volcker. so we're grateful for you being here with us this afternoon. i'll make a few brief opening comments myself in the turn to senator shelby for any comments you may have an following what i now call the corker world will go to criticism of some members here feels up that we compelled to be heard. built submit any documents they think would be worthwhile for the commute to have been a beacon of line of questioning. depending on the number of people here, we'll try to have enough time available to every thorough discussion of these ideas. and without today. , were entitled to prohibiting high-risk investment activities by banks and bingo to companies. and again, chairman paul volcker and turn to our heroes witnesses. we be today as we have overpass number of months in the shadow of financial crisis that nearly toppled the american economy. it's worth repeating again the cost of the greed of recklessness that brought us here. over 7 million jobs in our country have been lost. the retirement

this is called the volcker rule and today chairman paul volcker himself will make the case for it. i strongly support this proposal. i think it has great merit. the second would be a cap on the market share of liabilities for the largest financial firms which would supplement the current caps on the market share of their deposits. i think the administration is headed in the right direction with these two proposals. i know the timing of them and how they've been proposed at a critical time when we've been deeply engaged on this committee. i'm proposing ideas to reform the financial services sector has raised the eyebrows and other considerations by people but i think we need to get past that if -- and how we could get through these issues. these proposals deserve our serious consideration. and so today we'll hear from the chairman and the deputy secretary of the treasury, neal wolin and on thursday we'll hold another hearing with business and academic experts. these are bourne out of a fear that a failure to act would leave us vulnerable to another crisis. and a rufuel of. -- refusa

to me, this is where volcker should put his strength.ou have a chance to get a real change in too big to fail. >> i agree. one of the remarks he said today that raised my eyebrow is where he said the house bill fixes that. i have to ask whether he's read the house bill. in fact, the bill passed by the house would allow creditors to be bailed out. >> and a $4 trillion safety net to fail. >> exactly. >> all right, peter, last word. is any of this going to pass the volcker plan up or down? >> i think the plan will pass. i don't know if we'll get comprehensive reform. >> sorry for the brevity, but you were enlightening on the lightning round. stay here for last thoughts. >>> i'll say on the obama budget raising tax rates on successful earners and investors is not the way to help main street. tax the top end and you hurt the middle and lower end as well. we need capital and labor this the country. why not lower all tax rates across the board in some serious flat tax reform? we'll be back tomorrow night. [ crowd gasps ] [ announcer ] if you th

thank çççi]you, ch volcker and secretary.cker, one of the actions taken by the fed during the crisis was transforming large banks into bank holding companies with access to the fed's window. what should be done with investment banks that became bank holding companies if the volcker rule is adopted? >> well, if the rule was adopted, they would have been engaging in some activities but they can still get in trouble. banks have a history of getting in trouble. that's one of the reasons you have a federal reserve. get this trouble and it seems to be a viable solvent institution and you have recourse to the federal reserve to handle even rather extreme liquidity needs and i think that is totally appropriate. that is one form of government support given to the banking system and i don't see that changing. i think it's important to provide that backstop and almost every country in the world provides that backstop to it's banking system so that does not change. >> secretary wholen. in the proposal includes a provision to give banks t

despite obama's bashing, despite the volcker rule, despite the scorn, volcker and jpmorgan are going to live long and prosper if we have a pattern that pans out. to infinity to where no stock has gone before, no, but a lot higher than they are right now. we've seen with health care and the credit card companies. when day after dale obama tax add industry, what do we have? a buying opportunity. not a time to sell because congress won't or can't let obama have his way. when it comes to goldman sachs, when it comes to jpmorgan, it is time at last tonight to take the other side of obama's trade. ha seen in pennsylvania, ha seen? >> caller: jim, buia from philadelphia. i'm a student at drex the university. >> yes, i'll give you a philadelphia college's rock buia right back at you. what's on your mind there partner? >> caller: my question to you is about your poin on toronto dominion bank. ticker symbol td. early october td just completed their acquisition of commerce bank. what happens was during that i recall completion of the merger they had a systems integration and the computer system

