Good morning. Im melissa harrisperry. Today marked a very important anniversary in modern u. S. History. I want to take you back to what we were all watching five years ago today. And remind you how none of us knew just how deep our economic problems went. On the broadcast tonight, meltdown. The American Financial system is rocked to its foundation as top wall street institutions topple under a mountain of debt. Coming up tonight, how did it happen . Whats next, and how safe is your money . Meltdown, rocked to its foundation, mountain of debt our Financial System, as we knew it, was about to change forever. That day the Dow Jones Industrial average lost 504 points on the days trading, with the largest point drops in history. The nasdaq was down more than 81 points and the s p 500 was down more than 59. Was what was the cause of all of this . Take a look. All of this fallout from what happened last night in new york, as Lehman Brothers filed for bankruptcy protection just after midnight, with 613 billion in debt on its books, lehman is by far the largest bankruptcy ever in this country, dwarfing world cam back in 2002. So lehmans filing for bankruptcy the night before wasnt the begin of our financial meltdown. That was fueled in part by the implosion of the Housing Market the year before due to the subprime mortgage crisis. But lehman started a domino effect of Financial Institutions toppling, merging, or being bailed out to stay afloat. Merrill lynch became part of bank of america. Aig, the Worlds LargestInsurance Company, teetered on the brink of collapse. It was ultimately rescued by a bailout that gave the government a 79. 9 stake in the company. These events and the Economic Uncertainty had many around them thinking, the sky is falling. That included senator john mccain, who decided to suspend his 2008 president ial campaign to return to washington, d. C. , amid the crisis. Both he and his opponent, then senator barack obama, joined president bush at the white house. In that meeting, political leaders tried to harm out the 700 billion government bailout plan for the governments Financial Institutions. That initial plan failed. But, eventually, the senate and house passed revised versions of t. A. R. P. Or the troubled asset relief program, which was spearheaded by then treasury secretary, hank paulison, a former ceo of Goldman Sachs. But lets pause. Because its easy to get mired in the details. And its understandable why we were collectively afraid on monday, september 16th, 2008, but i want to suggest that the questions that should have been asked should have been asked before the crash. Because unlike chicken little, the time to be worried is not the day when you see the sky falling in on you, the time to worry are the weeks, the months, the days, the weeks before, when there are signs that our economy is hemorrhaging and banks are operating under a too big to fail mentality. So how are wall street and the banks doing today . Its a pretty good day to be a bank. U. S. Bank earnings rose to a record high of 42. 2 billion in the Second Quarter of this year. And on friday, the dow closed at 15,376, more than a thousand points higher than the markets peak before the bubble began to burst. But, are we about to be chicken little all over, a day too late, again . Time magazine asked that question in this weeks cover story. How wall street won, five years after the crash. It could happen all over again. Meanwhile, a new study this week found that the top 1 of earners in the u. S. Took 19. 3 of total Household Income in 2012. That is one that is the 1 ers biggest life of the total income pie in more than a century. But lets not lose sight of the fact that as the banks have bounced back, they havent brought the rest of us with them, although they are the one industry that tries to convince us that if they fail, we all fail. At the table, William Cohen is the contributing editor at vanity fair and author of house of cards a tale of hubris and wretched excess on wall street. Time excited to invite and have at my table here, soledad obrien, josh barrel, politics editor, and andrew boyce, former policy adviser to mitt romney. Thank you all for being here. Bill, i want to start with you, right now, are the banks still in the too big to fail category . Absolutely. They are more concentrated than ever. Weve lost three of our Big Five Banks in this crisis. Bear stearns is gone. Lehman brothers is, of course, gone, liquidated, and Merrill Lynch is not nearly what it once was as part of bank of america. So where we had five powerful top big wall street firms, now weve got two to three and theyre much more concentrated and much more powerful. This is a huge lost opportunity. Remember five years ago, there was incredible fear in this country. Thats when things get done on wall street, where the lines of fear and greed cross. This time we missed this opportunity. The banks are stronger than ever. Soledad, im interested in this missed opportunity idea. Im wondering if in part it has to do with our Public Discourse around the banks. Absolutely. No one cares. Your average consumer will shake their hands, oh, the banks. Thats it. People arent saying and theyre not calling for, listen, theres an opportunity now and we need to get in and change these rules and really push for full implementation of dodd frank, et cetera, et cetera. No ones doing that. No ones talking about it. They