how will financial regulations and the new structures of the financial system affect the functioning of monetary policy domestically and abroad? to all of these questions, i'm sure some of you have the beginning of the answers. i know that our speakers will offer their proposals, but i hope that it begins here. before i give the floor to chair yellen, it is my real pleasure to introduce the person to whom this lecture series is dedicated and who has kindly agreed to be with us today, michel camdessus. [applause] his legacy is well known to us all. michel, you presided over the fund for 13 years. you were its longest-serving anaging director, and your stewardship was transformational for this institution. soon after you took the helm in 1987, the world as you knew it, as we all knew it suddenly went into shambles, and it was undone radically and unexpectedly. you managed the fund through the fall of the berlin wall, the unraveling of the soviet union, the mexican crisis, the asian crisis, and the russian crisis. yet when you announced your intention to retire and some frivolous report

how will financial regulations and the new structures of the financial system affect the functioning of monetary policy domestically and abroad? to all these questions, i'm sure that some of you have the beginning of the answers. i know that our speakers will offer their proposals, but i hope that it begins here. now, before i give the floor to chair yellen, it is my real pleasure to introduce the person to whom this lecture series is dedicated and who has kindly agreed to be with us today and has traveled from paris yesterday, michel camdessus. [ applause ] his legacy is well known to us all. michel, you presided over the fund for 13 years. you were its longest serving manager director and your stewardship was transformational for this institution. soon after you took the helm, in 1987, the world as you knew it, as we all knew it, suddenly went into shamble. and it was undone radically and unexpectedly. you managed the fund through the fall of the berlin wall, the unraveling of the soviet union, the mexican crisis, the asian crisis, and the russian crisis. yet, when you announced yo

it's the entire financial system and it's not just the united states financial system is the global financial system of which the american financial industry is so much a part of. i want to leave a fair amount of time for q-and-a for everyone to participate. just a few words about the economist perspective of this. at least one economist perspective. so, i am a professor of economics and the way that i look at what we have here in the financial system is that we have two public good that the stakes. one is a financial highway system. think about the physical highway system that is the public where a lot of people don't interfere unless there's congestion and you want to keep it open and free and working. those that are helping manage the system to gamble with their businesses and lead to potentially break down which was completely cut off the traditional commerce shipping of goods and services. so the financial system is very much a public good and financial highway system. the banks and other shadowing our running the system. and what they are doing is gambling with it. there is a second pub

of the global financial crisis. we have made considerable progress in implementing a macroprudential approach in the united states, and these changes have also had a significant effect on our monetary policy discussions. an important contributor to the progress made in the united states has been the lessons we learned from the experience gained by central banks and regulatory authorities all around the world. the imf plays an important role in this evolving process as a forum for representatives from the world's economies and as an institution charged with promoting financial and economic stability globally. i expect to both contribute to and learn from ongoing discussions on these issues. thank you very much. [applause] >> oh, my goodness. madam chairman, you have impressed us enormously with a rich, dense, very informative and very candid your read of the current situation and how monetary policy and macroprudential tools could be used in sequence, in parallel, in different circumstances. and i would like to, mayb

so, the financial civil is very much a public good. it is a financial highway system. the banks and other shadow banks are running that system. and what they're doing is gambling with it. that's what they're doing. they're gambling with the public good. there is a second public good. that is the level of confidence in the economy. when lehman brothers failed in 2008 its building did not collapse. none of the people working there died. there was nothing physical that happened to the economy but the failure of lehman scared the hell out of everybody and we had collective panic. so people who are employers, small, big, employers, started seeing all this panic, all the discussion of the next great depression. google searches for that spiked sky-high in september after lehman went under. press had a field day with something they could write about. politicians had a field day. everybody got nervous and employers decided, let's fire people. let's fire my employees before my customers stop showing up. and over the next 19 months, eight 1/2 million americans were kicked out on

we learned from the financial crisis about the greenspan doctrine that you ignore financial and financial problems potential financial instability bubbles and concentrate on cleaning up after the fact simply doesn't work that the costs of cleaning up are too high so i think central banks have to worry about financial instability and bubbles before the fact and they have to do something about it the question is what to do. i think the worst of the available alternatives is to raise interest rates prematurely and stifle economic recovery and growth better is to use regulatory instruments to do what the . new zealand authorities did for example in clamping down on frothiness in the housing market by raising the regulatory loan to value ratios so janet yellen chair yellen last week pushed back against the idea that the fed should raise interest rates now because the spine actual markets are frothy and i agree with her what the fed should be doing is putting on its hat as regulator and clamping down on on excesses in financial markets using regulatory instruments so one of the fed or any centr