the man leading the charge: paul volcker, the former chairman of the federal reserve. today he told lawmakers those "too big to fail" banks shouldn't own or run hedge funds. he's urging them to pass what's being called the "volcker rule," a bank ban on speculative trading. volcker says limiting that kind of risky behavior will help prevent a repeat of the bailouts of 2008. here are the stories in tonight's "nightly business report" newswheel. an uptick in homes under contract led to an uptick on wall street today. the dow saw a second day of triple-digit gains, up 111 points. the nasdaq gained more than 18. the s&p 500 is back over 1,100, up 14 points on the day. the national association of realtors' pending home sales index rose 1% last month to a reading of 96.6. that marks its ninth advance in the past ten months. in tonight's market focus, a mortgage analyst tells us the biggest threat to those gains. that housing report also pushed oil prices to a two-week high. light sweet crude for march delivery jumped $2.80, or almost 4%, to $77.23 a barrel in new york trading

the president of the united states called this the volcker ruling today chairman paul volcker himselfke the case. i strongly support this proposal and i think it has great merit. the second would be the cap on the market share of liabilities to the largest financial firms which would supplement the current caps on the market share with their deposits. i think the administration is headed in the right direction with these two proposals. i know the timing of them and how they've been proposed and a critical time when we've been deeply engaged on this committee. i'm proposing ideas to reform the financial service sector raised the eyebrows and other considerations by people but i think we need to get past that if we can and think about the merits of these ideas and how they would work if they could in fact be put in place so i welcome the conversation we are going to have today and the remainder of this week on these issues. these proposals deserve our serious consideration and so today we will hear from the chairman and deputy secretary of treasury and on thursday we will hold another h

at the time paul volcker said this bailout would not set a precedent but the market's new that it would. if not in the public lexicon and they understood to big to fail and they understood the implications at the time it was warned of the big banks have the ultimate anti-competitive subsidy. they are too big to fail the matter how mismanage they may become the book will stop with the taxpayer. when the government once more of something, it will subsidize it. if you want a financial crisis built up over decades based on other companies borrowing for the purpose of reckless speculation, then beckham late for the purpose of reckless speculation and that is exactly what the government did with this policy and other financial institutions to borrow rates make could not have otherwise because this was in effect lending to the government said a higher interest rate. this was the first limited to commercial banks. but investment banks had to compete so they created there on two big to fail. this was two complicated to fail. [laughter] hearing about the exotic financial instruments, many had goo

volcker is correct. we don't think that his proposal, though, makes a lot of sense.and the most appropriate thing to do now is to move forward with the house bill. i mean, we've already -- the administration proposed legislation. the house largely adopted it. we were largely in favor of most, up to 90% of what was proposed. >> should we bring back glass/steagall? >> i don't think so. >> the volcker rule on steroids. >> we've moved on and markets are so much more globalized. if we did in the united states the u.s.-based firms would be competing with global firms that are not operating on that model. >> coincidence that not long after glass/steagall is effectively repealed we wind up with people in your business almost driving the world economy off a cliff? >> i don't think there's a correlation between that. i mean, we've talked about this before. when i've been on here. i think it was more, it's obviously the end of a very long cycle but we also -- >> sure. >> and we admit that some of the financial engineering was pushed too far. i don't think that had anything to d

volcker has another.he right thing to do, and what do we finally end up with, do you think? >> well, clearly, what needs to happen is that jobs have to be created. it seems that most everyone agrees that in order for jobs to be created, we've got to get lending out to small businesses. the question is, how do you get banks to make loans to small businesses? i think, you know, it's questionable as to whether or not throwing money at banks makes them make loans to small businesses. i think that there are other things that can be done. clearly the sba has to jump into the picture and expand the type of lending that they do. but, you know, it's really -- i'm really unsure as to whether or not just giving banks money is going to force them to make loans. i think that's the one thing that t.a.r.p. has proven to us. you can give banks money, but you can't make them lend. >> because they're too nervous to lend or there's no demand for lending? >> i think there's absolutely demand for loans. but i think banks are

