but what has disturbed me is that others like paul volcker have been very... share many of the same views have been very... their views have been very reluctant to be heard. >> rose: but they are heard now. >> they are being heard and that's what i feel much better about. >> rose: but being heard on one question, the big question of financial reform and the need for new kinds of regulation. >> that's right. and even that is not as much as i would... i think is necessary. >> rose: okay. >> we're about a third of the way. >> rose: what will be the two-thirds that are missing? >> well, for instance, volcker has focused a great deal on making sure that the depository institutions, commercial banks, do not engage in proprietary trading. that they're not too big to fail. >> rose: that they don't have hedge funds or private equity firms. >> exactly. i've also been concerned that you can have too big to fail institutions that are not deposit-taking institutions. investment banks. that once you separate the two, you can sll... >> rose: but he seems to be arguing to me

paul volcker. we will recognize the chairman and then mr. volcker. >> thank you.leased to have the opportunity to discuss the federal reserve's role and the actions we are taking to strengthen our supervisory oversight. like many central banks around the world, the federal reserve cooperate with other agencies in regulating and supervising the banking system. our specific responsibilities include the oversight of about 5000 bank holding companies, including the umbrella supervision of a large complex financial firms. the supervision of about 850 banks nationwide that are both state chartered and members of the federal reserve system -- >> will the gentleman pause for just a second. ma'am, you are going to have to take that out of here. you are breaking the rules. you are either going to have to leave or we will have to have you removed or you will have to take the sign out. [inaudible] >> this confirms too broad set of benefits to the country. because the wide range of expertise, the federal reserve is uniquely suited to supervise large complex financial organizat

i got a nice big headline in may german had -- newspaper that paul volcker thinks this is nonsense. i do think it's nonsense. 4% is quite something. i don't know what i can say other than once we lose sight of the ultimate stability, we have lost a lot and we need to sort our way through. it does not surprise me that we have zero price inflation at the moment. that happens in the bill -- in the middle of a big recession. it comes close to zero all the time, that is ok with me. i think that is what should be in people's minds. as more than a monetary phenomenon. if we were in athens, how you deal with the situation as a practical matter in the context of the euro is a very tough question. >> the administration that mr. volcker served in 1971 applied wage and price controls and inflation hit a roaring 3.4%. >> that the was 4%. -- i thought it was 4%. >> you begin with provocative remarks about the growth of the financial sector. you said measures have become larger than manufacturing. we have seen the compensation's come back strongly. do you have any proposals that you think would ad

. >> thank you to paul volcker, a great president of new york state, and we are proud of your contribution to our country and your public service. there's a great deal of concern about the proposal in the dodd bill in the senate regulatory reform proposal that limits the fed's banking supervision to banks that are larger than $50 billion. first of all, do you see a need to make a distinction between large and small banks? and i would specifically like to comment on the federal reserve's interest rates steady by the federal open market committee which met yesterday, comprised a federal probe -- federal reserve governors, the president of the new york fed, and on a rotating basis, the presidents of five of the regional reserve banks. does this have an impact on the fomc's activities, first mr. bernanke and then mr. volcker? >> if we of the regulator of only the banks, we are thinking that is a bad idea. we need to see a broad financial system. we need to have the information about the broader economy and know what is going on across the country, not just in the great state of new york, for e

paul volcker. we will recognize the chairman and then mr. volcker. >> thank you. i am pleased to have the opportunity to discuss the federal reserve's role and the actions we are taking to strengthen our supervisory oversight. like many central banks around the world, the federal reserve cooperate with other agencies in regulating and supervising the banking system. our specific responsibilities include the oversight of about 5000 bank holding companies, including the umbrella supervision of a large complex financial firms. the supervision of about 850 banks nationwide that are both state chartered and members of the federal reserve system -- >> will the gentleman pause for just a second. ma'am, you are going to have to take that out of here. you are breaking the rules. you are either going to have to leave or we will have to have you removed or you will have to take the sign out. [inaudible] >> this confirms too broad set of benefits to the country. because the wide range of expertise, the federal reserve is uniquely suited to supervise large complex financial or

