was debated more than the proper role of the national government the debate started is the united states bank constitutional and carry through the end of the 19th century of what really constitutes a corporation can they conduct commerce across state lines? should the national government provide welfare? user hotly debated issues including should it provide pensions to survivors of the civil war? we did that and magnanimous fashion but implicit was we provide it to the norris but not the south. >> host: what is on the cover of your book? >> then national capital early 19th century. definitely an artist's rendition. i wanted to pick an image to convey the fear of losing -- looming presence look at the bottom half of the book you see trees. than a fence than cows grazing on the lawn. >> host: what do teach year? >> u.s. history, and he chain a lecture class called digitize saying america and it looks at the key developments 1983 the lens of the information revolution. >> host: teaching contemporary but right about 19th century? >> i set out to write an introduction to a book and i remember i wa

we have the biggest bank in the united states by assets.s led by someone who has been the champion of deregulation, the warhorse saying don't regulate. don't overregulate and who has been trying--jp morgan chase and jamie dimon have been in the lead of trying to water down the vocal rule which was designed to stop these kinds of things. to prevent these trades that are too speculative too excessive and not prudent and certainly would effect commercial democracy and it happened within living memory. you know, we all suffer from a certain memory loss and a short-term time horizon but it's hard to hide from the fact that this is just a few years ago. this whole thing--these kinds of errors, these kinds of sloppiness, these kinds of excessive risk, these kinds of bizarre new instruments got us into deep trouble, the near meltdown of wall street that had to be bailed out and hurt the entire economy. so eliot, we have every right to be shocked but beyond being shocked, beyond our range i think we got to urge our politicians to do something about

marketplace today it raises real concerns this mark this bank has almost one third market share in a national market for mortgages to the united states all the other big banks max are well below ten percent there would drawing from the market so wells fargo is celeste man standing in this marketplace for mortgages both commercial and residential well let's talk about somebody who has become the self anointed representative of the too big to fail banks a man who has got ninety trillion dollars on his balance sheet of derivatives and other unsecured liabilities i'm speaking of course of jamie dimon at j.p. morgan he is arguing with the government that he needs less regulation. he needs to be able to increase the amount of leverage he has on his books and he needs this swaps market deregulated so just for those out there in the international audience just briefly explain a swap and then what's jamie's problem well jamie's problem i mean in some respects i agree with him when it comes to basel two and three and all the rest of it dodd frank is a disaster we're actually hurting the u.s. economy with all of these initiatives through becaus

basically it is foolish to have the largest bank in the united states, a bank critical to the u.s.nomy, doing speculative trading, like we saw here, they should focus on basic banking functions. it is a return to the idea of the glass separation that used to exist between investment banking and depository for many decades from the 30s to 90s. >> i read an article that said these banks are too big to be regulated by the government. is that the case here? >> there is a real question as to whether these banks are too big to manage, not just too big to fail, but too big to manage. too big for their top executives to really understand all the risks they are taking and i think the regulators have to take a very serious look at downsizing these banks. they have authority to do that under the dodd frank act so they can split up, downsize, causing banks to spin off speculative operations. the rule would have some of that effect and i think the regulators should take steps to simplify and shrink these banks. >>> thank you for coming in and giving us your perspective. >> thank you. >>> ceo of

well first of all you know i don't work for a bank i work for a financial firm the united states and i can tell you and i can probably speak for the banks we are a very very heavily regulated the regulation is actually over the top you can you can almost make a case that we're more of a of a non-paid intelligence gathering unit of the federal government then we are a private sector for profit institution that being said yeah there's a lot of regulation there there could be it i don't think i think there should not be as much regulation and clearly what you've got here is you've got a couple of banks you mentioned earlier how many fewer banks there are now than there were in the past and that's because these bigger banks have had huge there's huge barriers to entry if you want to get into the banking business the red tape and you have to jump through and the regulation you deal with essentially means makes it impossible so we have these institutions up in the top that are that are that are totally ensconced in our economy and yes they're the best friends that washington has and yes the