financial intermediation right. in 2005 up to 2008, the federal reserve ran a study for the financial we need more power and let them pick out the bad intermediation and it didn't work last time so i can't see how it will work next time. >> i appreciate that. mr. wilson, you're not a health care expert, but you are an employer. you have to comply with the regulatory requirement and health care requirements now under the affordable care act as an employer. would you say the combination of these two regulatory behemoths have created a greater burden on your institution? and if so, has it been to the benefit of your employees or your customers? >> no, sir. we always provided health care to our employees. since we are small we get a tax credit. this year i'm struggling because the irs is telling me one thing, my accountant is telling me another thing about buying on the changes. i've spent considerable time with that issue. in the financial institution regulations there's a lot of time and effort. it's not only complyin

auto industry prior to the financial crisis but like them you. it's true the auto industry took a major hit and now has to rebound it's not going to go away like the music industry it's going to just be substantially smaller again like the music industry which is ok and like the motown tunes that the city created detroit still has stuff to offer perhaps just a little bit less of it. because. it was a recent book stress test for former treasury secretary timothy geitner argues that quote politics ultimately determine what gets done and quote you can't afford to get bogged down in a protracted fight so geithner seems to be suggesting the obama administration did what it could do politically during the financial crisis and not necessarily what it actually wanted to do now i spoke with professor derren asha mobile who the author of why nations fail an expert in understanding how political and economic institutions can lead to economic success i first asked him what he thought of gardner's point of view and here's what he had to say. there are always

as chief financial officer, mr. hale receives the department's financial policy, financial management systems and business modernization efforts. our next witness is mr. robert speer, acting assistant secretary of the department of the army. mr. speer assumes responsibility for his position a couple of months ago, in february of this year. as acting assistant secretary, mr. speer advises the secretary of the army and chief of staff on matters relating to financial management and oversees the development, formulation, and implementation of policies, procedures and programs for improving the efficiency and effectiveness of department resources. our next witness is the honorable susan rabern. is it dr. rabern? are you retired navy? what was your rank in the navy? >> captain. >> captain. all right. so we'll have several titles to use for you today. but the assistant secretary of the department of the navy for financial management and controller. dr. rabern was appointed to her current position august 2013, last year, as

financial power to force the french and british government. roll back their invasion of suez financial power is used repeatedly and when you have a case like european bank funneling money to the government of sudan i think it's entirely appropriate for the u.s. government to use whatever instruments it has at its disposal to discourage that. yeah i you know at a very active i kind of agree with you when i first heard the story i was outraged but then you know the more i read about him the more that i learn about all these sanctions and had a lot in the past five years on foreign banks it seems like it's almost shocking that anyone is shocked on some level do you not agree well i think what is shocking is that the french authorities either were unaware of what b.n.p. probably bought was doing or they looked the other way either way it doesn't reflect well on the quality of european supervision and regulation of the financial system we know that banks are in the business of making money and moving money and it's that the role of the regulator th

and all of to her those financial institutions in order to and dance the financial interest is in all the american banks so when they beat up on barclays they beat up on the french they beat up on the german by then goldman sachs j.p. morgan city by and by america they can sort of move again easier oh noes own the territory of those black so i think that's also part of it in fact a true think should be the main. the main part of it but i don't think the world should accept the fact that the united states government jan and. decide. what countries they're buying it's these other sovereign countries what the banks and sobbing countries who they can do business with and yes i think you see the dollars importance diminishing over time is that right. yes i think it has to diminish over time primarily because of the sanction thing. because you save if you're not if you're a country and you're not far off the dollar payment system that no sanctions can be applied to. and there's really no benefit any longer of being in the dollar payment system it grew up at the end of world war two because

financial crisis but i think we have to think about the lobbying power of the financial institutions and the oversized part of wall street over all the beating to know what sort of things were done and we're not doing. what your response actually weeds very well to my next question because during a lot of our recent guests of started using the term crony capitalism when talking about political connections and business in the u.s. now let me give you a quote that i think kind of been kept in capsule it's why we're going to quote business interests financier's in the case of the u.s. played a central role in creating the crisis making ever larger gambles with the implicit backing of the government until the inevitable collapse more alarming they are now using their influence to prevent precisely the sort of reforms that are needed and fast to pull the economy out of its nosedive the government seems helpless or unwilling to act against them now that was your mit colleague simon johnson in two thousand and nine so there aren't do you think simon johnson was valid. you know i think hugh

