Transcripts For CSPAN Key Capitol Hill Hearings 20240622

It compounds month after month. That is only to people who are getting unemployment or are unemployed. Many are the heads of household. The implication of this part of the crisis affected many tens of millions of americans well into the 50 and 60 million. 27 million americans directly affected, so the Ripple Effect into 50 or 60 million americans just from employment. Housing prices collapsed back into thousand one levels relatively quickly. Historic foreclosures were out of control, millions and millions of foreclosures. Small businesses were crushed. As Economic Activity plummeted one of the frontline organizations started going bankrupt at historic rates due to the complete lapse of Economic Activity. Underwater homes, the silent crisis, when over 30 . The mortgages were much higher than the value that the homes could be sold for in the markets as prices collapsed. Even through today, there are still waiting money way too many underwater homes. There are tens of millions of americans and families behind the numbers. This is just one picture you can take in 2008, 2009, 2010, of the lines at job fairs. This is atlanta. This is children at the become Elementary School in southern florida in october 2011. At that time, every weekday more than 200,000 hungry students were getting free or reduced lunches because they could not afford them, often almost always because of unemployment and foreclosures and homelessness. At the time in that county, the economy was so bad that seven out of 10 students were eligible for those lunches. This is one of the most telling photos. The Ripple Effect at the state and local level from the collapse of the economy and financial crisis. This is fellow firefighters applauding a fiveyear veteran who is telling them to keep up their hopes as they prepared to turn in their gear after being laid off. Camden laid off one third of its firefighters. That act was repeated, with firefighters, cops teachers, and a lot of other state, local and Municipal Workers because of the collapse in tax revenue and diversion of resources to mitigate economic effects of the financial crisis. Here is a man who is unemployed applying for food stamps in february 2011. Food stamps skyrocket in 2011 two being used by 43. 6 millions of americans. That should surprise no one when you look at the unemployment numbers and foreclosure numbers and underwater home numbers. This woman in 2010, pose an unemployment check from burbank, california. She was laid off from a Quality Assurance job where she was making 100,000 a year. This is from her. It really gets me when they say you lazy people. They have no idea how depressing that is when you have been beating your head against the wall trying to find work. That was the economy facing tens of millions of americans. With tax revenues plummeting and social needs skyrocketing, government deficits and debt owned a ballooned. If you can see, it believes starting in 2008 in 2009 and 2010. That is because tax revenues evaporated and Economic Activity dropped and social needs skyrocketed here it this is a very telling chart. This is the u. S. Debt as a percentage of u. S. Gross domestic product. In january 2008, the cbo projected the percentage of gdp as that at 22. 6 . As be debt. Good skyrocketed to 73 . One thing and one thing only happened between those two projections and that was the financial crash, and the economic crisis is caused it caused. This is a chart that shows you real tax revenue is still lower in the Second Quarter of 2014, in 29 states since the recession. Not only did it go down in all 50 states, at the time of the recession and years afterwards, deep into last year, real revenues are still down. It is interesting, the same thing has happened in the private charitable sector. Nobody talks about this. Charitable contributions declined. Charities were asked to provide more services with less support. The exact same problems that squeezed federal, state and local governments squeezed charitable sector too. The giving declined the worst in 50 years. No surprise, the shock was the worst since the great cat crash of 29 and the Great Depression of the 1930s. You would think you would have roughly similar declines in other activity including charitable giving. So public finances are tremendously stressed. Deficits and debt drive decisionmaking. Large endowment losses and contributions decline. Virtually every issue anyone cares about is suffering due to trillions of dollars expended, were used to stop the crash and mitigate the damage. This is just one example. Federal financing for ir d rnd leverages the rnd in the private sector. In 2009 through 2014 it dropped to a calamitous 26. 7 . That is not the only area. Almost everything has suffered from cuts and underfunding, from education, poverty arts science, housing, the environment, energy hear it you name it. Every one of those issues has seen cuts since the 2008 financial crash in both the public and private funding side. Many of those cuts have been very significant. Even a future funding increases as future funding increases it will never make up for the lost jobs, homes, rnd that wasnt done and lost lives and lost dreams. Let me conclude by mentioning just one other cost, which is never mentioned. That is the exploitation of financial reform for political and partisan gain. Given the devastating cost of the crash and the crisis conflicted inflicted on tens of millions of americans families workers and businesses, preventing such a catastrophe should not be a political or partisan issue. After all, the economic wreckage and the cost knows no party affiliation. The economic calamity caused by the financial crash did everyone regardless of political affiliation. This chart shows by state, the average rate for a year from the Fourth Quarter of 2009 2 the Fourth Quarter of 2010. It is broken down by red state and blue state. It shows the economic wreckage from the financial crash, really does not care whether you are republican or democrat or independent, east coast west coast or middle of the country. The economic wreckage inflicted massive damage in every part of the country. That is why it shouldnt be a political issue or partisan issue. The wreckage w not political. Athe financial crash was what made financial reform and doddfrank so essential. Preventing that from happening again is what financial reform is really all about. It is not about numbers and statistics. It is about protecting americans jobs businesses, homes savings, retirement and standard of living. It is also about making sure that public funds are never again diverted from social priorities to bailout reckless financial activities. And that is also why the dodd frank financial reform law must be fully implemented and aggressively policed. As soon as possible, as strongly as possible, and as thoroughly as possible. That is in summary, the cost of the crisis and a review of the crash, which is the essential context one needs to understand the doddfrank law, to talk about the law on an informed basis. With that as background , i dont know if our next guests are going to come through the door but if they do, we will be introducing them. If they dont, plan b will be coming in a moment. Anybody have a drumroll . Excuse me. Join me in welcoming senator chris dodd. [applause] former congressman barney frank. [applause] and our moderator ylan mui. Very quick introductions. Ylan mui all right. Ry quick introductions, not that they need much. Senator chris dodd, after serving six years in the house of representatives served 30 years from connecticut from 1981 through two thousand 11. He is the