation by the fed was considered necessary.

failed as a result of leeman's failure. the interconnectedness. is wrong. under the material financial activity standard, fsoc has designated four financial institutions, aig credential insurance, te capital, and metlife. designation can be a destructive event to a firm, because it gives the fed virtually unlimited authority. after having experienced fed terminated the business of its subsidiary, ge capital, in order to hopefully eliminate its designation, which

was successful. eliminated time, it is significant source of funding for small firms. metlife did not agree to its designation, and sued the fsoc in d.c. district court. the court overturned metlife's applied to and fsoc the d.c. circuit, which has not rendered a decision. the relevance of all this to the apotheosis, what a title, the apotheosis of the administrators state -- all the greeks out there know it means the high point of the ministry of state. relates,e happy if it but it is only the beginning. any non-bank financial firm can

and subjected to this designation, that the special regulation, if it proposes to the stability of the united states. standards.tains no ofre is no definition material of financial distress, nodefinition of activities, definition of threat or what was meant by the financial stability of the united states. no does it ascertain any firm firmof what size of must be designated as a state, yet. it will be subject to the stringent regulation of the fed.

to designate the firm as fife, fsoc was authorized to predict at sometime in the future, the financial distress of a particular firm or its adversees will have effect on the entire u.s. financial system. this is impossible to know. or how skilled or expert the members of an administrative agency might be, they cannot predict the future. the decision is. discretion, and the ability to , givingtain activities to fsoc authority control entire markets. when the congress gives these extraordinary discretionary powers to an administrative agency, it is further empowering the administrative state.

the broad discretion given to be fsoc in this case could an on constitutional delegation, legislative power, the supreme court has not invoked this concept since 1935. many think it's dead. one of the reason for thecourt's reluctance -- court's reluctance is that we don't have a good definition of legislation and administrative action on one hand and the other. this should not be impossible for a court to determine in individual cases. a legislative decision has wanted distinguish and characteristics. arbitrary, taken from some and given to others, and does not require any justification, as long as the constitution is not violated. just by congress setting a $50

billion threshold for treating a bank holding company this way, that is one example of a legislative standard setting decisions that are completely arbitrary. $50 billion makes no more sense than $200 billion in this context. they called and companies cannot and have not challenged that. they have done so legislatively, but not in the courts, because congress is allowed to make those kind of arbitrary decisions, which an administrative agency cannot. once these decisions are made, the administrative agency can be cast to carry them out. to chief back marshal's decision in 1825, when he was based with this question of the difference between an administrative and legislative decision. his point was that the important issues, the important decisions

are made by the legislature. the administrative agencies have some delegate of responsibilities, but not the important ones -- delegative responsibilities, but not the important ones. someone has to determine what the important decisions are, and that is the responsibility of the court under article three of the constitution. the unwillingness of the court to make these decisions is responsible for the growth of the administrative state we have seen now and into the future. to send has been happy difficult decisions to the administrative agencies. the framers were wrong in this respect -- congress will not jealously guarded its powers. as chief justice marshall said in marbury versus madison, we heard this from the attorney general -- it is emphatically

the province and duty of the judicial department to say what g, thew is, yet if anythin supreme court has gone the other way in the chevron line of cases. they have deferred to the administrative agency's interpretation of what congress authorized. and they are allowing the agencies to say what the law is. in the metlife case, metlife w on, the district court did not give the fsoc any difference. receiveddn't decide it excessive discretionary powers. fsoc's decision was arbitrary and capricious,w because it didn't consider the cost of designating metlife as something that was -- something that was actually not required by the statute.

created an case opportunity for the court to consider the scope of discretion congress gave to the fsoc. this decision does nothing to restrain that growth. until the supreme court uses the authority to define where legislation ends and administration begins, the administrative state will continue to grow. thank you. [applause] entrance.ce peter speaks in his usually dramatic way. is to see if i can find some horror story that will one up his -- >> [laughter]

