the thing about president reagan was he was comfortable with himself. >> reporter: now 89 shultz is a distinguished fellow at hoover institution where of late he's been pondering the problem of banks deemed too big to fail. a recent quote, if they're too big to fail, make them smaller he said. we wanted to know more. what's the basic problem, as you see it, with financial institutions at this point in time? >> in the first place, if somebody is known they will be bailed out, well, they do excessive risk. because they're doing it on the tax payers' dollar. the whole system is badly damaged when bailouts occur. it takes all of the accountability out of the system. and the market system depends on accountability. so we have to design a system so anybody in it can fail. >> reporter: did you run into this in your... some of your past lives? or is this a new phenomenon? >> oh, no. this is something that you see in aate lot of settings. i've run into the same problem before. long about august or so of 1968 , a strike of the long shoremen sharts on the eastern gulf coast. president johnson th

and i actually, once i had an opportunity to have a brief conversation with george shultz, reagan's secretary of state and put this theory. he completely agreed. he agreed that it was gorbachev overvaluing star wars and not reagan. so, reagan was not responsible for the fall of communism, not by a long shot. but the thing he did do that carter didn't do and that kind of conventional minded people were unwilling to do was precisely what i dismissed at this time when he called the soviet union and evelyn tire. that is he was willing to question the legitimacy of the soviet union. the soviet system which was in fact an illegitimate system. and the sky did not fall. now turned out when freakin' said evil he just meant, he didn't really mean evil. he mends misguided. and he like happy endings. he liked the kind of movie where the villain, the good guy kind of shows that guide, shows him the right way to behave and then the bad guy comes on over to the side of the good guy, and that movie was the one that played out. it turned out he didn't mean the soviet union and it was evil, it just meant that