longestserving senator in that state. I think it is fair to say he was in every Major National policy debate. Capping off that long career was his work in the hundred 11th congress in 2009 and 2010. During those two momentous years, center dot led the fight for two hispanic historic pieces of legislation. First the Affordable Care act after senator ted kennedy fell ill and passed away in august 2009. Senator dodd picked up the legislation and carried it to the end, and it is quite a remarkable a congressman. Thats not enough. He is chairman of the Center Banking committee, led the fight for financial reform and got the legislation done on the senate side. Congressman barney frank served for 32 years in the house of representatives. For the fourth Congressional District in the commonwealth of massachusetts. He also has been at the center of nearly every Major National policy debate for those 32 years. From 2003 on, he was the leading democrat on the House Financial Committee and served as chairman from 20072011 where he shepherded financial reform into law. There is a lot i can say about barney but what i really want to say is, you have to read his book. [laughter] i want to say this. Dont just read the book. Read the two appendices. If you care about the issues we are talking about today there is that and much more in his book. It is terrific. He did not ask me to do that but i couldnt resist. Ylan has spent more than a decade at there are certain post the washington post. Among many of the topics, she has covered the financial crash and crisis as well as its cost for some time. She has done reporting on the longterm unemployment benefit cuts and what to do so Many American families, as well as terrific reporting on the metastasizing devastation from the subprime mortgage in motion implosion. Terrific reporter, we are lucky to have her. Ylan mui thank you very much for that introduction. And thank you for joining us. I would like to start about, and get your take on five years after the law that there is your names has been passed. Where do you guys think it has been most effective ensuring the Financial System is safer, and where do you feel it has fallen short . In five minutes or less. One of the things i appreciate is to remind people i often say, we are both blessed and burdened with no memory. That has been an asset in many cases but obviously a burden in this case. Its important to go back and remember exactly where we were at the end or middle of this crisis when we were losing 750,000 jobs per month. Over that time, 10 million jobs were lost. 5 million homes. The numbers vary between 13 and 20 trillion in National Wealth evaporated. We are still seeing the effects to the state. Institutions, credit unions, Insurance Companies commercial banks that has been around for decades are gone. All of that happened. And yet today it is hard to remind yourselves what actually occurred. How devastating this was. If you ask me what has changed a lot. Obviously the economy is doing tremendously better. 64 months of continuing job growth. We have reduced the gdp debt. Leverage is better. Liquid assets exist to almost too much today. Transparency in the Derivatives Market has been a major achievement. The industry went from 90 billion to 600 trillion in the matter of a decade or so. We have made sure to a large extent that you cannot have taxpayers they allowed failed institute a bailout failed institutions. And for the first time in the history of the country, the radical idea that there ought to be something called a Consumer Financial Protection Bureau. I just left celebrating with the staff over there this afternoon. Incredible work that organization has done in four years. 17 Million People have had over 10 billion of their money returned to them. 650,000 consumer complaints have been handled by the agency in four years. In the past, we had passed separate pieces of legislation to deal with consumer issues. Today it is a onestop shop. When people say what has happened, it has been phenomenal. Not all of this happened exactly because of our legislation emma but without it would have been very difficult to talk about the economic recovery. Rep. Frank a couple of specifics. But i do have to say, im older than chris but im not senior in service because he had six years in the house. He has 36 years to my 32. Senator dodd 68 years together. Rep. Frank we were just looking at a picture of lakhdar Cronkite Walter cronkite and looking at how young he looked. [laughter] but we have accomplished i think, it is hard to look at specifics because much of what we did was to avert trouble. There were two things that were curiously problematic. First of all the number of bad loans being made today, actually im glad dennis mentioned the appendices in my book. There was a myth among liberal democrats who fought that homes while republicans were trying to stop it. It was the opposite. In 2004 for example, brad miller cosponsored legislation to ban the subprime loans because some states tragic event and the Bush Administration preempted the states from doing it. The Republican Leadership ordered that the bill died. But you do not have the kind of toxic loans being made, which is good for the system and individuals. Secondly aig was one of the precipitants of the crisis. I thought that was an odd opinion. Aig feeling the federal government suing the federal government, the best description is an arsonist suing the Fire Department for water damage. There were selling credit, not only without the ability to pay off if necessary but without any idea with how much they told. First they told the fed it was 85 billion in the hole. Than 170 billion. It wound up being 185 billion. Nobody could go out there and inter incurred that kind of derivatives without having the ability to pay for it. Second point is that we have seen a confounding of the negatives that we got from the left and the right. People on the left who said this bill will do anything some of them are not happy unless they are unhappy. First they complained the bill was not strong. Then they complained that theyll do not have teeth. Then they said the regulators had pulled its teeth. They were wrong on both accounts. The biggest mistake on the right when they predicted all these economic disasters. It has not stopped the banks from doing what they are doing. We did not in that bill, then anything except lending money to people for their homes who couldnt possibly pay it back. What we did say was Financial Institutions under that bill could take any risk they wanted to take, but they have to be prepared to stand behind the risk and take losses. And i think that was that is the essential fact. My biggest disappointed disappointment, to get double through. We had tension in the securitization business was the most important thing we can do. In the market area. To get the bill through, we had to create what i thought was going to be a small category where some very solid Mortgage Loans could be exempt. And then people talk about do the banks weaken the bill . Will the biggest weakening was essentially to take the loophole and make the loophole keep the rules so you have no Risk Retention for Residential Mortgages. You have it in other parts of the economy. Fortunately, they did not make that permanent. And i hope we wont get into this problem again. But the exemption and i know the argument was, we hav in america before 1980, there were no mortgages. Because we did not have securitization. You had Risk Retention. That is my single biggest disappointment. Ylan mui you mentioned the economic recovery and a strength of the economy as one sign that financial reform is working. Some people might say that the economic recovering has persisted despite the massive amount of regulation that doddfrank precipitated. 