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Jack Lew on Fannie Mae, Freddie Mac [VIDEO]

Jack Lew on Fannie Mae, Freddie Mac [VIDEO]

Jack Lew on ending Fannie Mae & Freddie Mac

Treasury Secretary Jack Lew talks with CNBC’s Steve Liesman about the “melt down” in the government sponsored enterprises and the debate over the debt limit.

Transcript:

there has been suddenly a bunch of talk about reforming fannie mae and freddie mac. there is a bill from senators corker and warner that you haven’t had a chance to comment on. hat the way that the administration wants to reform fannie mae and freddie mac, what is in the senate bill right now? yes, i think that the conversations that senator corker and senator warner are having are very important. first of all serious bipartisan conversation. it’s a conversation we’ve been part of and working with them as we’ve been working with the chair and ranking member of the committee. i think there is a set of principles that are very important that we have to make sure that we never again end up with the failure like fannie and freddie where the taxpayer is left holding the bag for an unbounded amount of risk. we also need to make sure we ve a private financing of mortgage market in this country that’s restored. we have too little private financing of mortgages right new. we need to go back to private financing of mortgages. and we need to make sure that there is access to credit for borrowers who are wedding who worthy because owning a home is part of the american dream. i think that’s the general goals of corker and warner. that’s what we’ve been working towards. and i hope that this bipartisan conversation can continue and be successful about that. staying on fannie mae, a prominent nent member of this audience asked me to ask you why do you need to take all the dividends. why are there no dividends or no distributions left for some of the shareholders and some the bond holders? steve, i have to just remind you and everyone in this room that just four years ago, fannie and freddie were melting down and the taxpayer was put in a position where it was not clear what the limits of risk being taken were. it was set up in a way to save our financial system and it was set up in a way for taxpayers to get repaid. i think that it has worked and i have to note just on a sad note that herb allison had such a strong hand in designing these programs passed away this week and he was a great american who did great service to this country. i appreciate that. back to the issue. is there room for compromise here with some of the private sector stake holders? you know there is litigation on the matter. we can settle it now. let me move on. when we spoke if n. may, you said we would not reach the debt ceiling til at least labor day. has that changed and are we any closer towe would not reach the debt ceiling until at least labor day. has that changed and are we any closer tosaid we would not reach the debt ceiling until at least labor day. has that changed and are we any closer to avoiding a debt showdown? that is still where we stand. it’s 00 bit jush that the secretary of treasury has to look at day to day cash flows because artificial deadlines like the debt limit create the necessity, not just to see what our general condition is, but will we hit a day when social security checks have to be paid or disability or military retirement checks have to be paid and not have enough money in the bank because we hav enough money in the bank because we have the debt limit. and steve, the debate over the debt limit in august 2011 and the months over that is one of the most damaging self-inflicted wounds that i have ever seen washington inflict on itself and the country. it can’t happen again, and the congress has the do its job and extend the debt limit. no question about incurring new obligations, but it is a question of whether we pay the bills that are authorized in the past. congress has kept that commitment, and this country has kept the commitment for over 237 years and it can’t stop now. and so will we have a deal in the 11th hour and 59 minutes or some way to avoid the train wreck? well, the congress is clear that the president has made clear he won’t get into the negotiation like 2011 to the question of whether to take a default is on the negotiating table, because it is not. congress has to do its work. when you came in, and you up to the naivete, and what do you think of that? well, thank you for the extensionaivete, but something has to happen by the end of the year to fund the government for the next year. i hope what we have is an agreement that will replace some of the damaging cuts of sequestration to have a kind of recognition that building a better growth of america and future of growth of jobs that we have resources available for infrastructure and education and research and development, and there are a lot of things that there are bipartisan agreement on and we can work through in the time that remains. we have a package in place that essentially accomplishments the amount of deficit reduction that we set out for the ten-year period, but the question is composition. we remain of the view that medium and long-term entitlement and revenue review is the right approach. it looks like sequester is going to play itself out, and it is not going to be derailed which you were optimistic would happen in the spring? well, i think that there is still time for congress the act to address some of the issues that i have addressed. i hope there is a bipartisan agreement to try to do what is in the best interest of the country, and of the best interest of the economy and best interest of americans who want a middle-class income for

Jack Lew: ‘We need to use all the tools in Dodd-Frank’

Treasury Secretary Jack Lew talks with CNBC’s Steve Liesman about the controversy surrounding financial reform and ending too big to fail.

