of writing thousands of pages of regulation, it probably should be adjusted around the markets. particularly smaller institutions. we are seeing more of that decadeng now more than a , there is a huge focus on deregulation. plus, there was an agenda of unfinished work. we made some progress and there was a big to do list of things that still needed to be worked on. i'm not sure we are working on the things in the way we should and then there is regulatory pushback. is currently the professor the university of california in berkeley. you can watch the entire interview with paul croom -- krugman tonight at 8:00 eastern. we talk of a for thousand eight financial crisis. risk janet yellen

season the financial markets. we will have been on c-span. ontinues. host: amid the holiday shopping frenzy, discussion about the state of small business in america. guest, former head of u.s. small business administration currently working with bipartisan policy center mainstream finance task force. we will be to some of the task force work but right now, what is the definition of a small business in this country? how is it somebody called a small business according to the federal government? >> it's delightful to see you and i always love to talk about small business. this is actually a really interesting question. what is small? the numbernition of of federal agencies, small business is anybody with fewer than 500 employees. now, that's the general definition but if you want contracting, every single industry has a different definition because if you have a manufacturing company with 100

people, that's small. but if you have an accounting company, that could be big. the other thing is, small business comes in all kinds of shapes and sizes like out of the 30 million small businesses in the u.s., 24 million have no employees. so most small business is just or person in their office doing what they do by themselves. limitis there an income for small businesses, is there a point where you make too much money to be considered a small business? guest: for certain programs, there is. as i said, it really depends on whether you are talking about a high gross venture, one of the people who are going to be the next google in silicon valley or you are talking about a main street small business, somebody who has got a shop. they don't really want to grow. and each of the policies that we make in government, for each of these kinds of small businesses, needs to be tuned up to their

needs. one of the mistakes that i think they make is that everybody thinks one-size-fits-all. not true in small business. host: we will talk about that this morning. i should note that in this segment, specialized for small business owners, (202) 748-8000 we would love to have you as part of the conversation. all others, (202) 748-8001. our guest, the former head of the small business administration. we've spent a lot of time in recent weeks talking about the ups and downs of the stock market. how much of the stock market is made up of small businesses? guest: none. small businesses related to the stock market because it's a barometer, but that's really the larger businesses and that's what of the reasons why economists sometimes forget about small businesses. the fed is too busy watching monetary policy and macroeconomists are so busy with consumers and investments. and who is worrying about the impact of small business on the economy?

the answer is half of the people who work in this country only work for a small business. that's half the jobs, so you better be worried about it. in trying to understand the state of small business, was the best metric to determine how well small businesses doing? of my you hit one favorite subjects, there aren't enough metrics. we do not track the health and well-being of small businesses. we don't track how many loans are being made to small businesses. the best numbers that we have really are the small business optimism measures, the surveys, and the fed surveys about whether they are getting capital . things we did is put in some requirements that we start to measure, but they have yet to be implement it. we are sort of flying blind. imagine flying blind in half the economy. host: what are they telling us right now? guest: right now they are

telling us some good news, which is that small businesses are doing better than they have been doing in 10 years. end of the recession, the recovery, which was very slow and bumpy for small businesses. we could talk about why. now, finally, they are doing well. but there are always clouds on the horizon. easy optimism started dip. they are worried about uncertainty and uncertainty is, as you know, all over the place. the stock market is something which means people have less money to spend maybe in their small businesses. .nd the trade and tariff wars they are worried. host: talk about the impact more of the trade wars on small businesses. where are you specifically seeing it? guest: when i was working for obama, we did a huge amount to give small businesses the know-how and the capital to export.