25 billion is the number being thrown around. Ok, 25 billion [laughter] and representative jeb pensively said has doddfrank never left, the Financial System would be more secure. Many are primarily the result of the law itself. Has doddfrank made the system more unstable . Rep. Frank of course not. Does anyone want to go back to the fall of 2008 . Senator dodd to stabilize Financial Institutions look what is happening in europe. Taxpayers and citizens being pitted against each other. Lending expectations institutions. We now prohibit it is banned under the legislation to go back and ask the american taxpayer to do what we did in the fall of 2008. Leverage is in so much better shape. Stabilizing institutions. They have already dealt with a number of institutions pitting mutual funds and so forth, dealing with nonbank Financial Institutions. Looking over the horizon to make sure they are not product lines are institutions that could cause difficulty. We now have the ability to spot crises early enough to coordinate two conduct quarter nation that did not exist in the past. We think it is going to work and we gave the responsibility to the fdic that has the history and record of how to do that. All of those major issues, it did not exist, today clearly we are in far better shape than we were. The reason, of all the economies around the world the one that is doing the best and most stable is ours. It was not a miracle, it was because of hardware. That we put in place that allowed us to achieve that. Ylan mui but what about the unintended consequences like market liquidity . Rep. Frank before i do come in one aspect. I was amazed to read i wish i had his ability to say ridiculous things and be unfazed by the potential reaction. [laughter] he complained that nothing has been done since the bill passed about fannie mae and freddie mac. The mans party has been in control of the house of representatives ever since. He is chairman of the committee that has jurisdiction over fannie mae and freddie mac here it. The republicans controlled the congress and did nothing about fannie mae and freddie mac. In 2007, when we had control, we passed legislation that put them into conservatorship to turn things around. We would have, if we could take control, worked on in 2011. Republicans have been in control of the congress and the house for five years. They had t they have done nothing about it. As far as unintended consequences, there is one case where they say there was a shortage of liquidity. I have seen no evidence that this was going by anything we did that required people to have cattle quote capital. In the first place, it was an effect that was still with. It had no negative longterm consequences. When you are in a transition there will be some things to work out. People are getting used to this. But i do not believe that the requirements for hired capital it is, we have to learn to live with it. Paul is the one who said, the notion that liquidity is the single most important thing to look for in our Financial System, and everything should give way before liquidity, is when you get into trouble. Risk retention means less liquidity. Anything you do to safeguard the system and diminished liquidity have unintended consequences. The biggest one talked about is the suppose it problem for Community Banks. I asked people when i meet with them, what it is in the bill specifically that they have problems with. I do not get answers. To the extent that the bill treats different sized banks differently is in favor of the Community Banks. They are not examined independently by the cfp be. The increase in deposit insurance maximums was done at their their request to diminish the competitiveness. I think what the opponents of the bill has done is very clever. They have done a beat and switch best bait and switch. They talk about the Hurt Community banks, but when they get the chance to legislate, they help big banks. The one case monday used to legislative clout by holding the appropriations hostage, they amended the lot regarding pushups. I dont know many 3 billion banks that have to worry about facing a requirement to set up subsidiaries. I think that is clear. You look at a major proposal, so they talk about the Community Banks but they help the big ones. Senator dodd going back to your point of the fannie mae and freddie mac issue. The republican colleague and i wrote the tarp legislation. We had a lot of cooperation. I recall him saying on the floor of the senate when the bill came up for consideration, it was not the lack of trying, we just could not come up with an answer that would be satisfactory. Which is a separate issue that needs to be done with. Barneys point, this tale lagging dog that was the problem. Secondly unintended consequences, that is not a reason to not legislate. There will always be unintended consequences potentially. They will probably be things down the road you will want to change and modify. Theres nothing radical about that idea. There will be unintended consequences, i presume. You dont sit around and do nothing. If that was the case you would never legislate. Rep. Frank one other point. The criticism that we did not and too big to fail, i think we clearly have done. Some institutions are clearly in that category. Other institutions are subject to the discretionary judgment of the at they are fighting against this notion that they are in this category. Midsize banks tried to push of the 50 billion so they will not be covered. The more credible criticism comes from tim geithner, namely that we made it too hard for the fed to a lot banks. I havedisagree. Given what we have been through if that is the case but will have to persuade congress. There is the notion we will give the unilateral right to do that. History is history. There was one allegation that the bill contributed to a temporary problem with liquidity. They got the buy side and sell side incentives mix up in that. That is the one thing in five years they allege was damaging and it lasted a couple hours. You had called that a frightening precedent. There had been 139 bills to repeal. Frank or to reform or change the law. I am curious to see where do you guys how durable is this law . Mr. Frank getting that on its merits the fear was the republicans would put a short term appropriations bill through and that would have damaged the economy. America, this is what it is about. This is how they can manipulate derivatives. That was a huge hole in the bill. It was the president. They have talked about repeal but compare obamacare to financial reform. They have had 50 or 60 votes on repealing the bill. There have been no recalls. I have not seen that many bills to repeal the whole thing. The only thing i sign 2011 to repeal the whole thing came from michelle walkman michele b achman who is not in the leadership delegation. They are afraid of it. They know it is popular. That is why they make the big arguments about the Community Banks. The danger is if a republican was elected president , they will be afraid in terms of voting for it. They will point to the regulators they appointed previously. I know this sounds quaint to say this today, we happen to be very good friends and richard has introduced legislation but if you look at it carefully there is very little dodd frank. Nothing on the Consumer Protection bureau. Just as there is this chatter about undermining it, there are some things that go back to your earlier question. I regret we did not have so funding. What has killed our efforts in the past, we did do this so funding of the