each nonbank financial company designated by the council is required to prepare and provide to the fdic and federal reserve a resolution plan or living will for its rapid and orderly resolution under the u.s. bankruptcy code. second, title 2 of the dodd-frank act provides for an orderly resolution process to be administered by the fdic. thank you very much for your attention. i'd be pleased to answer any questions you might have. >> thank you. thank you both. i will begin with the question. as you're probably well aware, many different companies from various industries and both of you emphasized the tailoring of the designation procedure and the regulation procedure. they have mentioned, some that have been mentioned as candidates for systemic designationing are concerned about a sort of one size fits all where let's say you're assessing a large insurance company on the same sort of criteria that you would judge a bank institution, a nonbank institution the same. you've kind of mentioned this in your topic, but how will you deal with the differences in the industry business models? i'll

when you're looking at a non-bank entity, the fdic is more accustomed to working with banking entities, i mean, i want some confidence and i know you probably can't make a judgment statement, but is the confidence there that the fdic has the expertise again to make judgments when trying to unwind non-bank institutions? is that a concern? >> well, chairman, we have the treasury department and our fsoc members involved in any orderly liquidation authority have been working with the fdic to understand what their approach will be to designating -- i am sorry, to putting a firm in order liquidation and how they would ajds that and devoted significant resources to that process but ultimately what resources and the details of their approach is a question you would have to pose to them. >> right. my time is up. i am going to go to ms. maloney. thank you. >> thank you. i would like to ask mr. auer, i understand the criteria the council has established by regulation and statute, but i would like more clarity on the exact metrics that will be used in designating non-bank financial companies as sf

the fdic is more accustomed to working with banking entities. i want some conference and i'm sure you can mant make a judgment statement that the fdic has the expertise again to make judgments when trying to unwind nonbank institutions? is that a concern? >> well, we have the treasury department and other fsoc members involved in any orderly liquidation authority, have been working with the fdic to understand what their approach will be to designate, i'm sorry, putting in a film in a normal significant but ultimately, that's a, what resources and the details of their approach is a question you would have to pose to them. >> all right. my time is up. so i'm going to go to ms. maloney. thank you. >> thank you, and i'd like to ask mr. auer, i understand the criteria the council has established by regulation and statute. but i'd like more clarity on the exact metrics that will be used in designating nonbank foreign ministers is saifis. how much interconnectedness makes a firm a sifi? could you elaborate in this area. >> again, in the multiple rounds

i want to quote back to you the new head of the fdic and mr. gruenber's recent comments and get your reflection on this. he said three of the goals are to ensure financial stability, accountability and viability, which means converting the failed firm into a new, well-capitalized and viable private sector entity. now, when the market hears that, they don't think that that's a firm that is going to fail. the implication here -- and it may not be for the stockholders, but certainly for the creditors -- is that if you loan to that firm, there's a very good chance -- that's not to talk about, you know, death panels for what's going to happen to the firm. that sounds like the goal was the same as it was in 2008, unfortunately. although part of that goal is to stop the crisis from spreading, the other part is that nursing that insolvent firm back to health, eventually through either public dollars or new debt, which although we can argue that it won't be, i think it likely will be guaranteed by the government. so, the assumption here again is that th

one note while i am a board member of the fdic, on this i speak for myself today. first, banking organizations should be allowed to conduct the following activities, commercial baking, underwriting asset and services. most of these latter services are primarily fee-based and does not disproportionately place a firm's capital at risk. they're similar to the trust services that have long been part of banking itself. but in contrast, dealing and market making, brokerage and proprietary trading extend the safety net's coverage and yet do not have much in common with core banking services. under the safety net, the incentives that follow from it, with those incentives, risks are created that are difficult for management and the markets to assess, to monitor and to control. thus, under the proposal, banking organizations would not be allowed to do trading, either proprietary or for customers, or make markets which requires the ability to do trading. allowing customer trading makes it easy to game the system. concealing proprietary trading as part of the customer trading.

