Transcripts For CSPAN2 Books About The U.S. Economy 20240713

Your new book is called living in plain sight what really caused the financial crisis and why it could happen again. You were a member of the Financial Crisis Inquiry Commission investigating the causes of the 2007 in 2008 financial crisis. You said that only democrats on the committee but the republican appointees what did you see they didnt . Looking at the housing system in the United States with dodd frank and fannie mae and freddie mac for quite a while before i got on the commission so i had a lot of background of what was happening in the housing sector. I was looking for the commission to look into what happened with fannie mae and freddie mac and the role they played in the housing crisis and ultimately the financial crisis and i found the commission was not interested in they would not look at it. s. Host that i was outside i thought, the partisan differences between the republicans and democrats and and am afraid that the republicans felt that they just would not agree with anything that the democrats said they did not want to, indict the Bush Administration. A couple of them had actually been in the Bush Administration so i felt that i had to speak with an independent voice. Host you wrote a lengthy dissent in the late stages of that inquiry that of course grew into your book. Give a lot of unconventional views in this book which we will get into for people who are not understanding, it really focus on the housing and Mortgage Markets in the United States and the governments role in it. When and why did the u. S. Government is so heavily involved in the Housing Market. Pretty are actually began in the 30s and the new deal, when the government intended to assist banks in making loans by guaranteeing those loans and assuring those loans and then fannie mae was established in the late 1938 also part of the new deal to provide liquidity to banks when they had a mortgage, they could then sell it and then they could liquidity for the mortgage and then make more mortgages it was all very helpful in inducing more home sales in the United States. That was the beginning and the government really got much more involved in the 50s when actually started adjusting the fha and the federal housing administrations. The standards in order to improve housing in the United States or increase the amount of housing sold in the United States and its desire to help the economy. That is when we sort of backup of the rails because once the government started using housing as a way to improve the economy in other words, to improve the market peoples view of their government and how successful it is, then it became a political issue and center when it had been before which was simply a question of making sure that the market function well. Sudeep at a across the democratic and republican demonstration, and in housing and encouraging activity. Where do you see the more recent turning points in this development. Peter i think the key turning point here at least from my perspective west 1992. That was when congress adopted something called the Affordable Housing goals printed they work under a great deal of pressure at the time to make sure that the borrowers who were the low million income, they had credit for mortgages and many activists, as part of those borrowers in those communities pressured congress to do something that would provide much more credit to those groups pretty then the congress adopted the affording housing goals which required fannie mae and freddie mac, they were only given to them and they required them, lender bought mortgages from banks and other originators, to make sure that the ones they may, 30 percent had been made to people at or below the Median Income. That authority to require a certain quota was given to the department of housing and it urban at that point in overtime, between 1992 and 2008, they gradually rationed of these requirements and added new ones. For example by the year 2000, 5t fannie and freddie bought in any year, had to be made to people who were at or below the Median Income and by 2008, it was 66 percent that wouldve been in the Bush Administration. So is not a partisan thing. Sudeep not under clinton first. Under bush, the whole idea was carried through by hud. It was designed to encourage americans to save money, to develop and build equity in their homes. Obviously part of this is to ensure the lower income and middle income people can have a home in an asset of this kind. Is there something wrong with this idea in general that people should be able to buy a home and find a home in america. Peter absolutely nothing wrong with that. There are lots of good reasons why homeownership should be encouraged. But the problem with this system was that aforesaid and freddie mac overtime to reduce their underwriting standards. In that way, they floored a number of people into buying homes who could not actually sustain the mortgages over time. In fact, when the year 2008, and this is really an important date in the book by the year 2008, more than half of mortgages in the United States are what you would call, subprime mortgages. About 31 million other week mortgages were by 2008 and of those, 76 percent where the books of Government Agencies which to me, shows clearly there is a government who created demand for these mortgages. Now what happens when underwriting standards decline. Its not simply that the people who have bought homes are unable to carry those homes. What also happened was when those homes failed, when the mortgages failed, they accept all of the people around them as well. All of the neighborhoods and the values of the homes of all of those neighborhoods go down. So what the American People should understand after the financial crisis in which they dont think they really understand today, is that they are older. Within her writing standards are reduced so that those people who had cannot necessarily sustain the standards dont have the proper credit, do not have the downpayments, are enabled to keep the mortgages. Sudeep we have a couple of separate issues that intersected in this. One was was the existence of fannie and freddie and what they had done, for a while and the other with herself and political push, to encourage more homeownership and then combined of course fannie and freddie were there as the vehicle to do all of this. What happened then in fannie and freddie in his existence and its relationship with lawmakers that led to where we got into the crisis. Peter is really quite interesting because the person who ultimately became the president of fannie mae jim johnson, that was his name he realized that he was very political operative before that he realized that fannie mae was under stress because it had a very strong government franchise that it would have sent to sustain over time and i think you recognize that he fannie mae and freddie mac of course if they actually became kind of dip orders of low Income Housing that would give them a strong backing in congress and keep them in their position where they were getting all kinds of support for the government. And making quite a lot of money. Both of those institutions. Sudeep and became fannie and freddie, even though they work essentially started by the government, they became private entities. Peter they were privatized in 1968. In a 1970, they were given the authority to go from where they originally were which was only buying government backed