suddenly, the technology, you can tell your business, your goods far away. if your you don't know market is going to be open, all of that investment that you made, it suddenly is uncertain. it's up in the air. lobstermen in maine are really suffering because all the exports that they used to make in china has stopped and canada is making those exports. we really have to keep our eyes on small businesses and when you hear about the trade ands, it's a very bad tone nobody is worrying about opening doors for small businesses. host: 30 million in america? we hope some of those small business owners will join us. for all others. what is the main street finance task force? guest: a great partner when i was in washington has joined the

bipartisan task force. and she and i and several others intoir and investigation whether we should have financial services reform to benefit the main street small business owners. and the answer is yes. desperately. lot of work being done on financial services reform right now, but it's not the right kind of work. is, we get a lot of things to do with consumer protections. all of those consumer turns out, they don't apply to small business borrowers. small business borrowers are not afforded the protections of a disclosure of how much they are going to pay on a loan. facts and duration of the loans, all of the prepayment penalties, that are now afforded to the consumer. so, why is that?

host: were small business is specifically excluded, or that just overlooked? guest: i think there was an argument that they were business savvy, and why do you need to disclose to them. they're smart enough to know. so they did a survey, they went out to small business owners and they asked them, here's a loan. and these are the terms. how much is the interest rate? and the answers were all over the lot. 5%, 30%, 50%. i teach now at harvard business school and i tried it on the students, the alumni. and they couldn't get it. so my conclusion is that it's complicated. and why would you not want to be transparent and disclose to a small business owner? it seems like a no-brainer to me. if people want to find out more, where can they go? guest: there's a website and we have a whole set of recommendations out there which should be a great guide and remember, bipartisan. how many things can you think of

that congress could undertake in this next year that really, truly are bipartisan? small business is one. host: more of those recommendations as we go until about 8:45 this morning. landed from richmond, virginia. good morning. caller: good morning. , many peoples would like to go into business and they have a good idea. my opinion is a lot of people in small businesses really should not go into business because it's hard to deal with laws and stuff. but because you something about that. the health insurance that you discover talking about, that's hand-in-hand with small business. it's because you can't have people working and then they get hurt on the job. in virginia, if you have small

business, you got five or six people working for you. it's about the numbers. you have to have health insurance. but i think that the thing that small businesses do wrong is try to make all the money because if you have small businesses, you have to pay payroll tax. and payroll tax involves unemployment, state and federal. and it also involves your social security. post: you bring up a few issues. guest: you brought up whole number of great issues. you are exactly right, because small businesses hard. and a lot of people give it a try and they failed. but it is kind of the path to the american dream. and the fact that we have an open access to starting your own business and growing it, that's really part of the fabric of our economy. now, you bring up also, health care. one of the most

important thing to small business owners is that they provide health care to their employees. and the reason is they want their employees to stay with them. it's like a family. they want to grow. but they don't have access to affordable health care and that's one of the things that i was really happy with in the affordable care act, is that we were going to be able to provide more market prices for small business owners to go and buy health care. and we are seeing them doing just that. host: your task force recommendations, do any of those have to do with the health care side? guest: no, the task force recommendations are really focus on the finance area. also think that's an area were small businesses really rely on government to have their back. because small businesses, if they are going to start up, they need access to capital. and one of the reasons it's something that you also mentioned. small businesses have cash flow.

and jp morgan did a study. most small businesses had 27 days of cash bumper. and other than that, if the customer doesn't pay, they could run out of money. and when it run out of money, things are over. so one of the things that we want to make sure is that they have access to a line of credit. that's the kind of thing that the bipartisan task force was talking about. host: have you make that easier? guest: turns out, there's a moment right now in finance where technology may change the game for small business lending. on this been working and writing on this since i left government and came to harvard business school. and the reason is that technology is going to make small businesses much more understandable to a lender. up until now, small business owners that wanted a loan had to

do a pilot paper work, walked down mr. he, talk to the bank, wait three months for an answer, and maybe it's a no, and then they go to the next bank. now people are online. you can fill out an application in half an hour. and you got an answer the same day. in the money can be in your account the next day. that is known as a small business lending. so it opens up a whole set of doors. the next thing that happens is that amazon, paypal, square came in the market. now you have big technology companies and entrepreneurs and the banks broke up. wells fargo and jp morgan and bank of america said wait, we are not going to see this market to the new guys. so they started paying attention to small business owners. so all of this is good news for owners.siness as long as they know what

they're getting into. host: maryland, go ahead. caller: good morning, how are you doing? i'm a small business owner. i started my small business two years ago and it was so hard to get a loan for a small business. so i had the banks and small they seeanies and when that you're starting out as a small business, you still have to get a loan from them. basically what i did was i use to start myney small business and up to now, i still haven't gotten any loans, to get a response back. and they do come back, it's either no or high interest rates. thank you very much. host: before you go, what kind of business is it, what do you do? caller: electronic repair and phone repair. host: thank you for sharing your story.