the banks are using fdic-backed depositor money to fund their exotic risky transaction. that's a key question. i have not heard an answer all day, all yesterday or what. it's not only against the law, it worries main street and smacks of a new unaffordable bailout for the nation. until we abolish too big to fail, i fear all this is going to continue. so let's talk. former fdic chairman bill isaac is with us. he is the chairman of fifth third bank core. we bring back our old friend peter wallison. he wrote the blog piece jpmorgan's losses prove that the volcker rule is unworkable. and dick bove. apart from the additional issues of the volcker rule, and apart from peeling back the hedges that were hedged and rehedged that didn't work, i want to know, who is funding the purchases of these risky assets? is it in fact taxpayer-backed fdic retail deposits, which is not supposed to happen way back under the law that repealed? in other words, where is the taxpayer protection here? i don't see it. >> the taxpayer's got nothing to do with this situation. jpmorgan has $2.3 trillion

the fdic via other purposes. over in europe and the citizens have no faith in them and taking the money out and the government even though we don't like government involvement. is going to save us. >> and gary b. you feel safe, don't you? >> i do. actually, and in fact, the more the countries overseas will call not just european countries. the more troubles they have. i think the more secure we've become because we are the default safe haven in the world. and i'm not worried, and scott mentioned the fdic. look, i suppose it's a 1% chance there's a run on our banks and i highly doubt it. in other words, i'm not worried. >> yeah, but jonas, long-term, long-terms, we may have recessions, we may have high interest rates and have huge deficits. a lot of the problems that are plaguing the european countries. doesn't that worry you? >> they, you know, they've got a situation where people are scared the money is going to turn into other currency as the countries break off from the euro. i don't think that could happen in

>> that is the intention of the title two orderly liquidation authority is to extend what the fdic has for banks to non-banks. >> and we can do this and not ov overregulate and that is what we are trying to accomplish today. >> that is what we are trying to do. >> i would agree. >> the comments of congressman al green democrat of texas before a house subcommittee focusing on financial institutions and the testimony of michael gibson from the federal reserve board and lance auer. the systemically important financial institutions was one reference. fsoc is the financial stability oversight council a direct result of the dodd frank legislation that gives broad authority to this council to identify and monitor financial institutions focusing on some of these financial institutions as you heard from congressman al green are too big to fail. this issue also coming up on capitol hill with robert muller confirming that the agency has opened up a preliminary investigation into j.p. morgan chase and company disclosing last week it has suffered a multibillion-dollar trading loss. reuters pointing

. >> reporter: acting fdic chairman martin gruenberg told bankers in chicago the "big bank" strategy aims to help stabilize the nation's financial system, while preserving a failing bank's healthy subsidiaries. gruenberg says the fdic would operate a bridge holding company for those stable operations and spin it off later to a private firm. >> this would allow subsidiaries that are equity solvent and contribute to the franchise value of the firm to remain open and avoid the disruption that would likely accompany the closings. >> reporter: government regulators say the lehman brothers bankruptcy in 2008 triggered the banking crisis that led to the great recession. the dodd-frank act gave the fdic new authorities to resolve so-called systemically important financial institutions. gruenberg says that authority will help them reach across borders. >> when you are dealing with one of these large systemic companies they have extensive international operations, so you have to work with the foreign supervisors of the foreign operations of these firms, in addition to the domestic regulators.

the sidelines here, i have been impressed by the amount of effort going on particularly between the fdic and the uk authorities on this issue. where there's a meeting of minds near as i can see in the euro zone generally. but getting that down in a very complicated way so the authorities can work together when you have an incipient failure is very important. i do think considerable progress is being made in that area. so i will just stop there touching on some of the points that i think are critical. >> thank you, chairman, volker very much. i'll take five minutes in questions. starting with the ranking member and we'll go from there. you've often talked today about the moral hazard issue. the pattern of government support for the largest institutions for each greater risk taking. in december at that committee table sheilah behr told the subcommittee quote, it's important for the government to be sending all the right signals that we do not view it as a good in and of itself to keep these institutions alive just because they are big. your congressmens about the skepticism might be overdo