volcker rules. obama stated the union. is that still dictating market sentiment? >> sorry, i missed that, nicole. can you repeat that? >> do you think washington is still dictating market sentiment? >> yes. well, clearly, over the last couple of weeks, we've had lots of uncertainty in the equity market on the back of the volcker rule. bajs came off sharply. and i think what's happened maybe a number of times now is that washington has come out from announcements and hasn't necessarily put too much flesh in the bones in terms of details. and the markets like to fret over what this might mean, how severe it might be, over what time frame it will take hold, and that uncertainty isn't great for equity markets, especially when it affects big sectors like financials or health care. on top of that, we have got questions about the budgets, we've got questions about defense budget. so yes, i think washington is definitely a cap on equity market enthusiasm right now. the microreports are trying to support things on the other side, but we have got that push and pull of polic

this volcker rule was not in the proposal last summer. i assume part of the reason we did not have it was because it was a legislative proposal that did not have, and that we don't have the detailed gad for the legislative language as to how to actually make the definitions. my question chairman volcker is, drawing bright lines between the permissible and impermissible activities on the market making proprietary trading is going to be very difficult, and some people say impossible or and workable. if the government makes it too difficult for banks to take positions then there will be less liquidity in the market and corresponding impact on capital formation and robust economic activity. do you expect that we will receive some specific legislative language so that we can understand specifically what we are talking about or what the proposal is with regard to proprietary trading and the other details of what is being discussed here? >> i think that is mr. wolin's responsibility. >> so you give us a ferry ride and secretary wolin will give u

you've got the bank tax hike and the volcker tax hike. are these examples of the washington war on capital and business? >> has anybody told the administration that prop trading is not what got us into trouble here? has anybody said it represents liquidity on the market today? all the share use see trading on wall street are not joe and mom and pop main street. they're institutions that are trading very frequently so that we have the liquidity. this is not an issue that we need to be attacking right now. we might need to attack leverage levels, cap levels, things like that. >> where would you go, just real quick, and then i've got to get zack back in. yo u're a bear now. you're going to go real defensive. what does that mean to you? >> we still have the volatility index. i mentioned that to you a week and a half or so ago. the tips are a play. you can get a little bit of a yield. but i don't think investors should be the heroes. be caution, have cash, and wait. there's a lot of uncertainty. there's no point in being a hae. >> what would y

volcker on that? >> i'm not at one on that. >> rose: why not?> why, as i said, my first priority by far is the kind of broad authority i just descbed to you and i don't want to slow down the process. and when i look at what i went through-- bear stearns, lehman, a.i.g., washington mutual, wachovia, fannie mae, freddie mac-- that authority wouldn't have made any difference. it wouldn't have helped us in any of those situations. rose: but would we have had the problem if those institutions... if they there hasn't been any... >> as i said, i don't think they are dhash is to the point with those. now, what i do believe, and i do think that there's some real truth he's on, and when i... in the book i talk about the risk posed by very large, complicated institutions, the concentration, and they... it is a very large terrific the system. >> rose: too big to fail is an idea that bothers you? >> it bothers me. so i want the resolution authority, but the other thing i do... and i say, i want regulators to focus on size, lines of business. but all business

basically, there was a move into them because of expectations for the volcker rule. now when it's expected make the volcker rule won't affect the money centered banks as much people are taking money out of the regional banks. add pnc going to raise money to repay t.a.r.p. does that mean or banks will do the same thing? we're seeing regional banks pull back on speculation as well today. >> thanks to all three of you. david, mary, peter. david reminds us someone, somewhere is making a lot of money. >> always. >> that's the way the world works. >> we need someone to lend to all of the people that have to borrow. >>> your supposed to declare anything over $10,000 when you fly into the states. have you ever flouted that rule? wait till you hear what people go to smuggle massive amounts of money into the country. >>> another problem for america's banks today in washington, as senate hearing on whether america's banks are involved in lawnering hundreds of millions for corrupt foreign officials. money laundering is $1.5 trillion global problem, some involves sophisticated of

they applied the old rules to new markets and when a civil of this is in the 1980's when paul volcker the fed chairman of the title recognized that the jump on markets were getting ahead of themselves, speculatively, and he simply got the fed to put the old rules regulating how much borrowing people could do for stock speculation on this new market which was effectively the same thing to say and take over companies could only borrow half of the price for a takeover. this provoked a tremendous outcry but it did mean when the jump on the markets went through its turbulence and a downturn in the late 80's and early 90's the economy didn't suffer the kind of catastrophe we suffered today. unfortunately most of the time the governments and financial institutions did the opposite. they confuse what kind of risk taking needed to clear consistent limits on borrowing and what kind of risk taking just needed discretionary surveillance. they thought the financial industry have identified and courantyne all risk with no risk let you didn't need these limits and that is exactly what alan greenspan

