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I have and the convention floor in Tampa.
-- the election is bringing the financial crisis and the bailouts back to light they were a bit topic and congressman Ryan's speech last night.
With some mom with a plan to prevent another bank bail out Robert Downey former chairman of the Securities Industry Association.
I joins me now Robert if you actually whitbeck in a prayer were -- local Saxony you.
But yet you did not want to see Glass-Steagall.
Repeal that separate investment banking from commercial -- and why that's a surprising connection I think.
Well I think it's surprising today but it wasn't surprising then.
Twenty years ago and I was chairman of securities in -- association.
We had very few commercial bank members.
Investment banking was completely separate from commercial banking.
And so we were defending.
The idea that an investment bank an independent firm should be able to compete.
Without uncle Sam's backing and frankly commercial banks have deposit insurance so are there are different creature than investment -- I think -- -- very same point a speech she gave it Huston you said.
That basically that we didn't learn anything from history that -- the set the savings alone the ball goal.
You love the eighties because they've -- ensured it -- -- -- hundred billion dollars one you know came out of taxpayers' pockets.
This win learning -- -- sleep now we're still a learning.
It seemed that we didn't because when congress finally got rid of Glass-Steagall in 1999.
And it had been chipped away by federal regulators bank regulators before that they had of perfect example of what goes wrong when you have.
Federal deposit insurance and you -- -- laws and that's what happened with the S and l.s in the eighties and they they they were able to get many more powers and of course as you say a hundred billion.
A taxpayer's money.
You know it's also something else that you should whenever nation privatize as the gains while -- socialize the losses.
No societal good can be achieved.
Yes as can you elaborate on -- -- don't simply it's it's.
Capitalism has to permit failure.
And failure was up.
Thing that happened often in the investment banking business.
When it was independent Drexel Burnham is a perfect example it didn't bring the nation down -- the system then was just the failure other firms succeeded.
But -- but -- -- a special situation because they have.
Backing from Uncle Sam and they have access to the Federal Reserve.
In times of crisis where is an investment bank has -- -- from a commercial bank when it when it was independent.
So those are the kind of things that I think should not be permitted to happen to you.
We UN also say we can't.
Bring back plastic -- there's no way the genie in the bottle well so there's no way to put that genie back -- up.
Well I think it would still be the ideal solution but I just think realistically it would be hard to do that.
Luckily do that does take away FTSE well and and -- -- Well I think that was a little misunderstood in the Wall Street Journal piece because what I really talked about to be consistent and if you're gonna get rid of the and the reason.
It's -- often called the separation investment banking and commercial banking but that's part.
Par today is deposit insurance so to be intellectually consistent yes.
Get rid of part B then get rid of par today but -- day is here to stay deposit insurance by Uncle Sam is here to stay the question is.
Who should have the advantage of that and we don't not believe it should be.
If -- should be used by investment banking or commercial bank.
Let me ask you this in your opinion do you thing that -- Baker former investment banks the Goldman Sachs and Morgan Stanley is even Barkley is an accent do you think that they would.
Prefer to go back to just investment banking because when used the phrase proprietary trading around here people look at it look at you like you're about to stab them in the back.
You know well proprietary trading was was no problem for an investment bank.
Because if the prior -- -- trades didn't work out I -- there -- problem could you decide who and you succeed if they did work out.
But if you're then going to be if you're commercial banking you get bailed out on a proprietary trade that's a that's a big problem I don't think though that trying to define a proprietary trade verses.
Market making and and and hedging is is that it's an easy thing to do when that's where I would disagree with the chairman Volcker.
It's a nice idea it's well meaning.
But it's so hard to do.
Do you disagree with the bulk or.
Role I I don't I think it's a good attempt to but I think guys I said in a talk there what -- it will be putting lobbyists and lawyers kids and grandkids.
True business school in graduate school just fighting it it's it's just too hard to define what what -- part -- trading.
And what's hedging and what's market make.
Robert Downey who -- Securities Industry Association chairman -- take for me of -- that you've been very vocal let's talk again -- -- -- her at another point they can't.
Thank you -- okay.
Well the -- about.
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