i don't think banks that have fdic protection should be trading for their own account. proprietary trading under those types of institutions probably is not a good idea. the problem with the volcker rule is how are you going to write those rules? how are you going to deal with all the complexities of that legislation? and therein lies the problem. >> scott, you're going to write the rules based on what the banks lobbiests tell you to write in there. i hate to be so cynical, but they're going to have a big influence on how that looks if it ever gets done. >> of course. and they probably should. but the problem with writing too many rules, you're going to get another code of the irs, an internal revenue code. and the smartest guys gravitate to that code and find ways to drive through it. the banks have already stated they're not dpoing to be greatly impacted by the volcker rule in activities going on. they're already looking at ways to drive through the rule. >> couldn't this incident show firms to use hedging to prop trades and still get around and still be in compliance

having joined the ford board of fdic a month ago, it's a pleasure to serve. we can draw from collective experiences and diverse backgrounds that will inform our discussions and decisions going forward. this subcommittee asked me to discuss a paper title restructuring the banking system to improve safety and soundness. i prepared with my colleague, chuck morris, in may of2011 whe was prosecute president of the federal reserve bank of kansas city. i welcome this opportunity to explain the recommendations in that paper. one note while i am a board member, on this, i speak for myself today. first, banking organizations should be allowed to conduct the following activities. commercial banking, underwritering securities services, and asset and wealth management services. they are similar to the services that have been part of banking itself. but in contrast, dealing and mrkt making and trading extend the safety nets coverage and yet do not have much in common with core banking services. they are difficult for managements for markets to assess, monitor and to contro

i understand in this case, fdic has experience this this area. will act as conservative or liquidator of that institution. a sufficient authority to keep the institution running in essential ways and in short run. so that there is a continuity in the marketplace. and inside of spreading contagious kind of panic or connections because the fdic will have the authority, sufficient authority, to keep it operating in the short run in areas that are essential. i think that is possible. it is not now smaller institutions. but as i said before, to make that effective, i think for some of these biggest institutions, that have very substantial operations overseas, those operations tend to be centered in the uk. so i think you do want to get consistency between the uk and u.s. authorities. and they also have the provision in the law for so-called living wills. where the banks should organize themselves in a way that they -- makes it easier to break them up. than is the case now. and that will be a continuing supervisory challenge to make sure the banks are

uncle joe was not a fan of the fdic. he told me it took his money to subsidize his inefficient competition. i personally support the fdic as a protector for the depositor, but want to suggest that this safety net apply only to banks which receive fdic-insured deposits. i am convinced that offering the safety net to other financial institutions which provide services not deemed appropriate for deposit loan commercial banking institutions is not sound public policy. the deposit facilities of financial institutions which provide primarily investment, hedging and speculative services should have no taxpayer safety net. these institutions should be governed by market forces with investors understanding what can be earned and what can be lost. this would involve the need to separate two cultures. the one which uncle joe articulated and our family has followed for 144 years, by establishing long-term customer relationships and building our community and preserving its liquid assets. other financial institutions can provide the

the weekly loss in a month. >> if you're too big to fail, then you should be broken up. >> former fdic chair sheila bair says this is a reminder of how vulnerable america's banking system still is. good to have you on this day. >> thank you. >> you're a former banking regulator. your initial shouts when you saw the news on jpmorgan? >> i do think jpmorgan is well managed. if this kind of thing could happen there, it makes you wonder what would happen to the institutions that don't have quite as strong management. but you know, these very large complex institutions are very -- it's a question, no matter how talented you are, can manage them from the top of the house, which is what we're seeing right now. so, yes, i do think this reconfirms my view that at a minimum they should be required to reorganize themselves, have operating subsidiaries separately managed with own int mediate boards so they can focus on a particular business at hand. trying to manage a $2 trillion institution is a challenge for anyone and this is the kind of thing, even the best-managed banks, fall through the crac

