American dream, american greed, its a very provocative title everything today we are in for a real treat. Were going to try to have a very lively 30 minute discussion and then going to try to leave room for about 10, 15 minutes of obvious questions before we break, and we have a hard stop because of cspan2 today at 10 50. To kick us off, both of your books are so well conveyed and really so captivating, id like to ask each of you to kind of take us off with maybe a two to three minute elevator ride to the top. What are the major points in your books and what do you haver to say about them. Im going to start with bethany. Before i do, shaky ground is the title. Its very timely today come this week unfortunately japan is in the news again, a very severe earthquake. In 2011 i was in tokyo for the big earthquake there which touched off tsunamis in a Nuclear Emergency that they are still trying to deal with. 2008 our Global Financial system melted down. Eight years later bethany says were still on shaky ground. Y. , bethany . So ive always been fascinated by these two large companies, fannie mae and b freddie mac. Freddic, they are the largest Financial Institution in the world withth over 5 trillion of outstanding liabilities. These two countries were created to serve the American Dream of homeownership, to help enable the flow of mortgage credit in the United States. Its funny because most people in the financial world dont care about fannie or freddie. They are part of the infrastructure of our lives we dont think about until the no function, but they already critical if you have a mortgage come if you want to get a mortgage because of the availability of mortgage could help shape your ability to finance your house. Your house, and homes are still the most important financial asset that most americans have, and theyre actually critical to our economy. Way back in the 1920s Franklin Roosevelts treasury secretary described housing as the wheel within the wheel of our economy, and it is. Housing makes up some 1520 of our gdp. So if the Housing Market isnt healthy, the economy isnt healthy. Basically, i feel like everyone should care about the strength and the fate of these two companies. And some of you may remember they were taken over by the u. S. Government in the fall of 2008 and put into a state called conservatorship where they were basically supported by a line of credit from the treasury, and the idea was this was going to be temporary. We were going to figure out a a way to resolve this. And instead, here we sit going on eight years from the date they were taken over, and they still sit as wards of the u. S. Government. Someone told me it was the greatest example of government dysfunction hes ever seen, and while that may be an exaggeration given whats going on in washington, nonetheless, the point probably holds. Theyre being drained of all their capital, and the profits that they produce are being used, basically, to cover the budget deficit. And the problem with that is in the wake of the financial crisis the big ideas been get more capital into Financial Institutions, and the whole system will be safer. And we have, collectively, the largest Financial System in the world that instead is being drained of capital with no real plan for their futures. So i think that leaves all of us in a somewhat precarious position. Thank you. Well, that leaves me with even greater unease than when i read the book. [laughter] maybe ben can give us some more happy news, but i doubt it. His book is entitled indentured, the inside story of how a few people took on the injustices in College Athletics and how the industry is where it goes and who gets it. I have to kind of make a confession here. Before i read bens book, i was very much on the side that said, hey, College Athletes, theyre getting a great free education. Why do they need to get paid . Theyre not employees. I have to tell you you know that line in Jerry Mcguire where they say to tom cruise or she says to tom cruise you had me at hello . Ben, you had me at page 2. Half and im not that [laughter] and im not that easy. Indentured, cartel, gestapo, mafia, some people in the book are compared to j. Edgar hoover, even darth vadar. Is this fair and why so harsh, ben . Sadly, i think i have more bad news to follow bethany. So good morning, everybody. I think you can break up the problems with College Sports, theres sort of three buckets. And the first is the money. College sports is a 13 billion industry now, so that, if you can believe it, is more money than the nfl bring withs in. So this is a brings in. So this is a lot of money. And theres coaches that are making 5 million and 10 million, there are conferences. Were in acc country, but i guess were also in big ten country now because of maryland. They all own tv networks now, and they make between two and 300 million a year. The men who lead the conferences have 3 million salaries. Most of the coaches 4, 5 million salaries. And of all of this money players, you know, the ones driving the revenue, driving the interest, see what amounts to less than a sliver of this. So you have this financial dichotomy. The second piece is that the ncaa has a 400page rulebook that, basically, governs every aspect of a College Athletes life. It tells you how many times you can eat at somebodys house, you know . Who you can accept a ride from. If