From times square in new york city, the new wall street week. Humble southern beginnings and a british private school. Larry summers and ben bernanke came from different backgrounds, but both love the baseball, harvard, and the white house. What was your childhood like . Works a small southern town. Economically challenged. Agriculture and textiles. Our textile town, my grandmother moved in 1941 and started a drugstore. They were sort of like the practitioners for the town. People would ask them about i worked in the drugstore. It was a good experience in many ways. A chance to see how people live in a small town and how hard it is to make a leaving living. You talked about the struggles. How did that set you up for later in life . My father was the town pharmacist. He gave people credit. A lot of people could not pay. He would talk to them about what they could pay. It was a tough time. A lot of economic challenges, even today. Did that, years later, shape your thinking about Interest Rates . The availability of credit . My father was a small businessman. There were competition. Store and borrowed money to build a bigger store. They had to get a bank loan. He needed to have access to the credit. Years later, that did have an impact on you when you are thinking about availability of credit . Credit is critical. You cannot make an economy work without credit. That was my concern. Credit was going to freeze. People were not going to get a loan or the kind of financing if they needed it. You got yourself into harvard. This is a fantastic burke book, then bernanke, the courage to act. Let s talk about this. You got yourself into harvard. You could earn enough working to pay part of your cost at harvard. I was a construction worker. Carrying cement and sheetrock. When i was a college, i worked south of the border, a tourist you grew up in a small town in the south review got to cambridge and said you felt comfortable. Tell us why. Mr. Bernanke i was bookish. I loved ideas. Cambridge, massachusetts, they are in the small city. It is a place where you can learn about practically anything. You could study swahili. French history. The title the book, the courage to act. Mr. Bernanke my wife suggested it. Made. Highstakes. They were made under tough uncertainty. People at the wed. Fed, congress. Often, the toughest part of the thing was the we had to do what we had to do. Where did you grow up . I grew up in suburban philadelphia. Had two younger brothers. Came from a family where both my parents were economists. Someone said, since one of my brothers is a lawyer, the other brother is a psychiatrist, they i don t know anybody in philadelphia who is not passionate about schools. Is that something you grew up with as well . Mr. Summers i grew up passionate about the 76ers. 45 years in boston has moved that a bit. After i have seen how the websites do, i still check out the phillies and eagles. What kind of kid were you . I would not say i was the wildest. I didn t do my homework reliably enough. I was in the chess club and math club and stuff like that. Mr. Summers . Mr. Summers i m not sure i parents. I went to england for a year because my father was on sabbatical. Because it was england and traditional, they insisted on interviewing not just a kid but the parents as well. My mother and father and i were there. The guy asked me, the headmaster asked me, who my favorite president was. I said, Franklin Roosevelt. He said, Franklin Roosevelt . I said, yes. He caused us to win world war ii. The guy continued to express that he was shocked. My father, almost lost his temper. He said, Franklin Roosevelt was the guy had served with a set of conservative people in the war who hated roosevelt. He always supposed roosevelt was hated by the american people. Far from it. I did go to that school because my mother successfully restrained my father. I grew up in a wonderful household. Family. I would hardly call myself a rags to riches story. In that sex, i m not sure i m the classic american dream. But i feel incredibly lucky to have had the set of opportunities that i have had. It makes me want to give Something Back to the country and that is why i have wanted to hello. I am Larry Summers. David rubenstein. David petraeus. I am watching wall street week. I watch wall street week. I m pleased to be on the brandnew wall street week. I hope you are, too. Wall street week is sponsored in part by a coward. An unobstructed view. Imagine a business built on the premise that straightforward Financial Advice is the thing to do. Rising above the discord of an industry compromised by conflicts of interest. We live by the fiduciary standards. A legal pledge to put our clients interests first. Not because i was done. I was tired. I started looking around for a business i believed in. I wanted to do something more green. They help me create a business plan. They taught me unimaginable i am here. Get your free business mentor at score. Org. Dr. Ben bernanke steered the country through one of its worst financial storms. He talks about being the chairman of the fed during the crisis. Most people a good