>> explaining how there are other horrors and the administrative state. the horrors i am about to talk about do have solutions, whether the once he is talking about are extremely difficult. the thing i am going to propose, using pha as a vehicle, is as follows. whenever you put together an administrative agency when -- which has independent standards, it can only issue regulations and prosecute cases, but it cannot internalize inside the functions of ae federal district court by putting together a panel or commission, or in the case of consumer financial protection you cannot put these people together to give them the power to adjudicate, so that the only kind of judicial review you can receive is that which comes from appellate court. this issue has stalled financial

regulation with -- and continues everywhere else. many of you have followed the ptab, the patent trial and appeal board, which is designed substitute for the adjudicative system. as we heard from general sessions, the separation of powers is indeed very important protections for liberty. you do not one person to hold all the keys to the safe. if that person is good, things go well. if that person is bad, things will turn out to be hard. the situation that we have with cfpbrren having to do with is an architectural masterpiece.

you would hear on how it is the administrative agencies ought to be authorized. you would believe there are people out there who often turn out to be rigorously partisan. we have to insulate them from political pressure so they can protect the public from various kinds of abuses that are going to be inflicted upon them. there is no question that a powerful metaphor in the united states is the relationship between wall street and main street. wall street is thought to be a -- subject to extensive regulation. b together,ut the cfp they insulated from various kinds of circumstances. insulate it from various

kinds of circumstances. insulate it from various kinds of circumstances. they gave it budget protection by financing it through the federal reserve. and they give it power with respect to the way you decide cases. you can see the powers that came through. these are complicated financial transactions, in which liability was rather questionable, but it has to do with the application of rules put together by the organization and the extent to which they are bound to the cfpb. cordray decided to increase 104fine from $4 million to million dollars, saying this is a perfectly ideal situation, to give a public speaking to a corporation which probably committed no kind of violation. when the case comes up to the district circuit on appeal, judge kavanagh decided he would give them a choice. he said, if you want to have a single commissioner, you must be prepared to accept this person can be removed at the pleasure

of the resident. "the wall street journal" began a removal campaign, underground scene could be dismissed for under theunder -- idea he could build -- be removed for cause and the removal of the president. view, this is not a perfect protection. if you start to look at the many commissions that are put together, some with a three-to discover there is a rigid party separation under virtually every kind of issue. the so-called expertise is a very sharp political division, under the view you have a court of general jurisdiction by the way of rotation sitting on these cases, makes it much less likely you can have this particular sort of division.

the mistake in the cap an odd opinion -- capital opinion -- a kavanaugh opinion did not go far enough. we have to come up with a powerful decision that calls for complete separation of the enforcement and regulatory function on the one side, and a adjudicative function on the other. exactlyher question is what kind of bodies you want to put together? there is the question of whether you want specialized courts, or whether you want to put them in the courts of general jurisdiction. on that question, i relatively agnostic. -- i am relatively agnostic. the fact that these particular judges tend to be appointed by judges of the judiciary rather than the president tends to

cause strong political division. we have agency after agency from the new deal, this very difficult situation of 3-2 or 1-0 commissions, and what is the problem? you have the problem of flipover. with a change in the presidential administration, the majority goes from one party to another. the commission tries to undo the particular decisions made somewhere else. you have the same thing in the securities and exchange commission. sec is one ofthe the worst offenders on this particular situation, as it is and ittitutionalized, can be prosecuted before a judge of its own appointment. 97% of yourinning cases in friend of your own tribunal, the only conclusion you can breed is that you are playing with a death -- deck of

cards. if you do not -- you do not want that kind of situation to exist. people only spoke about the arcana of various issues associated with financial regulation. simple minded point that goes back to the principle of separation of powers that can be applied to financial areas, but that can be carried on everywhere else. we have to understand we will never undo the administrative state, nor should we try, given the complexity of functions that government has to do. they these complexities, justify the amalgamation and adjudication and legislation and prosecution of the same agency. the agencies will run just fine. and everyone can take a deeper breath and sleep more quietly at night. thank you. [applause]