guest: thank you very much for that call. the smalltalk to all business owners, because we need more of you. how many electronic repairs do you need? a lot. so, why is it that it's so hard for you to get money to help start your business? the reason is that it's hard for bankers and lenders to know what's going on inside a small business. we call that come in economics, information capacity. but all the sudden, with new technology, you've got all kinds what's going on inside a small business. of data streams. so a small business now, instead of just being judged on their credit score, the new way is it you get permission for them to listen to your bank accounts, your credit card records, all of the information about the better business bureau, whatever is going on in your business. and that gives a much better sense of you as a business owner and the finances of your business. ablehat happens is you are

to make a better credit decision. there's less informational capacity, there's more transparency. and it's done faster because it's done electronically. so, that is really the new standard in small business lending. the issue with startups is that they are new, and they don't have any history. and also, there's an issue with small loans, because it's hard for a bank to make any money on a small loan. so we are hoping that all that will change with the new emergence. host: virginia, kevin, what kind of business? caller: we are a business consultant. host: what is your comment or question? caller: good morning. thank you for doing this. we talk to our clients about and especially when we prepare them for financing because we have a

lot of small clients that believe that just because they have a great idea or just because i have certain aspects, i should be able to get a loan, and that's not the way it works. but the other side of that, we know that a huge number of people fail. a lot of them fail because of the decisions that they make because they don't have any insight or view into parts of business that they really should understand. they don't have the analytics or have not developed the analytics or they think that my cash flow in my lossthey don't have the sy balance sheets for my financial statements are the only things i need when in actuality, there's a lot more to it. what i'm hoping is one day as we get the financial technology in place, you also get the analytics in place to help his misses individually as well as across the industries. host: thanks for the call. are a i have to say, you

very impressive man because one of the things that we talk about book is thehcoming concept called small business utopia. and

starts talking to her and says you should probably draw down on your credit line. you will need to do some advertising because dunkin' donuts is giving out a coupon. enablend of intelligence future should be coming soon for small business owners. i'm glad you described it. host: the book is coming soon. have you ever run a small business yourself?

have been ad i capitalist investor for 30 years. i have been involved growing businesses all my life. my grandpa jack came as an immigrant starting in the back of a shoe shop, he started with two machines making textile spirit i worked with him when i was growing up in the summer. he is to say our family doesn't work for other people. a were for themselves. we are small business. it is kind of in my blood. >> joe in new jersey, good morning. >> good morning. officer,ired military a new jersey licensed electrician. small development centers, new jersey, king that you -- king university.

a bank in union, there is no product for military veterans. alone, alleged talk about those -- like you to talk about those two items. veterans andfor what is the significance, really going for the loan. >> thanks for the question. guest: one thing that has been him ofnt to help veterans have a lot of leadership ability of a have

proven and it makes them very strong business owners. over index in the country with small businesses. this should be a small business loan. running the with michelle obama on returning franchisorsd we got to turn low fee or no fee to start a business. it was already a business plan to need a good leader and operator to step in. i think it is an excellent idea i would support. the idea of this house, can you talk about it? i used to say to people, we take your house and everything why? because his taxpayer money.

we are playing with taxpayer money and we need to make sure we protect it as much as possible. it is true lenders and bankers always want collateral. one thing that is happening now is there finding other ways to make collateralized loans. a loan right now, and they take money out of every why --one of the reasons host: it would be a fee that .oes to pay back the loan >> a lot of the new lending whatever revenue coming in. maybe you don'