crisis started when bear stearns collapsed. Is that about right . X i do. Before, we knew house prices were high. They begin falling into thousand six. We also new subprime mortgages and others were not doing great. What we did not appreciate was this was going to trigger a big, broad financial crisis. We only began to see inklings of that in 2007. Were members of the fed having communication with the executives . I talked to executives regularly. Even people on wall street did not have that clear of a vision of what was happening. I can remember being in the city when it was evident lehman was going to collapse. Feels like yesterday to me. We were worried if it failed, it would cause a financial panic to go up another level. Create a huge problem for the economy. We tried really hard to save it. We used the same strategy we used with bear stearns. We brought potential buyers to new york to try and get a deal done. Too many losses. In the end, it failed. We tried really hard to save it. Put it into the context of history like the panic of 1907 are the great depression, 1929. Your opinion of the sorts of failures and the impact it has. The Federal Reserve was created precisely for the panics. It was a situation where people lost confidence in their bank. There was no deposit insurance between desk before 1934. People would line up and the bank would fail. That was a scale scary thing. People were going to the banks and taking cash at atms. I remember local banks in atlanta, they were actually running out of cash because of the amount of money coming the whole week, both sides lehman, aig and other companies in trouble, we had a run that funds. A lot of people have accounts at money market mutual funds. Funds. The first thing we tried to do investors were running away from risk every way they could. From liquidity. Everybody wanted the whole cash. Nobody wanted credit or other kinds of assets. We would ultimately lend funds to different kinds of markets. Trying to make sure firms had the funding they needed. Up at the congress, the first big meeting to discuss the crisis. Tell viewers about that meeting. We determined we were going to lend money to pay bills. Basically, the whole company. Why it was essential to protect the system. The senior center, rubbing its chin. Nothing you have heard here tonight constitutes congressional approval for what this is your call, your decision and your responsibility in july, 2007, you said the crisis was about a 90 billion problem. When it started to contagion, if you well, it became a bigger and bigger problem. You masterfully stepped in and took measures to stop it from being broader. Tell us some of the measures. In the old days, it would have been just the banks. In a modern system, you have banks and also security steelers. There is another type of market where cash is lent to companies. If you want to finance your inventory, you borrow on what is called a commercial paper market. They started stopping commercial paper. You were comfortable because you have a longerterm view. We did ultimately because we are a public institution. Every loan was paid back with interest. We turned over profits to people. There were so many products created by the investment banks to be sold. Are you surprised there has not been the kind of prosecutions one would have thought against these institutions . That is pretty much what has happened. Billions and billions of dollars. Most cases, individuals have not been held responsible. My problem is with the i want to talk to you you about the future. Curious what i learned and what you should be thinking about. You have to look at the system as a whole. You can be looking at each individual piece which is what was happening. You also have to look when things are going well. Sometimes there is a risk building up under the surface. You have to pay close attention to that. In the end, you have to make judgments and find out where the risks are. Richard fisher. He said he was worried, it might be difficult for you to make difficult decisions. It is tough for anybody to make hard decisions. He says you worry super empathetic person. I think it is important for policymakers to look at the people behind the numbers. These are really people with real jobs. Real jobs and families. What we all did, my colleagues and i, the right thing for main street. That is what we were trying to accomplish. They were too big to fail, that was the concern. Is that still a concern . We are making a lot of progress. They hold bigger buffers. If they lose money, they are losing their own money. For a long time, before they ever get to the point where there is concern about the solvency. If they can shut a firm down without creating a broad panic, they will be more inclined to do that. Signup for the free wall street week newsletter. Go to wall street week. Com and sign up today. Wall street week is sponsored in part by Coke Industries koch industries. From fuel, we help make it all. It is about the journey. We are koch. My 401 k statement. I can t seem to save anything. Pizza for todd. Don t get left behind. Get tips for