i don't know if the larger financial institutions whether one it say we have achieved financial stability. but it comes at an incredible cost. it is harder for low and moderate income americans to buy a home. thanks to dodd-frank there are fewer community banks serving the needs of small businesses and family. thanks to dodd-frank mainstreet businesses and farmers faced higher cost in managing their risk and producing their products which is impacting every single american at their kitchen table. thanks to dodd-frank's vocal rule the capital markets are less liquid than they were before making it hard for companies to raise capital and harms individual's saving for retirement and children's education. services like free czech -- checking -- are being curtailed or eliminated. it is one of the reasons the house financial means committee has moved regulatory bills. a number have passed with bipartisan support. none of which have been taken up by the senate. by the time it is over, the house financial service committee would have created a sin of omission housing finance reform and working al

at least regarding financial matters. researchers got surprising answers and results of a financial lit fie test given to teenagers around the world. hampton pearson reports. >> reporter: at george washington university, a forum that included educators and financial experts was told american teenagers are just in the middle of the pact worldwide when it comes to financial survival skills. that's the major conclusion from a survey of some 30,000 teenagers in 13 countries done by the organization for economic corporation and development. that survey found only about one in six american teenagers able to make basic decisions about everyday spending, even though finances is already a fact of life for many 15-year-olds. arnie duncan says the results are a call to action. >> this is a baseline never had good data before, that's why it was so important to participate. we have to be transparent, tell the truth, the good, bad, the ugly. >> reporter: it was more about financial judgment than math skills so we put some of those ques

so there's financial accountability beyond just the financial statement audits. how can we break this up into the accountable kpoeb nent parts and utilize that process in terms of figuring out where the audit should occur and how will the audits feed into the ten big omb audits and in the end, the overall audit for the defense department? get off this -- we're not going to conduct an audit until we know we're going to have a clean audit. and instead, eyes ause audit asl tool. thank you and thank the witnesses. >> thank you all again. i've got a lot of questions to ask but i'm not going to ask. i'm going to let you eat lunch. but the record will stay opened for a certain amount of time. 15 days until may 28th. and i would very much appreciate responses of questions, especially both of you. and we'll from there in september and october on how it's going. the other thing that i think is really important and, general, i hope you'll do this. i know gao will look at this. this erp is a big deal. if it flubs, everything flubs. and so that ought to be right on the top ta

on air and in the financial world. to see these developments i mean not stopping to see there is only taking no demand for credit not going to get any economic benefit in life there are and there are folks. hello there i'm marinating this is boom bust and these are some of the stories that we're tracking for you today. first up you can't hold a good city down or apparently a mediocre car manufacturer general motors had surprisingly robust sales in june despite record breaking recalls we look into how and why in today's headline story and professor darron us in mobile who is on the show as well darren is an expert in understanding how political and economic institutions can lead to economic success and we're getting his take on former treasury secretary the secretary timothy geithner's point of view you got it and in today's big deal edward harris and i are talking about the end will be i asked report and what it says about our current post prices monetary policy experiment it all starts right now. welcome to the now ou

financial stability.nt comments outlining the importance of the tools must lean against the financial excess and focus on the resilience of the financial system report to the need to ensure that the firms, particularly the largest and systemically important firms are prepared for the worst and able to withstand shocks from a variety of sources. in that end, it is imperative that the wall street reform will be completed as soon as possible. we must not forget how costly the crisis has been so the regulators and congress must continue to do all we can to keep our financial system stable and promote strong economic growth. with that i will now turn to the ranking member for his opening statement of. >> thank you mr. chairman. during doctor yellen's nomination hearing i noted the need to fill the vacancies the chairman reference at the federal reserve board with individuals bringing balance to the viewpoints. again i state the president should nominate someone with community bank experience to the board to fi

so we are moving away from this concept of a productive financial sector into a compliant financial sector. and i'm fearful that that may be part of the long-term the of this particular piece of legislation. but if we go to his point about things that maybe we can agree upon, i am encouraged by his comment and by the comment that perhaps community banks should be exempt and i think that maybe that is a move in the right direction and let's see if we can build upon that and maybe agree that this arbitrary flesh is a bad idea. i was surprised because i wasn't here at the time, but that number was originally 10 million, which means we were actually contemplating a financial institution to be treated the same as 1 trillion which is just absurd. i will start reviewing go down. >> i want to start is whether or not he thinks it would be better to replace the 50 billion-dollar threshold with something that actually looks at the complexity of the business that the actual business model and what the financial institutions are engaging in. >> i will ask you the same questions afterwards. >> there are