Consumer Financial Protection Bureau which i think was smart. That is a source of contention. You cannot strangle an agency by depriving funding. The thing i worry about to some extent, the Health Care Bill has some financial interests that care about the bill. The insurance industry, the pharmaceutical industry. They will be reluctant to have any major changes. This does not have large financial interests in favor. Theyre making changes way ahead of the regulators. The culture has changed dramatically. We were talking about a bank that he works with and he said i cannot believe the number of risk committees i attend. Where institutions are sitting around thinking about product lines or other decisions theyre making and are their implications, risk implications question mark that did not happen before. There is nothing in our bill requiring that. It gives you some sense of how the culture has changed. Many institutions are way ahead of the regulators and in implementing the ideas that the legislation requires. I am optimistic about what is occurring in the marketplace. I am were it because we do not have major financial interests that will defend our product. I agree with that. You have reality is reality. If a democrat, if Hillary Clinton is elected president and 2016, the bill will survive even if there were people even if there will be vetoes. By the year 2020, these practices will be embedded. You look at the rhetoric of the late 1930s and 1940s. The securities and exchange act they were predicted by the cash to be terrible. They got used to it. By the year 2020 after 10 years this bill will take root. It is not quite to be in their interest to introduce all this instability. My major fear is it will get under it ministered but i do not think many will go back. To some extent, we have diminished but we have diminished is there ability to be self motivating. We have diminished the ability of the Financial Community as opposed to being the financial intermediary. The role is to facilitate real Economic Activity. It is clear that with the inventions of the 1980s and 1990s and the new entity outside the banking system, the major justification is the profit it would make for the institutions rather than some function it served for the economy. When people talk about reductions, i think that is a good thing. Senator dodd that is a rose around 8 at the height for the crisis broke. There was a massive increase. Host we heard dennis talk about the importance of context instead of remembering how bad things got during the crisis became in 2008. Can you take a trip down memory lane, when did you realize the depth, was it during that meeting with her 90 or was it before then . Senator dodd i have been stunned. Hank paulson they had hearings on the mortgage crisis. When they were in the majority in the Senate Banking committee. The subcommittee. When i took over in january for the first time of 20 2007, we had almost 90 hearings are gathering on the mortgage crisis growing. It was hard to get them to show up. Hank olson showed up to talk about china. They had bear stearns over st. Patricks day. That was an isolated case. This thing was cratering as we were talking. It was the crisis again long before that. And the refusal to recognize what was occurring and all the evidence was out there. It was going to be a big deal anyway but it could have been a lot less of a big deal had we acted early to stop them metastasizing in the Residential Mortgage market. And then it goes up six months later to the day with aig and lehman brothers. We had the meeting where ben bernanke said, unless you act speaking to the 15 or so of us in the room them you act within a matter of days, the entire Financial System of this country and a good part of the world will melt down. That is from the most important central banker in the world telling the leaders of congress. It took us two weeks to do it, to write the tarp legislation and then you had people who lost their seats. It was only the most single unpopular thing we did in congress and probably the most necessary. But clearly this process began a lot earlier than the fall of 28 2008. Rep. Frank mortgages given to people who should not have gotten them was at the core of this. The mortgages were given and then they were and the and the mortgages were the bullets and they came up with these guns that shot them all of the system. It started with the mortgages and then they securitized those into packages. The key was the bad mortgages. There was this myth that day they wanted to give all this housing to four people. They passed the homeowners equity section act which gave the Federal Reserve the power to regulate mortgages. Alan greenspan explicitly refuse to use it. In one of my favorite quotes in 2007 before became obvious was happening, he said in his book economics and the age of turbulence, it is true that these mortgages carry a high risk of nonrepayment but it is worth taking you cannot have a capitalist Society Without strong publics work for Property Rights in this creates support for Property Rights. He refuses to do it. A group of states start to act. Georgia was one, new jersey and they start to act, North Carolina at an act to regulate mortgage practices. The Bush Administration response in 2004 i a blanket [indiscernible] the only thing the state could do was enforce the fire code. And say they are not discriminate on racial grounds. Total blanket preemption. We did a lot of good stuff, we ended that and we restored the right of the states to do not as much as before but a significant amount of regulation. That is the second effort to do with subprime mortgages. It is the state and the Bush Administration preempted. At that point, brad miller and mel watt tried to draft a bill. We began to work on the legislation. Tom delay tells mike oxley were not in the is this of regulating like that and he ordered oxley to tell bacchus to collapse the effort. Things die until 2007 when we take over. In november of 2007, you get the bill through under democratic control to regulate subprime mortgages. The wall street journal has an editorial, november 6, 2007, you can look it up like Casey Stengel used to say, keeping low income people, especially minorities from getting homes and says why this concern about this up prime move . 80 are paying on time. Like it was a good to testing. We did get the bill through the house. Chris runs into opposition from the conservatives in the senate. What we finally took that legislation we had worked on and it is art of the financial reform bill. That is the history. I did see that. What i did not see was how badly it would affect the rest of the system. I did hear from paulson and bernanke. They did, to their credit, it seems to me, come to us and say this is the problem. We have two choices if a big it goes bad create we can let it go bankrupt and dana and of the debts and have all kinds of problems or we can take it over in detail the debts area that is what played out in layman and aig. So we did see the subprime thing. I did not see the extent to which it would be so infectious for the economy. Host the first draft was much more radical than the bill that passed for you to have three agencies overseeing the entire financial them. Could you talk about your thinking at the time, why you decided to make such a bold statement with your draft legislation and some of the political realities that went in to the crafting of what became the bill . Center dot there are some stations that would like to revive the idea. But the idea would have a much larger constituency than it did then. Because at the end of this process, we wanted to get rid of a lot of the unnecessary [indiscernible] this was never some sweeping architecture. Every time there was some regulatory aday that got created over the last 80 or 90s 90 years. The idea was of creating one single regulator. You had a lot of regulatory arbitrage, aig being the classic example. That was the basic idea. We got three votes for it. People screaming what he murder about the soy moved on. To try and test out ideas and find where the tipping once our. We incorporated the idea that we will it is not an illegitimate relation. The idea was to create a system that would allow for that to occur. While it was called radical at the time today you might have different thoughts about it but that was the genesis of the idea. Rep. Frank it is tough to do a lot of things at once. We did very difficult politically hard complicated my head hurt. When i retired, i celebrated two things. It was november. I announced i was not going to march in the Christmas Parade and i began to sing in my own head because i have a terrible voice. My version of an old antiwar sore song. Aint gonna study driven if no more derivatives no more. There are political resistances. We barely got 60 votes in the senate. We came close to losing a couple of the key provisions in the house. This was never going to be possible to do them both. There were some specific ones. The fed became very controversial. There were people who would a furious if you give them more power and some if you gave them less power. The independent Community Bankers complained because part of what chris did was agree to have one credential regulator. The statechartered banks Smaller Banks do not want to share a regulator with a big banks. They were afraid of it was the same regulator it would be overwhelmed. That was put oh active life we did get rid of the office of fed supervision. That was the one case where there was clear duplication between the otc and [indiscernible] they would need a regulator or countrywide and a and anybody else who did not want to be regulated. I had a fallback. I wanted to change the name to the office of sick leave dispensation. That was the basic problem. We had a hard wonderful job in making the substantive changes. It was multiplied by trying to do the regulatory, and then you had the single biggest obstacle which is statechartered banks area that is one of the things complexity. We had the dual inking system. Most countries do not. That is the cause of a great deal of laxity of our system. You had to live with it. Post financial reform should not be hard of an issue areas however in the senate there were three republicans who voted for the dodd frank l. Can you talk about your efforts to garner republican support . Sen. Dodd the actual vote itself, you end up with the numbers you have cited. When evening in the follows 2009 or 2010. I asked all the members of the committee together in the Senate Foreign relations to many hearing room on the first floor of the capital. I did not tell my staff what i was going to do nor did i share what i was going to do with anybody else. I announced i was. To work on the legislation. I announced that mark warner and bob corker would work on too big to fail. Chuck schumer would be working with Michael Crapo on corporate Corporate Governance. I would be working with thick shell be. Deck shelby. I waited for someone to ask who the hell are you to tell us what to do but everyone liked the idea and they went off staff and peers. This is to back to take too big to take on. They made worthwhile contributions to the product you see today. They did not finish it in every case. They could not quite come to closure on the derivatives section. They contributed a lot to what is in the hill today. The idea was one i watched having sat on the labor many for 28 years with senator kennedy who was a master at this and our they would ask people to Work Together on things that were complicated. We took revisions of the bill. Dealing with the congo. Sam brownback. I took the day lugar dick fuld are legislation. And from provisions we incorporated. We made an effort to bring people in as you normally do in a process. If you take major provisions of theirs to add to the things, in many cases those people and of being supportive. No lack of trying. The bill reflects an awful lot of that contribution i described earlier. Rep. Frank i became Ranking Member in 2003 with mike oxley. I had a very Good Relationship with him. He had power i did not realize. Dick cheney wrote in his book, and 2003, the administration tried to get reform of fannie mae and freddie mac by but barney frank killed bill. I was not chairman of the committee, i did not become chairman until 2007. I realized i had been paid or great honor having dick cheney lie about what i was doing in 2003 kind of put me in the same category as weapons of mass destruction in iraq. It was an unusual distinction. We worked well with oxley. I had become chairman. We did try to the house did pass a bill on fannie and freddie in 2005. Bipartisan than the house. The Bush Administration thought it did not go far enough so it died in the senate. The Senate Republicans did not like what the House Republicans had done but we worked together on it. Then i become chairman and republicans decide in the house they are going in opposition. I mentioned the question of subprime loans. Spencer bachus had tried to work with us and was overruled. In 2007 when he is the Ranking Member of the full committee, he works with us and we did adopt in 2007 subprime restrictions which never did pass the senate but became part of the bill. That is the basic law. We were working with Spencer Bachus on the bill and he voted for the bill when it went to the floor of the house. As a result of his working with us and bringing some republicans along, the more conservative republicans who were dominant on that midi and were now running the committee, went to the house leadership and tried to get him dumped. This was reap reported in the hill and roll and politico. The price he paid was they sent minders over from the Republican Leadership to control him. There would be cases when a statement would come out i did not say that. He was penalized for working with us and he got the message. From then on, there was no cooperation. When president obama comes in, this is part of the problem, the republicans when bush was president there was some instinct on part of some of the republicans to help the administration. When obama is president there was no partisan reason to want to be working with the administration and no ideological reason. It was and never had a chance. There were some republicans on the Committee Interested in housing stuff but the word was out, they were going to be in opposition. The same it should not be partisan. I should not have to choose between being fat and being hungry. It is what it is. Sen. Dodd Susan Collins was incredibly helpful. By adding substance to the legislation. Olympia snowe and scott brown of massachusetts. Was a vote. Rep. Frank i develop a very strong relationship with round staff. We had [inaudible] he beat Bill Jefferson in his freezer. Then someone who voted for the senate bill to the lady who was not a witch. And people said, did you have one extra vote . They agreed they had to do it together. We get the three boats and i am finally relaxed and they get one of those phone calls i hate to get. Chris calls and says we got a problem. We paid for the bill by an assessment on Financial Institutions that had 50 billion more in assets. Cbo told us it was 20 billion. It would make more money outside. That is the cbo role. We had to come up with 20 billion dollars. We will assess the Financial