we spent a lot of time with the fdic on title two, just to give them advice and thoughts on it. i think the most challenging piece is on the swaps not clear ch they still leave a tangled web of interconnectiveness. that's why it's clear to get the margin rules right. between the financial institutions and particularly between the dealers. >> both fdic and the fed on this? >> yes. and we've had the table tops where we take hypothetical, not a real company, but sort of think it through. there is a challenge in one provision with the unclear swaps. we worked on that. >> very much. >> what uncertainty would be in the market. it seems everything is challenging to get it done before japan or australia opens, which is sunday around 5:00. but thn there might be a 24-hour stay in the uncleared swaps. >> i really agree with what chairman gensler said. >> chairman. i have a few observations. did both of you agree that you can't take risk out of a marketplace? >> absolutely. risk is part of a marketplace. these large financial institutions help our society manage that. >> right. right. >> y

work because the monsters of investment banks hedge funds, all wrapped up in one company have this fdicuarantee of the checking account and allowed to gamble. and gambling in the securities market, that's a free market. don't combine with it a commercial bank. >> i don't think they did combine it. on top of it. >> they were not, they were-- >> the headline is minus 2 billion. what we don't hear about, they made 4 billion dollars for the quarter. so, i mean, that's what they're in the business of doing. sometimes when you gamble, you walk away with a big stack of chips and sometimes a smaller. and-- >> that would be great. but that's not what happened. as we saw five years ago, that's going to happen because there's no system to not have that happen again. there will be another too big to fail. and hundreds of millions to save the economy again. >> not on a 2 billion dollar loss. >> all right. guys. all right. and thanks very much. another tsa oh, security scan e, correcting dust in warehouses rather than at airports. there's a private solution to save money and maybe even lives, too. do

we have fdic and we have the discount window.t and they're able to get money for cheaper, they're able to raise money at lower costs because everyone knows they have an official life insurance policy. >> austan, are we going to have the guts to use resolution authority when the time comes, if it ever does? >> i think we will. i think the law tailors it pretty tightly if you have to get money, then money can only be used for funeral expenses basically. it can't be used to keep you alive. you have to be broken up and sold off into pieces. the real question is is that enough to deter guys from building up big interconnected institutions? i don't totally know the answer to that but i hope we've made some progress. >> i didn't understand what you said. in terms of hedging their macro risk, should they not be allowed to do that? >> i think we got to keep a major eye on that. in a case like this, if that's hedging against something, well, where is the big positive $4 billion they're going to get from this hedge? >> and hedge their hedge

read about how the resistance that took place when we were trying to put fdic in place, and fdic has proven to be very beneficial when we are looking for an orderly means by which we can liquidate banks. true, mr. gibson? >> yes. >> are we trying to do the same thing now with nonbank institutions? >> that is the intention of the title 2 early liquidation authority, to extend what the fkic has for banks to nonbanks. >> and i would close with this. we can do this and not overregula overregulate. i think that's what we're trying to accomplish today. do you agree, mr. gibson? >> that is what we're trying to do. >> mr. auer? >> i would agree. >> thank you. thank you, madame chair. >> mr. luetkemeyer. >> thanks for coming today, gentlemen. a couple of questions with regards to fsoc. coming from the small bank, community bank pr expectative, some of the things that have come down, there are a lot of rules. i believe that frank was sort of shotgun approach. are we going to come back and take some of the pellets out of the bullets and go back to a rifle approach? make sure the rules are speci

but you're right, the fdic is out with its quarterly banking report. let me run you through the numbers and explain exactly what they mean starting with the loan balances. loan balances of banks declined by $56.3 billion. that's the first time in several quarters there has been a decline in loan balances. but insured institutions earned $35.3 billion. that means profits are pretty healthy. and in 2012 the first quarter a $6.6 billion improvement over 2011. so that is a healthy number as well. the fdic cautioned not to make too much out of this loan balance decline. take a listen. >> the overall decline in loan balances is disappointing after we saw three quarters of growth last year. but separating the components gives us somewhat more perspective on the change. and we would suggest that we should exercise caution in drawing conclusions from just a quarter's worth of data. >> so, tyler, is it a data point or the beginning of a trend? banking bringing back their lending. obviously that's got implications for the economic recovery going forward. we're go