mortgages into the conventional market were the begin to buy regular mortgages. Both. Peter them both on the new york stock exchange. All the way up the became insolvent. But the political relationships became extremely important because as they grow and there was a great deal of pushing the bush and Administration Much more regulation of fannie mae and freddie mac. And from their point of view especially fannie which was much more political from their point of view, to avoid more relation, they had to rely on the democrats of congress. The difference in congress are very focused on making sure that fannie and freddie in lowIncome Housing. Even though they work beginning in the 2000, defined that they were buying mortgages that was ultimately would cause them to suffer tremendous losses, they could go to congress ago to hud and say we wont comply with these anymore. Because it is driving us out of business. They couldnt do that because if they did that, the democrats in congress no longer support them. In the effort of the Bush Administration to place them under much greater regulation. This was in 2003 2004 and 2005. That would become successful and then so profitable so that they were caught in the spice between on the one hand, having to keep the democrats on their side and on the other hand, having to comply with the Affordable Housing requirements that would gradually going to drive them to insolvency. Is the coronavirus continues to affect the economy, were taking it look at the other programs about trade and finance in the 2008 session. Up next, henry former treasury secretary in the George W Bush ministration spoke with investor Warren Buffett 2015 about the actions taken in response to the 2008 economic collapse. Ive read various economists, adam smith, david ricardo, and all that. Ive really never heard of more eloquent statements that distinctly sums up the economic world than george bush made in December Think of 2008 when he said in the memorable words, if money doesnt listen up, the sucker will go down. [laughter]. So jealous, it was like the gettysburg address trooper to the point. [laughter]. Is the book, really have no appreciation for the fact that he understood what was going on and understood what needed to be done. It was overtime the wood through those proposals. Warren phil. He was not well he was always surprised when i was surprised. And i surprised more than once. [laughter]. Was a great surprise. I would say that who spoke to him, wanted anything similar from our previous career, as a matter what you negotiate, that all things and understandings about the relationships we have, if i didnt have the right relationships, it will be my fault. And so i met him a year before the crisis to get to know the president and to work with him. And remember, he went to business school. He understood the fundamental understanding markets. And he obviously cared about them. So the conflict that he dealt with, was the same conflict i dealt with her anybody. Risktakers should bear the responsibility of their own losses. And so the interventions were not something, he certainly did not. But from day one, understood that the Financial Markets were about our economies and jobs. Seventythree i would be coming to him and i would run up to sell him halfway through the conversation. It was a lesson, we will get through this. Its not always going to look good. This is one of the politico only unpopular but we are not going to literally coming at him. We will do the same jobs to save the economy and that was his point of view and you talk about my mother and in some cases it was most likely mother telling me that i need to work out in things will get more so i can give are slim. [laughter]. In terms of the other political stages, going up to the election, he probably felt that barack obama was more knowledgeable in what was going on in the financial crisis than john mccain. It is unfair. Henry no doubt, fear and that they had the conversation that i had with john mccain. They were just as frequent then as they were with barack obama. They were difficult he certainly gave me more anxiety. But all of that. And now president obama was engaged in candid and i felt comfortable he was going to support will be needed to do. But, im quite grateful to john mccain because i have real respect for him as well. Because they tell you, and the election, six weeks away when we were at the congress, there is no way we wouldve been my judgment got the tarp if john mccain had, against it. He had played the populace card, we would have been left defenseless. So as i look back, i am increasingly grateful of the way he handled himself during this period. During the time unless a few hours of sleep. Henry at one point i read what you said and you nailed it. Warren that was when he came back. There is quite a scene. He interrupted his campaign to come back. Michelle davis is here with me today, insisted behind him that i specify,. [laughter]. Roll call vote. She said to me now, someone asks you, that john mccain coming back, just lycee, i welcome the involvement of everyone in this. I think she was afraid of what might come out of my mouth. Henry she talked me down on the plane. But as it turns out he can agaiu talk about anxiety. John mccain, when he was back, started talking with the House Republicans and rallying them. He did his part. And then even after we got to the top, he did not jump on and criticized some of the things we did. And again they work American People in front of the fact that on all levels, the American People notice the bailouts. It was, i look at the whole and in some time, after the election, when things were done and this may be slightly exaggerated to but i recall Something Like 93 percent of the American People oppose the bailouts. And 60 percent opposed torture. So. [laughter]. 70 percent where we were going to suffer much worse in recession. So weve never been able to explain to the American People that this was altered, this was for real. Warren you have these consultations with obama. But i understand they sort of ended after the election but. [laughter]. [laughter]. Both mood president and the administration had repeatedly said that we really didnt anticipate the outcome for the economy. The message that you were giving them, expected things to turn around. The one warren, i would ask you, well i did not expect that. I knew, when we went up there, as saying in the book where we talk about chris cox and i went up on september 18th. Henry to meet with congress. And that difficulty that we had at the time as lauren said, much better than i could, the Financial System, they were freezing up. So i knew with certainty, the business was going to turn down because when you have companies that is uncertain whether they can do shortterm funding, most will go to the ceo is a, bus i may not have all of the funding you would like the next 30 days. So what is the company do pretty you start cutting back. But congress did not see it yet in the district. I knew with a certainty it would get worse. I am not sure i knew it was going to be 10 percent unemployment the new it was going to be bad. So then, and i knew that they did not do something, then it would collapse. In the business would not be able to find itself and pay for the inventories and pay suppliers and let employees go now in ripple through the economy and we have armageddon. So then, when he finally did turn down, we have this terrible situation of as congress