Transcript:

you’re arguing dodd-frank ends too big to fail, but there’s a lot of controversy about that. why don’t we need glass-steagall to be returning? sdl what i’m arguing is we need all theed tools in dodd-frank to make sure we’ve ended too big to fail. that’s why the rules and provisions that are are implement this had year are so important. that’s why what’s happened in the last 60 days is so important. i think there is a shared goal between what i’m saying and what many of the senators are saying which is that it’s unacceptable to be in a place where too big to fail has not been ended. and one of the things i guess i would say is that any efforts to delay or dilute the implementation of dodd-frank, if we get to the end of this year and we cannot with an honest straight face say that we have ended too big to fail, we’re going to half to look at other options because the policy of dodd-frank and policy of the administration is to end too big to fail. how did do you know you’ve done that and how do you know when goldman stanley blows up or one of these other companies that you don’t go in there on a weekend and you’re panicked like your predecessors were panicked and you go in this with taxpayer money to bail it out. i certainly hope we don’t have a real time test. the goal is to build procedures and mechanisms which we test with stress tests and with oversight that is very serious to make sure that there are adequate resources in place so that institutions can handle problems that they get into on their own and that if there is a need for resolution, there is an ordinarily process like the single point of entry where you can go through it without it causing the failure of our financial system. an awful lot of work has been done, an awful lot of work remains. that is the stated policy of dodd-frank. it is the law of the land. it is the policy of this administration.

Treasury’s Jack Lew addresses Wall Street reform

Treasury Secretary Jack Lew gives the keynote speech at CNBC’s “Delivering Alpha” conference. In his Wall Street debut, Lew discusses financial reform and the Dodd-Frank Act.

Jack Lew answers Wall Street’s questions

Treasury Secretary Jack Lew shares his thoughts about financial reforms, Fannie Mae and Freddie Mac, and how well Bernanke handled the economy during the economic crisis, with CNBC’s Steve Liesman.

Transcript:

cnbc’s delivering alpha conference. steve liesman beginning his q&a session with jack lew. — who are proposing other bills around dodd-frank trying to change it, repeal it modify it. even bring back glass-steagall. you’re arguing dodd-frank ends too big to fail, but there’s a lot of controversy about that. why don’t we need glass-steagall to be returning? sdl what i’m arguing is we need all theed tools in dodd-frank to make sure we’ve ended too big to fail. that’s why the rules and provisions that are are implement this had year are so important. that’s why what’s happened in the last 60 days is so important. i think there is a shared goal between what i’m saying and what many of the senators are saying which is that it’s unacceptable to be in a place where too big to fail has not been ended. and one of the things i guess i would say is that any efforts to delay or dilute the implementation of dodd-frank, if we get to the end of this year and we cannot with an honest straight face say that we have ended too big to fail, we’re going to half to look at other options because the policy of dodd-frank and policy of the administration is to end too big to fail. how did do you know you’ve done that and how do you know when goldman stanley blows up or one of these other companies that you don’t go in there on a weekend and you’re panicked like your predecessors were panicked and you go in this with taxpayer money to bail it out. i certainly hope we don’t have a real time test. the goal is to build procedures and mechanisms which we test with stress tests and with oversight that is very serious to make sure that there are adequate resources in place so that institutions can handle problems that they get into on their own and that if there is a need for resolution, there is an ordinarily process like the single point of entry where you can go through it without it causing the failure of our financial system. an awful lot of work has been done, an awful lot of work remains. that is the stated policy of dodd-frank. it is the law of the land. it is the policy of this administration. you will not be signing that resolution committing taxpayer funds. we are committed to ending too big to fail. that’s what dodd flank does as a matter of law and what our rules are intended to achieve. let’s do another sort of washington business. there has been suddenly a bunch of talk about reforming fannie mae and freddie mac. there is a bill from senators corker and warner that you haven’t had a chance to comment on. hat the way that the administration wants to reform fannie mae and freddie mac, what is in the senate bill right now? yes, i think that the conversations that senator corker and senator warner are having are very important. first of all serious bipartisan conversation. it’s a conversation we’ve been part of and working with them as we’ve been working with the chair and ranking member of the committee. i think there is a set of principles that are very important that we have to make sure that we never again end up with the failure like fannie and freddie where the taxpayer is left holding the bag for an unbounded amount of risk. we also need to make sure we ve a private financing of mortgage market in this country that’s restored. we have too little private financing of mortgages right new. we need to go back to private financing of mortgages. and we need to make sure that there is access to credit for borrowers who are wedding who worthy because owning a home is part of the american dream. i think that’s the general goals of corker and warner. that’s what we’ve been working towards. and i hope that this bipartisan conversation can continue and be successful about that. staying on fannie mae, a prominent nent member of this audience asked me to ask you why do you need to take all the dividends. why are there no dividends or no distributions left for some of the shareholders and some the bond holders? steve, i have to just remind you and everyone in this room that just four years ago, fannie and freddie were melting down and the taxpayer was put in a position where it was not clear what the limits of risk being taken were. it was set up in a way to save our financial system and it was set up in a way for taxpayers to get repaid. i think that it has worked and i have to note just on a sad note that herb allison had such a strong hand in designing these programs passed away this week and he was a great american who did great service to this country. i appreciate that. back to the issue. is there room for compromise here with some of the private sector stake holders? you know there is litigation on the matter. we can settle it now. let me move on. when we spoke if n. may, you said we would not reach the debt ceiling til at least labor day. has that changed and are we any closer towe would not reach the debt ceiling until at least labor day. has that changed and are we any closer tosaid we would not reach the debt ceiling until at least labor day. has that changed and are we any closer to avoiding a debt showdown? that is still where we stand. it’s 00 bit jush that the secretary of treasury has to look at day to day cash flows because artificial deadlines like the debt limit create the necessity, not just to see what our general condition is, but will we hit a day when social security checks have to be paid or disability or military retirement checks have to be paid and not have enough money in the bank because we hav enough money in the bank because we have the debt limit. and steve, the debate over the debt limit in august 2011 and the months over that is one of the most damaging self-inflicted wounds that i have ever seen washington inflict on itself and the country. it can’t happen again, and the congress has the do its job and extend the debt limit. no question about incurring new obligations, but it is a question of whether we pay the bills that are authorized in the past. congress has kept that commitment, and this country has kept the commitment for over 237 years and it can’t stop now. and so will we have a deal in the 11th hour and 59 minutes or some way to avoid the train wreck? well, the congress is clear that the president has made clear he won’t get into the negotiation like 2011 to the question of whether to take a default is on the negotiating table, because it is not. congress has to do its work. when you came in, and you up to the naivete, and what do you think of that? well, thank you for the extensionaivete, but something has to happen by the end of the year to fund the government for the next year. i hope what we have is an agreement that will replace some of the damaging cuts of sequestration to have a kind of recognition that building a better growth of america and future of growth of jobs that we have resources available for infrastructure and education and research and development, and there are a lot of things that there are bipartisan agreement on and we can work through in the time that remains. we have a package in place that essentially accomplishments the amount of deficit reduction that we set out for the ten-year period, but the question is composition. we remain of the view that medium and long-term entitlement and revenue review is the right approach. it looks like sequester is going to play itself out, and it is not going to be derailed which you were optimistic would happen in the spring? well, i think that there is still time for congress the act to address some of the issues that i have addressed. i hope there is a bipartisan agreement to try to do what is in the best interest of the country, and of the best interest of the economy and best interest of americans who want a middle-class income for themselves and their children. something else is going to happen by the end of the year. we will learn about the administration’s intentions when it comes to a new federal reserve chairman. i am guessing that you don’t want to tell me any names, but feel free to correct me on that, ll me what the administration is considering for the new chairman of the federal reserve. well, i have to start with ben bernanke has done an extraordinary job as fed chairman and you look at the work they have done, they have literally helped to save the u.s. economy and the world economy from a depression that. — that is enormous achievement. i will keep oval office conversations in the privacy. and is there something that you — i will keep it in the privacy. that is move on, and i can follow-up if you want. it won’t be different wording. and let me talk about the washington post article talking about the sequester, and the government cutbacks and said very few of the most extreme outcomes that you guys and the administration predicted have come true. have we escaped the worst of this and did you overstate it for the political reasons? no, it is not overstated, but if you look at the impact on the department of defense, we have a bomber fleets sitting on the squadrons sitting on in desert storage and who knows if they will fly again if they are called back into action. we have pilots losing flight time who will have to requalify if there is an emergency. on the domestic side for the kids not making it into the head start programs and the research scientists not getting the grants to maybe discover the cure to alzheimer’s or kans eer, — cancer, the effects are rear. it is not and on/off switch, but there are consequences that we will pay the price. in broad macro economic terms we have lost the gdp growth whether it is half a percent or full percend it is serious gdp growth, and jobs. and if you gave me a program to create hundreds of thousands of jobs, i’d be a hero, and replacing sequestration with those programs is serious. and senator, i know you have to run over to meetings in washington and then to rush sharks but if you could leave was the single best one or two ideas that the administration has for creating jobs, what would they be? well, steve, no substitute for economic growth. so we are working everyday to makure that we are doing what we can to generate the momentum of economic growth, because economic growth will create job s. we have targeted approaches aimed at creating centers of manufacturing excellence and modern manufacturing, but we need both. we need an economy that is growing, and we need to target the areas of innovation through things like manufacturing hubs and research and development. to say it is one thing would be to oversimply a very complex problem, but we wake up everyday of how to grow the economy and create jobs. how about things like tax reform and things like reducing the taxation on capital rather than increasing it? well, tax r important. i hope that as part of the frame to be dealing with deficit deduction that is balanced we can achieve tax reform. it would be a good thing, but the reaching the agreement on the frame is in the way. and i cannot be responsible for you to be late to a meeting with the president.