the current chairman of the fdic and their staff, head of resolution team at the fdic have come up withy viable blueprint for these institutions by taking control of the holding company and operating it from the holding company level. i think in times as we get the lifl wi living will plans, you can break them up in pieces. for taking control of them at the top is what would happen and the bond holders would take the losses the the industry gets asets assessed for it. i think it's a very positive and something we need to factor into the prices decision and exercise market decision as well. >> real quick, in terms of the trading loss, $2 billion, that did not impact taxpayers. >> no, it did not. >> can you equate this idea to the idea that you want the bank broken up? >> i've suggested that they be broken up by shareholders and it's a way to deliver value to his shareholders, break up his bank into more easy to manage pieces. i think there will be taxpayer benefits as well and are they worth more in the component parts and huge massive complex that is extremely difficult to manage? >> i

we have spent a lot of time with the fdic are entitled to to give them advice and thoughts on it. i think the most challenging piece is on the swaps that are not clear. they still leave this tangled web of interconnected in this. that is why it is critical to get the margin rules right. particularly that there is margin being collected, not against the commercial end users, but between the financial institutions, and particularly between the dealers. >> are you working with the fdic and the fed on this? >> yes. we have had some tabletops where we take a hypothetical, not a real company but we think it through. there is a challenge and one provision in title to with this drops -- in the swaps. and you may remember work doing that. what uncertainty would be in the market. it seems the weekends is everything challenging to get it done before australia or japan opens sunday at 5:00, but then there might be this 24 hour stay in the uncleared swaps. that is an interesting set of challenges. i agree with what >> he said. to com >> i agree with what he said. >> do you both agree you canno

they thought the e rururo zone an fdic.et their money, but they were wrong. the run is in the financial market where investors don't want to loan them money and in their banks where ordinary greeks took out 7 million euros on monday alone. greece is tiny so what cares if it defaults. if one endebted country goes down, will the next? what about portugal or ireland or spain. sud seasonally it's become easy to see,000 euro, that grand flawed experiment could come pa apart at the seams. things could fall apart within months, not years. economics and more important political could be huge. joining us now is nobel prize winning economist and the author of end this depression now. it's a new book that i've read, which is fantastic. thank you for being here. >> okay. hi. >> first, because you're smarter than me and you know this issue better than me. are there any corrections? did i mislead the audience about what's going on in europe? >> the one thing i would say is this is not jimmy stewart's bank. the trouble is there's a real p

we have been told by the fdic that part of this interaction will be to indemny file certain creditors and counter parties, and that seems very similar to aig, which dodd-frank and members on both sides pledged that we would not get into another bailout situation. many companies are asking themselves the same questions and whether the regulators think they're systematically important. the financial stability oversight council's final rule is not at all clear. it is therefore my hope that the regulators testifying here today can help provide the committee and all affected parties with some much needed clarity on these important issues. i look forward to this discussion sxws thank the witnesses for being here. and i do want to say in conclusion, that because of the jpmorgan chase situation, we are again hearing from some of our colleagues that we need a law which will essentially prevent a business from losing money or taking risk. and no law can do that. nor should a law attempt to prohibit a company from taking risk. in fact, that's just an impossibili impossibility. now, when taxpayer

who pays for the fdic?ell you what. >> he's suggesting the taxpayers. >> someone would come in if it's insufficient. you go after the banks and that in this environment you'd go after the banks for the next ten years to pay that back if the taxpayer had to pay for the fdic. >> no, no, it's actually easy. because what banks would then have to do to keep their low cost of capital, they'd have to reveal what the risk profile truly was, which we don't get. and a real computer time with quick access today they'd be able to do that. and that's the missing link. because if they had to pay real prices for risk capital, the whole system would be vastly different. >> i'm not going to disagree with you. that they added risk to the system at all, but then -- >> the repeal of it. >> but then i think bear stearns, lehman brothers had nothing to do with it, merrill lynch, zero to do with it, aig, nothing to do with it. fannie mae, nothing to do with it, freddie mac, nothing to do with it, bank of america's problems, count