sought, they sought to await the American People sing it, lit up and said, give us these authorities and if you dont, are going to be in deep do do. Its going to be bad. They gave us the authorities and we were in deep do do. And it is very hard to give credit for presenting or preventing a disaster. Something that we never saw can see. We are looking at other programs about the economy. In 2015, former Federal Reserve chair, men sat down the Democratic Senators sheriff brown of ohio, talk about the actions that that Federal Reserves took in response to the 2002008 crisis. My grandmother would tell stories about her youth and the 30s when she was living in connecticut. Mr. She told me was that she was very proud because her children were able to go to school mark new shoes every year but the kids in town, lots of them did not get new shoes and in some cases didnt even have shoes and she said the shoe factories had shut down of the depression and the fathers have lost their jobs and therefore not enough money to provide shoes for the kids. I was six or seven years old i could see something wrong with this. All he had to do is the factory. Produce shoes and in the kids would have the shoes. He said no it wouldnt work that way. Its a real intellectual puzzle of the great elections at the factories are still there and the workers are still there but for some reason is not happening that problem is as kane said, this is to visit working. Through puzzle to me i dont one pretend that i was inspired, i was interested in all kinds of things but when he came back to it, and graduate school, and handed to be whatever they would the holy grail of economics. Most important puzzle the congress would have and actually did a lot of time researching and thinking about it. I guess the paradox of the shoes will go down in history. The student 2007. I came to the senate in january and i was been a committee and its called the sleeping banking committee. They had finished with a lot but did not have a lot in their agenda. In my wife and i have now. 441 oh five was zip code we lived it and it will mean mushy about when the mains as it was the first half of 2007, more foreclosures in the zip code of 911 zip code in the United States of america. And it seemed to me, as in 2007 in 2008 until at least until the spring of eight, there was not all that much attention from the feds. The housing issues because we had not on the housing crisis was more because a whole lot of reasons in cleveland it was predatory lending and sort of the synergism. Predatory lending. And obviously whats happening with manufacturing. In a declining base of manufacturing. Why did the feds sort of missed this in some sense and why was the government over all not cognate sent. In ohio in fact was about the middle of this and was more foreclosures every year than it had the year before all of the state. Why do we not see that as a country. How serious that was. Sen. Sherrod i dont quite accept your characterization. I spoke about foreclosures a number of times. My concern was that some foreclosures probably were unavoidable. In some cases it seemed like that there just wasnt enough effort being made to modify mortgages and find a solution whereby people can stay in their homes. I did speak about that we were obviously more concerned about the Housing Market which was beginning to slow as early as 2006. I talked both about foreclosures and general problems in subprime beverages rated we thought about it about the risks it to the economy overall. But we didnt worry about the effects of our communities for example, the empty houses creating and affecting local tax revenues the feds to Pay Attention to that. Bet i heard the statements but also would say that the Consumer Protections. Ben that they would stop predatory lending some of the responsibilities and the authority that had. Particularly prior to that year. I think you are more into december your president says is perhaps. I just began to different people in cleveland and other cities and Consumer Protections on some of the predatory lending. Any regulator was particularly there for us. Sen. Sherrod you use the word predatory is really critical because a talk at some length in my book, i sorta have to go back even before the time i was there. It stems back to the 90s, some of these issues and debates. One of the biggest angels was made in washington. Im not blaming anyone in particular but it is between predatory lending which was illegal lending and deceitful lending the god people in trouble almost immediately. And then there was legitimate subprime lending. Actually tough it is being a very Good Development because a lot of people with more modest and means to counteract redlining. And again into a home advertisement in the american dream. And quite honestly, one of the reasons that there wasnt more aggressive this for subprime lending was a fear of cutting off. In a very strong distinction between children is already illegal. You can debate about enforcement versus subprime lending which was viewed as being a different kind of thing. Ben page 94 of your book you write, and asked dont think that staff spoke about how good the staff was. I dont think that they seem to be in their own career or financial interest to go easy. They were however open to arguments that regulatory burdens should not be excessive and competitive market force to some extent, be or deter or lending practices. I work in an institution where the lobbyists, and a different environment from regulators but regulators work some people. If you may have remember when the dodd frank asked and said now it is halftime. And theyre going to go lobby the regulators. And im in a place in the senate where lobbyists come out you regularly over time. In part because you and i and our staffs in your regulators back when you are non civilian, they tend to hear from the most elite in society over again and they hear the same song. Its easy to get socialized. And you want to win the war and preserve the union that was from lincoln. And he said no you have to go out and get your Public Opinion back. Oris francis said i will go out and smell at the flock. It doesnt strike me that way. It just seems to me that the fed is less likely to be aware of the pain of how many fed regulators really know people who have their homes foreclosed on and are still likely to see that and understand that. Sen. Sherrod one of the features is the pro reserve system. The president of the cleveland bank, but reports about what was happening in cleveland and how that the housing the lights printed in your concern is a thing, is not wrong at all. I think what was happening well before the crisis was theres a philosophical perspective that was shared not just by the fed with others that the Financial System should be more or less regulated. Meant to be more dynamic and so on. We know now that there are a lot of problems with that. He thinks had capital, he didnt really have to watch them too carefully. The revelation should not be too burdensome. Looked at the u. S. Ca econom, about the book, home records. It takes a critical look at the people and businesses profited off of the 2008 market housing crash. A million American Homes were foreclosed on. Those during the great recession. They did it all disappear. Somebody ended up with them. The wealth gap in america today, is bigger than a hint and spent in 100 years between that top one tenth of 1 percent and the other 90 percent. The