Jack Lew: Dodd-Frank didn’t stifle growth

Harm from the financial crisis was not limited to the U. S., said Treasury Secretary Jack Lew speaking about financial reform at CNBC’s Delivering Alpha conference.

Transcript:

thank you, tyler, for that kind introduction. i’m not sure my fourth grade teacher would have appreciated it. and thank you all for having me this morning. i’m glad to be here at this year’s delivering alpha and to be here in new york. not far from wall street, the engine of america’s financial system. next week will mark the anniversary of the dodd-frank wall street reformnd consumer protection act. and i’d like to spend a few moments this morning speaking about financial reform. what made it imperative, what we’ve accomplished, and what direction we’re going. when president obama took office a little more than four years ago, america was in the depths of worst economic crisis since the great depression. we were losing an average of 750,000 jobs a month. our economy was contracting at a rate of more than 5%. the pain was severe. you didn’t have to be harmed directly to know how painful it was. there is a good chance that a family member, neighbor or someone you knew was affected by it. and the harm was not limited to the united states. it spread beyond our shores damaging economies around the world and undermining our reputation as a read leader among nations. now, there were a number of factors that led to this economic catastrophe. none more significantn the near collapse of our financial system. in the span of a few weeks, many of our nation’s largest financial institutions failed or were forced to merge to avoid insolvency. the panic that gripped the financial system reflected a buildup of risk that was mismanaged or misunderstood. some found loopholes and outdated regulatory system to take on more risks than they should have. others create a complex financial products that few understood. borrowing standards loosened allowing too many americans to take on more debt than they could afford, while leaving investors and institutions with risks they were unable to manage. at the same time, government oversight failed to police or even detect the abuses that were occurring. regulations on the books were old and worn out. leaving consumers, investors and financial systems itself with inadequate protections. the regulators were operating undeucture that was largely designed in the after math of the great depression and was out of step with the far more complex modern marketplace. so the president faced an economy in free fall and he moved quickly to break the back of the financial crisis, ease credit and reignite growth. because of his actions and those of the previous administration, the federal reserve and congress, our economy began to turn away, growing and creating jobs faster than many had anticipated. but putting out the fires of the crisis was not enough. we had to reform our financial system. we had to strengthen the rules of the road, put powerful consumer protections in place, and modernize our regulatory frork. we also had to make sure the taxpayers would never again be on the hook if a financial company failed.

Cramer & Chanos preview Lew

CNBC’s Jim Cramer and short-seller, James Chanos, Kynikos founder & president, share their views on what they hope to hear from Treasury Secretary Jack Lew when he speaks at CNBC’s “Delivering Alpha” conference.

