or to operate on to then a capital margin, make it difficult or impossible for competitors with better intentions to take the prudent course. we cannot discount the risk that some day excess of reliance on the idea of too big to fail may lead to financial institutions that are too big to save with disastrous consequences. new regulatory approaches that recognize the importance of incentives, that recognize what is probably inherent in human psychology, are, we believe, essential. .

>> all systemically important financial institutions must have adequate capital. substantial capital requirements attenuate any moral hazard problems by ensuring that lenders are relying on capitol, rather than the perception of guarantee. they reduce the ability of shareholders to rely on eight

heads i win, tails, taxpayers lose dynamic. they provide a caution and reserve that even when mistakes are made, the result is not to threaten the ability of institutions to meet their debt obligations and so support systemic stability. raising capital requirements in an enduring way is the subject of an important paper that secretary geithner art discussed with his colleagues a few weeks ago, and it will be a major issue on the agenda of the g-20 when it meets in pittsburg this week. i do not believe that any regulatory reform that does not

succeed in raising capital levels will meet the challenges of this moment. the second critical issue is resolution authority. our financial system will not be failsafe until it is safe. economic and his story begins historians will debate for a long time the wisdom of the choices for the alternatives that might or might not have been available to the authorities as they faced problems at lehman and aig a year ago. what is beyond debate is the unsatisfactory character of those choices. it is wrong that taxpayers,

thousands of miles from wall street', should be at risk because our system gives authorities no choice but to commit taxpayer money or to accept collapse and chaos. it is essential that we developed means of managing the failure of financial institutions, because without the prospect of failure, it is difficult to contemplate the application of market discipline. there is a really good line here that makes this point vividly about financial institutions

without failure not being like a religion without death. at georgetown, i am better off not attempting to go into that sphere. the third principle, again, thinking about incentives and the inevitable human imperfection, eliminate regulatory arbitrage. financial institutions should not be able to choose among competing regulators. if they can choose among competing regulators, they will, on the basis of who regulates least. who sets the lowest standard. it is not reasonable to expect that regulators will happily see this set of institutions under their jurisdiction shrink

dramatically, and so it is inevitable that if regulatory competition is possible, either between the regulatory agencies within a single country or between regulatory authorities in different countries, competing to regulate particular institutions, that you will see a race to the bottom. fourth, and here in the automobile analogy comes especially to mind. regulation needs to be approached from the viewpoint of the system. how should speed limits be set? should they be set only with a view to how fast cars can go without an excessive risk that they will go off the road and hit a tree? or should speed limits be set with a view to the fact, the

possibility that if all the cars are going to fast, when one car has an accident, the pilot will be too harsh? no one would imagine setting speed limits without thinking about the possibility of multicar accident. yet our traditional paradigms for financial regulation has focused on the provincial regulation of individual institutions rather than the interconnections that come from their functioning together as a system. we can no longer take an institution by institution approach. similarly, any market such as the derivatives market that is so large an interconnected that its breakdown would threaten the stability of the financial

system must also be subject to comprehensive authority. finally, it is our judgment, and it comes from the same kind of reflection on incentives. it must be carried on by regulator whose interest is the mandate of the consumer rather than the profitability or help a particular financial institutions. in light of the recent events in the mortgage market, the prevalence of predatory lending practices and the ubiquity of problematic practices in the credit-card market, we have become convinced that it is essential that consumer financial regulation be carried out by an independent body whose mandate is exclusively consumer protection.

this idea, which one might not have supposed would be the most controversial among these principles, has generated substantial controversy. advertisements are being run on behalf of forests and other main street merchants, suggesting that -- on behalf onflorits -- on behalf of florists. i doubt that any florists are paying for those ads, and i would suggest those ads or the financial regulatory equivalent of the death panel ads that are being run with respect to health care.

those with an argument, making it. those without a good arguments try to scare people. that is what is happening here. this is a critical issue. it is one on which the president's is determined a separate consumer regulator will do much to protect consumers from the abuses that have become all too clear in recent years. taken together, if we can adopt this philosophy and implement a program based on these principles, then we can at the same time address other issues like compensation, where incentives are obviously a crucial aspect.