homeownership rate, is at its lowest level in 50 years. It is important that people understand that it didnt just go down in 2008 and 2009, and continued to go down and 11, 12, 13, 14 and 15 until it bottomed out in 2016. Above takes a few years to put together and i was sitting there in 2016, and i was watching donald trump with this populous insurgent campaign for president. And time when the economy is supposedly doing really well. Loan employment, i industrial average, many executive growth, wall street is doing great but america is angry. And then Bernie Sanders is doing incredibly well with the same populous message so it seemed like housing will be fruitful way to focus and so i basically started with this question, 8 million americans lost their homes. We lost our wealth. Where did not go. Until that. The home records. The typical American Family had a lot of their equity in their homes. So when you lose a home, when your family loses home, and you cannot lead to child communities grandchild, that is a significant wealth events. Some only 8 million homes but it will have an intergenerational impact. The homeownership is basically in america the way people save money. He would either we follow the dow jones follow it but only 20 percent of the americans own stock. The average americans only have about 4000 in the bank. We are paycheck to paycheck society where most of our money goes to things like transportation, Health Insurance premiums, clothing, food, all of that disappears the moment we spend it. Housing is our biggest expense into that is going to go a portion of back into our homes, in the form of equity that we can pass on to our children are enjoying a healthy retirement or its going to go to our landlord and theyre going to enjoy all of that. So when you say that homeownership is at its lowest rated 50 years, you are talking about the dispossession of peoples ability to let the american dream. The average american in the america is hundred times more wealthy than the renter. Its not that that that homeowners make a hundred times more men than renters. But i am or more because i own my house. Not only that, but i live in a city of San Francisco which is rapidly and people are getting evicted. No rents are going up. There being displaced. The meantime, im sitting there with my 30 year fixed Rate Mortgage paying less than most my friends were renting and i am saving money and god forbid i have a medical event that requires me to dip into the equity or cannot afford to send my children to college credo are about to retires god forbid. At some point, i want to have that ability. And my colleagues dont have the dome of the homes. They dont have that ability. Part of the story of home records and certainly a part of this other story, deals with those mortgages. Dorothy how did you get into researching about those. Aaron i mostly was interested in the california make called so some of you may remember it it was the first big bank to fail in the housing sector. It was the biggest make the field since the great depression. The government ended up holding this disaster of a bank. This was a bank that have been combined only for reverse mortgages but also like the socalled ninja loans that were popular during the boom. No income, no job, no problem. They had disneyland loans they call them that because there it was the only bank. Disneyland claims, 90000 and approved it without looking at any paperwork. That was them. When Housing Markets offered to, it went bankrupt the government ended up holding the bag. There was a dramatic run in the bank, people work pushing and shoving on the streets of pasadena. The bigger pictures were in color. And it steve who is now a treasury secretary, he stopped and and brought this bank he bought it for nothing. And then the government make this deal with him where we wouldnt subsidize his foreclosures rated. Dorothy guaranteeing that he couldnt take a loss. Aaron you shouldnt foreclose for a bank. Because you will lose money but not if the government is picking up the tab and we agreed to become 90 percent of the tab we paid his bank more than a million dollars. He foreclose on more than a hundred thousand people. Including many seniors. So i have this bank, missing my foreclose on over hundred thousand people, a Home Ownership rate at this record low, run by the secretary treasury secretary, large sheets of bills the kind of almost like a doctor evil on a picture. In the worlds richest building. His great story for a journalist but also, you mentioned the reverse mortgages. I happened upon that. And i became interested in these private equity funds that actually bought these houses at the foreclosure. And i found this house that was in South Los Angeles for the guy who was living in the house is renting from one of these private equity funds that happen to be owned by the friend of best friend of donald trump about 30000 homes with bust. Back in new york is dying of cancer and sick with aids and facing a rent increase. And i was like oh my lord. Select a good reporter, what happened before the sky moved in. In this Company Bought the house in 2013 for hundred 80000 this and i found the discussed had been owned by the same date africanAmerican Family that had moved west from mississippi during the great migration, and finally been able to buy this house in 1973. 1963. The very year that california banned discrimination. They had been foreclosed on by seema nguyen because of one of these reverse mortgages. And now i have this house they didnt just involve one member of Donald Trumps inner circle, is possessing this family whose whole wealth was tied up in their home. And then as i continued to pull the string event that this house had been bundled into a mortgage back security by morgan chase another this was 540 million lien on this bungalow in south la. And then subsequent to me publishing that story on the 2017, trumps friend decided to flip out of this company and he sold his interest and another one of Donald Trumps friend who is the chairman of blackstones company imitation homes now owns 80000 homes in the same house, and in the the dreams of this American Family that have been sold, and foreclosed on, in the house was bought by Donald Trumps best friend and then they raised the rent on the guy is sick with aids. Bundled into a mortgage and then fell to another one of Donald Trumps best friends. Another to god another mortgage and leverage again pouring more wealth out of that house now there is a billion dollars on his house. I should write a book about these people. Aaron is really complicated. In september of 2014, sociologist Marion Cooper looked at economic sessions exasperated inequalities in the United States. Heres a portion of that. We know inequality has been on the rise in security has been on the rice so we now have a hollowed out middleclass pretty their losing jobs and homes. That story is mostly told through academics and who they work at job reports and what these concluded, is that right now, we have unprecedented levels of inequality. They havent been described like this since the great depression. As a pretty dramatic conclusion. But i felt like a dramatic punch of it, wasnt coming across any of the statistical tables and charts the soap meticulously documented so i felt like somebody needed to go and talk to people about how they are coping with this. So underneath these are numbers about these trends these everyday lives. We nor more of them and how