Institutions. Three republicans that became too much so chris gets word from them that they cannot vote for the bill on the floor. Chris announced told me that we have been told that we cannot do it. We had finalized the conference, inc. The gavel, signed the bill. There are no rules for committees. No one had had one in a long time. Sen. Dodd. [indiscernible] rep. Frank i announced that the conference was reconvening. We entered the bill we had signed off on and took it out of extra tarp money. That was it. Sen. Dodd i forget which member of the republican side made a suggestion and i thought if we can live with that we will have an ability to get this as barney pointed out, there was objections the Financial Stability counsel. The four becoming treasury secretary before becoming treasury secretary he was in the clinton administration. I want to mention the many things he has fought for that have received no attention. Nonetheless, it is cftc funding. It has one of the most important jobs in protecting people from derivatives. It is a small agency that has been at omb, the secretary has fought to increase funding. He has not received any it has not received any attention. It tells you a lot about his priority and his concerns when he is fighting for an agency as small as the cftc. It is an example of the things that he has far for that do not get headlines and are important. We are lucky to have secretary lew. Secretary lew good afternoon. It is an honor to celebrate the act. Chris dodd and Barney Franks efforts led to the passing of comprehensive financial reforms. On behalf of everyone here, i want to thank them for their leadership, their vision, and their unrelenting determination. [applause] secretary lew today, we mark the anniversary and i want to reflect on the progress we have made. I would like to begin by putting wall street reform in the context of the crisis. I see this is a key ingredient to the Financial System. When obama took office, our country was in the depth of a financial crisis. Our economy was contracting at the fastest rate in 50 years and companies were shedding jobs. The american Automobile Industry nearly collapsed and families lost homes and savings. The recession started with the financial rate price financial crisis. Its spiraled into a broad economic crisis that her families and businesses on main street and wall street. Financial stability 10, at times, seem abstract. It can have a real impact on americans. When people discuss wholesale rollback of wall street reform it is important to remember those who suffered through the worst recession of our lifetimes. The storefronts, the surge of foreclosures make no mistake unstable Financial Systems are must all. Stability harm us all. Stability promotes growth, maintains deep Capital Markets and extends credit to consumers and small businesses. To that end the wall street reform set out to transform the way the system operates so that it is more stable, transparent focused on serving customers. With all of the major rules written, the economy is growing inc. s are lending, there is no doubt that banklss are lending and there is no doubt that it is working. Before this, many institutions were undercapitalized. Undercapitalized. The incentives were to take too much risk and it turns out that a significant portion was borne by taxpayers. Wall street reform required sufficient buffers to their the cost of failure. Bear the cost of failure. During the crisis, this was borne by others through private profits and public action. The Additional Capital serves as a shock absorber to allow banks to weather economic down turns. Often, we hear it as money that takes leave on the sidelines and that more capital leads to less lending. A bank with insufficient capital cannot lend. Banks added 600 million more to absorb the losses. The largest and most complex Financial Institutions often held the least amount of capital and it threaten the stability of other firms. Wall street reform created a Regulatory Framework that applies to complex firms. The regulation of all of the banks was improved by wall street reform and only the 31 largest are subject to enhanced standards. The heightened requirements include communities rules liquidity rules to make sure banks can with stand storms. Wall street reform recognizes that risk to Financial Stability is not confined to regular banks. We were accountable for looking across the system and ask questions about the emerging threats. There was inadequate regulation of aig and lehman brothers. There was no accountability to identify and respond to risky practices that are learned across the Financial System. When several companies experienced distress in the lead to the financial crisis, they damaged the economy broadly. To address the gaps, the wall street reform created the Financial Oversight Council that brings together the federal and state regulators to monitor the entire system and identify threats to stability. The approach has been datadriven and deliberative. It examines potential risks in activities across the Financial System. Since the creation, it has enhanced Financial Stability and designated Financial Market utilities and nonbank companies to address the risk. Through the work of agencies like the securities and Exchange Commission they address risks. New protections were needed. They are working to put in place reforms for the important financial products. To keep the taxpayers from ever having to step in, wall street ended too big to fail. Regulators have modern tools to protect taxpayers and regulators can seize regulations and wind to them down. The financial crisis does not respect borders. We are observing International Capacity and have supported changes to financial crisis. Ensuring stability is not enough. Functioning markets ensure fairness. Wall street reform tackled the Derivatives Market. In 2008, it was notionally valued at prior to the reform, it was unable to see or hear the market as a whole. The result was a massive web. The losses and the potential losses for derivatives led to a panic across the market. Participants were highly leveraged. Thanks to wall street reform, the derivatives are subject to a comprehensive framework and many are traded on transparent platforms. The transparency requirements are at work in other aspects. The law requires Hedge Fund Advisers to report to the securities and Exchange Commission. The law seeks to improve Corporate Governance and the wall street reform created an office of financial research. It ensures standards and analysis. The office was leading to the development of International Standards and it will make Financial Data easier to use and understand. The system changes and we must look to monitor new dynamics to ensure that it remains dynamic and anticipates have access to information. Safer banks and more transparent markets are essential and they are a means to an end. For wall street reform, Financial Institutions lost sight of this. This encourages banks to take a longer view and strategies are around short term bets in the securities market. A cornerstone of reform is the evil rule. The volcker rule. It prevents london whale transactions. It allows banks to provide Core Services to customers and protects markets making, underwriting, hedging, and trading in securities. Wall street reform did not just set to reform Capital Markets. It makes sure that banks are invested in cornerstone reforms and it requires a lender make a reasonable and good faith determination that the borrower has the ability to repay a loan. This was rarer leading to the financial crisis and many lenders loaded mortgages to get compensation up before selling the loan. It