saving. Heirloom tomatoes. Lazy picnics. Our commitment to helping america s farmers and ranchers. We are koch. Everybody once a healthy u. S. Economy. That is his solution for growing this great nation. About slow growth and then you became a distinguished policy advisor. What steps were taken . Are we different today than we were were . Works there are some things that true. One of them is the u. S. Cannot be in it wastes of prosperity and away sis of prosperity. That is true when bill clinton was coming to office. S. We were worried about what was it is true right now when you ve got a lot of trouble in europe. When emerging markets are moving more towards submerging and less towards emerging. Talk about fiscal policy for a second. What would you put in place now . Infrastructure . I would embark upon a program of infrastructure investment. Which would initially be financed by borrowing. If there was evidence the economy was overheating, would be financed by an increase in the gasoline tax and the carbon tax. The extra money people because of excessive potholes, works out to a 47 gallon gasoline tax. It is crazy not to make these investments to do adequate investment. One problem people do not understand is the difference between good debt and bad debt. What you are calling for would add to the deficit. Is it your opinion that would be good debt for the society . X yes. Think about this. Deferred maintenance is debt. Actually, borrowing money in order to do things today when they are cheap rather than agenda ration a generation from now is reducing the burden. It is not increasing the burden. I think you could articulate this, the counter argument someone would say, be at the tea it is hard for me to make the m in support. 19 trillion in debt and climbing and we cannot afford to do this kind of thing. Get the government off the backs of the people. I have not had a chance to hear your perspective in terms of a result of quantitative the income disparity. Asset prices have benefited such population. How do you square that in terms of, it was necessary . We ve got a huge opportunity to push the economy forward. If we do, there would be less need for monetary access to drive the economy forward. I think there was a better way to do it than with extraordinary easy monetary policy. Is necessary because the policy was not in place. If it created certain excess, rather like highend prices, they would say that is one of the negative byproducts. There are medicines that are necessary for your health. To have adverse side effects. It has to come on the fiscal side and structural side. If we had the right immigration policy, it would spur residential investment. That would mean more private investment. It is not all about the private sector. It is about having more feeling good about pfizer . Johnson and johnson . They are all components of the Health Care Sector which includes over 50 stocks in the s p 500 to add diversification. Why invest in a single stock and you can own the entire sector . Considering the risks and rewards. Visit us on the web. You can join millions of americans turning off the old media. We are in over 40 million homes. We are available online. You can watch us anywhere in the world. Just download the app from your iphone or android. Do it today. Find out why millions are tuning in. In part by Morgan Stanley capital. Cheeseburgers and harvard yard, these are a few of the favorite things of the great economic minds of Larry Summers and ben bernanke. One of the things we do, we play word associations. Come up with a word. We get your reaction. Hawaiian shirts. I always wondered why you cannot have hawaiian shirts and still do a serious job. It is hot in washington in summer. Hawaiian shirts. What is the perfect day . Getting up, putting on my jeans. Driving to an institution. On research projects. Favorite meal . Cheeseburger and fries. You had sleepless nights. That is keep you up at night now . What s i like to see my dog which jumps on the bed. I sleep pretty well, thank you. Your first reaction . If you could have dinner with any three people who are alive . Franklin roosevelt, winston churchill, albert einstein. Favorite part of the day. Dinnertime. Best thing about the harvard campus. Harvard yard. 2016 election . X democrats. Strong leader who history will remember well. Your history. He fought hard to make i want to thank and bernanke and Larry Summers for joining us today. That is it for today. You can check in with us at wall street week. Com. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] paid for by skye [music] joel osteen well, its a joy to come into your homes. And if youre ever in our area, i hope youll stop by and be a part of one of our services. I promise you well make you feel right at home, but we thank you so much for tuning in today. And thank you again for coming out. Id like to start with something funny. And i heard about this archaeologist in new york, he dug down 10 feet and found traces of copper wiring dating back 100 years. He concluded that new yorkers had a Telephone Network over 100 years ago. Not to be outdone, an