they cope with it but we dont know how theyre coping. We also dont understand of this divide between the have and havenots in our Society Changes the way we experience security. So lets start there. There been longstanding trends which are the tours are economic and security and for their income disparity, income disparities for many companies. And then 2008 happen and a recession happened. When we clarify about the Overall Economic trends. What is happening noted the 2008 recession affect us pretty. I think three of the most important things that happened for families is the decline of middle income jobs, what we call the shift. I can explain. And growing inequality. It used to be our economy was based on manufacturing today and some tourist services. So about 80 percent of jobs are in the Service Sector now. In comparison, the service jobs are paying less. They come with fewer benefits. Theyre much more insecure. And then layered on top of this is that workers no longer have the leverage they once did to bargain for better wages and better working conditions. Thats because unions are on a steep decline. So into the 50s, about a third of employed people are represented by unions. In the region New Historical low. Only about 11 percent of workers represented by unions. Its not that they can just collectively bargain to get a better deal. But this is the road and it a moral commitment. It used to be that even if you werent in the union, other employers have accepted that and then increase the way of the wage for a lot of the people who were not in the unions. So we have double whammy here. The other thing that occurs is one of call the shift in risk. It is been a rewriting of the social contract between employees and employees, is to be based on actual loyalties and protection. So that means that employers give people good wages and benefits and in return, people were fairly hard for that company. But what happened is everything has been offloaded by governments and corporations onto individuals and their families. If you think about the movement from pensions. Employers used to share the risk with us and i will really on their own. So all of these things together have really gotten us to a point where the types of jobs are harder to find and harder to hold onto. So to suffer other than it used to be. The question is how tough and depends on where you sit. Were always going in security and taking risk and there is that fear of the rise. There are some highly educated people who are actually doing really well they still have really good jobs. This plays out in different ways for different families. So you interviewed over 50 families over long periods of time. Have you read the book, you will find that the information is detailed and intimate. You are not just able to subscribe how these families are living but a really deep detail how they feel. Why do they feel and how they feel which i know is a sociologist, you taught me that is what we are looking for in the underlying reasons. In mythology right these interviews and how did you conduct them and how did you see and get families to open up to you. Marianne because i wanted to understand this more personal life. I went out and wanted to find families and rich and middle class and the poor and asked them about obstacles in their lives. But it wanted to add something to that so i followed families around. In a very in depth way. I really followed them around. If i went here they did too. I would take the kids i go to the doctor in their soccer games and the hardest part about being this is recruiting the families. And specifically, its hard to have people have you come into their lives. Its really hard so if somebody ever as you say yes. And for example, but what was extra hard is that i needed to know what income levels some of them felt in. Normally people you dont walk up to a stranger and asked him how much they earn. So i had to figure out a way of doing this. So for a long time, i met a gal who is working at a Big Box Store one day as i was passing and starting this project. And she seemed really nice. She solved the problem ahead pretty so i interviewed her and she invited me along to a tournament game and i dont know much any of you know about Little League but i learned way more than i ever wanted to know. They are really long games. Really long. And sometimes theyre not so bad when they lose because people getting a home. The pain parents are dying for something to talk about. They are pretty. [laughter]. Soy was sitting in the stands with her. They start working class communities. I just trying to get a ball to land. The opposing team got a car, is a really fancy cars and they hope their car would not get hit with the ball. I asked where this other car came from and she said it was from a community, silicon valley, affluent community. And i realized there was a miniature story. So i drove home with laura. She has a sort of aging, beaten up minivan. There was a crack in the window. And i kept wondering what if i was in one of those nice suvs. And thats when i realized that this could be a really great way to recruit families because i can tell from at what level of income and family level. So the next few weeks driving around silicon valley, and sitting in the stands. And really i was separated. [laughter]. [applause]. And i saw lots of games. And it might be a stanford researcher. Not another parent. [laughter]. Got turned down a few times a lot of people said yes. I formed the core of the families that i ended up working with. Youre watching the tv on cspan2. Im a highlighting author talks about the u. S. Economy. All of these programs are available to watch in their entirety at our website, booktv. Org. Next from 2017, Washington Post reporter Amy Goldstein wrote that the effects of the 2008 recession on wisconsin. Were General Motors factory was closed. In june of 2008 when the announcement was made that General Motors will shut down production eventually here, they have an 5. 4 percent. In march of 2009, a few months after the vast majority of these jobs disappeared, over 13 percent unemployment. So on the job loss front, you are a winner are you are a loser. And beyond that i had to think that i wanted to tell the story of what this big recession had done. It is important to me to find a place but not previously been part of this. I do not want to write about an accumulation of economic decay. I wanted to show what one that economic time is. So michigan was no story. I wanted to find a place for economic trouble was new. And obviously the General Motors Assembly Plant had been shrinking a little bit and little bit more until a bit a couple of decades. But always get a new project. So this closing, plus really a very different thing that nobody in town had ever experienced. That was very appealing to me. But that i was happy but was very appealing to me as a place to potentially do this writing. This talking to people about what is happening in their community rated i had the sense that no places exactly like every place. But as much is possible i thought it would be interesting to find a community to write about where the pattern of job losses matched pretty well, the National Pattern of jobs that went away in this great recession. If you think about what happened nationally, the manufacturing factor increased loss in the a lot of the jobs. They had paid pretty well emma and did not require a lot of education to get. More men than women lost jobs in