institution versus the other to maintain the robustness of the 6,000 community banks that continue to exist in the united states today. >> and do you agree, i wasn't clear on how far your agreement with dr. hoenig was, in terms of the advantages that large banks get over small banks in terms of the way the system has been built, the less expensive -- less expensive financial market, the advantages they get that way in borrowing and other things. >> i think the community banks are largely in different markets than the largest five or six institutions or three or four institutions that are really focused internationally on very large -- very large lending, so there's a lot of separation in the activities that they undertake. there are concerns on both sides that there are some subsidies on the smaller bank side from some of the safety net as well as on the larger bank side. i think a careful cost benefit analysis should be done to identify where those subsidies may be and as much as possible eliminate them, because i think both it's unfair and not good policy. >> and do you agree that there are different conseque

bank of england was doing a lot of this type of activity. they became very good at it. as we will see, while the united states was suffering with banking panics for the latter part of the 19th century, banking panics in the united kingdom were quite rare periods of the bank of england sort of set the pace in some sense. it was the most important central bank, and it helped establish the practices and the approaches that we still used today. now, i need to talk a little bit because it is less familiar about what a financial panic this. in general a financial panic is sparked by a loss of confidence in an institution. and i think the best way to explain this is to use a familiar example. how many of you have ever seen the movie, it's a wonderful life? was people are watching christmas movies than they used to be a guess. well, one of the problems that jimmy stewart runs into as a banker in a wonderful life is a threatened run on his institution. what is a run? well, in this imagine a situation like jimmy stewart, before there was any deposit insurance, no fdic. imagine you have a bank on the corner, regular com

certainly the biggest bank in the united states and a big, embarrassing story for the bank with the reputation as being one of the better-managed and a bank that didn't need a bailout but last night j.p. morgan reported in the past two weeks it's lost $2 billion in risky trades. a nutshell the bank was basically hedging. taking out insurance against its own risks and got it wrong. in a late-night emergency conference call, the boss, jamie dimon blamed it on errors, sloppyness and bad judgment. you think? also embarrassing because he's been very vocal and against the new rules coming into the u.s. the volcker rules that are design topped prevent this from happening a bank using its own noun fleevepbt from happening. no doubt lit strengthen the talk for this. >> the most important thing about the j.p. morgan is in fact the global ramifications. we will see the g-8 countries looking at the american rule and saying maybe we should do it ourselves. up until the end of this year they were still able to trade out of the u.s. but as of the end of the year they will have to commit to other countries, t

. >> so you are not seeing the uncertainty that other bank executives, certainly in the united states are sai seeing, where we are unclear about the volcker rule, unsure about how it shakes out. >> let's not forget deutsche bank is one of the leading banks this this country. 11,000 employees. 20 locations. we are a leading foreign exchange currency house in this country. all of the rules which you just talked about are highly relevant for our franchise as well. exactly where we find up with the volcker rule. it is as much interest for deutsche bank as for any of the u.s. majors. >> how do you see the company changing in a couple of years given this new set of regulations we will be seeing. u.s. business, you said the most important or incredibly critical to everall bank. 11,000 people in the united states. how does the bank change. how does that business change in coming years? given the regulatory backdrop? >> if you look at investment banking sector, four sets of change is coming. very quickly, capital, lots more, liquidity, we have to hold more. business model, much neyorer. and ab

in eight hundred thirty three president andrew jackson threaten the second bank of the united states for corrupting politicians he actually campaigned for president on ending that banks life and largely because of his efforts eventually did die oil corporations match manufacturers like kitchen match manufacturers whiskey trust sugar corporations all sentenced to death in several states even standard oil got put to death in new york state in one thousand nine hundred in one thousand nine hundred four although other parts of it survived in other states but today corporations are put to death any more even when they do fraud us of billions like the pharmaceutical industry or poison entire cities like energy chemical corporations do or deny care to us like health insurance companies do so they can inflate their c.e.o.'s obscene incomes or steal money from us like the banks on wall street we need to bring back the corporate death penalty and make sure the corporations are acting on behalf of the public interest again now for his take on this issue i want to bring in conservative commentato

united states. >> how leveraged are u.s. banks now to the situation in europe? have they done a good job of limiting that leverage? >> i think the u.s. banks the thing i would say is, one, a lot more capital than they had a fuse year ago, a lot more liquidity, a lot cleaner balance sheets, very little exposure to peripheral europe. of course, the situation -- you can imagine scenarios in europe that got bad enough and broad enough that will would be consequences back to the u.s. banking system. all we can do is make sure the u.s. banking system is in a situation where it has capital and liquidity resources to handle shocks. >> there has been a lot of talk about whether or not the big banks should be broken up. where do you come down on that debate? >> i think it's obvious we want to eliminate any doubt about this too big to fail issue. we can do that in sort of two ways. one, force large systematically important financial institutions to hold more capital, have larger liquidity buffers to reduce the probability of their failures to a very, very low level and, nu

