ten days ago, congress gave important new tools to the treasury, the federal reserve and the fdic to meet the challenges posed by our economy. my colleagues and i are working creatively and collaboratively to dough employ -- deploy this tools and direct our powers to disrunning of the economy. today we're talking decisive actions to protect the u.s. economy. we regret having to take these actions. today's actions are not what we ever wanted to do, but today's actions are what we must do to restore confidence in our financial system. today i am announcing that the treasury will purchase equity stakes in a wide variety of banks and thrifts. government owning a stake in my private u.s. company is objectionable to most americans, me included. yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. when financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs, and even closing up shop. to avoid that outcome we must restore confidence in our financial system. the first step in that

treasury,ment of federal reserve, fdic, and all the federal agencies in our country will bring the full force of the united states government to strengthen our financial system so we get the economy back on track. these agencies, each have different authorities, instruments, and responsibilities, but we are one government serving the american people. we will work together as one. with a newgins framework of oversight and governance on all aspects of our financial stability plan. the american people will be able to see where their tax dollars are going and the return on their governments investment. they will be able to see whether the conditions placed on banks are being met and enforced. they will be able to see where the boards of directors are being responsible with taxpayer dollars and how they are compensating their executives. they will be able to see how these actions are affecting the overall flow of funding and cost of borrowing. these new requirements, which will be available on a new website, will give the american people the transparency they deserve. these steps build on th

the fdic said there could be a run of the banks. thing the fdic did during the crisis was push a blanket guarantee, covered by the positive insurance. the fdic said there could be a run of the banks. even if depositors are protected. put in a temporary hearing tv. that is not permitted anymore under dodd-frank -- temporary guarantee. that is not permitted anymore under dodd-frank. the treasury department in the tol of 2008 provided help money market mutual funds, part of the shadow banking system. an alternate way for people to save and invest. permitted the be same way today as it was then. three of the crucial firefighting tools don't exist. >> we have been talking to well-known investors during the financial crisis. getting their perspective of where we are. you did, too. what were his observations? >> he does not think we are on the verge of a crisis. bubblets out several indicators are flickering, but not flashing. bridgewater has the depression on in 2008. clicked it is not on now. when we do have one, many years from now, he

might be interesting to know that just this week, the fdic announced that bank profits have continued to skyrocket, yet middle class wages have shrunk. if work isn't valued, americans can't earn their way to a better life for their families, no matter how hard they work. last year's tax bill was an opportunity to reset our priorities by focusing on american workers, focusing on the businesses that invest in them. a bunch of democrats, a bunch of us, had plans to cut taxes for millions of american workers and businesses that create jobs here in the u.s. we fought to expand the earned-income tax credit and the child tax credit that reward work to put more money directly into the pockets of working families. we worked to cut taxes for businesses, but only those businesses that treat their workers well and keep jobs in the united states. we want to encourage them to create even more good-paying jobs in the us, instead of rewarding them for sending jobs overseas. but of course we know what happened. special interests went to work, republicans rejected the patriot corporation act. the resul

the fdic said there could be a run of the banks. put in a temporary guarantee.t is not permitted anymore under dodd-frank. provided market to the mutual funds. sort of an alternate way to save and invest. that would not be permitted. show -- of therr crucial firefighting tools. exist. talking tobeen well-known investors during the financial crisis. you did too. what were his observations? >> he does not think we are on the verge of a crisis. he has several indicators that are not flashing. bridgewater has the depression in 2007, 2008. one, many years from now, he shares the concern of people like tim geithner. >> one of the influential folks -- founded bridgewater, the world's biggest hedge fund and he is one of the most influential voices on all things --ancial and all things we wanted to hear more. >> he doesn't think that we are in a bubble right now. he does see the growing financial and political risks. >> i don't think we are in the midst right now. when you hit zero interest rate skew have a different type of debt crisis. i think the period we are in is s

i talked to the fdic about it and got the sense of how it was put into practice. with lehman, if we had had the ola procedure it would not have solved the problem but it would have created a more orderly and less destructive resolution than what the uncontrolled bank -- bankruptcy we had. i think it will be tried and if you have a single firm that's in trouble and the rest of the system is broadly ok it could very well work. >> it is an elegantly designed set of tools with new authority that congress may possible. but i think even in the wildest dreams of the architects, it was not designed to save us from the risk of a panic. when the fda seat -- fdic first came to me when i was in the treasury, and walked me through how this works and i asked how it would work if we had applied it -- in the fall of 2008 would it have worked? they said, and i thought they were right, of course, the risk is if you do it for wanda, you have to do it for four more and the only way to offset the damages for the feds to lend freely and for congress to ultimately guarantee the liabilit