this recession. That was through janesville. I thought that this was a community that had a number of the qualities and lost jobs that are the people around the country would understand and could identify with. I also had the sense that if it nicely into a victory. I remember the first time i found a Youtube Video that then senator barack obama gave at the Assembly Plant in 2008. I dont know any of you remember him coming. And i remember the first time i listened to the video saying, the promises of janesville is the promise of america. And that line gave me goosebumps because i heard that Youtube Video a couple years after the Assembly Plant and there was an irony and to watch this president ial candidate to hear what he was saying and of course theres part of the sitdown strike in the 1930s, and a similar plant in part of the domestic war effort in world war ii rated they started turning out artillery shells instead of vehicles. And people big people were here. I just like that history. And of course before he knew anything about this community from anybody here. I had to sense that i might find it interesting politics. I just thought there might be Something Interesting about it but an old uaw of town that was represented by scott walker in the State Government by in congress by paul ryan and state that was led by scott walker. As a journalist, try to bring all of my recording instinct to think about what might be a good setting. And i decided that i was going to make an exploratory visit to janesville. When i first came here, i came here in july 2011. I had arranged to meet some people, a couple of people in the room here were part of that on the couple of days i was here i met with them. The very firstperson west end. [laughter]. Who was obviously an alltime reporter who by then had left the newspaper and was on a different radio show. When he is on now. He was working as an education consultant. He had an office and now has been renovated into offices. And san and i talked and talked and talked for a couple of hours. We talked about the history of this community, what was like when he was here growing up as a boy. We talked about what the assembly that meant and talk about what is happening now we talked for probably two three hours nonstop. And finally he said to me, would you like to see the plans. And i said, of course i would. So i got the car with this man i never known before the day. [laughter]. And we drove down Central Avenue and we turned left and there was the plant. And obviously was huge huge. I had never seen it before. This big still roughly 8 million square feet closed auto plant. As we were approaching, stan says something that day was surprising. He said i hate to go by this. As it might. I may have left is sort of surprised me stan was a pretty tough character. Hes a veteran reporter. He calls himself a cynic and i tend to agree. [laughter]. Hes not somebody historically has been reticent to go through something in town. What he told me was that his father had worked at the plans. And as a boy he remembered how proud his father wasnt his General Motors wages had of him by his first chevy. In this manner had just day said that to me, i thought theres something something here in this community about the relationship between this closed plant and people sense of work and people sense of what life ought to be like and was not anymore. So kept coming back. For a lot of years. I have met and spoken with many people in town. Many more people even into a book that so many people thomas thats a lot of people. And thats where my gratitude comes in. I have learned from all of you who have met with over the last six years. Why try to do this to get to know. People try to get not who have s vantage points in this community. People who were at the Assembly Plant, people who were at the suppliers, people who were teachers and trying to figure out how to help kids with families that were hurting. People who did Economic Development work. I really wanted to understand how this thing looked from lots of peoples perspectives. I was really slow to figure out who would be the main people in my book. Because i felt that i could not takpick. I think that it cannot really pick it will be the main character characters and story that i wanted to tell. Until interested but with the choices that different people made them over the range of choices that i could figure out who could be very good examples of each of those kinds of choices. I arrived in 2011, which was obviously ten of years and the assembled plant had shut down. I knew from the beginning that we need to go back in time so that i could tell the story from the moment that the announcement happened. That this was town would be change. So i knew that i would have to find people who to talk to who could go back a couple of years with me and explain what life had been like before it showed up on the scene. I also had the sense that i needed to understand the history of this community. I spent a lot of time reading and at the Historical Society because i wanted to understand what the past of janesville admin. I wanted to understand where the pride in the work that was done here, came from. I wanted to understand what the identity expectations of janesville was because i wanted to understand what it felt like when things were changing. If i do a lot of this historical work in one of the things that really struck me when i started chewing up and talking to more people. It was that when the fight closed, there was a lot of disbelief in denial that it was for real. I showed up to half years after it stopped here and he kept running into people who said, just wait, its just a matter of time before he comes back. Does that sound familiar to you. And that will why was that. That was because this Assembly Plant had started making tractors in 1919 and chevrolets, on valentines day in 1923 and every time a product one away from this plant, another product it enjoys showed up. So was no expectation or experience with it not happening again. So when i began to see was that people make choices about what to do next. I sometimes came to think about it, what choices did people make when the best choices, and jobs were gone. People began to make choices. It took people a while to settle into what they were going to do. Up next, coauthor of the book the body kit economics. In 2013, mental and physical health. In the u. S. , suicides and even similar cities face massive unemployment, and some cities we see this in others we dont. Condition but also enrolled in the program. And with everything. And with the employment. And that preemptive spending on these programs and in the downstream cost but there is a question and for the european thing and those control trials in the us where to go off on your own and good luck to you and all of these the same result has been found reducing those Health Outcomes as a side effec effect. We were seeing this implemented in much of the us and with that Austerity Program with a triple digit a recession. And at the time of the sequester in terms of recovery. With a major policy document with the chief economist which basically amounted to 400 pages and the fascinating document to get through the following with that Current Crisis that is assumption for every dollar of spending how many dollars do we get back and we assume if its 11. Five and with that document its a nice round number but there are four different groups including and its greater than one with 1. 