Cpac. I want to make a couple of announcements seized silence yourself of this. Your cellphone sam personal recordings are forbidden and there will be a book signing crowd members of the panel right after this session for our i have to tell you that if you buy the book you buy it upstairs in the lobby bin the siding is across the street across the street. Once again welcome. We are privileged to have three authors to of taken very different approaches to record and analyze the financial crisis began in 2008 and the many effects political influence lobbying and misdirection to avoid the of regulation and oversight to avert the financial crisis of a few years ago in and to keep it from happening again in the future. On my left end to my left. [laughter] and just this week . Nomi prins her book is all the president s bankers. A former wall street executive that is in for the New York Times and fortune and the nation and that is of Broad Spectrum of publications in the united states. Her book examines the relationships between banks and bankers and our National Government bollenbach to the turn of the last century period the story forward to the president day of my rights is is the coauthor of the bankers new clothes is anat admati. And George Parker professor of economics graduate school of business i know from personal experience as one of our most uncompromising and penetrating analyst of the Banking Sector that we have today. For both shines best buy allow dash a spotlight how they could have avoided the most effective reforms since the crisis by lobbying and i hope i am not being to plunge, by buying. [laughter] lying and to my far right pathologically speaking is helaine olen a former colleague at the New York Times and her book is pound foolish. Her work has appeared in the Washington Post and a forbes but her book looks at the personal finance monsters the week inundated with every day on television , online and in print. K and to have preliminary thoughts their motivations and anything they want to say with the subjects they can fit into within five minutes each and then to your questions. It is an honor to be here with this amazing panel. We have a good 10 minutes to talk about each other. The man who was driving the car and asked me what i was talking about and i explained the book about all the president s bankers he said it is tighter than ever now but i hear it has gone back 100 years. I said that is exactly what i talk about if my book and he says not just wall street but the families, the blood and the marriage. That is weird. [laughter] and it turns out he had heard something throughout the week. It was so amazing how someone who was not related to meet would talk about a theme that was out there that was part of the discourse. It was so warm feeling to come here and the reason that i wrote this book that i had worked on wall street before the financial crisis happened is certainly there is an intense alliances and into dependence between austria and washington that we are all aware of. It is obvious when the heads of the banks dont go to jail but those small people do there is a definite problem in society of justice and accountability. Today is a more concentrated power of wealth that we have never had before. Today they control 84 percent of the deposits of all fdic insured banks as well as 85 of the assets as well as 96 of derivatives. A concentration of capital in one set of he and san this is after the financial crisis. It did not get their just accidentally. Looking at the idea i had been covering what was going on in washington that there is a lot more going on with this. The big six is an interesting number of book before this call black tuesday i did plus research they and this book but i found a meeting that have been the wall street on october 29 and add new where the market was starting to fall, all the and regulated speculation and but he got five other bankers together that collectively we and the big six banks at the time and that name was coined from 1917 and for word because it was about those bankers at the time theyre all related in some capacity. If not by blood but marriage if they related by marriage their children were or would be so there was a strong connection that we could do this but the story went back with those groups of what be imposed upon them from the greater society. But the tide went to the panic of 1907. Jpmorgan had more money than the Treasury Department and in the late 1890s real people dead and i have as much invested they were just impacted. Today they have deposits than they are more isolated but at the time the government called upon jpmorgan to help. That panic is that Teddy Roosevelt and talk about trust busting other industries he did not bust the bank the reason is he trusted and supported ian socially involved with jpmorgan and others that were big bankers at the time when the panic catmint there was a Trust Company called the knickerbocker Trust Company that imploded because of bad bets in the copper now with some prime and teddy bears ago called upon jpmorgan to save the situation. Then Teddy Roosevelt you wait for my word the treasury secretary would have to wait for the meeting that was called at midnight at the Hotel Manhattan a new york where morgan invited some of his friends head of National City bank still hanging around with that much under. And a bunch of other people talk about how they say if the market. Also having to to 5 million that is the first time they said i need your help do whatever you need to do. They do save the situation but not with morgans monday but the shares not the company from fifth avenue to get the deposits. And thats he was invested. That was a situation with the government said Teddy Roosevelt said do this and morgan said okay. That was the beginning of the situation leading to 1913 while they have 30 seconds or less but added that came the idea that and not even to have the other backing and that they push for the Federal Reserve