encouraged the lenders to go into expensive products. The abusive lending practices resulted in risky practices that hurt consumers. Reform eliminated the predatory practices and maintained access to credit and are a worse in terms they can understand and and afford in terms they can understand. The fcsa addresses issues in the Housing Market. We must strengthen our is all to pursue comprehensive reform of the Housing Finance system. Our resolve to pursue copperheads a reform of the Housing Finance system. It makes borrowing for a home simpler and more understandable. Similar reforms are being adopted for auto loans and payday loans. The effect of the reforms is that lenders must extend credit in fair terms and on good faith. They must offer better terms and not find ways to sell consumers products they do not need it cannot afford. The independent Consumer Financial Protection Bureau, which is dedicated to protecting consumers, it is focused on rules with Consumer Protections that prevent predatory behavior. The bureau makes the Financial Marketplace work better. It transforms marketplaces and puts a stop to discrimination and is tackling abusive payday lending practices that trap some americans in debt. We have put them in and we are raining unscrupulous lenders. Before wall street reform, victims rarely saw their money returned. Now, with the help of the enforcement division, money goes back to people. That includes military families targeted high predatory lending schemes. Consumers and homeowners hit by deceptive practices. The bureau has secured relief for consumers harmed by illegal practices in the Financial Marketplace. One of the greatest strengths in the Financial System is a generation after another of innovative financiers. The goal of financial reform is not to innovate. It is to make sure that this keeps up with the system. The work of reform is constant and we must the unyielding. The progress must the renewed. If we are to avoid another financial crisis, we cannot afford to take a break from this pursuit. In the past, policymakers have been tempted, especially when the economy is doing well, to roll back the regulations, we can the reforms weaken the reforms, and reduce oversight. Were hearing calls to water down rules because there are concerns it affects liquidity and markets. We all share an interest in properly functioning markets and we need to make sure we do not return to this. As we learned, dealers with too little capital cannot provide the quiddity. Pr provide liquidity. This is a mark of progress. We now have to remind ourselves of the lessons we learned. It would be great if banks could selfregulated and forces that produced excessive risktaking were a thing of the past. Instead of slowing down work, we must sustain the progress we have made. We must ilda on the accomplishments and focus on improving the Financial System for the users of the Financial Services and not just the first providers. You must continue the efforts to expand access to credit and bring the private capital back into the Housing Market by creating housing reform and Work Together and congress to strengthen the reform and enhance the ability of committee banks and other Financial Institutions to serve main street. Regulators implement new rules and they must use flexibility provided to make sure it is the the smaller are regulated differently from the more complex. This is not the same as erasing laws that place reviews on the largest banks in the country. We simply cannot afford to take the risk to the Financial System of making changes to this law that would weaken consumer, investor, or taxpayer protections or impede regulators from carrying out their missions. Wall street reform increases the scope of the responsibilities and they need a stable source of funding to conduct work. Congress should bring the budget in line and allow the agency to Fund Operations with the primary beneficiaries of oversight. We need to protect the ability of fsoc to prevent risk. Fsoc is critical to understanding how developments affect the Financial System. It is growing through hedge funds, pension funds, and mutual funds. This evolution of the Financial System means that we must consider a different kind of risk and be open to different kinds of policy responses. We must always be looking ahead and ask what the risks are in the future to make sure the Financial System is safe. That is why we need to look ahead. We must finalize the important rules, like the ones that raise standards on analysts and fix compensation practices with shareholders, taxpayers, and customers. We have seen attempts to roll back safeguards by slipping provisions into bills. This use of riders is on acceptable. Let me be clear, the administration will oppose the efforts. The bills that threaten to push the clock acts two 2008 and leave the American People vulnerable, i recommend the president the dowveto them. In the aftermath of the crisis, we have seen proof of what we have always known, the American People are resilient and determined, capable and creative, fiercely independent and profoundly generous. Americans took the actions needed to emerge from catastrophe. They pay down the deb saved and secured retirement. They chose to create new businesses and industries and rebuild the nation on a new foundation to lead the world again. Around the world, the ability of the u. S. Economy, the American People, and our process to bounce back is admired and serves as an ideal to which others respond as pire. Financial reform needs to be worthy of the American People. I worked hard to make it the law of the land. Today, tomorrow, into the future, we will work hard to keep the law strong in statute and practice. Thank you. It is a pleasure to be with you here today. Thank you. Stay in your seats until the secretary has left. Thank you all for attending and for watching. Remember to visit the website regularly. Dont forget, in the audience, get a copy of the report. You are watching on tv, it is out our website www. Bettermarkets. Com. Thank you very much. This concludes the program. The white house spokesman was asked about Donald Trumps remarks about john mccain. Here is what he said at the news briefing. For an apology. Do you agree with that . I resist the tent mptation. You were approving. There is a selfless example that mccain suggested. He suggested that he has taken criticism and can handle it. He is right when he says that veterans are entitled to an apology. You agree . I agree with what senator mccain had to say. The president has a history with both of these guys. With trump, there was that whole birth certificate question. What does the president make that donald trump is actually leading in the battle for the republican nomination . I have not had a detailed john kasich begins becomes the 16th republican candidate to join the president ial race. He will make the announcement in columbus tomorrow. We will have live coverage at 11 a. M. Eastern on cspan3. The u. S. And cuba officially reestablished diplomatic ties with ceremonial openings of embassies. We will bring some of that to you in a moment including remarks from secretary of state john kerry and his cuban counterpart. The u. N. Security Council Votes in support of the iran nuclear deal. On our next washington journal, will get an update on the congressional agenda. Then we will talk to mark lopez of the Pew Research Center about childhood poverty rates. Washington journal is live on cspan at seven eastern. 