>> i would like to open up the conversation among members of up the conversation among members of the panel. >> most of the regulations have yet to be issued. >> professor scott, as you talked about the lender of last resort, the classical theory of lender of last resort, as i

was mr. badgett said , lend freely, but at high rates. at very lowly, rates. is this emblematic of a new economic theory? [laughter] >> you're making a good point. let's go back to the 2008 crisis. this was a particular problem for banks. the fed had a 50 basis point panoply great for a borrowing -- -- our rate for april we wing window when the crisis occurred. nobody came to borrow and they knew the banks were in trouble. they lowered the rate, over market rate. nobody came. why? the banks were concerned, they needed the money.

they came to the fed, even the -- though the banks had no obligation to disclose the particular fireworks, that this would be doubt through reports the fed issued -- that this would leak out through reports the fed issued. they still did not borrow. the fed created something the term auction facility, where any bank can borrow at an auction bank. you couldn't tell the good banks from the bad banks who were borrowing. here is the dilemma that was exposed in 2008. if the penalty rate is high, or if you specifically penalize the borrower, and that particular borrower freaks out, they won't borrow and the situation gets worse and you have a more difficult problem. they should pay a penalty, whether it is a penalty in the form of a penalty rate, or something else, disappointing

management for example or some other consequence, there should be a consequence. >> there is too much information there is too much information out there regarding borrowing. >> studies i have cited show the , therection facility were other facilities that bank of america received. there was an effective interest rate of .8%. goldman hit 1.4%. those are rates that no one else could have gotten. decide likey nuclear reactors that they are not going to be allowed to fail, you will do anything necessary to subsidize. these were a enormous subsidies they received -- an enormous

subsidies they received. >> we charge you a fair market rate, you were doomed to fail. wrong abouthings the whole federal reserve lending system is that it only allows the government as a lender to take back interest rates. they need to start thinking about interest rates, which is abused, but nonetheless available. say, we are going to give you a situation of 2.0%, we if this thing goes up, now own 50% of this business at such and such a rate. 20% at that kind of a bright. we will take it out of the open market at some point or another. what happens if you don't want people -- you don't want people in the lending business to have to make a judgment on the front

end. you would rather have this thing as a contingent process. if you change the nature of the situation, you can do it. with the aig situation, you don't have that much stability. created transactions in which you have a third-party corporation, which announced it was taking equities. and then you have silly litigation before judge wheeler and meyer. you don't want people do have the wrong statute and give the wrong result. when you call the fed the lender of last resort, the word lender is a dangerous term. it limits the way in which you can provide relief. no private party is going to give some kind of assistance. we should not handicap the fed in that way. >> i would like to make a

comment about this question of too big to fail. i don't think people are making enough in the way of distinctions on this issue when -- on this issue. when you read in the press that banks are too big to fail, there is some distinction that should be made. bake holding companies are ordinary corporations -- bank holding companies are ordinary corporations. what we saw in the financial failed, when leeman there wasn't any interconnection between these large institutions. when one fails, it will drag down others. institutionso fail are the deposit takers, the deposit insurance. they are gigantic. we have more of them that are over the trillion dollar mark. those institutions are too big

to fail. they are not covered by the dodd-frank act and are under the jurisdiction of the fdic, which has nothing like the resources necessary that deal with the failure of a bank, so we are still in the position where we the no way of handling failure of one of these very large institutions. i am not trying to propose any kind of action, but what we ought to understand is that the act, intended to deal with the too big to fail problem, does not deal with the real institutions that could cause a financial crisis is one of them failed. -- if one of them failed. suggesting we go back to a division under the

glass-steagall act. as i remember, when the act was gotten rid of, the idea was that banks here in america could not compete with foreign banks that were doing universal banking, into the reason we were abolishing glass stable -- and the reason we were abolishing glass-steagall was to be in the universal market. is that a problem? >> if you go back to the 90's, the european banks said they couldn't compete with our major institutions, including the specialized investment banks like goldman, morgan stanley, merrill lynch, what was then the old jpmorgan. from what i have read, our institutions were doing extremely well. that was the story that was told.