have the idea, the banks, they get bailed out. What can you do . Too big to fail . So i think that theres no conversation that then pushes the political discourse, that then pushes the politicians to push it back against those who fund them well and those who frankly have a lot of power. Look at all the number of meetings that had happened to try to get some of these iterations and various versions and parts of the bills passed. The bankers are in there at every moment negotiating and tweaking and tweaking until it lost all its power. And part of that is about the asymmetry of information. I may care. I may be at home shaking my fist, but the amount of time i spent over the course of this past week, learning about leverages and derivatives, and to be able to sit at the table this morning. Part of the problem, the reason the bankers could be in there doing it is because there is an asymmetry of information. They know how these processes work, that are very opaque to us as consumers. And i think thats a necessary part of policy in this area. Banks are complicated in whatever way you come up to regulate them is going to be complicated and the bankers will have conflicts of interest and will want the industry to be regulated in a way that benefits them. So they have to be part of that process. And i think weve gone the direction we have for a set of good reasons. It doesnt really work just to say, well break up the banks to the point where theyre small enough it doesnt matter if they fail. Lehman wasnt that big. So i think dodd frank, the approach theyve taken, we need to make them safer so theyre less likely to become insolvent and need rules that allow the government to better manage them if they do fail. Its still an open question whether thats going to work. But we took that approach because we had to take that approach. I dont think theres another way to approach this and try to prevent another crisis. So, on the one hand, i get this, right . I get what josh is saying, and this is the too big to fail narrative that emerged. That the banks simply had such an important part of our economy, that allowing them to fail would have had even more cascading effects for main street. That said, as hard as it may be understand Something Like a derivative, whats not hard to understand is executive compensation, what the big guys make. When i look at the economy five years lake, in 2007, before the crash, it was 8. 4 million on average, and in 2008, start to come down to 7. 6 million. But today, on average, executive pay compensation is 9. 7 million. So if im at home watching, i understand five years ago, they failed, and theyre making much more and at the same time my income is stagnant. Thats whats been going on with monetary policy. If you look at ben bernanke keeping Interest Rates really low, who has that benefited . People who own stocks, property owners, and people who own the big banks. Because they can make a lot of money investing those assets in other ways. Thats one of the reasons why these big banks have a huge comettive advantage in the market, because Everybody Knows that they have this implicit subsidy and the government is going to bail them out. So you do need to break up the big banks. I dont know if josh fundamentally disagrees with you an eye roll. Whos benefited from loose monetary policies . People who are in work now, who weve had even an higher unemployment. And the other thing is, we would have had deflation if we wouldnt have had such aggressive action on part of the fed. Thats not clear. Its a counterfactual. It is. But people keep saying, the fed is printing all this money and theres going to be all this inflation. Inflation is running around 1. 5 . If the fed would have been less aggressive, we would have had homeowners even deeper underwater. One of the things weve needed would have been easier money policies that would have had a temporarily higher inflation i think executive compensation is, if the bank is doing better and the leader is perceived to be running the bank well and theyve made money, they get compensated with that. So i think that thats sort of a different category altogether as opposed to something that happened post the great depression, where the banks were kind of, mostly, sort of on board with the big changes that had to happen. What is interesting, i think, now, you actually have the banks kicking and screaming and theyre like, were not going. Absolutely, there will not be reform. We are not going to make it. I think people have made this a lot more complicated than it needs to be. They have their own language at the banking level. But its really pretty darned simple. Its about incentives. And you had a chance to change the incentives on wall street five years ago, because they badly needed to be changed. Because what you have now, people are rewarded to take risks with other peoples money. Pause with me. I want to talk about that question of risk and incentive and about whether its about greed or some connection between them. Before we take a break, we want to bring you the latest on the flooding disaster in boulder, colorado. At least four people are dead and 584 still unaccounted for this morning in the massive flooding. President obama has signed a disaster declaration for the area. Heavy rains have washed out roads, swamping cars and homes. The region is bracing for more rain today. National guard helicopters are airlifting stranded residents to safety. Theyre warning residents cut off to leave or face weeks without Running Water and supplies and electricity. Stay with msnbc for the latest. 