with with reserves in the banking system as we've seen in the united states just filling up the banking system with reserves there's not enough itself create inflationary conditions and that could be done to morrow so it is something that could be done immediately and i think that you need to get the patient out of the e.c.b. then you can deal with the long term operation of reconstructive surgery which which will have a growth component if i come back to you in berlin i want to agree with something you said earlier the program about mmer market i mean she's a. legitimately elected leader and he has a strong political base and he's had to face elections and whatnot but nonetheless you know what point is germany have to think about the welfare of everyone else because everything that you said earlier about law based on treaties and things like that i completely agree with you but the interconnectedness of all of these things germany at some point in time has to think about everyone else not just itself. germany is not thinking about just itself because that is the main idea of the europe

again who are the names that you would give a country their central bank that you believe are involved in as you mention the united states is there anybody else. well the bank of england is involved but the big the big one is united states that said treasury you can. exchange stabilization fund certainly and then just b.c. j.p. morgan goldman sachs should mention the squid they were the ringleader chill of that three or four years ago and i have just completely disappeared from the sea so they're gone but it's just a combination of course and then they have their lies and other central banks to help them some gold on the market as i mentioned earlier i think the europeans got duped another gulping because. they're not selling any more gold at all while other countries are buying as you mentioned and now one thing i do want to ask you about you you mentioned a d.p. world and several times and they really have gotten a lot of flak for what people believe is manipulation of the silver market and we did actually hear from blythe masters the head of global commodities answering a question about that and she defended it saying

in your opinion there shoild not be a central bank in the united states of america? >> yes, sir. we don't have a central automobile manufacturer or dairy. >> how do you juxtapose that with central banks around the world where major countries in the world all have central banks? >> when i'm expoupding is not the majority view among policymakers. but that hardly makes it incorrect. >> i think that's a fair statement. mr. taylor. >> i think we should reform the fed. i think the evidence especially in the last few years is that the policy's not working. i look back in history and i see the 80s and 90s part of the time when alice rivlin was on the fed and things worked pretty well. it wasn't intervening like it is now. it worked. i think we need to get back to that. i call it a more rules based policy. i think some of the reforms we're discussing today will help us get back to that. >> next please. >> i think on the whole congressman, that the 20th century was better than the 19th and that having a central bank was a modest, useful part of the institutional structure it gave us a fairl

real bank loans are actually happen a lot quicker when the bank runs really happened you think about northern rock for example or in the united states we had a bank run in two thousand and eight which precipitated some of the stuff in the first crisis that we had pretty lehman but i think that you go back to one nine hundred thirty one with from the austrian bank that there was a bank run on that created the preconditions for a generalized bank run so these are the sort of knock on effects that you would see and that's the kind of existential crisis that would really bring things to a head in europe exactly and you know the e.c.b. they understand so as deflationary as the policy has been on the fiscal front in europe the e.c.b. has just been pumping money like into the banks trying to prop them up artificially obviously because they're bankrupt in order to prevent this so it's sort of an extend kind of maneuver in order to pretend that these institutions are solvent so that at some point later on when things were easier to do they can they can resolve their institutions that are still insolvent you think back to the l.d.c. crisis. w

in the 30s, there were thousands of bank failures, but almost all of the banks that failed in the 30s at least in the united states were small banks. and there were some larger banks that failed in europe. the difference in 2008 was there were many small banks that failed in the intimate but they were there were also intense pressures on quite a few of the largest financial institutions in the united states. and the next two pages are shortlisted short list of some of the firms they came under intense pressure. bear stearns which is a broke her dealer came under intense pressure in the short-term funding markets in march of 2008. it was sold to jpmorgan with fed assistance in march. things calmed down a bit after that and over the summer if there were some hope that the financial crisis would moderate than in the late summer things really began to pick up. september 7, 2008 fannie and freddie were insolvent. they didn't have enough capital to pay the losses on their mortgage guarantees. the federal reserve works with fannie and freddie's regulator and with the treasury to determine the size of the shortfall and ov