you would have institutions that were more specialized or focused. they would be better at what they do. i think when you try to do everything you tend not to do anything that well. >> banking crises are almost universally caused by bad loans. not by securities activities. ok? so if you want to make sure that you're not subsidizing this banking system, let them do everything but making loans. the idea of robbing their powers, the major argument was in terms of risk. ok? so that you were diversifying their activities, you know, to

decrease the over all risk of their enterprise. that idea to me is totally valid. ok? to go on't think we want back to the world in which the bank part goes down, the whole thing necessarily goes down. i think it's good we have diversification in the banking system. >> can i add to that also? hat is the reason why the -- there was a permission for bank holding companies to acquire securities firms and other kinds of financial institutions was because if you look at the data you will see that most of the financing that is done in this country is done through the securities markets. and the trend is all in that direction. the banks have been basically flat in terms of the financing that they provide to the

corporate world. so if you want to have successful financial institutions, you cannot freeze them into a position where they are basically losing their role in the economy. they have to be allowed as i see it to compete in the areas that are growing and that is the securities markets. >> i agree with all of this. i'd like to make one other point, that you always want to reverse engineer past failures. at least you don't make the same dumb mistake twice. certainly if you start looking back and say banking practices in the 1930's and 1940's it was very common to have situations where the loans would be limited to 50% of asset value. very low. it turns out you don't get a lot of leverage and you don't get yourself a lot of failures. what we then did is we decided, no, we want to goose up home ownership as an independent ideal. any time you have an in state ideal it's a mistake. it turns out that home ownership is good and should be

able to survive without having crazy subsidies. what you then do is tell the banks what we would like you to lend at 80% or 90% or even sometimes 98%. well nobody is going to do that unless you give them a guarantee. then you have the implicit fannie and freddie guarantee, implicit guarantees are always terrible because you don't know exactly how much they cost. they're not on the books. they always create the opportunity by the government or some sort of collateral obligation, and then the bill comes through because of the social failure. so what you have to do is not only let banks compete in markets in which there is potential growth securities and so forth but you cannot go back to another system in which there are any impliss guarantees that can come through because we will then see a repetition of what happened in 2008. that's not exactly what happened. fannie and freddie may be out

of that, some federal housing bureau which will pick up the slack because the political consideration for rational, nonracial reasons to subsidize home ownership is so great that what happens is the way in which we seem tongue we'll beat the odds is take a huge number of losing bets and then we somehow assume that through the law of large numbers of this will all work out or as in the old days in the jewish garment business this was the joke, you don't make up what you lose on every piece by having large volume and that's something that lendors in the united states seem not to have learned. >> a brief response. my view is based on my study the key catalyst for the crisis were mortgage backed securities, collateralized debt obligations, and credit default swaps. you securitized really bad loans and you sold them around the world pretending that they were good just like the big banks did foreign bonds in the 1920's.

ok? then you used credit default swaps which were a form of insurance to convince people, oh, someone will cover this if things go wrong. so we basically again combined banking with securities and insurance and peddled what was really terrible stuff as if it was good guaranteed stuff. and when everything blew up, uncle sam had to step in. because the institutions that were doing this were so gigantic that they couldn't be allowed to fail. now, again, i think the moral hazard that you get when you basically say i'm not putting own portfolio, i can package them in securities, sell them around the world, get triple-a ratings by bribing the credit agencies and get a.i.g. to provide credit default swaps to back them up, i mean there were a series of per verse incentives. so my view is look at the conflicts of interest created by universal banking. the last thing i would say is there was an interesting article on bircha bank the other day.

it's one of the big european universal banks. they pointed out the share holders of deutsche bank had gotten something like $15 billion of euros of dividends over the life of deutsche bank since 2001. insiders had 71 billion of euros and bonuses. the universal bank franchise has been a bonanza for the insiders. they have made out like bandits. share holders not so well. thank you. >> a comment of course on what ou said. we've been debating this for years. the way it was phrased was the banks sold the mortgage backed securities around the world. the oir way to look at it is they were bought around the world. why? because the government has a policy here in the united states that caused a gigantic

dubble that was far beyond any bubble we ever had in the past. and what was happening in the people were taking out mortgages with good, high rates. people were willing to lend to them because there were never any defaults. when there is a bubble everyone can refinance in the united states without a problem. so you never see defaults but you see high rates and people in europe and elsewhere around the world wanted these obligations. so the banks actually were running out of the available mortgages as things got hotter and hotter toward 2008 and began to use credit default swaps. i want to say one thing. you can use a credit default swap to imitate an actual mortgage backed security which is what they did. but one thing about credit default swaps, very complicated subject of course.