i believe that we can create a system that is much less vulnerable than the system that we have today. we can create that system while at the same time preserving and strengthening the very great benefits that a financial system performs in terms of allocating capital and in terms of permitting the better sharing of risk. that is a crucial challenge in the years ahead for all of us who are involved in finance. it is a crucial challenge over spurring the economy, and it is one piece of what ultimately is the mission of this presidency,

to establish a foundation for stronger, more inclusive ligroin american economy than we have seen -- work exclusively growing american economy than we have seen. the boom of the 1980's ended with the 1987 stock-market crash and the savings-and-loan debacle. it ended in the bursting of the internet bubble, and the boom in this decade ended with a financial crisis that began in 2007. our challenge is to create economic expansion and growth, not based on financial bubbles, but instead, based on real production of goods and services for the benefit of all the citizens of our country.

there are many parts of this agenda. the new american economy needs to be more export oriented and less consumption oriented, more environmentally oriented and less energy production oriented, more bio and civil engineering oriented and less potential engineering oriented, and more oriented to the interest of the middle-class. i would suggest that a stronger, better regulated financial system is crucial for all that, and all of us working together can do much to bring about such a financial system. thank you very much. [applause]

>> we have time for a few questions, and let me begin with one. in retrospect, was it a good idea to repealed glass-steagall provision separating traditional banking from investment banking insurance? >> i think have to go meet my plane now. [laughter] i should say before anything else, i said a variety of nice words that i meant very sincerely about georgetown university. i should also acknowledge my friends that the "financial times." who work a sponsor of this conference. i say that with some hesitation, having been a -- having briefly been a columnist in their pages. liggett my staff, sitting there in agony, wondering what i am going to do next -- look at my

staff. for those of you who are interested in following the top of debates that i talked about, there is no daily in the world that is a reference with the quality that "the financial times" is. i think we have to think a great deal in the years ahead about the rules on financial accommodations, but with respect to the glass-steagall deregulation, i would make these points. first, there were no mergers between banks and investment

banks from the time of the glass-steagall repeal until after this crisis had begun when the bank of america merrill lynch murder took place -- merger took place. i do not think the suggestion that somehow this repeal calls all of this, since no new mergers took place is not plausible. the available evidence suggests that is efficient diversification was a crucial problem. what were the critical problems? lehman brothers, which was a

stand-alone investment bank. bear stearns, which was a stand- alone investment bank. look at the country's that escaped the major carnage that the united states escape, and i think canada is a good example in this regard. while they have suffered in the recession, they have not had nearly the financial dislocation we have had, despite having many of the experience is common to north america. they established a diversified set of major financial institutions several years ago. indeed, a large part of what enabled the resumption of stability at the moment of panic was the conversion of morgan stanley and goldman sachs to enable them to get access to

the discount window, the combination of merrill lynch and bank of america. so i do not think the argument that somehow, if you separate an investment bank activities and commercial banking activities, you would not have had the crisis. excess of separation between them may have lead to more crisis. at the same time, it is important to recognize that the concern behind many of the discussions of glass-steagall is a very real one. that is the necessity of, if you are going to have financial institutions that have access to

a discount window, that have some potential for support, the need to control their risk taking in a major way. so that impulse is the right one. its failure to take place to a sufficient extend is obviously a critical part of the problem, but our judgment is that the right levels of control on capitol and leverage, the right kind of capacity to create failure, the taking of a systemic approach, is probably a better way to contain those risks than to put restrictions on what type of activities an institution engaged in one thing can also engaged in.