you are a College Athlete and you want to transfer schools, you have to get the ncaas permission. You have to get your coachs permission. And whereas the adults in the room can leave school no problem, so the way the rules are applied to the kids, the athletes and the adults is wildly disparate. And the third thing is what is supposed to make all of this okay, as john mentioned, is the scholarship, this college education. So, yes, we have a lot of money. Yes, there are a lot of rules, but this is all okay because were educating these athletes, and thats what College Sports are about. Well, unfortunately, that isnt quite the case, because federal Graduation Rates for football and mens basketball players are about 50 . Anybody that has seen the news about what happened at North Carolina over the last 20 years where these athletes were funneled into classes, literally fake classes that the university knew about, that the Athletic Department knew about, they did not meet. The classes did not exist, and they were meant to keep the athletes eligible. At other schools you have majors like fitness studies that the bigtime athletes are clustered into. So the idea that theyre getting a meaningful education or any education at all is sort of fiction and hearkens back to mythological College Sports and ncaa that might have been around in the 1970s. But its not anymore. And so, you know, between the rights that are taken away and the education that is not delivered and the financial dichotomy that exists, you have a system that ends up being, you know, theres no other word for it than its exploitive. All of us, i think, love as americans, all people, we love authenticity. We also recoil at hypocrisy. Hypocrisy is a threat i see, actually, in both your books. And you mention it explicitly, ben. Could you talk a little bit about how it seems like the ncaa beyond being just arbitrary, really kind of picking and choosing who gets rewarded and who gets the blame or who gets punished, could you talk a little bit about that . I dont think you have to look any further, Everybody Knows the term student athlete. Weve all heard this, yes . This is ingrained in the fabric of america, the fabric of Higher Education and college. And the word was made up by the First Executive director of the ncaa and precisely because there was a Football Player at a school in texas who got hurt playing, and his family requested Workers Compensation benefits because here he was doing a job for the school. He was an employee, and as soon as he got hurt, he was entitled to workers comp. And this terrified people at the ncaa, terrified people across College Sports. And what did they do . Be they invented the word student athlete, embedded it in all of the ncaas literature. Schools had to call the players student athletes, broadcasters on tv had to call them student athletes, and it was nothing more than a marketing ploy to avoid paying out Workers Compensation. And it has worked fabulously. But i dont think that theres a more obvious example of hypocrisy than sort of this word that is treasured in the United States today and treasured by colleges and by College Sports, but its origins and its roots are far more nefarious than we would realize. How about the markets, bethany . You know, weve all heard the expression too big to fail. Are there some companies, are there some banks that are way too connected to fail . I know you dont cherish your time working at goldman sachs, im told [laughter] but i wonder if that gives you some perspective on, you know, why it is regulators and the government allow some banks to be saved and others not. And theres been a pretty Common Thread from goldman. Am i seeing a bogeyman here . Is that why aig was saved . Its a big question. So i worked at goldman from 92 to 95. I was basically at the janitor level, so i cant pretend any great insight into the workings of our Financial System from that. But i did learn not to be afraid of Financial Concepts and, i guess, not to be intimidated by people in business. I think goldman is probably an easy bogeyman, but i think the real bogeyman is probably much, much, much larger than that. There is this back in the beginning days of our country, we were always scared about the power of big Financial Institutions. There was a lot of rhetoric about how we could never be a nation that had big Financial Institutions because of our fear of the power that those Financial Institutions could have. And one of the really odd things about the financial crisis is that for all the rhetoric about too big to fail and how institutions had grown too big and too powerful to fail, we came out of the financial crisis with institutions that were even bigger. And people will tell you that they are now much safer, that weve put in place all sorts of new rules and regulations that will, that have fixed all the problems. I tend tock a little bit to be a little bit skeptical perhaps from having billion around and for having a negative contrarian personality that weve fixed the problems. In the wake of enron, we passed a law called star babes oxley sarbanesoxley, and when president bush signed this in the rose garden, he talked about how now our Financial Markets were safe, and we put in place all sorts of things that made ordinary people protected. So a few years later down the pike comes the financial crisis, and you had