but lehman brothers was a big player in the credit default swap market. when they failed, suddenly, without any warning, the credit default swap market kept operating all through the financial crisis. so don't get frightened by something like a credit default swap. it turns out that it is not as harmful as people suggest it is. and it is very useful for an institution to manage risk. and what we've done with credit default swaps since the crisis in the dodd/frank act toss make that much more difficult and lso to set up a set of institutions, financial market utilities they're called, which are now backed by the fed and which will be the cause of the next crisis. >> you got it. >> one sort of comment on this stuff. one of the things about

regulation and financial businesses is the way in which they look at their book of business. essentially if you are a responsible financial company you start thinking about diversification and all the rest of that stuff. what you do is you look at an entire portfolio of assets and see essentially the internal stability. so you may have some credit default swaps or other kinds of derivative institutions that may look highly loaded in one direction or the other but if you have physical assets on the other side to sort of complement them the volatility of the portfolio is far lower than the volatility of one of its components. hen a regular -- regulator comes in it turns out you have these jurisdictional boundary lines so often the default swaps are regulated by one guy and the physical assets regulated by another and the each will see an unstable portfolio because they can't take account of the other operation. what happens is this regulatory provincialism tends to exacerbate risk that market

institutions designed to essentially control. the reason i chimed in with peter is because essentially what we now do is have another one of these regulatory hot hourss which is going to have limited vision on it and generally speaking since it is getting only limited information it is going to make a systematic mistake with respect to the volatility of the portfolios which means when it comes to regulations and interventions it is likely to get them wrong. i mean, smart regulation. trust to peter and austin. we do a fine job. >> i'd like to open the session to questions from the audience now. i'll ask you two questions. when you ask a question identify who you are and where you're from and, secondly, make it a question. >> thank you. >> first of all, here in the front. >> thank you. i'm a banking consultant here

in washington and very active with the financial institutions practice group. following up on the comment i have a very simple question for the panel. what should be the federal government's response if any should a funding crisis and consequent contagion erupt in the shadow banking world and given the requirements of market to market accounting trigger substantial capital losses in fdic insured banks which in turns triggers the costly failure of some of those banks, again, a very simple question. [laughter] >> who wants to take that one? >> i mean, my simple minded response is we have to change the status quo, right? he status quo is unacceptable. i agree, that's what we're facing. if we don't change it. now is it a magic bullet to get all that short-term money back inside banks? not a magic bullet but then at least you know where it is and you can regulate it and begin to respond to it and begin to charge deposit insurance premiums and other things to

offset it. right now we don't know where a lot of these claims even are. the regulators don't know for example the whole scope of the repo market. and credit default swaps, lots of luck. i mean, so that's the problem with 2008. we didn't know -- the regulators didn't know that a.i.g. had $80 billion of credit default swaps and were going to bring down many financial institutions. one last example. $50 billion. ok. $50 billion of the bail out for a.i.g. was paid through directly as 100% coverage on their credit default swaps to major financial institutions including every one you can name in the united states and europe. if they have not done that, the c.d.s. market would have collapsed and some of those institutions in serious trouble. so the a.i.g. bail out was a c.d.s. bail out among other things. just to be clear about what happened. >> well, just on that -- >> there is so much to disagree

with. let me say one thing. [laughter] >> that is all of this faith in regulation is remarkable when you understand the banks that got into trouble as arthur was talking about were all heavily regulated and the regulators were inside them every day. and so, still, they didn't know what was going on. what happens with regulation is that people believe, like arthur does, that regulation stops risk taking, and as a result of that they put more money in banks or make more investments in banks when if they were aware of what the risks were, instead of relying on the regulators, they wouldn't. >> look, i have another point. one of the things about these redit default swaps. just a factual point. if you hook at the exposures on