>> the next question has to do with china's appetite for treasurys and what that might do in terms of our policy and the degree to which you are concerned about that. >> yes. we have a substantial appetite to borrow, and they have a substantial appetite to hold reserve and linde to us. that is a relationship that has been very substantial in our mutual interest and it has very much been a source of support for both economies.

i think it raises what is the question whether china holds the debt or whether anybody else holds the debt of how we think in the united states about the accumulation of government debt. i believe very strongly that we did the right thing, we did a necessary thing by substantially increasing the government budget deficit as part of stimulating the economy. if we had not done that, the consequences would have been much more serious economic collapse, collapsing tax revenues, far greater need for government spending in many areas, and ultimately, much more debt. so the steps we are taking to protect the economy protected

the financial system and protected our national health and very important ways, but as the economy recovers, as private sector borrowing increases again, it will, as the president has said many times, be necessary to bring down the budget deficit in a substantial way, to contain government borrowing and to limit the size of the federal government's role, it will be important in terms of our financial relations with china but equally our relations with the world in both the public and private sector. so that is going to be a crucial objective of government

policy as well. i would say that this is just one of the reasons why it is important to pass the president's health care program. you cannot construct a scenario -- if you bring down the growth rate of health care costs, not by overwhelming amount, by 1% to 2%, it has a profound impact on the federal budget picture. so addressing the issues in our healthcare system is critical, not just as a moral issue for

americans, not just because of the contribution it will make to help, not just because of what it will mean for the competitiveness of businesses who are paying such a large merchant -- a large bird, but also because it touches things as seemingly remote as our financial relationship with china by enabling us to go after the budget deficit. so there is a reason why this has become such an important issue to president obama in the first year of his presidency in the midst of an economic crisis. it is because whether it is the competitiveness of american firms, the security of american families, or the standing of the united states global capital markets, addressing health care is of absolutely critical importance.

>> may believe that the commercial real estate bubble is just starting to correct itself. how do you see this affecting financial markets over the next few years, and how do you think we should go about preparing for this >> j.p. morgan was once asked a question of the same kind. he was asked what he predicted would happen to the stock market, and he paused and lean forward toward its audience. i was going to say leaned into the microphone, and it occurred to me that when he was doing it they did not have microphones. he leaned forward and said in my judgment, based on my years of experience in the markets, going forward into the future, there

will be fluctuations. i think that is a reasonable prediction. with respect to commercial real estate, there is no question there is substantial the stress in that sector. you have already seen substantial price adjustments. unlike in the early 1990's, there is less evidence of large overbuilding. the problem appears to be more financial.

unlike in the 1990's, it appears to be a problem whose focus is let's toward the major systemically important financial institutions and more towards regional and smaller banks and other financial institutions. it is obviously something that is going to receive attention. . the treasury made an

announcement of mind-numbing complexity that i seek to summarize yesterday's having to do with the tax treatment that will prevent the more effective working out of distressed real estate than was possible previously by permitting renegotiations without triggering tax penalties. these issues will require continued attention by bank regulators, but ultimately there are all those vicious cycles that i talked about the that are operating in commercial real estate, and there is the potential for them to become a

virtuous circle, as the economy starts to recover, the demand for space will increase. that will provide support for cash flows and support for asset values. that will provide support for lenders. that will provide support for cash flows. that will provide support for asset values. that will provide support for lenders. that will provide support for asset values. this is how these situations work through. it is a matter of real concern. it is something that we watch closely. but i believe if the broad economic strategy is successful, it will provide considerable support in managing the challenges associated with commercial real-estate along with specific targeted measures, like the ones that i mentioned. thank you very much for the

opportunity to be with you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> you are watching c-span public affairs programming, courtesy america's cable companies. >> on america and the courts, u.s. solicitor general elenore kaydin, and later weekly addresses from president obama and congresswoman sue myrick.

