act under glass steagall we had two kinds of banks one like your neighborhood bank did checks books check books home loans and savings accounts their technical name was commercial banks they also did checkbooks and things for businesses certain kind of bankers water were called investment banks places like merrill lynch used to be goldman sachs where you bought and sold stocks bonds and commodities but you couldn't have a checking betting bank space glass steagall said that these two kinds of banks had to be different and separate it couldn't even be owned by the same people they couldn't get into each other's business she always knew that your bank wasn't gambling in the back room with the money in your checking account or your savings account and was now hustling your mortgage to some foreign investment fund. republican senator phil gramm and his banks are buddies particularly those over at enron where his wife when he was on the board didn't like that at all so in the final year of the clinton ministration they put an end to the glass steagall act with a law called gramm leach bl

the volcker rule doesn't do what glass-steagall does but why have those protections and if it works so well for so many years why do you not believe in something we should return to or look at? >> let me take a shot at that. you put your finger on the timeframe, what had been up quite safe, stable, not particularly innovative financial system began to change. one of the big reasons it began to change was commercial banks were facing increasing competition on both the asset and liability sides of their demand sheet, their balance sheet. on the one hand, this is a good development, the growth of -- >> where's competition coming from? >> growth of capital markets, public capital markets allowing more and more corporations to issue public debt, issue bonds so they didn't rely on bank lending, bank bar wing that they used to and on the other side growth of savings vehicles like money-market funds which provide higher returns than an insured deposit of one of those institutions so the banks felt themselves squeezed on both sides by what in some respects were very good developments which is t

there are certainly people who stand for the full repeal of glass-steagall. there are huge political fears about doing that, but i do think some form of breaking up extremely large banks and disallowing reckless trading activity is noteworthy. i do think the thing about compensation and deferring is essential. but does it fix the problem completely? i do not think so. the truth is that if you swing for the fence in year one and your bonus, things do not work out, you can still leave and go to a hedge fund or go do something else. i do think that the law actually has to become stricter. i think greed and swinging for the fences will always be around. it is impossible to stop. so i think you actually need to change the root cause, which is in some -- if someone gambles with client money or bets against their client, that person needs to potentially go to jail or have some disincentive that is so great that if you're reckless person, there are only two or three things they think about before they endanger the whole house. laws have to change in addition to compe

the congress repealed the glass-steagall act, and president bill clinton signed the repeal. >> it was a bipartisan repeal. >> right. it's a joke. that allowed the banks to make risky bets with their depositor's money. eight years later, our financial system collapsed. it's like a joke. this is a system that creates in the private enterprise a core mechanism and a logic that makes them do the very things that need regulation and then makes them evade or undo those regulations. >> you probably saw the recent story that facebook, which made more than $1 billion in profits last year, didn't pay taxes on that profit and actually got a $429 million rebate from you and me and all those other taxpayers out there. ge, verizon, boeing, 27 other corporations made a combined $205 billion in profits between 2008 and 2011 and 26 paid no federal corporate income tax. what will ultimately happen, richard, if the big winners from capitalism opt out of participating in the strengthening, nurturing, and financial support of a fair and functioning society? >> well, the worst example i just learned about

he doesn't support a skwes star, glass-steagall, this is the president's agenda. >> paul: why would weect anything different? don't we expect that of the nominee. >> we expect that of this president which is to say usually treasury secretaries represent the american economy. this treasury secretary is going to represent the public sector, not the entire private economy and when he goes up there on capitol hill as mary suggests, he's going to be defending barack obama's public sector agenda. if that's what his expertise is. >> i guess that's kind of what we expect. but i guess the larger question for me would be, does he know enough about the financial industry? does he know enough about the international economy that if we get into trouble, he be the kind of troubleshooter or leader that-- >> no, he does not. he did not show nothing of that knowledge. >> and going to forge the next agreement. >> the currency change after world war ii. >> it might be unprecedented. and prior to tim geithner, what you had a usually, the people who had great success in business, or real intellectual stand

there have been additional ideas such as, you know, separate -- essentially doing glass/steagall again, separating the commercial banking and investment banking activities. we're doing that to some extent, for example, with the volcker rule, but i don't think that glass/steagall by itself really would be all that helpful because after all in the crisis some of the firms that failed were straight investment banks and some of the firms that were in trouble were straight commercial banks. so, i'm open to discussing additional measures, but the plan is to impose costs on the largest banks to make them internalize their systemic imprint to develop a liquidation authority and to strengthen the overall system and over time that ought to improve the situation. but if it doesn't, i think we ought to consider alternative and additional steps. >> well, in closing, i would really continue to encourage you-all doing that now. and, again, i think this is a bipartisan concern. i've expressed this concern and several ideas, for instance, with senator brown on the committee. the three components you de

and he was one of the key players in helping pass the repeal of glass-steagall. and, you know, this is kind of the way it works. it's not a one to one, you know, obvious connection. but, you know, glass-steagall was repealed specifically to legalize the merger of citigroup. and, you know, coincidentally bob rubin, who was the treasury secretary and jack lew end up working at citigroup five, ten years later. and they make enormous amounts of money. and then they go back to government. and again, this is just sort of this merry-go-round that everybody in washington knows about. and that's the way it works. >> how do you explain president obama's attitude in this? when he was running for president, he promised the close the revolving door. and he seemed genuinely shocked at the collapse of the financial system and the banks' role in it. but he also was raking in massive campaign contributions from these very people. did those investments, did those contributions turn out to be good investments, or do you think he's just overwhelmed by the system that's controlled by