70 for every dollar that you invest and then to end up with the same number. The irony is germany figure this out a while ago while they were recommending for greece to go austerity with the multiplier to actually undergo stimulus internally well recommending the opposite. But texas figured out a long time ago the savingsandloan crisis california massachusetts help to bail out texas. And to see this manifesting and with the changes of recovery. But are we just going to spend forever . But that would have been a good time to cut back. And with that data driven approach to undergo spending increases. A number of people are concerned that welfare will be permit and with the system forever and we will be cheating the system. With the american journal of economics that it was essentially that in fact it was quite the opposite. But with that general welfare assistance and furthermore the multipliers that are high because of the people that are eligible for food stamps when they are unable to get those food stamps that they cannot spend on their eating what they could spend on food. And during those periods where they could get food stamps other spending can stimulate the local economy. Even if you didnt care about public health, the net result is a reduction. It is however to recognize it is difficult to define that recessionary. With those programs of less of the tax base but is there a better way as well. And then to those types of programs and at the same time so that we all know that risky investments lead to a recession with the mortgagebacked securities are so one with the mortgagebacked securities are so one if you heard of that tobin tax that the highest commodities and hedge fund and others that it seems incredibly small when you are transacting hundreds of millions of dollars due to the way the stock market volatility encourages heavy transaction. And that pool of the money would increase as people are undergoing in the high risk transaction and the reason i would argue fire on for such a system and that unique time is not that unique. If you look at periods of recession, certainly over the last several years or decade decades, we havent had a recession that is large. It is somewhat surprising if you look at the number of crashes taking place last few decades. But it strikes me and from the variety of commodities and to adopt that into that social and Economic Policy it might be better and then what to invest in so naomi, now that we have this 100 year history. And then to the voter. And then a major banker who can influence policy and in the new york fed board with the class a director and had a j. P. Morgan chase it was jamie dimon but to be at the height of the financial crisis when it first occurred also director of the new york fed the wall street located fed of the 12 member reserve system he was one of the people like hank paulson at that time treasury secretary when i came into goldman ceo and chairman of Goldman Sachs and tim guyton are who had a lot of relationships and the new york fed president and then became the treasury secretary under obama at the turn to see how all these individuals who have the ability to direct policy and money coming out of washington through their own institutions which are public institutions. These banks trade on the stock exchange, they are monitored by the Federal Reserve because the day job is to be the Regulatory Oversight body and they are monitored but yet to have such a tight relationship with the political powers. And then when they need it with a far greater figure than individuals are able to galvanize and as a result money goes from taxpayers and with the glasssteagall act in 1999 and from 1933 so typically with the taxpaying public and voters of speculation that banks could do. They could choose to bet on all sorts of stuff but its on them, on their shareholders and private partners, it wasnt on the government or people. That is 1999. With peoples deposits , peoples cash, peoples mortgages into institutions and that do badly with it and to come to the government for help. But the fact they have all these deposits to say we have them. Atm machines will not work they will not get their money back unless you give us these other things. The additional way from taking money from depositors and taxpayers that they influence the policy that allowed them to have those deposits. On multiple levels they are extracting by their influence when things go wrong and through rules surrounding businesses from taxpayers. Host there is a tweet can you explain how someone so brilliant and economically astute, you proposes an Economic System that always fails that human and Economic Cost and dissolves into a dictatorship. She supports progressivism socialism. Is that true . Are you a socialist . I do support certain socialist policies because if we think of how economics divide into the needs of society and the money that comes from society, helps society and the government are used to appropriate those funds but i think about how expensive healthcare is for people in the country. I think about for a student to go to university and to come out 50 or 70000 in debts ultimately they cannot be the kind of participant in our economy that they could have been without so much debt. When i went to school i started out in Public Schools and a Community College and ultimately a State College and nyu from education but i paid for that along the way. I pay for that because when i was learning, by working that was enough to allow me to afford courses and books and rent tiny places. Now that is the impossibility. Looking at the economy as a whole to think is it to be more level for people and then to contribute in an easier way and how we also have firefighters and post officers and Police Officers and a whole host of elements in society that are meant to help more society than just shareholders or banking institutions. I look at it from the standpoint of a Healthy Society that tell the economically and educationally and to be protected defenses another level of society that goes into it and to protect everyone in the country all of those are social good and what i support from the economic standpoint financially is not to risk the countrys Financial Health to be bailed out to the extent by taxpayers are held to that extent of the Federal Reserve. I look at the economy to be holistic in that respect. Host in todays political environment is capitalism at a Tipping Point . I think in general we are a capitalist nation. We do strive as a nation to do Business Activities that create profit that go in different ways. Or to society or to peoples future. I dont think that is going away. But i do think using wall street as an example and the financial crisis and the fact our Federal Reserve still has 4 trillion of assets on our books after what is not an emergency situation we should think since it happened in 2008 and they are still subsidizing wall street in larger banks, that is a tremendous amount of money. So healthy capitalism has to recognize putting too much money and one place has been a cost to the general Financial System or the general economy is not necessarily a good decision. So it needs to be more regulated so places that do that or were ignored into the collapse we are reeling from in terms of these policies. Those need to be reinvigorated and we need to protect everyone. Host before we go to call calls, the fed, in your view is a fed type bank necessary . And