they thought the eurozone had an fdic.y thought rich countries like germany they would always get their money back, but they were wrong. the run is in the financial market where investors don't want to loan them money and in their banks where ordinary greeks took out 700 million euros on monday alone. but greece is tiny, so who cares if it defaults. think back to the terrifying logic of bank runs. if one indebted country goes down, will the next? and that's the worry. the if greece can fall to a run, what about portugal or ireland or spain or italy? suddenly it's become easy to see how the euro, that grand flawed experiment in monetary political union, could come apart at the seams. we are not talking about this in prospect, either. things could fall apart within a matter of months, not years. economics and more important political could be huge. joining us now is winning economistnd the author of "end this depression now." it's a new book that i've read, which is fantastic. thank you for being here, paul. >> okay, hi. >>

across the table are officials from the fdic's office of complex financial institutions.it is their job to plan for a big bank failure. >> ...mitigate systemic risk. >> so the scenario is sort of everything but title ii. >> narrator: there are many questions. >> non-bank operations... >> narrator: how to unwind derivative contracts? >> billions of dollars notional value of derivative trades... >> narrator: how to protect customers' money? >> the funding is provided by a line of credit provided... >> narrator: how to deal with foreign subsidiaries? >> the subsidiaries went into the solvency, value was eliminated... >> narrator: how to prevent catastrophe? >> this is a problem f the entire strategy. you continue to have mega-banks. because from a market point of view, surely what you're looking through to how disruptive would that be, what kind of systemic knock-on effects could it create? >> i don't know how this ends. we like to think that we live in unique times, but during the 1920s, we had a tremendous amount of financial innovation. and when we had the great crash and

the fdic just put out a plan this week in which they made it clear, they're not going to bail out theditors. so if we do some of these -- go ahead. >> i would also agree the power to come down to washington and say, you saw what happened in 2008, you have to save us or you're coming down with us, i oppose those bailouts, but that was an argument that most members of congress eventually bought and there's a lot of thinking on wall street that if push comes to shove, they will also get bailed out, if they're too big. >> dave schweikert -- >> you're making the ultimate moral hazard argument, that once you do it, you create the moral hazard that becomes part of the cycle. >> that's right. that's right. >> and bill, ultimately, wouldn't you want to see the sha shareholders being the one who sa said, look, we're the one that took in the shorts. even jpmorgan had $1 billion on $100 billion of movement, it's still the shareholders that actually they're demanding corporate leadership. >> i've got to get out. i've got to get out, gentleman. it's a great discussion. the shareholders did take it

in the united states in '08 we handled it by the fdic raising the deposit rates that they protect, and i think there is an easy backstop here which is difficult probably politically which would be that the ecb backs euro backed banks and that would prevent the run on banks either before or after greece were let loose. >> david, are we already seeing the greeks take money out of those banks and put it in sort of seemingly stronger banks like the deutsche banks or other european banks of the world? have we already started to see the greeks withdrawing some money from those greek banks on all this uncertainty? >> absolutely. i think there has been some reports out that there has been money flowing in the french and german banks. the smaller depositors may stick it under their mattress. >> i had one ceo tell me his depositors were burying it in their backyards, maria. >> oh, god. >> what that does, rick santelli, we just showed it there, the euro continues lower here. the dollar is a little higher, and all the markets are responding to that. are they ignoring fundamentals in this case or i

the fdic ensures their deposits. back in '08, '09, they said from the financial industry you go issue debt and we'll guarantee it because they had a tough time selling it. jp morgan issued a 10s of billions of debt, and they have not yet refinances that. apart from the free money they're getting from the fed they are using our guarantee and our money in effect to do these sorts of things. i think this should shut them up once and for all when we say don't go gamble, don't place bets on redifficulttives and don't run an offshore hedge fund without cash. >> let me summarize this. they can issue debt, borrow for less. they have an advantage over all their competitors. they're using our money to take big risks. if the risks come in, they take the upside. if they lose we bail them out. this is not capitalism the way i learned t which is why there are a lot of bankers who oppose it. there are bankers out there who say we're at the competitive disadvantage and this isn't fair. >> absolutely. size in this world gives you gre