. >> john: when they say bring back glass-steagall, we much need it. shocked that republicans are so willing to be cast as the puppets of the banks that stole from us? >> no. >> john: innocent doe care how it looks? >> i think to a certain extent they don't and they're not being held accountable enough. it's not that there should be a consumer protection bureau, they're holding the government hostage and refusing to abide by the laws that they have passed in the past. the president needs to go out there, there is a lot of am ammunition to go out there and say, do you understand your credit card contract? do you understand your mortgage contract? 99% of the people who have those financial instruments can't. that's the point of this. it's not just also to protect those consumers but we obviously see if you start with the problem of a series of fraudulent mortgage loans then this becomes a cancer that filters through the entire economic system. this is important to the economy well. >> john: joe, isn't sam right? isn't this the time when the president nee

. >> john: you don't have to know glass-steagall and repeal to understand how dison the that was.ow on time. the speech had no new inside and it was the same speech that romney was trying to to sell. is the g.o.p.'s idea is to go against obama. >> there were so many inconsistencies that we would expect from the republicans it made no sense. it was just tired rhetoric that he's comfortable saying, combined with some democratic support. >> john: you would think they would work with democrats. when the economy gets better they can take credit for it. >> i had the speech before the president began. i got to believe that he could have read the speech before the president gave it. >> john: you know the president's speech writers were insorting north korea all day long. >> we got the speech ahead of time. >> john: this is the savior of the republican party? is it just his heritage? the fact that the tea party used to like him or is this man or bobby jindal going to be the big players. >> clearly it's his heritage. and clearly he doesn't have it. it's been clear to me for a long time. the

advance voice of power never stuck. 70 miles west, his english teacher, and perry said that it glass-steagall initiate of her backyard and reads the paragraph before her. the suitcase closed and i went blind. my body was squeezing under many suitcases and i could barely read. after hours and hours, squeezing under suitcases, i felt depressed and hot. i just wanted to escape, but many suitcases are stacked on me. i was sweating. i wanted to scream, but a new would be worse. they could go after my sweet grandma and hurt her because she was sending me to freedom. i knew i would never see my single that. i would never achieve up my moms hope that my grandma so, so i made my handsets can be strongly. it is 7:00 a.m. sunday october curser enabling page. and fearless inside you coffee is very lukewarm. in between sips from her favorite mug, she stares at the purple morning glories creeping up her chain-link fence in the college essay. a suitcase? he's lucky to have survived. but can in hand, she tries to imagine an 11-year-old noong called up in the darkness, his fist clenched. surely he understands

do you believe in the reimplementation of glass- steagall? >> senator, as we discussed when we had this conversation, glass- steagall had been over the years somewhat of an anachronism. much of the activity in the financial world had gotten beyond it. i think the problems we had in the leading up to the financial crisis were evidence that our financial regulatory system was not in peace with the growing complexity of the financial system. i think dodd frank wasn't -- it was an important part in regulatory fashion regulating oversight. i think as we go forward, we have to ask restaurants as he complete the implementation of dodd frank. are there were actions that are needed? they need to make sense in 2013. going back, i do not think it is a recessive gaining -- resuscitating a 1930 act. >> i will take that as a no. to that point, i do not know how you can -- are you not worried that will provide more systemic risk as well? >> i think that if you look at the issues like margin requirements, it is important that we get on top of regulating thin

mary cantwell asked him about glass-steagall and other things but he dodged most of this and pretty closedministration a lot of credit for being smart, giving pete domenici to do the introductions, everybody on the bias was getting curious at that point and it really did move us toward he is a bipartisan deal cutter and we will get all this. he played this quite well and fortunately so i think he has 60 votes for good or bad. sandra: you got the last word, thanks for joining us. dennis: he said the state of the union plan is dead on arrival in congress, we are joined by senator rand paul to go over the tea party response last night. sandra: bbats, i am not talking about you, not playing around all. long-running batter -- battle over copycat dolls, the ceo of the company coming. dennis: look at today's s&p winners and losers. (announcer) scottrade knows our clients trade a invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their ick trade bar lets my account follow me online so i can react in real-time. plus, my local scottra

we're doing that to some extent, for example, with the volcker rule, but i don't think glass/steagall by itself would be all that helpful because in the crisis, some of the firms that failed were straight investment banks and some of the firms in trouble were straight commercial banks. so i'm open to discussing additional measures, but the plan is to impose costs on the largest banks to make them internalize their systemic imprint to develop a liquidation authority and strengthen the overall system. and overtime that ought to improve the situation. but if it doesn't, i think we ought to consider alternative and additional steps. >> well, i'll let you -- in closing, i would really continue to encourage you all doing that now and again, i think this is a bipartisan concern. i've expressed this concern and several ideas, for instance, with senator brown on the committee. the three components you described are understood by the market. in my opinion, they've been digested and valued by the market. and the market still says there's too big to fail. in particular, i would continue to urge y