island backed by went to every president ial library with the original documents i dont trust media. The present company expected. Of course. The purpose of the media is to tell the truth. But historically the expectation that the time was massive so now we see then jaime dimon stuff with jpmorgan, said Jpmorgan Chase there is the legacy there. I will wrap up a lot of love dash. [laughter] but the point is these things have a long tail with the relationships that manifest in policy not just from wall street to washington but one box not pate revolving door but one box of power that is shared by different groups of people that have a incredible philosophical and financial ties. [applause] taken from there. Guys teach finance that the Business School wondering what is going on and why this industry managed to harm so much . More of falling in and of rabil experience. So with great pieces of literature i could not believe what i heard. What was this nonsense . The more i look and the more i read the policy papers even academics the more disturbing it was because it was complete and Utter Nonsense but the headlines in the paper it is not true. With the nonsense one way or another it became obvious or of a nuclear what people do or wanted to know with the feeling i am in the rabil and i tutor who ever i come across. They dont care to note. It is not that hard. If you dont clear the nonsense we dont know hope so this is a book with a mission to remove the nonsense from the debate for those that have no clothes the system has not changed in the last five years it is very disturbing and very scary. They want you to believe the Natural Disaster that happened with the break the ambulance to help us. But instead that they made it seem like it was plumbing. A liquidity problem. [laughter] to hide the sensibility of the regulators that absolutely failed to protect us and have not been tweet since. I cannot unpacked all of them but they are false. The analogy is imagine in trucks driving as 90 miles an hour in residential neighborhoods and tell you if they were good drivers in that 90 miles an hour to drive for terrible things will happen if we drive slower. Here are the policemen not even having speedometers to show the speed. Theyre incredibly efficient and then they teach each other down with the Collateral Damage then they got to be saved as well as the Insurance Companies to have the fuel flowing again. Then they say pick me up and drive again. And we still have the risk that we cannot see. The battle is not pretty and the lobby is intense with every bit. The force against the power of this in the event that i did not appreciate but i do now. Trying to do just bring in the voice that does not care what the outcome is to try teetwo unpacked what they empower more people to challenge and then next time it happens to have a story. To get the narrative for them including the academics unfortunately. [applause] i writes about the area. That is with the personal finance and for several years in the late 1990s looking at the Los Angeles Times you have the subject with the Financial Planner that their life would be so fiat after this and all would be well. I came back to this several years ago want after i stopped to ask a question of how we had gotten to this point how are we convinced with Financial Planning with good Financial Behavior we would all be okay. Weve never address the point in this world we put more and more responsibility on people that the tension was put away as our salaries were stagnating at the same time you need to save for retirement and your kid to College Education and take away the rights of the student loan to pay medical expenses for hospitalization that went up 20 and it is your fault the fed does not work out. I became interested how we were sold of the idea because itll seems very natural but planning retirement was just 35 years old at this point. And with a group of people it is thought anybody in this room. Doesnt matter how badly the you are making a mint. I dont have a lot of time to speak their Retirement Savings we have roughly 23 billion that sounds like enormous sum of money less than 20,000 per person considering that the cost for retire bridges over 200 those who but why do we tolerate . Lead dont know how much the Financial Services sector is making except it is a lot. It is probably somewhere in there they claim that they dont know that they can attract this money but they cannot tell you where it is doing. So we have become convinced that the premise of the book how we have been sold on the idea we could control our financial state in the world where the salaries are stagnating. And not fighting back. Then i find out the lobbying in washington the money thrown around to richer you are not protected as i like to say if the food was recruited as well as Financial Products we would have Food Poisoning at least once a week. [laughter] and how this would, to be sold on the fact not that women were underpaid to live longer but to emotional and that is why we have less. You could go through the whole gamut your financial problems are because of her childhood memories not your class. I basically brodeur book to come to the conclusion we need to begin talking about this as a society to talk about this in ways that we no longer think if only i had not gone to the starbucks eight times i could have paid that 10,000 medical bill. [laughter] i will conclude and let the panel began. [applause] thank you for that quick to digest. What interests me is many writers have the experience there is a particular moment with the theme of the book why they commit themselves to spend however long it is to defend it maybe you could dredge up with a case like that the anecdote or the moment that defines the moment why you would take on the project so you tell the story of the chairman of Deutsche Bank to justify. Start with that story. The moment where i would speak up had to do with wondering. In my missing something . And