when those loans soured, and then drove the financial crisis. the market reality as well as new regulation the justice department did not have a role did change how the mortgage industry worked. as for deter represents in the future every large bank has more time and money on compliance, more single people would say they're trying to meet the letter of the law and their behavior hasn't really changed. maybe when i talk to bankers, they're talking about what they are not able to do, it sounds like this has really abated since the financial crisis. >> what does this mean for someone trying to buy a house? >> i think for the meantime time the difference is we'll see again the housing crisis will go up. we're not quite there yet. for the next few years it will be difficult for marginal borrowers to get credit. after that, we have not cured the business cycle or lipping cycle. it's still with us and if anything we made it worse. >> we'll leave it there and that brings us to the end of "inside story." our program has come to an end but the conversatio

dollars now this will protect the emerging countries from any possible future global financial crisis is going to be seen as a buffer to protect them and if there is a global financial crisis in the future now the hope is that the brics nations can continue to grow and act as a counterbalance to the economic power of the west and in particular as i mentioned washington are russian president vladimir putin has spoken of what he wants which is a multi polar world in which the global economy isn't so western centric and isn't so dependent on the u.s. dollar so the signing off of these two initiatives is seen as a step towards creating that new economic world order. that was r t international correspondent paul scott in for two days of brazil. so the brits are a motley crew of emerging economies that have different economic and political systems but they're trying to figure out multilateral ways to foster economic cooperation and growth we sat down earlier with victor she professor of economics at the university of california san diego to learn more about what china is looking for at this

financial system. the u.s. capital markets are, by far, the most robust and deepest markets in the world. before dodd/frank, u.s. companies operated with cash on their balance sheets equal to 9% of u.s. gross domesting product. that's an example of efficiency. the european number is 21%. now that we're beginning to see the beginning impacts emerge, that 9% has grown to 12%. we're clearly moving in the wrong direction, hundreds of billions of dollars have been simply sidelined on u.s. balance sheets as a precaution against the uncertainty of the regulation. if we were to reach the 21% level of the european capital markets, that would sideline an extra $1 trillion. on that objective of dodd/frank, we miss. transparency. yes, there are certain banking activities that are now more transparent and they come under the microscope. the important thing and the real issue is risk. the risk of the banks that's is key. risk can neither be created nor destroyed. by taking them off of the -- and away from the visibility of a

financial products. it offers guidance on how to financially prepare for and respond to major life events. it gives tips on savings and borrowing and deterring fraud. the amendment that i offer today would direct universities and the department of education to provide students with information about the financial management resources provided by the financial literacy and education commission. for many students, a student loan is the first loan of their lives. if students consider the financial assistance that they need to get a decent education, it's critically important that they have the information they need to responsibly manage their finances. i particularly want to applaud the ongoing work and leadership in promoting financial literacy by the co-chairs of the house financial and economic literacy caucus, including representative hinojosa, who has been a strong advocate of financial literacy initiatives, and played a critical role in creating this commission. i'm also pleased to be joined by my col

i said some financial institutions. >> those guys did something, financial institutions and non-financial institutions that got us in the mess. >> well, somebody did something, and things went bad, is that correct? >> yes, sir. >> and i'll ask the same question -- somebody did something wrong -- >> i -- >> we didn't have anything covering it but somebody did something wrong. a lot of people did something wrong to cause the crash, is that correct? >> absolutely. >> okay, mr. d -- >> yes, there were financial institutions who engaged in risky activities and those risks blew up in 2008. >> and mr. kupek? >> yes, there were a lot of guilty parties, regulation was very sub-par, the regulators missed all sorts of warning signs. there are consumers all over the country that took out loans trying to profit by low rate always took profits, they were facilitated by the financial institutions. but it was not just financial institutions that caused the problem. the blame is widespread. >> so let me go back, what i hear and hear from my colleagues on the other side of the aisle is basically what they

institutions if they hit financial trouble. thank you. thank you, mr. chairman. >> chair yellen, i would like to thank you for your testimony. this hearing is adjourned. >> thank you, mr. chairman. >> here's what's ahead on our companion network c-span3. the house rules committee considers legislation that would grant authority to begin a lawsuit against president obama for what republican leaders described as "actions by the president and consistent with his duties under the constitution." 10:00 a.m. eastern. .m., the senate aging committee focuses on television scams targeting the elderly that cost more than 73 million dollars a year. witnesses include representatives of the ftc and the fbi. a look at today's headlines and your calls, live on "washington journal." the house is in session for general speeches at 10:00 a.m. eastern, with legislative business at noon. today's agenda includes more work on the financial services spending bill. in 45 minutes, we talk with democratic representative karen bass of california about a b