understanding increasingly there needs to be a sort of european wide system, banking integration like fdic like we have in the u.s. where depts are guaranteed by all european government than would reduce the fear of bank runs across the euro zone. that integration is something gernlens might potentially agree to at some point but i think angela merkel in particular is concerned about agreeing to too much before she sees the reform in greece and spain and elsewhere, before she sees the deficit reduction she wants to see elsewhere. there's a sort of game of chicken going on where angela merkel doesn't want to blink but she can't afford not to at some point or the whole thing will fall apart. >> from what i know, playing chicken with ankle merkel is not a good idea. thank you for coming in. while they're not struggling with their economies, europe is drafting new sanctions against syria, amongst other nations to do the same. but for now the international community is not planning any military action. speaking did thenmark, u.s. secretary of state reiterated american opposition to military int

i'm on the side lines here, i'm impressed by the amount of effort going on, particularly between the fdic, and uk authorities on this issue. where there is a meeting of minds as to the general approach, legal assistance may be different, is a meeting of minds as near as i can see in the eurozone generally. but getting that down in a very complicated as authorities who work together, when you have failure, is very important. and i do think considerable progress is being made in that area. so i will just stop there, touching on some of the point that i think are critical. >> thank you, general volcker. i'll take five minutes in questions. turn it to ranking member and then we will go from there. you talked about the -- you've often talked today and many other times about the moral hazard issue, pattern of government support for the largest institutions, breeds greater risk taking. in december that committee table, sheila bear, who resigned by them, she told the sub committee quote it is important for the government to send all of the right signals that we do not view it as n and of itself t

sure that their banking regulation that comes down is properly -- the guidance is communicated, and fdic was very, very helpful in this, making sure that local and regional regulators understood what the guidance was to make sure small business loans didn't get classified that shouldn't. that's an ongoing process, and plij to you. i pledge to lots smauf businesses we're going to continue to have those conversations making sure that small banks, community banks and everything is in the wrong with the regulators. that's something that across the administration we were very focused on. access to capital of critical. just quickly on health care for a second. i want to make sure that everybody knows some of the benefits that are available. you mentioned a tax credit you didn't qualify for, but everybody else should take a look and see if they qualify for the health care tax credit. the other piece is that with the health care legislation in 2014 there are going to come marketplaces where insurance companies are bidding on the business of small businesses creating more opportunity for you to f

these provisions, the liquidation provisio provisions, the so-called too big to fail provisions, the fdic has gone an awfully long way in implelting those. >> that's true. >> the rest of them are coming into play. there's still lots of work toing done. we would like to be going on completing the work without -- >> what are your concerns? that was something he was supportive of. and he thought congress could go even further in this area. what are your concerns further that? in fact wouldn't it make the changes for government intervention in the future? >> basically this t goes off to created a so you have this much of a marketplace, you have a consolidation in the industry you didn't have answer '08 so we've doubled down as far as that's concerned. now we basically have codified government intervention into the marketplace. before '08 maybe the market was a little unclear as to exactly where the federal government would come. whether it in housing, whether it's wall street or a bank. now we passed a 2,300 page bill and an and we basically have codified it and said these businesses are too

we now have a system, and it's been overwhelmingly implemented by the fdic, that allows firms to fail and guarantees that we will not be there to pick up the pieces and put humpty-dumpty back together again. >> arthur, does that prove the point? >> i don't think you can will formu formulaic about this. we have a plan that we didn't have before. we have the ability to respond quickly to situations which are unpredictable. i think that the savior of the automobile business was one of the high points of the economic history of america. and i think we're better prepared today than we were then, but there are structural problems that lead me to believe that we could once again see the problems that we saw several years ago. we are by no means out of the woods. >> what about the notion, arthur, we've heard it from the banking sector, that the regulatory pendulum has swung too far to one side again, that these rules, whether it's the volcker rule, whether it's new rules about counterparty risk, that it's simply too onerous right now in an economy that's struggling, that it's holding back the