. >> in your opinion there should not be a central bank in the united states of america? >> yes, sir. we don't have a central automobile manufacturer or central dairy or a central computer -- >> how do you juxtapose that with the central banks around the world where major countries all around the world have central banks? >> what i'm expounding is not the majority view but that partly makes it incorrect. >> i think that makes it a fair statement. mr. taylor? >> i think we should reform the fed. i think the evidence especially in the last few years is that the policy's not working. i look back in history and i see the '80s and '90s part of the time where alice rivlin was on the fed and things worked pretty well. intervening, like we're doing now, a more steady as you go policy. a lot of focus on the overall stance of policy, and it worked. so i think we need to get back to that. i call it a rules-based policy. not more statistic policy and some of the reforms discussed today will help us get back to that. >> next, please. >> i think on the whole, congressman, the 20th centu

banks and u.s. financial services is kind of the wrong remedy. i mean, u.s. financial services are the most overregulated industry not just in the united states but in the world. when you talk about a bank like jpmorgan it is regulated as you know by the fcc, by the federal reserve, by the treasury department, by the fdic. we have -- >> wait. i'm not sure either was calling for more reguonstev a in, i ink less regulation doesn't make any sense. you've got people like lloyd blankfine asking for better regulation. maybe that's what jamie dimon is saying. better regulations would make sense. better risk management internally is what's really needed he. >> we agree on that. look, let's look at who are the losers here. thank goodness the losers, erin, are not the taxpayers, because it doesn't look like jpmorgan's going to get a bailout, thank goodness, and actually the losers were not the depositors. the losers were the shareholders. that's the way it should be, when a bank makes bad decision, like any business, the people should lose money, they're the shareholders. >> true. a lot of them are regular people hoop have jp morguen in their 401(k). when people make a

yesterday i was in the federal reserve, that time banks could not branch outside the home states. the united states has one of the most decentralized banking system. sst suddeny from a decentralized system to a concentrated system. which i think is unfortunately. in the midst of the crisis it got worse. how do deal with that you may have people on this panel that are much more aggressive than i. i don't know how to break up these banks very easily. but some of the things reduced trading will reduce the overall size of the bank, reasonably. some of the restraints on derivatives will reduce their offbalance sheet liabilities, significantly. they are modest steps. there is a provision of the law that cannot grow beyond certain limits by americaer or acquisition. there are some limits here. but if you say, you ask me if i prefer a banking system with less concentration, i would. i think we can live more or less with what we have. >> thank you, mr. chairman. >> thank you, mr. chairman and dr. volker. thanks for being here. i've read some of the comments that you made spfkly about the volker rule.

care law was take over the whole student loan program and turn the united states secretary of education into the united states bankingcommissioner, almost. he has the job of making $100 billion of new student loans every year. the idea was the government can make it better than the banks. our friends on the other side said to the students the banks are overcharging you, we're going to take it over and we'll be doing you a favor. well, what did our friends do? they did take it over. they didn't do the students a favor. according to the congressional budget office, there was $61 billion of savings, money that the students shouldn't have been paying, i suppose. when we took it over. and what did the democrats do? they spent it, all except for $10 billion, and they spent $8.7 billion helping to pay for the health care law. so the way the congressional budget office looks at it, $61 billion in savings resulted from -- and these are my words -- borrowing money at 2.8% and loaning it to students at 6.8%. we want to take that profit, that overcharging the students, give it back to students. that's the way to pay for the 3.4%

you know the fed yesterday gave permission to a big chinese bank, icbc to purchase a bank here in the united states. the financial sector itself has a very, very keen interest in ensuring the integrity of its own operations, and that's true for the financial sector broadly, and it's true for each individual bank within the financial sector. and so part of what we do is you know, in addition to dealing with governments and talking to governments and trying to coordinate with governments, is to communicate directly to the financial sector about the importance of combating illicit finance. the importance of financial integrity and the importance of maintaining reputation, because that is what, you know, will assist them as they want to be players on the international financial stage. so, you know, we approach the chinese, as i said, in the same fashion as we approach other countries on that issue, and, you know, and we will continue to do that. >> you raise a great point, because i think one of the keys to your success is the rec nation reputation is the coin of the realm when talking about the intern