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Financial system making sure your money is safe and the future of investing.
Here to weigh in on all those topics Jack Brennan chairman of the Vanguard Group -- mutual fund giant you can see out there for more than a decade Jack is great you to be here.
A big picture here -- Jack having Ryan at vanguard as long as you did given what the government is doing say.
To take on the authority did go and and let's take over.
Nine of banks trying to regulate the pay of those people running financial institutions.
Is it too much or is it prudent.
Well I think yeah I don't think that final structure or the final regulations and rules and written yet I think we've seen.
Near term reactions to certain.
Issues in something like the authority to you know orderly unwind an institution I think makes a lot of sense.
But there's a long way to go before we know that sense what the final.
Future regulatory structure is going to be I think that's a good thing I think this is something that should take a lot of debate a lot of thought.
Not to be implemented in any kind of hasty way.
Well what's the downside risk then it's -- -- I mean there's always an unintended consequence right thanks what they're gonna be well -- -- Well -- -- and that's part of why you want to that's why you want why you want this to be a measured.
Really thoughtful debate I think that.
Figure out you know if there's a systemic risk regulators -- and information aggregate or or does it have authority.
Is it functional regulation with -- with an oversight body.
All of those issues are you know frankly intended to make sure we get the upside not the -- you know -- obvious downside could be.
You know you reduce the rewards for risk and you -- risk is needed and the question is.
At what level -- how it's it's supervised and the worst thing we could do is tighten things down so much.
That we reduce the incentives.
To put capital at risk in order to fund the economy to create new jobs -- organizations and so.
And I you know might read my sense is that that that.
Avoid eating tightening thinks too tightly is is in play right now and that's it that's a great thing.
-- talk about risks though and that one of the big kind of successful if you will government interventions was V.
Insurance of the money market funds last year after that one fun -- reserve primary fund broke the buck.
But in hindsight would it -- better -- If the government is -- it didn't do that perhaps or still isn't in there with the insurance program to force money.
Into riskier assets.
I actually think it was a I think that intervention was one of the great success stories of this whole period of time -- it was a unique period of time.
A unique set of risks I think in the marketplace.
You know we will unwind and and finish up in September 1 of our recommendations is an industry was to continue the program through September.
So I think in in that case that intervention not only was.
Successful but it structure was appropriate because it kept the market at play.
But provided a different.
-- -- different form of confidence frankly -- a period of time where was needed.
You know as you know you you you've -- the work that the industry is done on reforming.
And tightening up.
Money market fund regulation.
We think that sets us up to go back to an entirely free market answer as we move out into the future as this program on -- over the next few months.
I -- I don't wanna -- expand on this we've talked about increased regulation for the money market funds some protection there.
Homeowners who have gotten some trouble are being a little not I'm not entirely bailed out but they're getting protection with some these rule changes.
Foreclosure mitigation -- -- -- -- Where's the stock market protection you know because it because of the people that didn't get caught in the housing boom of the people.
They're they're surrogate wolf left aside here.
What -- The stock market protection ends up being you know getting the economy.
Back on its feet.
Getting frankly the financial system.
Shored up as well as it can they -- that there's no question that you know.
Stocks have the highest return potential but the greatest risk the risk side of that has been seen.
-- so we need to have corporate earnings.
Reinforced through a good economy we do need to have.
The future state of the capital markets and that includes the banking system the brokerage system.
Shored up as it's being shored up and you know so it's not a bail out there won't be you know.
Programs in place I can't imagine two.
Did it -- cents bail -- stock investors the best thing that can happen.
Is to get the economy and earnings going and frankly get confidence -- get -- there's a tunnel liquidity out there that wants to be in the stock market.
And the question is when does the bell -- that they are that people are confident enough to put that money to work.
But given the wild swings and given the losses Jack do you worry that investors will look at investing in stocks.
Like a casino and could abandon and -- as we've known it for years to come.
And it's clearly -- -- -- need to worry about it I don't think it will happen frankly I don't think it will happen I think we have.
A mindset in this country at least and I think more probably in the in the -- global economy.
That risk and reward are related and that in the long run you'll be benefited by putting money to -- money to work.
In higher risk assets.
Clearly you know when you see.
See ads and buy gold as it did well yesterday sure -- countervailing pressures but.
People will come back and be confident again.
And -- the average investor.
You know -- a 41 K plan is 41 or two years old.
In a -- to have interim losses and to put more money to work.
At 8000 on the Dow rather than -- not a bad thing and it's part of our job and the broad economy your job frankly.
To reinforce that fact to people that it's a long game and that systematically.
Being in the stock market.
Is the way you were most likely to create wealth for yourself and the nation Jack thank you so much Jack Brennan chairman of the Vanguard -- it was -- to -- -- -- well.
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