. >> so the volcker role a realm under alone, outside even banking institutions, needs to have it be augmented by some of the other proposals? >> no question about it. >> and finally, mr. chairman, you have said, mr. chairman, that there is quote not a shred of evidence that financial innovation has improved our economy. and effect financial innovation products company took is right to the brink of disaster. why do you believe that financial innovation got so out of control? can regulators, as the chairman and the committee do with financial regulatory reform, and regulators ever be in a position to keep pace with innovation? and if not, are there steps we should take to make banking and innovation, you know, subject to the ability to ensure that it doesn't get out of control? >> there is no assurance in this area, but part of what i hope is the effect of what we are proposing is to reduce the capacity of the banks, financial engineering techniques to get way ahead of the rest of the regulars. because the most fertile field of this is in the area of hedge funds, equity funds and prop

we've talked a bit earlier, senator raise questions about the volcker rule. i share some of your concerns about how you draw those lines. chairman dodd raise the question about using some of the intimate out there in terms of derivatives. can you tell us a little bit in his last 18 months with this increased focus on the largest sophisticated bank holding cubbies that you currently supervise, you know, what steps of the fed has taken to strengthen the supervision? any more specific way than you did. >> it would take me a long time. >> perhaps you can do that for the record. >> just very briefly there's been a lot of regulatory site. we're working with our colleagues in basel and elsewhere to substantially strengthen and modernize the capital requirements, the clarity of requirements, executive compensation requires, risk management requirements and a bunch of things to give a stronger machine. that's an important part. in terms of supervision we are restructuring our intern organization, and we think a landmark event, a warship it was the stress tests last sp

they applied the old rules to new markets in one example of this is in the 1980's, when paul volcker, the fed chairman at the time, recognize that the junk bond markets were getting ahead of themselves speculatively and he simply got the fed to put the old rules, regulating, jafaar wing people could do for stock speculation, on this new market which was effectively the same thing saying takeover companies could only borrow half the price for a takeover. this provoked a tremendous outcry but it did mean that when the junk bond markets went through its turbulence in downturn in the late '80s and early '90s, the economy did not suffer the kind of catastrophe that we have suffered today. unfortunately most of the time, the government's in the financial institutions did the opposite. they confused what kind of risk-taking needed clear, consistent limits on borrowing and what kind of risk-taking needed discretionary surveillance. denefec thought that the financial industry had identified and quarantined all risk with no risk left. we did need the sold limits and that is exactly what alan gr

and so did volcker.ut >> but ronald reagan raised the payroll taxes which really hurt -- >> but joan, they're for social security. joan, they're for social security. they make the program solvent. >> there were other ways to do it. he was a person who accommodated reality in a way that the tea party folks don't. he was a person that was to the detriment of my party, expanded his party. he was a big tent republican. now we have tiny tent republicans. they want the party to fit into a tea bag, pat. >> let me answer your point about social security. they came in with the recommendation and raised taxes. he did not like it, what they were doing. but had said, okay. if this is the only way to save social security, we've got to do it. you don't see anything like that today in solving social security and medicare. >> first of all, there are different ideas to solve social security and medicare, and they're not necessarily the crisis that they were back then. but barack obama just proposed a fiscal commission th

former federal reserve chairman paul volcker is credited with pushing that plan.oday, he testified before the senate banking committee. here's a bit of the case he made. >> commercial banking is a risky business. now the question is whether you want to, in effect, provide a subsidy or provide protection when they're lending to small business. when they're lending to medium- sized business, when they're lending to homeowners, when they're transferring money around the country. those are important continuing functions of the commercial bank in my view. i do think that these are getting public support. i do not think speculative activity falls in that range. they're not lending to your constituents. they're out making money for themselves and making money with big bonuses. why are we... why do we want to protect that activity? >> lehrer: now we >> lehrer: now, we get another perspective on the big banks, as seen by one of the leading c.e.o.s from that industry. newshour economics correspondent paul solman has the latest in his series of stories and conversations on t