the c.d.s. portfolio, and look at the major counter parties, take goldman saks as an example. goldman saks had 18% of its capital risk from the failure of a.i.g. 18%. that's a large number but it's not close to insol veinsy. going back to peter's point about the lack of keckededness. that 18% number doesn't count the c.d.s.'s that goldman purchased on a.i.g., itself, as a hedge against the inability of a.i.g. to pay off on the c.d.s.'s. if you take that into account, the exposure or counter parties -- is that surprising? risk 101. you don't put all your eggs in one basket. and i think goldman understands that idea. ok? >> i was going to make a similar point. >> so the fact of the matter is, art, if a.i.g. had not been saved by the fed, goldman would

have been fine. >> goldman would have been but not some others. >> other counter parties were in similar --. >> one of the other things to understand about goldman is things were not just hedges as promise to promise. they also took security interest of one kind or another, right? >> counted in the 18%. >> what? i don't even know -- you know all the technical stuff. the point i'm trying to make is on this one it's kind of a simple thing which is one of the reasons you run the flow through in the alternative what you do is get a kind of foreclosure in the financial markets with their repos organized in a way which allows for instant foreclosures independent of the usual rules on mortgage markets and so that also kind of protects things. so you have to protect goldman in order to get at a.i.g. because otherwise goldman will protect themselves. the other point i want to make on mark to market. this is a, i think a twofold answer. to the extent that you have readily tradeable market prices on various things, on a daily

basis it's perfectly sensible. but what happened in 1988 and so forth and which can happen again is we are trying to mark to market those kinds of securities that do not have a ready market. then in effect you deny a regulated bank, which is the ability to say i'm going to keep my assets off the market during a bad period of time and wait till sometime later. it's that inability to delay, which then forces them into markets, which then lowers the price even further at which point the cycle starts to complete. so what happens is instead of thinking this is a regulated institution, think of it as a single owner of a particular asset and ask yourself whether or not in bad markets the owner of the house is under a duty to sell and i think in that case you want the change mark to market because in one case it's valuable and in the other it's quite per verse. >> in the back, question? >> so about these systemically important institutions, it

seems to me that once they've been designated as the federal government's taking a lot of control of the internal governance away from the shareholders, and, to me, that should really be classified as a taking. you have the government instituting for public purposes and taking control away from people's private property interests in the company as they own shares in. i think changing that quo really change a lot of things. >> did i hear you talk about taking? [laughter] >> look, i mean, the answer to this is takings is half the problem but there is a second half of the problem which is whether or not when the government takes it gives you some kind of just compensation so that the share holders will regard themselves as better off than before. if in fact you are running a sensible kind of a bail out program where they inject money

into the situation which gives you liquidity and takes back a senior interest that's fine. and that was maybe but arguably the situation that you have with fha and fannie and freddie with the 2008 september bailout when they took a 10% dividend preferred stock for money that was put in. but when they then switch the terms of compensation so that amount that you get is nothing ever, then since you're getting nothing ever you should be extremely happy because if you never had nothing we wouldn't take it from you anyhow which is the government's position, then it becomes that. what happens is the reason the question is right is the takings issue is always raised but you have to look at both sides of the problem. what happens in many of these cases most notably with g.s.e.'s is nothing whatsoever is given to the shareholders when this thing is confiscated and what was so terrible about this is if you look politically on this kind of a bipartisan willingness to steal on both the republican and democratic side and i've written about this thing for years on behalf

of the hedge funds, i am always amazed at the casual arguments that people make saying we regard f.h.a. as a faithful agent of the individuals whom it is milking every dollar that they have. >> all right. another question? >> i'd like to ask the panel this. if you had a magic wand you could wave over dodd/frank what parts would you amend or repeal? then turning to reality, what if anything you think it is realistic to expect is likely to happen with regard to dodd/frank reform during the current presidential term? >> let me try that. >> i'll answer the second. it's easier than the first. you know, there is a bipartisan bill that was introduced this week, which basically tries to reduce the burdens of dodd/frank, limit them to in some cases banks that are under $250 billion and in other cases even smaller banks. it depends on which provisions