>> today on c-span, a portrait unveiling ceremony for former senator trent lott. you'll hear remarks from former president clinton, newt gingrich, and mitch mcconnell. that begins at 10:10 p.m. eastern here on c-span. next month, take a rare visit inside the supreme court, as we talk to the justices about the role, traditions, and history of the court. >> brandeis would not come in because he said this building was so elaborate it would go to their heads. maybe he was right. it has become over time a symbol of the court system, the third branch of government, and the need for stability, rule of law, which is what america stands for. >> supreme court week starting october 4 on c-span. as a complement to this original production, c-span offers free

teaching resources on our judicial system. this week on "the communicators" our guest is crist schroeder, the ceo of health central network. he will discuss the increased use of technology in the health- care industry and his experience is starting an internet based company focused on health care. >> the washington, d.c area is home to several technology companies. a recent article looked at some of the tech titans. chris schroeder was one of them. this week and he joins us on "the communicators." please give as a primer on your business.

>> when you want to take charge of your wellness, it can be very confusing and scary. we thought was a real opportunity with technology to do two things, first to create a collection with one destination, disease by disease and well this issue by well this issue. at the end of the day, we are wrestling with what we are thinking about. secondly, and pro-family importantly, these or experiences about real people. it is not just a clinical doctor telling you what to do. it is an opportunity to meet people like you who can give you support and guidance and ideas on how to live your life on a real-life basis. >> so these export patients,

where you find them? >> all of our sites are populated with what we call expert patients. these are folks that we have never heard of before, but their true advocates and leaders in specific areas. we have spent years building this network of people who start the conversation on the website. some are medical professionals, but most are just academics who have written books are been on television, and they come and right for us to start these conversations, and then eventually other people participate as well. >> is there a danger in self diagnosing? >> there is a profound danger, and we would never want to be in that environment. when you look in the offline world, there are too resources we rely on. we rely on our medical professionals. you also rely on people who have

been there. you take these considerations, and at the end of the day you have to talk to dr. with anything regarding science. when are looking for in the the in support, that is often not the place you first want to go. >> what kind of medical professionals do you have on staff? >> it is important that we have the medical aspect, because we have a significant amount of contact with websites that deal with a clinical nature. we also have a doctor who is our chief medical officer on the west coast to court next quality of some of the networks in the area. we also have medical professionals who are participating within are additional sites. if we ever have content that is generated by us, that becomes

clinical in nature, we have doctors -- >> heavy foundry research that the first place people are turning -- have you found through research that people are turning online first? >> anyone who has access to computer and specifically to broadband, 90% of them start online. most of the time, they start with a search like google or something like that. no one googles "help." -- "health." they start going to multiple locations to abrogate the truth. we can build very conditions

specific web sites, knowing that people will go to multiple locations to get smart about what they want to know. broadband is changing the fundamentals of the way people live. there are a lot of experiences about great single brands and how things have moved in the ball. it is clear that when rabin becomes part of people's lives, it almost makes the internet like turning on a light switch at the ended the day, because it is so simple and easy. it becomes a continuation, which means you have the ability almost any time at anywhere to conduct and communicate with anyone you want on your terms.

the ramifications are significant in many ways. >> this country is in the middle of a health care debate. what is the role that online will play, in your view, in these reforms? >> it is interesting to watch what a profound role technology played in the presidential campaign. it has been interesting for me to see that in governance, and has not played the central organizing principle in the way it did in politics. my theory is that when you are running for office, your goal is quite clear. you are going for a specific deadline. when you start getting into the nuance and complexities of governance, all of a sudden you have very diffuse technology in a lot of people's hands. a lot of different voices are saying a lot of different things. in the and it has ramifications

for the debate. the people who were worked up about health care reform or looking at different places to get information. it will be interesting to see whether that evolves over time. >> when it comes to health, what is the role of on line? >> technology is one of the most profoundly important aspects on an ongoing basis. we are at the early vanguard of this, the ability for people to find on their terms information from people like them so they can begin the process of taking control of decision making in their lives. when i was a kid, the ability for anyone to do this with any efficiency is profoundly important. the information and knowledge

aspect is the first page. as we move down the path were patient records will be literally shared an integrated in powerful ways with institutions, so that doctors can have instant access an understanding of what you are wrestling with, literally keeping data records of how our heart is taking and what will be problematic, all this technology that exists now is just the earliest part of what will change. >> is there a cost savings to healthcare costs by using the on-line portals? >> there different ways to answer that overall. the ability to aggregate large audiences to be served by