at the time chairman paul volcker said this would do such a precedent but the market's new is that apresident. we got a new freeze in the financial industry have not yet in the public lexicon which was too big to fail and the independent bankers association which represents small banks understood the implications of this its president of the time or not these big banks of the ultimate anti-competitive government subsidy. they are too big to fail and regardless of how mismanaged the may become the buckles stopped with the taxpayer. so, when the government wants more of something is subsidizes it. if you@ @ fail. when we hear about exotic financial instruments, credit the fault swaps and everything else, these are not so complicated. these are many of them have good innovation and market signals and all kind of other things but one of the reasons for their creationists to a scheme for was to ease keep these reasonable consistent limits on borrowing. credit stifel swaps, sprick dewitt -- this is a way to speculate without having to put cash to single securitization creating complex fina

and then plot -- and then white house economic adviser paul volcker. >> this week on "the communicators," the proposed merger between comcast and nbc universal. monday night on c-span2. >> former british international secretary clare short spoke to members of the and crack inquiry last week, saying that tony blair and gordon brown misled the panel. she gave testimony of private conversations of tony blair over her concerns of entering war. this is 2.5 hours. >> we will be hearing from clare short, who was secretary of state for international development from 1997-2003, when you resigned over the iraq question. i think everyone in the room will be aware that clare short has written and spoken extensively on her views on iraq, and today is an opportunity to hear those views within the process of this inquiry and an opportunity for clare short to respond to the many comments made by others about dfid and, at times, by herself. we authority heard twice from served suma chakrabarti, and this afternoon we will be hearing from hilary benn, who was secretary of state for international developme

but there's -- but this notion, and i know paul volcker has been saying i'm not nostalgic about reinstating glass stiegel, similar to the mccain and cantwell bill and turning the four or five main ones into a public utility where they're serving the economy and serving society. >> all right. dana and then we'll do one more in the back and then we 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 form. my apologies not to be at the 30,000-foot mark and i guess without getting into the leaves either but somewhere in the middle ground stipulating that you're both -- that we agree, that there's some very serious flaws to the current american financial regulatory system, that they need to be addressed, and that we're suffering as a result of these flaws. but also, that the senate, is battle weary, has been dealing with health care, 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, wh

which got quite a jolt last week as everybody knows with the announcement by the president of the volcker rule which shocked, astonished, amazed and excited and thrilled, i have to say, people around the world. and we have, of course, on a bigger level, too, quite fundamental transformations in the relative success and size of nations, economies, the extraordinary rise, continued rise of china and india, and clearly the discredit into which -- and we must be clear about into which the western models have fallen. and that raises the question of what the new normal is going to look like. so as a background and with that introduction, let me turn, first of all, to view his view on the short-term to dominic. >> thank you, martin. i think in a nutshell the news are better. we all know this, growth is coming back sooner and father than expected -- faster than expected, but we have to keep in mind that this recovery is still fragile. and it's mostly fragile because when you look at the data and figures, it seems the figures from the u.s. are encouraging, a large part of this is still supported b

. >> and do you support the full volcker rule? >> the president proposed working with the bill that passed the house including provision mr. kanjorski offered to give the government the ability to lead risk-taking by banks that we make sure those translated to the limits that will actually prevent risk-taking in the future. >> so it is consistent with h.r. 4173? >> absolutely. it's important for people to understand this bill -- >> i understand it include a provision that would give the government the ability to limit risk taking any way to prevent future occurrences. >> wasn't your legislative staff that worked to change the kanjorski amendment? >> again we work closely with members of that committee on a range of those provisions to make sure they met the intent -- >> you're not answering my question. spent on that amendment we absolutely worked with them -- >> limit in terms of its reach. >> we worked on the limits to make sure -- >> okay. so in essence the volcker rule is something you support? >> yes. >> you testified last mo

not with standing this proposal, the volcker rule or whatever you want to call it maybe there will be a shuffling. maybe these companies can actually readjust and still maintain a holding company with perhaps a regulated sub and unregulated sub but nonetheless the s&p composition of finances probably going to remain unchanged and, you know, ultimately will be unleashed so to speak on the unregulated side. so i would say all in all i tend to agree with jay somewhat on this. i think we'll find that the year is going to be front loaded. we're going to see almost a mirror image of last year and we're going to get a nice runup for the first half of the year and then realize, hey, state and local governments are raising taxes. the federal government is raising taxes. we're going to see a pullback toward the end of the year i believe. >> got to go, guys. jack and jay, thank you both very much. >> breaking news. u.s. transportation secretary ray lahood says he wants to talk to toyota directly. now, this comes as problems pop up with the prius. after last week's mass recall for pedal problems.