then thinking is it a big confusion . But the big moment was opening a textbook on banking to be absolutely horrified at what i saw. Very shocking. This particular block still has is completely false teachings that contradict the basic course is that we teach of other finance courses a and it can justify all the forces in the world and somehow leave that the door everything that you know, and they can make it up . They tell you it is very special and its reality that is what they get away with. The privilege that they have to live with the entitlement to take risks to have somebody else what was the essence of what was going on. Little bit by little bit for anybody to does not know what the Balance Sheet to come matt they dont need to know that. And house symbolism is to see through all the nonsense that was the moment but that was mini. When i write the book outside job ive might tell is but i also might drop dead. [laughter] or they will shoot me. [laughter] mine would have been five years 500,000 words are would have to dont have a and start over in my children for lead published after i am gone. But one that really crystallized is when you buy the book for personal finance i got this. Theyre not all full people but i began to look at the Financial Literacy the idea to teach financing is in school to have those behaviors and this sounds reasonable 18 baby this will actually work one of the greatest boondoggles it starts with the ford motor credits and that they have a problem with this upright model of they get the bright idea and they started throwing money at this been a really starts to pick up after 2008 you will see the Financial Literacy doubles again and a third time with did one year. When it comes down to is the basics plus the product with their names emblazoned as Brand Awareness are down big responsibility of all disasters of the past several decades on you. Not that they issued as a primary gauge to somebody who should not have had it that 100 pages single spaced you should have read it the and if you have taken the class of the eighth grade maybe you could get this. [laughter] is all your fault you should have known when the Mortgage Broker was paid and you should have known that, that you should have known i cannot afford that house because prices dont always go up and not to listen to him and it went on like that. I found example after example after Financial Literacy was sold to us. That really showed me the eve those of responsibility and what was sold to us. As i begin to have any words i was shocked to see to have absolutely any i. D. At all but the part that they learned was the financialservices industry was running and winding and dining them to teach them how remarks one Dash Networks train wreck i attended a major you been down the hill where they would wine and dine with great food that was the same thing. That is the key of the hill. [laughter] especially when you arent paying the bill. It is other peoples money. Not just the political system but it goes back to protect your own if your family is integrated then your policies will go that way. We foot the bill and what i talk about in terms of how this impacts people is we foot the bill with a political Financial System and about power. There are so many moments i was in the middle of nowhere at times like abilene kansas with the guy who would look up cattle ranching. And i went to every single place and i started to realize they were ahead of the banks for decades and if not in the Treasury Department or Defense Department or state department or National Security department. There was not the overlapping interaction not just because there were influencing washington but the same thing and two sides of the same point and all the stories i found show there was so much personal integration. You write about the new deal but one of the fascinating things is i was looking at documents no one else had looked at because they thought the people running for the banks were friends with fdr. But all of them. And James Roosevelt that worked with all the up powerful elite financial families to hang out and discuss matters of the day but individuals are very integrated and these stories i could keep going but these are are not conspiracies. And all of the moments these dire not that theyre not people on and check alignment in every manner possible. In much more at the core what america is a and what the democracy is not. If you look at the information that was something all along the way going in thought there would be connections but i had no idea how many there would really be or how close are tight they really were. That is a great point. [applause] mentioning being a hyde park president ial library one of the impressions is how bad all of the equipment was. None of the of microphone readers work to. There were broken down. As part of the National Archive system putting out appeals for the average person. [laughter] but one thing about fdr moving into citizen x he had a lot of friends from the 01 . There is a great moment i came across when he had written a speech or prepared a fireside chat how he would raise taxes up to the marginal rate of 90 and had a dramatic reading with his interior secretary and a republican by the way and Vincent Astor or was in the room was a close personal friend with one of the original 400 of the of mcallister great term and this is what i will do but they said frankly i am one of those people. Roosevelt looked at him to say you will have to pay also. [laughter] this leads me to a question i want to ask which is with that period that you cover going back to the dawn of the 20th century is seems there was some. Guest period there was a Successful Campaign for wall street and banking regulation. When we got the securities act of 1933 and a 34. Sec, disclosures corporate finance. We brought the new york stock exchange. And why do you think that . What was said about the 30s that made the difference . There was a man named winthrop