institution versus trading for customers, but i think that the real issue and perhaps this is what paul volcker was getting at is too big to fail. and we really need to eto kfocu how to resolve too big to fail institutions, and the dodd bill goes in the other way, and not fixing too big to fail. >> well, in this interconnected world we live in and where the financial institutions have their arms in so many places around the globe whether or not too big to fail can be transported beyond our shores. do you think it can? >> well, it is certainly a real problem, and although when the businesses do business globally they die locally and become someone's problem, and so the u.s. government has to convince financial institutions that no one is too big to fail. >> do you think that we will indeed see as senator dodd said in the second week of april, but there are some thorny issues in the bill, and granted that the administration has, you know, the momentum after the victory with health care certainly, but is that enough to push through regulatory reform? >> well, there are some thorny issues, and i th

it says that the so-called paul volcker will will be put forward despite the frustration that christopher dodd showed earlier. it says that yesterday mark warner, a democratic senator from virginia, "said he did not necessarily think it needed to be a mandate in the final legislation." what is your take on the volcker will -- rule them of guest: i have a tremendous amount of respect for paul volcker, especially his willingness to take tough stands against wall street and being prescient, as early as february of 2005, he gave a speech to stanford where he correctly predicted, very interesting, the kinds of risks being taken in the mortgage market and the real-estate market. i think that he was most effective when he was not standing by the side of president obama. what i mean by that is that when he was on the outside of the administration looking in, some of what he was saying in terms of risk-taking and revamping the way that wall street works made a lot of sense. unfortunately, i am not a big plant -- big fan of the volcker rule. i do not know if he was coopted on the way to the side of

but this notion -- and i know paul volcker is saying i'm nostalgic in glass-steagall but i am interestedin compartmentalization and turning the large ones, like you mentioned the four or five like you mentioned back into public utilities where they're serving the economy and serving society. >> all right. dana and we'll do one more in the back and then we'll need to have to close this down. >> >> thanks to both of you and a question to both of you and thanks to the center for holding this important forum. my apologies not to be at the 30,000-foot mark and i guess without getting into the weeds either but somewhere in the middle ground stipulating that you're both -- that we agree that there's very serious flaws to the current american financial regulatory system, that they need to be addressed and the suffering as a result of these flaws. but also that the senate is battle-weary, that be dealing with healthcare. that its agenda is full of high priorities. that this set of issues is very complex. and that the forces on behalf of the status quo are strong, how do you make the argument -- w

. >> paul volcker is absolutely right. think the two options you summarized there should be among the options we take, a careful look at. i think the federal home loan bank system is not without challenge today. and i think as the chairman said at the beginning, when you look at the housing finance markets and the gses, you have to look at the flb structure as well to make sure it can play the role it is designed to play, again, without leaving us with too much risk in the future that the government will have to come in to step in to underwrite those losses. you ended by asking is it possible to advocate a system in which the government plays no role in providing support for mortgage finance market through explicit guarantees, subsidies, support for liquidity. and i think there is a -- there is a -- certainly a pure theoretical option in this that may make sense, but my own view is there is probably going to be a good economic case, public policy ok policy case, for a carefully designed guarantee by the public sector going

. >> paul volcker said financial firms must face the threat of closure for a new regulations to be meaningful. he took questions after his remarks. >> the treasury has proposed -- this is part of the volcker rule. they made a proposal which is rather sensible. it is not a proposal that is so aggressive you'll make financial institutions small. a few institutions are going to run into a restraint of a proportion of the total market in the united states. that handful of institutions would approach 10% revenue limit that would be set, is small. an institution that has access to 10% is big enough to take care of itself. we do not have to worry about somehow prejudices against size and prejudice against american banks and other banks. i used to have to go up to congress and testify 30 years ago. i would get the question, you run all this regulation. look how big the japanese banks are. isn't it a terrible thing? i did not know how to answer that question. i said i would rather be good them big. this is a change when you consider the enormous size of banks. i do not think it is implicit we can get