the financial literacy group, what is it >> it's a group that helps government and non-profits with financial research hosti held that position over five years and we focused on financial literacy throughout the country. i think what we are about to talk about this survey shows why this is important. consumers play an important role in this economy. and if they make mistakes that aren't in their best interests it has affects, certainly as we saw in the housing crisis. that office was set up a few years ago and it was an inspired move to set it up host: so before we go too far when you say consumer literacy or financial literacy what are we talking about? guest: everything from preparing yourself for retirement, to getting a bank account if you don't have one. to managing basic things like a credit card, figuring out your mortgage, being able to budget. basically doing what you and your family need to do to get by in today's economy. there's so many choice today's than there were 30 or 40 years ago. we have a lot of abundance in credit cards, in mortgages. we are responsible for managing our o

states requireof financial literacy be taught. why? is quite unfortunate because a sound financial literacy curriculum is the gateway to getting a lot of students interested in math. years ago it 30 was probably ok for schools not to teach about financial literacy but nowadays with more and more students seeking financial aid after they graduate from high school and the state of the current retirement system, i think it is more imperative now than ever before for students to learn the basics of financial literacy at an early age. >> the organization for economic cooperation and development is out with a report that analyzed financial knowledge among 15-year-olds in 18 countries including the united states. american teenagers placed on -- placed ninth and were below the average in basic proficiency. are you surprised by the numbers ? >> it is alarming, but as i said earlier, as you start to introduce the concept at an early age by teaching literacy through math, you would get a lot of students very interested in math, and a lot of schoo

the colleg college scorecards ae financial aid shopping. in the college opportunity and access a wide range for small liberal arts college and giant state universities they made that commitment any place where you are always held accountable in the white house in front of the president for bringing them back in a couple of months to figure out how well they are making progress in file this away in the category. we've dramatically simplified the fafsa form that students use. [applause] >> thank you. i wish i could take credit for that before i came on. but because now we can monitor these things just yesterday the director of the student financial aid told me that the average time that it takes someone to fill out the fafsa form online has gone down to 20 minutes which i will say again as i said before is 20 minutes too long as far as i'm concerned but we will work on it. but that is as you know a major barrier for students applying for financial aid and we are happy to have gotten down to the 20 minute mark. but we have to do more which is

what role did the credit default swaps play in this financial disaster?e the centerpiece, really. that's why the banks lost all the money. they lost all the money based on those side bets based on mortgages. >> and the market's totally unregulated. >> and this market is almost entirely unregulated. >> the result is a huge shadow market that may control our financial destiny, and yet the details of these private insurance contracts are hidden from the public, from stockholders, and from federal regulators. no one knows what they cover, who owns them, or whether or not they have the money to pay them off. one of the few sources of information is the international swaps and derivatives association, a trade organization made up of the largest financial institutions in the world. many of them are the very same companies that created the vast shadow market, lobbied to keep it unregulated, and are now drowning there because of unanticipated risks. the ceo, robert pickel, says there's nothing wrong with credit default swaps. the problem was the underlying mortgag

financial regulators could help improve financial stability. can you comment on the effect that adding an explicit financial -- i guess i'll get that in writing, my response. my time has expired. thank you. >> time of the gentlelady has expires. we recognize mr. backus, the chairman emeritus of our committee. >> cherry allen, let me begin by saying this will be my final federal monetary policy hearing that i'll participate in as a member of congress since i'm retiring at the end of this year. during my 22 years of service on this committee, including my six-year term as ranking member and then chairman, i have heard testimony from the federal reserve chairbernanke, and now yourself. my observation during these times of both prosperity and during times of financial crisis is that we have leaders and a professional staff at the fed who have conducted themselves with honor and who have been true public servants. so let me thank you as well as your professional staff and as well as your predecessors for serving the people of america in this most im

the problem is, the goal is to create financial stability, but financial stability is the absence of a crisis. you can have a very stagnant economy with little growth, and there is financial stability. there is nothing in the law that tells regulators they have to take a trade-off between the growth of facts of stopping financial intermediation and weeding out bad financial intermediation and many times they don't get it right. some 2005-2008, the federal reserve ran a study for the financial stability border where they looked over and over and over again and securitization and credit risk transfers. in the same people that are regulating banks now, that same group of individuals who looked at securitization of sub prime mortgages, credit derivatives and said, these are great thing for the banking system, good financial intermediation. dahlia coming back and see what we need is to give them more power with no constraint and let them pick out the bad financial intermediation. it did not work last time. >> i appreciate that. and there you are not a health care expert, what your employe