trading by banks and in this case technical banks which we are quinn to go ahead within which paul volckert. the committee that i chair-- many suggestions being made by mark karney of the canadian bank and others, the notion is that you get proprietary trading not so much by a sharp line but by a volume of more or less, because there's a certain amount that has to be done to keep things going so the answer is, i believe that the major financial institutions understand regulation is coming. that is their interest to give us the kind of the advice we need so we can do it in the best way in the best way includes a tough way but a smart way and the other good thing is there i think a strong movement and it would help today. the european union, the united kingdom, japan, the candidate and u.s. work in the financial economy, working together. i think this has been very helpful and tougher regulation is coming and can be done thoughtfully, and it will be done in a way-- there is no overall sovereignty nobody to impose a bank tax. you don't need to have all and all one because there's no sovereign

volcker is doing a lot of subjects these days.f changes we need to implement. we have those well implemented. he has been very supportive. many of you know the traditional lending from the bank was the investment loan. given the structure of the institution, huge amounts of time spent on investment lending to bring the presentation to the board, but perhaps not the proper balance in terms of monitoring what happens to the loan afterwards and frankly making a risk management calculation based on the nature of the loans. we're changing the nature of the investment lending. one of the things that jim started here which i'm in some ways always amazed how we operated without it is a decentralization policy. we have decentralized a lot to the countries, but we have to recognize if we're bringing knowledge and learning, we can't have experts in each of those countries. so how do we use the matrix of the organization to combine knowledge and learning across countries. we do that relatively well within our six regionses. we don't do it as

volcker is doing a lot of subjects these days.ement. we have those well implemented. he has been very supportive. many of you know the traditional lending from the bank was the investment loan. given the structure of the institution, huge amounts of time spent on investment lending to bring the presentation to the board, but perhaps not the proper balance in terms of monitoring what happens to the loan afterwards and frankly making a risk management calculation based on the nature of the loans. we're changing the nature of the investment lending. one of the things that jim started here which i'm in some ways always amazed how we operated without it is a decentralization policy. we have decentralized a lot to the countries, but we have to recognize if we're bringing knowledge and learning, we can't have experts in each of those countries. so how do we use the matrix of the organization to combine knowledge and learning across countries. we do that relatively well within our six regionses. we don't do it as well as we need to across

host: a former fed chief, paul volcker, he is here and talks about the direct it to me to congress toe a proposed ban on banks. a member of the senate banking committee announced opposition to the barack obama plan. there was plenty of criticisms that the lack of details were in the announcement. guest: the big issue now is that banks are not lending to small businesses. the president is right about that. we need to un-freeze that gridlock. banks need to loans of vacant lot and expand their businesses. i am in favor of taking steps to expand the banking sector. the of the problem is that many businesses do not want to expand right now. what we are facing now is the national health care bill which kills small businesses with new taxes. you also have the democrats passing the cap and trade energy tax. that would have a major negative effect on our manufacturing. the small businesses that i talked to say that they cannot get loans but they are also saying that right now they don't want to expend. they see a tsunami of terrible ideas coming out of congress that will make it impossible to

everybody was outraged as i was and as paul volcker is about the outrageous bonuses paid in the industrythose are not free market bonuses. they are beyond the pale per 140 million, more than the u.s. grew in the fourth quarter. but we have to look at where it came from. and the beginning, we provided banks with an fdic insurance scheme, because we decided that banks are a vital facility like electric lights. so we have to protect that industry from self destruction. that is fine. but to accomplish social purposes, the government has required banks to make loans and establish competing banks, that make fannie mae and freddie mac that make loans that they should not make, which make the banks themselves ineffective and sometimes insolvent. at the same time, what we guaranteed banks their survivability, and we're really doing that we generally do is put it into another bank and cover its losses. that is what we do when we close the bank group we have a group of people that close banks every friday night in washington. they're people that work and custodial work in the department of commerce