. >> former federal reserve chairman paul volcker said financial firms must face the threat of closure for any new regulations to be meaningful. he heads the president's economic recovery advisory board. he made his remarks at the peterson institute for international economics. this part of the event is 35 minutes. >> do you see any value in limiting the size of financial institutions in either the united states or in other countries as some analysts have proposed? >> the treasury has proposed -- sometimes this is considered part of the olker rule because it was announced at the same time. i am not sure i am happy about that. they made a proposal i think is sensible. it is not a proposal that is so aggressive you're going to make financial institutions smaller. it does say a few big financial institutions which might become a lot bigger are going to run into a restraint of a proportion of the total market in the united states. it does seem to me that a handful of institutions that would approach to an%, or whatever limit will be set -- an institution that has access to 10% of the entir

. >> thank you to paul volcker, a great president of new york state, and we are proud of your contribution to our country and your public service. there's a great deal of concern about the proposal in the dodd bill in the senate regulatory reform proposal that limits the fed's banking supervision to banks that are larger than $50 billion. first of all, do you see a need to make a distinction between large and small banks? and i would specifically like to comment on the federal reserve's interest rates steady by the federal open market committee which met yesterday, comprised a federal probe -- federal reserve governors, the president of the new york fed, and on a rotating basis, the presidents of five of the regional reserve banks. does this have an impact on the fomc's activities, first mr. bernanke and then mr. volcker? >> if we of the regulator of only the banks, we are thinking that is a bad idea. we need to see a broad financial system. we need to have the information about the broader economy and know what is going on across the country, not just in the great state of new york, for e

part of the on-line coverage, ben bernanke and paul volcker talking about federal bank supervision and monetary policy. >> this week lawmakers are making the final push to get health care legislation to the president's desk. you control of the latest on the only network that covers washington gavel to gavel, c- span. take us wherever you go, online. iphone users, get the latest with the c-span radio app. >> cq rights today that a burst of activity is likely in the next day or two. we might see floor debate by the end of the week. >> this weekend on c-span2's book tv, this author on his book concerning the civil rights generation. another offer concerning his book on capitalism. former education secretary talking about white too much testing is causing the death of the american school system. "washington journal" continues. host: we're joined now by alex wayne from congressional quarterly. he is a staff writer who covers health care extensively. we will look at the procedure as well as the policy. thanks for being with us. guest: sure thing. host: we are at wednesday , at-- the get a se

i applaud paul volcker for his critical work on these issues which the administration has endorsed. unfortunately, the legislation now being considered by the senate requires the council first to study the volcker rule before deciding whether to enforce it. in the end, it could issue a recommendation not to enforce the volcker rule at all. or the council might recommend simply that regulators mandate capital requirements that are adequate for any risky proprietary activities a particular will undertake, a power regulators already have. the reality is that regulators have long had the authority to prohibit speculative activities at banks but never opted to do so. under the bank holding company act, the federal reserve may require a bank holding company to terminate an activity or control of a non-bank subsidia subsidiary, such as a broker-dealer or insurance company. if that activity or subsidiary poses serious risk to the safety, soundness or stability of the holding company. as we all know too well, in the past, these very same regulators failed utterly. indeed, as the umbrella regu

paul run amuck. it doesn't work. alan reynolds, great to see you. >>> coming up on the kudlow report '. larry summers warns of a bad jobs' numbers and fudges on the volcker plan to limit bank trading and tries to tell us if the president is really, get this -- really very pro business. you don't want to miss this. we'll get a quick report and "the kudlow report" will be right back. if you pay people not to work, guess what? they don't work! >>> earlier today, "fast money" contributor and president of metropolitan company, sat down with larry summers. she asked for clarification on the so-called "volcker rule" and here's what he said. >> the volcker rule spoke only to institutions that were banks. it did not speak to institutions, to other types of financial institutions, pure investment banks, for example. trading companies and the like. and so any financial institution that is not a bank is free to engage in these various kinds of trading activities. >> so, we have karen with us. this is a very rare and wondrous treat. hello, karen. >> hello, larry. >> let's zip through this. let me ask you, first of all. larry sort of dancing around the "volcker rule."