thats question number one. I think what the fed does to provide so much subsidy that it is not necessary i think the fact the fed can raise or lower Interest Rates in terms of not one Monetary Policy can be done within the treasury department. The fact the fed is structured in a way that allows the private members of the bank of how it is structured does provide credit take meetings with the head of wall street firms because they are the primary shareholders and then the historic shareholders created the fed. Wherever it is today, there is a major flaw of how it exist but it exist ultimately to benefit its members. And to the greater economy but the reality is that actions are very visceral with a Large Institution is in trouble or there is a necessity to help the j. P. Morgan chase or someone who has an institution thats part of the history and the fabric of how it was created and has benefited and continues to benefit from this implicit subsidy that all Central Banks provide to the largest in their respective countries and that is a flaw. A few of the takeaways in case you have fallen asleep or you want to leave early, trade creates winners and losers and politicians are very good but some people win, some people lose we did a really bad job in this country to take people who lost peoples lives were disrupted, the selfesteem and we didnt do a very good job we did a bad job of acknowledging that. And then to say create one. 5 million jobs per year if some are lost by trade or 25000, thats nothing unless youre one of those 25000 people a lot of that was concentrated in places like ohio, wisconsi ohio, wisconsin, michigan and pennsylvania. What those four states have in common every four years . Every four years they have something in common. [laughter] and that is what we are getting after with the american psyche for such a long time. Here we are on miami beach its not a surprise a lot of the cuban population is in miami and florida. Its always been a battleground state and the cuba policy the geography of where cubans live in this country it has a lot to do with the trading issue of politics and then to enjoy all the benefits of trade without a firsthand experience and with those hollowed out communities. Thats one of the things to talk about in the book. I dont want to give all the answers and ruin the ending but we have a lot of talk of trade deals like tpp, usmca or the china deal. Trade deals are not about jobs the labor rights, intellectual property a student resolutions and a lot of things but not about jobs. In the tpp was the agreement between the United States and 11 other countries and a 5000 page document which i would not recommend it does not read like a novel. The word jobs appears six times. Two of the six because its the name of the Labor Department so there are four references to jobs and 5000 pages with oil there is 11 mentions. So the case in point is not a lot about jobs even what nafta was designed to do in 1994 signed by bill clinton still has nothing to do with it. So trade is about job and exports but not trade deals. So what we are looking at now and im happy to address this with q a but we want to work with our partners i remember being at john and lindas home of world war ii with the filmmakers. And look at the devastation of world war ii and to form things for nato and that wto so all of these things to find ways they could Work Together something as horrible as world war ii never will happen again. We are in a period now the policy is much more unilateral to call the shots take the view or not a very different way we have operated from close to 70 years. It is the style but not we have used in the past to get things done. Let me give you a flavor of a couple of products. Does anybody have this . I use the iphone in the book the first let me ask who did their 10000 steps today . [laughter] you get 15. How many . Fifteen . [laughter] so the iphone i put it here to talk about the bilateral trade deficit that are president is obsessed with. The iphone was designed in the United States the Rare Minerals for this bigotry on circuitry come from the democratic republic of congo the chips come from the netherlands the gyroscope is switzerland. The main mechanism actually comes from samsung the biggest competitor in korea the glass comes from new york. This not would have existed without global trade we would not have an iphone without it. It is a symbol in china and as a result in considered as a chinese import. So it comes to the United States and apples proprietary it cost 230 for the iphone the cost about thousand dollars. But the 230. 846 actually less than ten dollars goes to china and yet the full 230. 16 or 18 billion per year of our trade deficit with china is the iphone but yet a very small portion comes from china so i use that example this is not a very good way to look at a bilateral trade deficit that the president is obsessed with i have a barber in washington i took a picture of him i just put it on twitter im in a substantial trade deficit with him on an annual basis im okay with that he is fine with that as well. So we cannot get hung up on the trade deficit if you go to the gas station to put 20 or 30 of gas in the car you have 20 or 30 worth of gas we get a lot of products from china to help us keep inflation down. Yet china has not been a good actor and takes advantage of the rules and overly subsidize their favorite state owned enterprises and companies and we need to address those issues but they are not a villain. We as a Global Community need to find ways to open the lines but this fixation and obsession about the bilateral trade deficit is wrongheaded and if youre looking for the china deal with the state of the union we would listen to or here in ten days we will hear this is the best trade deal ever done, i cannot think of too many superlatives to describe it. But with the israeli Purchase Agreement because we are so concerned about the bilateral trade deficit. Having run the export import bank, im all for an extra 200 million of exports but thats not where a trade deal is. So thats one of the things i want to do was give us a better understanding of these issues. On 5 00 oclock in the day afternoon this explosion occurs and it was blown up and at that point i came out of my foxhole to see what was going on and suddenly i heard a huge noise and i felt a shock and realized i had been hit. Of mcclellan general to gives me the ammunition the railroaders have risked their lives to set new speed records for the fastest route that will ever be run during the civil war not a single one of the ammunition rounds were fired. It was desperation and suicide but now armed a struggle between men who want to die in men who fight to live its a humbling experience personally but the people represents more than the building and the foundation. I was concerned by what i felt as the corrosive impact of the false narratives of the fbi and the false narrative they are having on the people and the ability to do their work. As people understood more about the organization of who we are and what people are drawn to the fbi most importantly how we make the decisions based on specific legal authorities and priorities and policies given to us by the department of justice. Not politics and personal preference and that kind of thing. Lets talk about the media because you do put a lot of examples in the book as you just described where they seem to have no bounds with the narratives on donald trump