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It will take new leadership in washington. It will take a real change in the policies and politics of the last eight years and thats why im running for president of the United States of america. That was nen senator barack obama in 2008, less than a month after the economic meltdown. So much attention is being paid to the anniversary that a white house official announced yesterday, president obama will make remarks tomorrow in the white houses rose garden to mark the fifth anniversary of the financial crisis and tout the economic progress thats been made. What kind of progress can president obama point to . He can mention the employment numbers, which were at 6. 1 before the crash, 10 at the height of the crash, and now sit at 7. 3 . Theres also gross domestic product, which is higher than precrash numbers, and median Household Income is not back to the precrash amount of 55,000, but is climbing back from a low of 50,700, in august of 2011. All of this leads one to ask, how much credit does president obama deserve for where we are five years after 2008s economic crash. How much credit or blame does the president deserve . I believe i mean, i completely agree with that speech he gave in october of 2008. Unfortunately, he didnt implement any of the things that he promised us. The change we can believe in never happened. He surrounded himself immediately as his close economic advisers with the people who are going to who are in part responsible for what happened, whether it was tim geithner or Larry Summers. Who were going to reestablish the status quo as quickly as possible. What was needed was a fundamental change in the architecture of wall street. There was a moment when it could have happened. It didnt happen, and i knew the moment it wasnt going to happen when he appointed tim geithner and Larry Summers as his key economic advisers. I think the president was cautious. He was too concerned because it wasnt a policy area he was particularly familiar with. So he relied on these people who had had the experience, who had been around, but those were the people who were in large part responsible for the crisis or complacent about its causes. So the dodd frank was a missed opportunity. When dodd frank were going through congress, a lot of the things that caused the financial crisis werent addressed. We have all this legislation that supposedly addresses these things and it supposedly doesnt. I want you to pause for our viewers and remind us what dodd frank is and why nearly half of the rules that were meant to be written have not yet been written. Dodd frank was the financial reform that was passed by congress in 2010. And the idea was that it would address some of these issues, for example, banks being too big to fail, it would address that. It would create all these rules to bapgs wouldnt take so much risk, roll the dice, gamble with so much money. Thats the famous volcker rule. But that rule hasnt been written. Because it sounds simple in concept to tell banks, dont take risks with your own but, but its complicated in reality. Banks have a lot of assets. What do they do with those assets and instructing them what to do is very complicated. On the politics, ive heard on one hand, okay, this was a missed moment, then, maybe it was a lack about understanding. Lack of accountability. If you look and see whos been held accountable, kind of no one. When you look at that 600page report that came out of the bankruptcy examiner that came out of the lehman bankruptcy, right, and he found actionable manipulation. Those are his words, not mine. And nothing came of that. I mean, so i think that theres a sense that, if youre a banker and there is no accountable at the end. I just dont think that anybodys really been penalized in ways that weve seen in the past. And it feels with too, when you say accountable, that carrot and stick problem, for if they are going to be so big, as part of our economy, then we both need the greed of bankers would operate and be forced, as a matter of policy, to serve the public good. And there have to be sticks on the back end, if it doesnt. What we dont want to do is say, we dont need banks, obviously we do, right . How do we shift the profit motivations, the greed motivations, so they serve a collective good . This is the problem. The housing policy and the policies that we instructed banks too engage in contributed to the crisis. Thats one of the reasons why a lot of the bankers havent gone to jail. They were complying with federal it wasnt illegal, right. They were complying with federal regulations that require them to lend to people with belowmo belowmedian incomes. And the problem is, if some of those people have poor credit, you increase the riskiness of the mortgage portfolio. But see, this is that return to the idea that what crashed wasnt the bankers and their choices, but these sort of irresponsible it was a combination. Homeowners. This is why i think its a mistake to turn this into a morality play and try to figure out, you know, whos morally culpable for the crash. I think it does make sense to say, the bankers are much more morally culpable than individuals who took out mortgages that were too big for t