who was the son of the father of the Federal Reserve. By the way related to Nelson Rockefeller is gimmicky was the great oval the aforetime york governor and David Rockefeller also who ran for two decades. A couple of generations of for that was friends with fdr and was concerned about the speculation that had driven the market. He was concerned about confidence in general at the first inaugural address talking about banking believing we have to fear is fear himself but because he had grown a bit about that a system that was more stable for everybody but it is ironic because jaime dimon would never said it will split up my bank that is a good ideas everybody can be more stable. But then it did and winthrop bolgers took out of front page piece to separate speculative activities period and she was from the fdic and he promoted it. Going back and forth to get the senator and loose name is of the bill to make it more stronger which was one of the competitors. But there is so much selfinterest with the popular rare it was to an understanding of language like aldrich headed James Perkins to work where if him they separated the banks before the legislation. That happened to help the country and the bankers and fdr. That separation lasted for about 40 years before in the 70s thing started to disintegrate but that is when bankers found other ways to make money and they started to go off the idea of more stability at home means of better profit for us how to make a much bigger profit and to go off in the on direction and they were allowed to do that also by president s who came after that. You and i were talking with a preface you have written for the paperback the willful blindness, where do you see if there is one particular product that the banks have not been weaned from that are back into with a healthy way . The mischief as possible every which way. There are many ways. Whenever i see that banks congregate with the investment i think first of all, they view this as safe but it is not also lending to municipalities and what that did it was clear there were going to get into trouble. So it encourages lending to government. There is municipalities with the sub prime. There are many ways the problem with thinking that i come from silicon valley. What makes this so fragile is they take it with somebody elses borrowed money. There like the home owner that bought the mansion but they have access to protect them from the creditors would choose our depositors. They continually live along the edge like that and its absolutely not necessary and that they are allowed to. With the blind in this that is a term with a writer who has a book called the willful blindness that we dont see the obvious source see no evil or hear no evil that represented when somebody told me there is the blind spot it is more of the bill full applying to this. You dont want to hereabout it because it is not convenient for me. I dont want to hear what you have to say i have my story and i am sticking to it. When you talk about what resonated with me but my wife and i were subscribers to money magazine. We discovered two things about money magazine that you only had to subscribe for one year. [laughter] because it repeated itself year after year. [laughter] it would come in the mailbox he would play a game to find waldo it was the place in every single edition where it offers the advise what you should do to save yourself from the financial ruin is consolidate credit cards. Thou one nugget appeared without fail in every last addition of the magazine. But since the theme of the book is the stack is stacked the deck is stacked against the ordinary investor that we are inundated. What can the average american thinking in terms of investors . What can we do to save our souls . Is anything in particular people should read . There is the big picture that is we all need to speak up because ultimately we will not keep up the and the only way is to insist on projections out of washington and that is not happening until we start to squawk but at least potentially we would get somewhere. Because people generally dont realize how stacked the deck is not Just Health Insurance or income or retirement. But the Financial Services industry has very little duty to help you. We think if we seek help like going to a doctor they have to give us advice is and our best interests that is the socratic financial oath. [laughter] but that is not true. Most Financial Advisers and here to the suitability standard which could be described as if it fits it is okay ian that is a fairly loose. Because most people have no clue, when i say is you have to ask questions constantly. Dont assume somebody is asking on your behalf. Do they have a legal duty to act in your best interests . If they dont walk away. They are not your friend. Asked about their fees, how they get paid, do they charge shooting and get money from the financialservices sector . Double dipping. It is so low dash to this, dont assume that youre not paying for it or somebody else is paying the bill and they dont have your best interest of our hearts. That is what i try to tell people. Dont take anything for granted and just say okay. One of the things to finish his weakest book called during with the exploration of the reptile brain how we get tempted by credit, what my book explains is the magic of leverage but the point is to everybody but bankers feel said a of those who landed are good and structuring the credit in such joe way right now the distortions have to do with too much than too little credit at the same time. The creditcard debt and things that are quite questionable at the same time it is not happening. The. I have squirrels in my backyard it is so easy to take somebody elses money to leverage somebody elses money would to have vague infrastructure that allows you to do with it to save issue when it does now workout at the expense of everything that went into it there is no real reason or nothing to break that danger onto