the temporary loan guarantee program from the fdic. quan tative easing. large scale purchases from the federal reserve. the backstop on securitization. there is a guarantee from the treasury department on money market mutual funds. money market fwunding -- funding facility from the fed. i am probably missing some. there are a huge number of interventions. again, my paper that just came out goes through some of these in more detail. and what was striking to me and to my co-authors as we wrote in paper was the economic literature that evalue waits these interventions finds -- evaluates these interventions finds them effective. the telf which went into effect march, 2009. the key staffer -- the godfather of telf, steve, stated the treasury into the geithner treasury and was there to get it launched. evaluation of the telf finds it reduced spreads, reduced interest rates on securitized assets but didn't reduce interest rates on any particular issue within the universe it was covered. so it sounds pretty good. helped relieve strains in asset-backed securitizat

clearly needed to stabilize citi, and we were able to do it working creatively with combineand the fdico our new powers and citi survived. >> the bank is getting $20 billion in cash from the $700 billion rescue fund, on top of the $25 billion it received just a month ago. now the government is going even further. guaranteeing time, up to $306 billion in risky assets held by the bank. >> the market reaction is been phenomenal. because there is some sense there is now a model in place for dealing with those other banks that president bush announced they might have to deal with. [cheering] barack obama will become the 44th president of the united states. the senatebama: confirmed timothy geithner as our next secretary of the treasury. hank: it was difficult in many ways for me to leave but i took real comfort from the fact that tim geithner, who had worked with me on putting some any of these programs together with even -- would be many treasury secretary, and ben bernanke was still the federal reserve. reformthat we needed to fannie mae and freddie mac. behind,eft a blueprint a plan for h

the three government responses were resort powers at the fed, liability guarantees from the fdic and the treasury and capital injections through the tarp program created by congress in 2008. post-crisis, all of these u.s. eapons had been limited or eliminated primarily by the dodd-frank act of 2010 as undesirable bailouts. now, dodd-frank purports to solve the contagion problem with heightened capital and new liquidity requirements and new resolution procedures. it is questionable how effective this policies have been or will be to decrease the risk of contagion and what their cost is to the economy. but even if they are effective and cost justified, you don't abolish the fire department just because you believe you have more fire resistant buildings. in the u.s., we need to restore and strengthen these three powers. most recently today, glen hubbard in "the wall street journal," and i believe last week paulson, bernanke, geithner in "the new york times" made this point. it's a fundamental thesis of my book and i totally agree with it. but the chances of doing this in an anti-bailout

they gave the fdic to resolve, put into government-run bankruptcy large financial institutions.have that during the crisis. we only had it for insured banks. so that's positive. there are limits on the fed's ability to provide one off support as they did with citigroup and others. that has been taken away. they could still provide broad-based support. there is truly systemwide problem they can provide general access to their lending facilities. but if you have, you know, individually, poorly-managed institutions, they are supposed to go into title two which is a very harsh process. neil: i always think to your point, banks have more emergency funds on hand if in case everything goes kablooy, that is a technical term, in a market downdraft, all bets are off. i remember 10 years ago a lot of those stocks were cascading, losing their value, that was the means or currency. didn't matter how much capital on hand, couldn't reflect what they were losing in markets? >> that is very true. what we saw in 2008, is because large financial institutions were borrowing a lot themselves and bor

peter: the fdic issued a blanket guarantee of all bank liabilities.ks are liable to depositors, covered by deposit insurance. this ensures other creditors to the banks don't get special treatment. but there could be a run to the banks even if depositors are credited. that is not permitted anymore under dodd-frank. peter: the treasury department in the fall of 2008 provided major help to money market mutual funds, part of the shadow banking system, an alternate way for people to save and invest. the would not be permitted same way today as it was back then. three of the crucial firefighting tools do not exist. carol: we have been talking to well-known investors who were there during the financial crisis to get their perspective on where we are. you talk to ray dalio, who runs the world's largest hedge fund. pete he does not think we are on the verge of a crisisr. i think he is right. bridgewater's depression gauge is not on. one, he when we do have shares the concern of people like tim geithner, that we need those firefighting tools. jason: one of the