of dodd/frank. bipartisan. i would say there is a very good chance it will pass. i think that'll be it. ok? there is such a narrow majority of the republicans in the senate and such disagreement among those republicans that i think any other practical fix to dodd/frank other than for smaller banks which i think we'll see will not pass. in terms of what i would -- i would sort of scrap dodd/frank and start over. >> thank you. [applause] >> anybody else? >> yeah. i mentioned two things right off the bat. that is the financial stability oversight council should be closed down. it's a danger. and to the extent that they go into things such as activities, which many people have been for, that is a real danger when they are going to be able to stop entire markets from

operating or entire industries from operating because they don't like the way they are operating. that probably won't happen in the trump administration but it could well happen in the next administration if it turns out to be from the left. >> first of all, i think the cfpb mark for extinction would not be a bad thing and re-assign us to regulatory authorities to other agencies which are better able to do it. the one i particularly hate which is self-contained and separate is the durbin amendment which sort of wrecked the debit card market for many years by announcing that the interchange system which had been the greatest success in financial innovation over the last 15 years was completely crazy because it allowed essentially people to charge the debit card holders a transaction fee and they wanted to drive it to zero. that's separate. i mean, people like todd zwickee who may end up running

if the lord is kind to us, the consumer financial protection board, has essentially killed off all sorts of innovation in this particular banking section and the reason why i think it may be is not only of the effects particularly odious in many cases but separate from the rest of the statute and that point, the problems are much less severe. >> i certainly agree that relief for the traditional community banks is long, long overdue. mong other things, we impose international capital requirements on traditional community banks. it makes no difference whatsoever. they are the ones who are doing what i believe banks are supposed to be doing and they are the lifeblood of most of our smaller, medium sized communities. we want a startup culture. we need these banks. we're loading them down with way too many mandates. i hope that can be accomplished if nothing else. >> if i could just add i don't think the villain is all

dodd/frank. this is what art just alluded to. a big villain of the peace resides outside the united states in the form of the bassal committee and financial stability board. okay. two major regulations that really affected growth, economic growth are capital and liquidity requirements. those do not originate with dodd/frank but came out of the basal committee and the financial stability board. how we deal with these international organizations going forward in terms of providing regulatory relief is absolutely crucial. this is not only an issue about dodd/frank. >> next question. >> thank you. i am an attorney but since 1972 i've been a money manager in he equity markets. >> generally the big declines have always been cause bide something different. the.com bubble, the fm

financial crisis, so as a money manager i'm always looking for the next thing. everything you said is great. i've studied it. i'm not sure if that is the last word. i don't know if any of you looked at what jamie dimen said affs fraud. it is very small now, growing rapidly. that's bit coin. it looks like the tulip bubble in holland. the question is have any of you looked at it? have a sense of the danger it poses to the capital markets? is there an administrative body that should be if not regulating at least closely monitoring the growth of bit coin? >> the only thing i can say is i read a little bit about the failure which no one has yet really explained. everybody lost their money and the money just disappeared. commit any kind of market where people's money just disappears and no one has any explanation

looks to me like a ponzi scheme. my analogy to bit coin would be a ponzi scheme that is the greater fool theory. where do the pay offs come from? it is not clear who is behind it. this is not my area of expertise but i wonder why people haven't been looking into it. maybe they have. but it as matter of some perplexity to me that a market like this which no one is vouching for, no one is regulating, no one is overseeing, and you've already had some collapses can keep .ollecting a lot of money >> our economy is great because of innovation. if people lose money on something like bit coin because they've speculated on it and

they've lost if it is a ponzi scheme then there is a criminal violation there. but let's not get into the business of regulating innovation. let it work out and if people lose money that's their problem. >> i have the following explanation. >> you can't possibly imagine how people are allowed it put in moneys which have systemic failures and there is no accountability. as i look at that statement it seems you have to close down every bank in the united states. they've all had similar problems. regulatory life is much more frequent in this country than in canada where they've never had these problems. the danger you have is if you want be to apply it to bit coin you have to apply it to everything else. to that particular point it may go back to only having gold bullion in order to run our exchange market. >> last question.