everybody else. Dont ever consolidates your credit. Throw it away. Seriously. But there is so many ways to extract the money to leverage to go up even today there was a huge bailout still going on today. Plus the infrastructure creates the implicit bailout there is a definite danger to that. One of the things that weve learned is all the advice was wrong. They basically just by money magazine bin do everything. [laughter] one Common Element as reading all of your book says the claim by your subjects that they are put on the earth to do good and fade too good. The banks save them lending makes the economy go with that personal finance types say they save money to help with the future or retirement. We hear this again and again with the prospect of regulation comes up but will distrait a good thing. Lewis douglas one of the original cabinet members very conservative, but at the moment when fdr calls the cabinet to say i take america off the Gold Standard lewiss reaction was this is the end of western civilization. [laughter] there is always this idea in the sector we cannot do without. I would like to hear from each of you. How much of a colonel of truth there is if any and how much is your narrative . Sometimes when i dont have a lot of time you use this quotation from paul volcker that came out that is called payoff why wall street always wins. In the preface he says unfortunately for allamerica he worked for many years as a staffer. Although financially illiterate. But later kaufman was a unique senator not running for reelection. So he went to buy dins ct answer to the two years remaining therefore he did not care about cut campaign contribution. With the conversation between paul volcker and the senator kaufman that volcker says anything you propose that they say planting or growth will suffer then he would pause and say is all bullshit. [laughter] not all regulation is good. I go to some events where i see the sauce age being made. I see the interactions between the lawyers of the regulators there were a lot involved a lot of legal stuff. It is the power play that has complicated with these interesting relationships to generate more jobs so they write a complicated regulation with lots of loopholes this is the full court ruled the way it came off the shelf was impossible to implement and it is 1,000 pages of legal rules. By the time it is done let me forget with the words that you know,. And injured said dodd frank act that is supposed to save us but only to the it reid do that also has to cut the budget but the first title there is a requirement from the banks when you worry about your loved ones to make decisions about disconnecting. They want the banks to describe how they would go to the same baker see court that Lehman Brothers went through that to five years to decimate all the assets out at Jpmorgan Chase at least four times bigger than Lehman Brothers of lot more if you count the derivatives how this would go through the bankruptcy court. So they spend money breaking these things and they are supposed to tell us that jpmorgan shares at the time will go down without harboring us. I do not need to see that there is no way in the world this would have been. They say read my lips no more bailout except that we will let them implode we will charge them to fix them meanwhile all the dead bodies. In, etc. , etc. [laughter] in other words, driving 90 miles an hour for . The point is not all regulations are effective or useful there are things to do better not that complicated but it is of mass. But the dodd frank act is bullshit. [laughter] it is true you can drive the truck anything remotely despite the complaints coming through the obvious and the people that expound upon it. The volcker rule i have read that literally six pages of base them what kind of a rule bin 900 of inception and it is ridiculous. But going back to the question after world war ii where before that it is something of the bankers wanted at that time it is easier to have money to speculate you dont have accountability or whenever the matter the less restraints the the easier to speculate the more likely to make money quickly if it falls apart with backing, so what . That was the Gold Standard because finally when it nixon took the u. S. Off he talked about not his idea but it was rockefellers idea who was running citibank because they pushed for the idea that america needed to expand for them to be powerful said joint philosophy but that american and competitiveness is important to both when the eisenhower doctrine talk about military support that coincided with an injured with the Financial Support while the u. S. Supports military maneuvers the u. S. Bankers were opening ranches in those countries. It was not an accident. They believe it very strongly and i said this is in the book but they are mutually reinforcing power and the people involved on the specter matt the most tv to levels understand it is mutually reinforcing. They dont debate. They dont need to understand the and if they did it does not matter because the ideology is the same it doesnt matter says it falls on its face is this the same with republicans and democrats different people say the exact same words. Now is sounds like they read each others lines. As we all the the ability to believe our own bullshit is a parallel. [laughter] [applause] dad is the explanation riyal believe were virtuous actors maybe there is an exception but that includes the bankers and Financial Services people. They really think what theyre doing is okay and dinner best interest that if we dont do it the way they say bad things will happen. I think a lot of times. It is in their best interest but to the point since were in l. A. I we is my favorite example you know, somebody who becomes a celebrity to watch the process if they are surrounded by psycho fans and normal people are embarrassed to go near them. So they slow the loot lose their ability to hear the word no. This is what happens to powerful people as well