the treasury, the talent at the fdic, and the experience at the fed and new york fed. i think one of the great advantages we had and of course we admire each other and we were lucky in our partnership before the two presidents we worked for. the huge advantage we had is that we had a team of people of exceptional integrity, smart, creative people who are overwhelmingly focused on trying to figure out what was the best of the bad choices. finding the most effective thing. that is something you have to nurture, you have to create the incentives to make it attractive for people to spend a meaningful part of their lives in these institutions. we are more dependent on that as a country because we replace large swaths of government at these regular intervals. we are pointing out the costs of living, the defenses weaken or erode over time, the importance of knowledge of how it works. a lot of this is about the depth of talent in the institutions that ultimately will also be necessary in a crisis. >> mr. chairman this is your house. you get the last word. >> it's a pleasure an

they write that it was mitigated by emergency powers that the fed, the fdic and treasury no longer possess. the dodd/frank act limits emergency loans or gain tease on assets agencies can make, in some cases requiring congressional approval. their diagnosis is right but it only hints at the real problem, the consensus that allowed for washington's speedy response to the crisis in 2008 that has since been destroyed. look at tarp, the $700 billion bank bailout signed into law by a republican administration within three weeks of lehman's collapse. the level of cross party coordination to get the thing out reads like a utopian fantasy today. george bush was a deeply unpopular republican in the waning months of his presidency. ha henry paulson got down on one knee and begged nancy pelosi not to blow up the bill. presidential nominees john mccain and barack obama, bitter rivals on the stump, both lobbied for votes while they were campaigning against each other. on the second try the bill cleared the house with the votes of 91 republicans and 172 democrats. through the blouses, washington saved th

a lot on the quality of people that occupy the civil service of the treasury, the talent that the fdic and the talentand experience at the new york fed . i think one of the great advantages we have i think and of course we admire each other and we are very lucky in our partnership and in support of the two presidents we worked for, i would say the huge advantage we had is that we had a team of people with exceptional integrity, smart people who were just overwhelmingly focused on trying to figure out what was the best of the bad choices? and that's something you have to sustain and preserve and nurture and create incentives to make it attractive for people to spend the means of their lives in these institutions. we are more dependent on as a country as we replaced a larger swapof the government . enthese regular intervals. we're pointing out the cost of living, the defenses weaken over time, the importance of a broader arsenal, the importance of what works but a lot of this is about the depth of talent in the institutions that ultimately would be necessary in a crisis. mister chairman,

then we'll be joined by fdic chair -- former fdic chair sheila bair.now. you're watching "squawk box" on cnbc this is a tomato you can track from farm, to pot, to jar, to table. and serve with confidence that it's safe. this is a diamond you can follow from mine to finger, and trust it never fell into the wrong hands. ♪ ♪ this is a shipment transferred two hundred times, transparently tracked from port to port. this is the ibm blockchain, built for smarter business. built to run on the ibm cloud. you mighyour joints...ngain, builtfor your heart...ness. or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life. ♪ >>> this week marks the tenth anniversary of the financial crisis cnbc has a special documentary that premieres wednesday night at 10:00 eastern time and pacific. it's titled "crisis on wall street: the week that shook the world. man

the authority that the fdic used theourageously to guarantee unsecured liabilities of bank holding companiesnk took that away. we don't have some protections but we have some important new ones. david: he lost some of the legal provisions. what about political? one thing you have going for you -- it was difficult but through congress. you got you got a president to really back you. do we still have that same political capital or confidence given what happened last time? congress. youhank: yes, that is really the key question. 2006, arrived in president bush was at a low point in his approval rating. he was in the high 20's. there was a very poisonous atmosphere in congress. i had a president really encourage me to develop relationships with democrats as well as republicans. fortunately i had a year to do that before the crisis. david: that was part of my interview with hank paulson. the senate judiciary committee is still debating the kavanaugh nomination. that vote is due in just about half an hour from right now at 1:30 this afternoon eastern time. after that the full senate. live from chi