reliable experiences is a fraction of the cost of traditional means. there is no comparison in terms of the cost differential. that allows a starter company like mine to reach 11 million people in short order, which would have been impossible because of the enormous cost of development if we had this connotation -- if we had this conversation tenor 15 years ago. -- 10 or 15 years ago. if anything has been clear in the debate, anyone who has been through a health care crisis, there is a terrible on us for us to step up. i believe over time it will have

significant ramifications on costs. >> he talked about electronic medical records, the pros and cons. >> it is an interesting and complicated issue. the first thing to think about are the institutions themselves and the ability for doctors to be able to share information. the places that actually have our informations and data are where a lot of the benefits and care will come from. the second is about us as users. this is very complicated, because at the end of the day, so much has been beaten into our dna, and the decisionmaking on health care has been done by someone else. your insurance company helps

prescribe what kind of services to take. at the end of the day, we worry about arco paid and how much we are out of pocket at the end of the year. i have rarely met anyone who has asked for or personally touched their health records, except in having to take them to another doctor. when you stop to think, it took 10 years for us to adopt online banking, and is still not all there. we have always banked, so this is an interesting thing. we will have to be taught new behavior to participate in what we are doing going forward. the third thing is privacy. technology is so profound, and people who are thinking about this and some of these issues do

not go to bed at night without thinking of how to make this a more secure environment. i think younger audiences are less concerned about the privacy issues that others. to think that anything is bulletproof, everyone in technology knows that things can go wrong at any time. indeed, credit card is used, there is a risk that something could happen. there will always be that people who will try to figure out bad things to do, and all you can do is be highly focused on it. the question is, do the benefits outweigh the risks, and i think they profoundly do. >> the people have to register, and what kind of privacy have within your portals? >> from a communications and website perspective, it is all

about transparency. if you see an article from harvard medical school, you should know that is what that is. if you are getting an advertisement, you should know it is an advertisement. we are very clear about it. we do ask people to register for some of the tools and email alerts that we put out. >> when you look at your site, there are some pretty personal questions on the side. are those people protected from asking their personal health questions? again, the watchword is transparency. people have to make determinations of how much they want to share. some people are incredibly open in describing what they have.

it brings a sense of authenticity. the fact is, you can read a post by someone who is more reserved and is still can be very profound, just by the integrity of what they are saying. one thing has been interesting to watch is that so much of the activity when people are sharing stories are anecdotes', most people are cleaning bag and treating conversations as content. they are not necessarily participating. in the early days of a diagnosis, you are overwhelmed and confused. you just want to sit back and watch and see what people are saying, and then make a determination before you jump in. sometimes people will register

and put a comment down in a way that they do not realize google can pick up on it in some form. if everyone knows what they are doing and how they are doing it, they are in a pretty good place. >> we are talking with chris schroeder. following congress, are you pleased with how congress has treated the issue of technology and privacy? >> i had a wonderful conversation with the former chief of staff of congress, and we were lamenting about the level of dialogue right now. as you look back in history, you will find someone who complains with tell congress is dealing with things. there are aspects of tonality today in all debates that seem more concerned than what i have seen over my lifetime.

you see it sometimes in terms of technology. some people are more comfortable with technology than others. like most things in life, there can be a tremendous amount of fear and worry about this kind of stuff. when you slice through it, there are some core issues that are profound, things like privacy, transparency, and open access, which the government must play a role in. he does hope that in the process that can be messy in building, that more often than not, the freedom of speech technologies are overarching. >> how much regulation the face in your current business? >> like any internet company, any of the issues that are being bought for about broadband expansion or privacy issues can have ramifications on the

business side of what we have appeared we are not regulated --. it is good to be in washington. we are very sensitive and well versed with the issues. transparency becomes a watchword that keeps you on the right side. >> you mentioned you had been with "the washington post." >> i started just about the day the ball exploded eight years ago. i ran another fascinating company here in washington called legislate. it was a great introduction to the internet. it was a paid online service