president obama sign a law called doddfrank in the rose garden. And the speeches are remarkably similar. The similarities are quite depressing. At the school where i teach, its called the dwight d. Eisenhower school. Ike eisenhower warned about the military Industrial Complex. Bethany has a chapter in her book called the housing Industrial Complex. Is this housing Industrial Complex, first of all, what is it . And is it something we need to fear as much as the military Industrial Complex . Well, perhaps in some ways. So my perspective on fannie and freddie, these two giant companies, i think the tone of the book is a little bit how i learned to love the gses. Theres this notion of the American Dream as Home Ownership, as this thing that makes our country a better society. And its ingrained deeply in our society. If you go back to the 1800s, that was part of the concept that a nation of landowners would make us safer, stronger, more cohesive society. But frank and freddie during their heyday were immensely powerful institutions and immensely politically powerful institutions, and they managed to take this concept of Home Ownership and make it a way to make a lot of money. Because you actually couldnt challenge the notion of Home Ownership. If you challenged fannie and freddie and said they werent doing the right thing, you were challenging Home Ownership. And thats also largely part of the story of the financial crisis, because if you tried to rein in mortgage credit even though people were getting a all sorts of risky mortgages, the companies would go to congress and say youre hurting peoples Home Ownership opportunities. So it became an excuse for all sorts of behavior that actually had nothing to do with home Home Ownership. And theres a lot of money at stake. The Mortgage Market is a 10 trillion market. The american Mortgage Markets one of the largest bond markets in the world. Its incredibly lucrative. Everybody wants a piece of the money. And so you have what people have jokingly, not so jokingly called the housing Industrial Complex which is this sort of looselyknit, formidabling alliance of all the people who make money off your homes, basically. And theres been an incredibly Formidable Political force in washington, and fannie and freddie are part of that. So a 10 trillion market. Ben, you referred to 13 billion in College Athletics. Where is all that money going . And is some of it going for good things to improve our Higher Education system . Not really. [laughter] so of this 13 billion, much of it goes to very high coaching salaries. So when you cant pay the players, the money has to go somewhere. It goes into coaching salaries, administrators salaries. The head coach at clemson, school played for the National Championship last year, the head coach has a chief of staff that makes 250,000 a year. The strength coach of alabamas Football Team makes 600,000 a year. And so one of the reasons that they make so much money is because in this money has to go somewhere, and it cannot be given to the players. And the way to recruit the players is to build, you know, palatial facilities. And oregons football facility has imported brazilian wood in it. They imported wood from brazil to build this facility. And its gorgeous. And its, you know, 40, 50 million. But thats how you recruit players, because you cant offer them money, so you have to offer them a lot of cool stuff. But another reason that, you know, the best coaches, that nick saban at alabama can make 7 million is because when they bring in the best players, it is a tremendous Marketing Arm for a school. Right . And so when you hear about Football Players that get away with, you know, close to but not murder, right . They get away with, you know, breaking rules and mistreating women, its because they are so valuable to the school. And so you have this strange dichotomy where these athletes are both exploited financially and then coddled and a lot of, you know, bad behavior is allowed because they are worth so much to these schools. And the budgets, the Athletic School budgets are almost always separate from the main college. So very little money ever goes back to the school. Its contained, and its used to build facilities and pay coaches a lot of money. You know, we spend a lot of our time at the National DefenseUniversity Teaching leadership, trying to look at kind of what are some of the successes and failures of leadership and and how we avoid that in the future in terms of our students personal leadership development. You know, bethany has a great quote, actually. You know, when we look at the Global Financial crisis and we look at the situation that were in, you know, the story of the crisis is often mortgagebacked securities and Risk Management tools. But youve said the end of the day the story is really about people. With the enron crisis, you had some pretty visible faces out there, ken lay and jeff skilling, you had the faces of the excesses in the 1980s. Who are the villains now, and are there any heroes . Thats a really good question, and its interesting. Ive always thought that business stories are stories about people. Theyre stories about human nature, and its one of the reasons i love covering these sagas of business gone wrong so much, because theyre human nature usually at its worst. Maybe sometimes at its best. Heroes are tricky in the financial cr