. >> paul volcker will love you. >>> coming up next, financial expert jean chatzky joins the conversationhis checkbook. that'll be fun. we'll be right back. >>> look at that. that's from the top of the rocket. 8:00 in the morning. a live picture of new york city. we're getting some low-hanging clouds and perhaps even a wintry mix, i like to call it, savannah. pictures there of times square. it's actually snowing in wk d.c., at the white house, where savannah guthrie does her best work most days of the week. but today she's here with us. so glad to have you. >> one night only. >> when you say that, it feels a little inappropriate. >> you won't there, i didn't. joe and mika en route to the west coast where they'll be doing some live shows from l.a. we've got a great group assembled around the table, well, for the most part. >> with a glare exception. >> we also have mike barnicle. how are you? >> i'm increasingly angry. >> i can feel it. oh, the rage. >> jonathan capehart of "the washington post" with us all morning. joining us today at the table, personal finance editor, jean chatzky, also

the question of banning proprietary trading by banks in this state technical banks which paul volckeralks about. the committee i chaired had given the regulator power to go forward to give a reason for the suggestions being made by the ssa. i spoke with mark of the canadian bank and others. the notion as you get the proprietary trading and also much by a sharp line of either work but by a volume of more or less because there's a certain amount that has to be done to keep things going. so the answer is all i believe the major financial institutions understand the regulation is coming. it is in their interest to give the kind of advice we need so we can do it in the best way and that includes a tough way that smart way and the other good thing is there is i think a strong movement and was hopeful today. the european union, the united kingdom, japan, canada, the u.s., all the manufacturers work in this finance and economy, working together. i think this has been very helpful in the financial industry understands tough regulation is coming and can be done thoughtfully and it will be done

indeed i am in total agreement with paul volcker. it is hard to find evidence of any real growth associate with many of the so-called innovations in our financial system. it is easy to see the link between those innovations and the disaster that confronted our economy. underlying all the sailors is a simple point, which seems to have been forgotten. i natural markets are a means to an end, not an end in themselves. we should remember that this is not the first time that our banks have been bailed out, say from bearing the full consequences of their badly needed market economies work to produce growth and efficiency but only when private rewards and social returns are allowed but unfortunately, in the financial sector, both individual and institutional commitments were misaligned which is why this discussion of incentives is so important. the consequences of the feathers of financial system were not born just by those in sector. but by homeowners retirees, workers and taxpayers and not just in this country but also around the world. t

the day after the president proposed volcker rule, even before graham-leach-bailey, they were allowed to invest. a clear message needs to be sent to banks that they are not only allowed but encouraged to invest. also, banking regulators particularly the occ has cut off new investments in sbic by removing certainly that banks will receive the credits for small business investment companies. there's been no legal or regulatory. cra credit for investments need tour memorized. on the incentive side. just 3% of that were allocated to community banks to invest directly in sbic, that capital can be leveraged by the sba and invested in companies providing long-term investment capital. >> the gentleman's time has expired. >> thank you for the opportunity to testify today. >> i apologize for characterizing in secondary. ms. robertson. >> good afternoon, my name is sally robertson. i'm a board member of the national association of development companies. additionally, i'm the president of the business finance group. it's a virginia-based nonprofit provider of the 504 loans. 504 is partnership tha

i applaud chairman volcker's direction. i believe we need to go further. we cannot pass the buck to our regulatory agencies. we have tried that before. they punted their responsibilities to the credit agencies into the banks them and we were left with disastrous consequences, the big issue we face is not how to make regulation cleverer, but how to protect taxpayers from a huge bill when all of the precautions fail and a bank steps into the void. congress needs to draw a hard-line that gets directly at the structural problems that afflict wall street and our largest banks. we must draw lines that divide financial institutions which are too big to fail. and we must draw lines that end the conflict of interest that literally and inevitably served to corrupt some of our most important financial institutions. mr. president, i've been around the senate for 37 years. and i know the laws are usually not written with hard and fast lines. laws are product of legislative compromise, which often means they're vague an ambiguous. and we have often justified our vaguene