geithner, that said we're better off but they are concerned about the tools that congress has the fdic, as wel thetreasury the canlonglanket guarantenk d the fed's powers are constrainthe treasurm rket funds ese toosed in the financial crisis senator gregg, if we are witnessing ten years later the pendulum and the pendulum swinging in reaction and maybe swinging back, where are we in that >> right now we're in a pretty strong position because most of the banks have been massively recapitalized at a much higher level than they were in 2008 you've got a diffusion of lending occurring which i happen to think is going to reduce the threat where all the lending over the internet and yes, it's at risk, but it's not a systemic risk i think actually we're pretty solvent right now. we're very solvent right now as a banking system the problem is that ten years from now, all the people who went through this crisis and recall the crisis and understood it was an underwriting problem and that it was a syndication of debt problem, are going to be gone and out of the system and somebody will try to do

and we're hopeful that over time there will be a joint proposed rule making with the occ, the fdic and the fed. it's a process. we're very much interested in continuing to push it forward. >> steve beckner, freelance journalist filing for npr. mr. chairman, following up on the neutral rate issue and you touched on this, you and your colleagues slightly lifted the longer-run estimate, the neutral funds rate estimate to 3%. that's still i believe like 125 basis points below where it was six years ago. what are the odds that productivity -- investment, productivity, labor market, other developments could further push up the longer-run estimates and possibly make the projected funds rate levels less restrictive than they now seem? >> in principle, the historic variables, the long run growth rate of the economy, neutral rate of interest, natural rate of unemployment don't move quickly. they move very gradually, pinned down by longer-run forces like demographics. in the case of the funds rate, it's productivity and demographics and other things, too. so they move quite slowly through time. i

anpr and we're hopeful that over time there will be a joint proposed rulemaking with the occ , the fdic and the fed. it's a process and we're very much interested in continuing to push it forward. >> steve beckner, freelance journalist for npr. mr. chairman, following up on the neutral rate issue, you touched on this, but you and your colleagues slightly lifted the longer run estimate of the neutral funds rate estimate to 3 % but that's still i believe like 125 basis points below where it was six years ago. what are the odds that productivity, investment, productivity, labor market, other developments could further push up the longer run estimate, and possibly make the projected funds rate levels less restricted than they now seem? >> so in principle, the historical variables, the long run growth rate of the economy, the neutral rate of interest, the natural rate of unemployment don't move quickly. they move very gradually they are pinned down by longer run forces like demographics in the case of the funds rate it's productivity, it's appetite for safe assets and demographics and other

depends a lot on the quality of people that up the civil service, the treasury, the talent at the fdic, and the talent and experience at the new york fed. i think one of the great advantages we have, i think and of course we admire each other and are very lucky in our partnership and in the support of the two presidents we work for. i think a huge advantage we had was that we had a team of people, exceptional integrity, smart, creative people, who were just overwhelmingly focused on trying to figure out what was the best of the bad choices, what would be the most effective thing. and that's something you have to sustain and preserve and nurture. you have to create the incidentives to make it; correct -- incentives to make it attractive and possible for people to come and spend their lives in these institutions. and we're dependent on that as a conserve because we replace -- country because we replace a larger swath of the government at regular intervals. we're pointing out the costs of letting the defenses weaken over time. the importance of a broader arsenal. the importance of knowled

the authority the fdic used so theageously to guarantee unsecured liabilities of bank holding companiesdodd-frank took that away. we don't have some protections, but we have some important new ones. david: when you lost some of the legal provisions, what about political? one of the things you had going for you and it was difficult and not in a straight line, but you got congress. do we still have the same political capital or confidence given what happened last time? hank: yes, that is a key question. i want to begin by saying when i 2006, president bush was in a low point of his approval rating, high 20's. it was a very poisonous atmosphere in congress. i had a president that really encouraged me to develop relationships with democrats as well as republicans. fortunately, i had a year to do that before the crisis to get some things done, stimulus with nancy pelosi and with john boehner and to some trade deals and so on. i developed a relationship with the president. congress come together in a bipartisan basis to give treasury unprecedented authorities for fannie and freddie and for ta

you an announcement from the banking agencies including the fed, the controller of the currency and fdic they're offering regulatory relief in the hurricane zone one thing that they do is they say the reporting requirements and lenders should work with borrowers in the affected communities and don't foreclose. it's common sense and now become because these storms are so often. show you one very quick chart. which i think courtney knows a thing or two about just as an example of the kind of things we do. these are building material sales. now, what is that spike? that spike is harvey we give a lot of this in the data so, this is just elustrative in the kind of ways that the storm, for lack of a better term, works through the system or through the economic data. big spike up in the wake of the storm and then the fall off. >> you draw the line straight through. >> if you want to see what the average is these things are bad for growth and bad for the economy and they create a spurt of growth along the rebuild and you also have that report this morning from jpmorgan and things like services n