Transcript:

every day of the week. centurylink® your link to what’s next. welcome back. we’re talking with jim cramer and jim chanos. dodd-frank will play a part in what jack lew is talking about. what do you expect and where do you think we are? in when i look at the bank earnings so far, i keep coming back to what jamie dimon told me which is that it turned out to all come out in the wash. he used to talk about it constantly. really go to the government, really take on the senator warrens even when she was just a thorn on his side. and he says, look, we’re dealing with it. and it’s not so bad. i wish goldman had addressed the capital ratios better. good article today saying why did goldman play coy when no one else did. i know brian moynihan is not going to play coy. jim. take federal deposit insurance. you should expect to be regulated. if you want to do the stuff outside it, holding company, in subsidiaries, i would define clearly what the taxpayer stands behind and make that the bedrock of banking system which is necessary for growth in our economy. everything else, let the free market decide it. it happen at the holding company, whether you call it a break up or not, you can just separate it. but anything else like cross border derivatives, it should be subject to market funding. let the market decide. because an awful lot of capitalists in our banking systems when you scratch deeply, are not capitalists. they’re capitalists when things are going well. they’re socialists when things are not going well. are you an elizabeth warren fan? i’m a big elizabeth warren fan absolutely. how about the idea that we got some transparency in the derivatives, we could make a judgment. i still can’t find out what the book is. fine. or how much is netted. and particularly in some of the european banks. to me you can’t have it both ways. but you were even talking about is doing some of the stuff in subsidiaries, that doesn’t avoid the problem. it’s still there. no, above. at the holding companies. let that all occur at the holding companies. let the banks, let citibank, let the bank of america that take deposit insurance that we back right here at this table, that needs to be regulated in my view. do you see risk in the system? because right now i don’t think the banking system will come crumbling down because there is no leverage. we’re long u.s. banks in our hedge fund. there are risks elsewhere. is that in part because we also far go has 30% of market, something that the united states never allowed before? we’re long the u.s. banks global presence. again, in o global fund just because i think that there is a atic european banks still and disasters in asia.

Delivering Alpha: Meeting of the minds

The Delivering Alpha Conference kicks off tomorrow. CNBC and Institutional Investor are hosting the event, where some of the biggest names in business and politics will be speaking, including Treasury Secretary Jack Lew.

Transceipt:

to experience it for youf. tomorrow’s the big day. the delivering alpha conference hosted by cnbc and institutional investor. some of the biggest names in business and politics will be there including treasury secretary jack lew. he’ll speak at the conference and join squawk box for a rare interview tomorrow morning. and that is certainly not all. josh lipton is back with me to go osome of the exciting speakers we’re going to hear from at delivering alpha. listen, we can start with your panel, you’ve got richard perry, perry capital. big deal guy. yep, the ceo of bridgewater. later in the day, david faber is going to ask jim chano for the best, most actionable ideas. someone that doesn’t do a lot of press. long time investor with a lot of respect. also carl quintanilla talking to john paulson, housing, m&a and gold. and finally, of course, carl icahn talking to our own scott wapner, which is so great given the ongoing saga that is dell, michelle. right, because he’s so involved in that. for the viewers that don’t know, he’s involved in trying to shake up the situation at dell. in michael dell’s takeover attempt. you’ve got the shareholder vote on thursday. michael dell, carl icahn forcibly opposed to it. it’s so great the day before that scott is going to be talking and i’m sure carl giving us his views on the entire deal. delivering alpha. for the novice viewer who doesn’t know what that means, that means delivering returns above the average, right? right. and these are some of — what’s remarkable is, some of the people you’re going to see tomorrow, i think of a guy like pelt which is so great because a lot of these don’t — a lot of these men and women don’t give a lot of interview this is your chance to hear from people not always out and about with the media. and giving you their best picks — managing the harvard endowment, which is the biggest in the world, she rarely gives interviews, as well. she can have such a long-term interview because she doesn’t have to worry about redemptions. her investors will never take away her money. they may take her away, but the money will always be there is so she has a really long-term view. really. i’m excited to see how the markets may react to different sectors. we’ve seen individual stocks move for sure. josh, thanks so much. got it.