that they be everything you want to know about legislation and regulation. just as i took the company over, the united states government's put all their documentation online for free. so i was the first to realize -- you have to have people get access to the information they want on their terms. >> launched box digital is a wonderful company here in town. it helps young start-ups think about their business plans and makes small angel investments going forward. if i ever coming feeling cynical about life, watching these kids

without any reservation about anything talking about how to bring technology to bear in their lives, i get more out of it than they do. >> there is a little bit of cross over their. does it benefit you to be running a tech company and now the head of the fcc? >> i worked in the state department in the white house, so i will train to know that any public servant worth their salt knows where the lines are. i have not talked to julius -- i would never have that kind of conversation. these guys know that everything has to be done in a linear way. >> you serve in the first president bush's administration.

thus help central make money? >> it is fundamentally a media company. if we had this conversation 15 or 20 years ago, if you wanted to reach as many people as you could reach. the beauty of the internet is twofold. it is tremendously precise. people can find very targeted information, and marketers can get the right message in front of the right people. i think that kills two very important birds. if you get an advertisement that is relevant to you, and if you are a marketer trying to reach markets, it is wonderful to do that as opposed to annoying people or spanning them.

-- or spamming them. sending me a spam or interrupting my tv show about something that has nothing to do with me is a waste of time. if i am hit with a message that is relevant, i may not choose to engage in it, but at least is relevant. we have just under 100 employees, with offices in new york, washington d.c., chicago, and sanford cisco. we have a network of thousands of contribute dues and loggers who are actively building the conversations. >> being the kind of company you are, the vinita central office? >> different people will argue it differently from different perspectives. i think there is incredible

value in the human touch. we have people who telecommute. when you can literally walk across the room and sit down with someone and have a real conversation about innovation or something you want to try, it is hard to substitutes. one technology we use -- the physical touch still has value. >> where did you get start up capital? >> we put together a group of investors and friends of mine. they are just good, honorable people who are trying to have a different kind of impact.

it started with a conversation with an investor from boston who i have known many years. we brought together some great investors on the west coast who had tremendous experience in places like yahoo.com that have taught me a lot. about a year ago, interactive corp. helped us do some acquisitions. we feel good about the money we have raised and the quality of people who are pushing us to think differently about business. >> you have barry diller and carlyle group. >> some of these guys bring some great impact on media and internet.

>> did you say you are making money today? >> yes, we are. >> four years ago you started this company. if you started it today, is the same capital available to you? >> i think there is greater wisdom and insight that investors are bringing to bear as they assess assets overall. there are not huge competitors in hell. -- huge competitors in health. i think the standards have sharpened, and it is very exciting.

>> what is the washington area like for technology? >> it is interesting. when aol was here a decade ago, we were becoming a consumer- oriented community. that has changed a little bed, with so much of the emphasis -- changed a little bit, with so much emphasis on technology. there are a lot of young, innovative people here. i have seen it with my company and others. companies are growing, developing, and flourishing in the environment. >> what is your advice to a startup company today?

>> it is a wonderful question. there is a fine line between thinking about creating a company and having some sense of what expectations you can build in the short term. a lot of times, on to careers think of the exception as the rule. -- entrepreneurs think of the exception as the rule. they are not thinking thoroughly about the ramifications of what they could build overall. it is a belief that -- at one level you have to believe you are going to build something that is significant. if you are focused on the wrong analogy, there have been unbelievable technological innovations. it never ceases to amaze me the number of great innovations at

the end of the day, passing a simple test. does it make my life faster, easier, or more efficient than the way i did it before? if you look at what apple has done or what microsoft or google have done, it passes the criteria of doing something that is profoundly useful in our lives that makes it much more efficient. i am very moved by finding ways to take advantage of the incredible technologies that have practical impact on people's lives. that is what i loved about the news business. we all look back at september 11 as one of the profound moments as one of the profound moments when we were trying to get