do you believe in the reimplementation of glass-steagall? >> senator, as we discussed when we had this conversation, glass-steagall had been over the years somewhat of an anachronism. much of the activity in the financial world had gotten beyond it. i think the problems we had in the leading up to the financial crisis were evidence that our financial regulatory system was not in peace with the growing complexity of the financial system. i think dodd frank -- it was an important part in regulatory fashion regulating oversight. i think as we go forward, we have to ask restaurants as he complete the implementation of dodd frank. are there were actions that are needed? they need to make sense in 2013. going back, i do not think it is a resuscitating a 1930 act. >> i will take that as a no. to that point, i do not know how you can -- are you not worried that will provide more systemic risk as well? >> i think that if you look at the issues like margin requirements, it is important that we get on top of regulating things up with us at systemic ris

>> glass-steagall has been, over the years, something of an anachronism. much of the activity in the financial world has gotten beyond it. i think the problems we had in leading up to the financial crisis were evidence that our financial regulatory system did not keep pace with the growing complexity of the financial system. dodd-frank was a critically important step to reasserting proper regulatory oversight of an industry that is critical for the help of our economy. as we go forward, we have to ask russians as we complete the of fermentation -- complete the implementation of dodd-frank, if more is needed. while i am a student of history and new deal history in particular is a great interest to me, i do not think that necessitating a 1930's statute -- >> i will take that as a no. to that point, i do not see how you contain this issue as we now see the cftc and the treatment of swaps and futures as different clearing measures. are you not worry that that will provide more systemic risks? >> if you look at the issues -- things like margin requirements -- i

that is the classical -- glass- steagal. 85 billion per month to bail out banks.: thank you for the call. i would tell you that before i came to the congress, i was a financial analyst, financial adviser. i was in the bond market and putting together instruments of credits. i would tell you that i am a co- sponsor of the classicglass-stel aact. egal act. i certainly disagree with many of the things that happened. at someone who voted against park. -- tarp. i have had many people tell me that is wrong. there is a lot of congress people who do not have the background. i remember in the boat, it did not pass on tuesday but passed on friday morning. i voted the first time when it did not pass. the stock market will go down you have to test this. we did not pass it. the stock market went down. then we came back friday morning and passed it, and the stock market went down and everything was in flux all the time for wyatt. you know, i did not get scared by that. i definitely believe separation between commercial and investing things is probably a good thing for the unite

that is why she will never get elected because of the nafta a nd glass-steagall. i voted for president obama. i retired and went back to work to make extra money. i see people out here. i would like to know the people who work for $10 per hour and pay insurance. host: what kind of work did you do? caller: i worked at a food manufacturer. host: you went back to work? caller: i was only 55 when i required -- retired. host: are you still working? sicko i work in a machine shop. -- i work in a machine shop full-time. i'm a $10 per hour 30 years ago. i hear these people call them lazy people on food stamps. it amazes me. host: in the chicago sun-times morning on the front page, the story of jesse jackson junior with the headline -- read more about the trials and tribulations of representative jesse jackson, jr. we are talking about your view of the economic recovery. we have a couple of more tweets that have come in. let us go back to the founds. rick, oklahoma, on our line for republicans. caller: this country is and one heck of a shape. when clinton was in office, we

by the time you got to the time glass steagall there was nothing left in terms of its restrictions.> i did write about that. >> you did. >> but on the larger picture -- >> the larger picture is the really interesting question. i think the following and i've given a lot of thought to this and lived with this issue for a long time, way before i've ever got to washington, too big to fail is an enormously important question. came up in 1990 when a group of banks were in difficulty. i think it's an enormously important question. i think the problem is, that if you look at what sandy had to say and i have a lot of respect for sandy, but i think that if you followed sandy's path and you broke up the banks in some fashion or other, as he's describing, the risk isn't going to go away. the systemic risk, the too big to fail risk will move from one place to another place. for example, if you could curtail what the banks can do in terms of trading, it isn't that the trading is going to go away. you have a large global economy that needs those activities but they'll go to other platforms. i thin

lew called the glass-steagall act, "anachronistic" and said that the dodd-frank act had "effectively dealt with the issue of too big to fail." and i couldn't disagree more. mr. president, in my view, we don't need another treasury secretary who thinks that the die regulation of wall street did not significant contribute to the financial crisis. we need someone who will stand up to these huge financial institutions and on behalf of the american people, small businesses, withou working famiy enough is enough to wall street; you cannot continue to operate the way you are. mr. president, the next treasury secretary will be the lead negotiator for the president on how to reduce the deficit, an issue that we are all concerned about. and here is the issue: do we balance the budget by cutting social security, medicare, medicaid, and programs that middle-income and working families depend upon? dak it that way. paul ryan will come up with that proposal. and it will mean huge suffering for tens and tens of millions of families who are already hurting. that is one way you can do deficit reducti