and as chairman, i will have the responsibility not only for the treasury but the fdic, the occ, the scc, all of these regulatory agencies. and if there is information that is going to be unveiled about what has been going on in the white house or donald trump or the treasury, it will come out. i will be very responsible in doing that. i am not looking to make up stories or to create ways by which to trap anybody. i will just do my work as a member of congress and as a chairman if i am able to become the chairperson of that committee in a responsible way. and then let things fall where they may. >> couple of questions for you. first of all, stay for a moment on the issue of impeachment. this is nbc news reporting. it's no coincident the top three leaders were all there in 1998 when bill clinton was impeached and are all quiet about impeachment now. they remember the energizing effect it has on their voters. what do you make of that argument? >> let me just say that. i think that what i have done and what i have said about impeachment helped to bring that discussion to light. and i kn

the one country where there is a multiplicity of banking agencies, the federal reserve, the occ, the fdicregulators, and where almost nothing has been done since the financial crisis to rationalize that system. there is a second point at global level. one that golden brown has made at the timeis that of the crisis in 2008 and 2009, there was a coming together globally of people who saw the world in the same way, who understood each other's problems and reacted decisively. can we say that the basis of international trust is there at the moment with the war of words between donald trump and the eu, the u.k. splitting from the eu, not exactly warm relationships with russia and china on these fronts. would there be the basis for common agreements internationally if there was another crisis? withins this a real fear financial services? he said george bush junior at the time was president and he was the one who approved some of the fed's action even then he said congress stood in the way. could we rely on the president of the u.s. to allow the fed to do what was needed in terms of cooperation?

the fdic's power to expand the deposit insurance in a crisis has been taken away. treasury power to guarantee money market funds in a kries have been taken away tarp has expired if we go back into a crisis, i hope we don't, but, you know, history says we will the real problem is we have lost important weapons to fight the crisis if and when it occurs >> what was the legislation that took all of those powers that -- those tools out of the tool kit? what was it? >> would you say the people that want to roll back some of the regulatory efforts that were embedded in dodd frank are misguided or doing the right thing? >> no. you know, i think what dodd frank did arguably well was strengthen our ability to not have a crisis. sort of prevent a crisis again, i would say, look, you know, we've made the buildings more fire resistant, but that doesn't mean you abolish the fire department. we took important steps to abolish the fire department. dodd frank is really a mixed bag. at santee, it did some good things ex-post it did some bad things >> last word to you. reacting eithe

namely the fed, and fdic. in doing so, it eliminates the burden lenders currently face in having to meet two different standards. i want to thank my colleague from pennsylvania, mr. evans, for his leadership on this important issue. i urge members to support this bipartisan piece of legislation and i reserve the balance of my time. the speaker pro tempore: the gentlelady reserves the balance of her time. the gentleman from ohio is recognized. mr. chabot: mr. speaker, we have no further speakers so we would reserve our time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentlelady from new york is recognized. ms. velazquez: i would like to yield, mr. speaker, five minutes to the gentleman from pennsylvania, mr. evans, who is the sponsor of the bill. the speaker pro tempore: the gentleman is recognized. mr. evans: thank you, mr. speaker. i rise, thank again to the chairperson and the ranking member for the support of this particular bill. as i mentioned earlier, this is important a

anpr, and we're hopeful that over time there will be a joint proposed rule-making with the occ, the fdic and the fed it's a process, and, you know, we're very much interested in continuing to push it forward. >> steve beckner, freelance journalist filing for npr. mr. chairman, following up on the neutral rate issue you touched on this, you know, that you and your colleagues slightly lifted the longer run estimate, the neutral funds estimate to 3.3%, but i believe that's still 125 basis points below where it was six years ago. what are the odds that productivity, you know, investment, productivity, labor market, other developments could -- could further push up the longer run estimates and possibly make the -- the projected funds rate levels less restrictive than they now seem >> so in principle the -- these starred variables, the long rate growth of the economy, the neutral rate of interest and natural rate of unemployment don't move quickly they move very gradually and pinned down by longer term forces like demographics it's productivity and appetite for safe assets and demographics and