> professor, thank you for coming today. you decried the tragedy of the federal government having to spend $850 million to bail out citigroup and bank of america. i understand your take on what happened in 2008 as little different than the other panelists. certainly we can take as a matter of judicial notice that there is a strong push coming out against congress to redress income inequality by asking financial institutions to make loans to people who otherwise would not be qualified and it is my understanding that f.h.a. losses are astronomical in terms of, in comparison to other forms of loans. in that sense the government spends plenty of money on behalf of the taxpayers for its own problems. could you take the position on that form of lending? do you decry that socially

induced lending also along with your other concerns about --? >> oh, yes. i've said repeatedly to people i think the idea about getting people into homes they can't afford makes no sense at all. i mean, what is dishonorable about renting? we basically have got millions of people into homes they couldn't afford and then their homes were foreclosed. they lost everything. they lost their credit rating. i mean, they're ruined for years. this was a horribley misplaced policy. on the idea that subsidizing housing at the point people simply can't afford what they're getting themselves into i agree fully. i think that was a terribly misguided policy. i also don't disagree that both the government and the largest banks, you know, there's plenty of responsibility to go around between them. unfortunately, the biggest banks found that sub prime lending was apparently a very

profitable thing to do. it was for a short time but it wasn't for a long term. >> out of a one sentence swer, one word answer, it is called rent. >> on that optimistic note i've got the hook over here. can we thank our panelists? [applause] thank you very much.

thank you so much. really enjoyed it. >> the federal society's national lawyers convention is taking a break now. they will return in about an hour or so and we'll hear from white house counsel don mcgann. it is supposed to start at 5:30 eastern and we'll have it for you live when it starts.

>> this weekend on book tv, live coverage of the miami book fair starting saturday at 10:po a.m. eastern. msnbc's chris matthews on the political life of bobby kennedy. best selling biographer arthur isaacson on leonardo da vinci. and nbc news' katy tur on covering the trump campaign. our live coverage continues on sunday at 10:30 a.m. eastern with journalist cheryl atkinson on how smear tactics are used to influence public opinion. political commentator charles sykes offers his thoughts on the conservative movement. cnn's ben jones weighs in on partisan politics and beverly daniel tatum looks at race relations in the united states. watch our live weekend coverage of the miami book fair this weekend on spoint's -- spoint's

book tv. this weekend on american history tv on c-span 3, saturday at noon eastern, the 70th anniversary of the hollywood tent hearings before the house on american activities committee. family members of black listed artists read from congressional hearing transcripts. >> what was your last employment? >> my last employment, just finished a picture called "the tall target." >> are there references to those studios in connection with your employment? >> i've been in theater for about 25 years sir. i think i'm well enough known to all of them from the roles i have played. >> were you a member of the communist party in 1942? >> i stand on the fifth amendment. well, it might incriminate or degrade me. the word communist is an emotional, hysterical word of the day. much like the witch in salem. >> and on the civil war a discussion on war monuments.

>> it was about victory. the victories in so many ways celebrated was the victory over reconstruction. >> sunday on real america. the world war ii propaganda film on the north africa campaign. >> the president of the united states welcomed the prime minister to great britain. the gravity of the moment brought them together. >> at 8:00 on the presidency, the book "26 seconds, a personal history." >> gradually starting in the late 1960's versions of the film began to leak out. and people began to see it. and when they saw it, because of the way that the film looked, it did not look like what the warren commission concluded. >> american history tv all

weekend every weekend only on -span 3. >> c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies and is brought to you today by your cable or satellite provider. after this week's open meeting four of the five s.e.c. commissioners including republican chair spoke to reporters about issues including regulations, media ownership rules, and a new broadcast standard for television. this is just over 40 minutes.