7 a. M. Eastern. It can join the conversation on facebook or twitter. Next they had a game. It was always to the right and almost always in the wrong. Robertthe debate over politics, war, god, and sex. Today i believe there is someone saying the numbers are dwindling. Talk about hot topics, hot salacious topic number two. Where is then i do not think that was the norm and tv at the time area i do not think these guys they did not need that. Howard k smith was a distinguished news men who was embarrassed by this. He was moderating but he disappears for sometimes five or more minutes at a time. Today you would not have the moderator not jumping in every 30 seconds. Everybody at abc stood back and let the fire burned. Next sunday night at eight eastern and pacific on quoting qq a. The two countries relaunched diplomatic ties. The u. S. Opened its embassy and cuba monday. Secretary of state john kerry will attend the ceremony in cuba next month. [cheers and applause] [crowd chanting] [applause] [applause] [speaking spanish] her excellency, mrs. Roberto jacobson, officials of the u. S. Government accompanies her. Honorable members of congress, esteemed representatives of the u. S. Organizations, movement and institutions who made huge efforts in favor of the change in the u. S. Cuba policy and the improvement of bilateral relations. Distinguished ambassadors. Officials and workers of the cuban embassies, esteemed friends. [speaking spanish] the flags that you revere at the entrance of this room is the same that was here 53 years ago which is kept in florida in the company of a family of liberators and have in kept ever since then. As a sort of premonition that this day would come. The sacrifices made and the struggle which, for more than 100 years fire people for their independence and determination. Today we pay homage to all those who died and renewed the commitment of the present generation [inaudible] with honor. [speaking spanish] [applause] [speaking spanish] we invoke the memory of [inaudible] for the freedom of cuba and was able to get a sort of knowledge of the United States. In his work, he made a vivid description of the great nation to the north and extolled its virtues. He warned against it extensive craving for domination which was confirmed by a long history of disagreement. [inaudible] we now recall his presence in this city in a will 1959 for the purpose of [inaudible] the purposes that brought him to this country by the same that have in pursuit throughout these decades in coincide with the ones we pursue today. Many in this room, politicians, journalists, outstanding personalities and the fields of art and scientists, students and social activists have enabled to [inaudible] which allowed them to get a better understanding of our recent goals and decisions. [speaking spanish] the ceremony has been possible thanks to the free of capable will, and work of our people. And also the strength of the cuban nation and its culture. Several generations of the [inaudible] in this effort. The example and vibrant speech, the chancellor of duty will remain forever in the memory of the Younger Generation and future. [speaking spanish] i bring greetings of an expression of the goodwill and determination to move forward. Despites despite the differences which makes it possible to solve i o problems bilateral problems. We know that this will contribute to peace development, equity, and stability. The purposes and principles and the proclamation of latin america [inaudible] which was signed. [speaking spanish] today the establishment of diplomatic relations and opening of embassies completes the first stage and paves the way to the long process of the establishment of i lateral relations. There have never been promote relations between normal relationship between the u. S. And cuba. [speaking spanish] the amendment under a military occupation thwarted efforts [inaudible] of quite a few american citizens and led to the usurpation of territory known as guantanamo. In 1959, the u. S. Refused to accept the existence of a fully independent small and the drilling neighboring island. A social [inaudible] our people will. [speaking spanish] i have referred to history to reaffirm that today, an opportunity has come up to work in order to establish new bilateral relationships, quite different. The cuban government is committed to that. [inaudible] which has caused so much harm and suffering, the return of the occupied territories of guantanamo. Every step forward will receive the recognition and the favorable acceptance of our people in government and most certainly, the encouragement and approval of latin america and the caribbean and the entire world. [speaking spanish] [inaudible] with United States in a constructive spirit that without any prejudice whatsoever to our independent the fall under the exclusive [inaudible] to insist in the attainment of absolute and tough goals only hoping for changes in methods will not legitimize them or favor the National Interests of the u. S. Or its citizens. However, should that be the case, we would be ready to state the challenge. [inaudible] between our people. [speaking spanish] [applause] [speaking spanish] we will continue to work hard and promote cultural and friendly ties between our people. We would like to convey the respect and recognition to the president of the United States for urging the u. S. Congress to [inaudible] and for the change policy has announced. It for the decision he has made to make use of his executive power. We are reminded of the decision to open the intersections1977. I wish to [inaudible] for having represented the cuban interests for the last four years. [speaking spanish] i would like to express our gratitude to the members of congress, scholars, religious leaders, solidarity groups business people, and so many u. S. Citizens who worked so hard for so many years so this day would come. To the majority of cubans have advocated and called for different kind of relation, we would like to send a recognition. Deeply moved, they have told us they would multiply efforts and remain faithful to the ideals area and ideals. [speaking spanish] we would like to express our gratitude to our latin and caribbean brothers and sisters who have some order to our country and called for a new chapter in the relations between the u. S. And cuba as was done with extraordinary perseverance by a lot of friends from all of the world. I reiterate a recognition to the governments represented here whose voice made a contribution. [speaking spanish] [inaudible] in the full dignity of human beings. His ideas which were vindicated in his centennial year continue to be the inspiration that mozillas along the path that we have chosen. Thank you very much. [applause] following the ceremony, a raising of the flag at the Cuban Embassy in washington. State john kerry and his cuban counterpart held a joint press conference. Secretary kerry will travel to carry on cuba on august 14 to attend a ceremony to raise the American Flag over the u. S. Embassy in cuba. He will be the first u. S. Secretary of state to visit the island since 1945. Secretary kerry i am pleased to welcome to the embassy [inaudible] i think we had a very constructive conversation. This is the first visit to the department of state by a Cuban Foreign minister since 1958. And today marks as well the resumption of normal diplomatic ties between our countries and the reopening of our embassies after a rupture that has lasted 54 years. It is an historic day. A day for removing barriers. [speaking spanish] of course this milestone does not signify an end to differences that still separate our governments. But it does reflect the reality that the cold war ended long ago. And that the interest of those countries are better served by engagement than by estrangement. And that we have begun a process of full normalization