Seebadnews YANG XIANG: Hi, my name's Yang. I'm a third year in Sociology. Thank you for this conversation. So my question is two-fold: with political populism, economic nationalism, and the lack of multilateral thinking, exemplified by Trump’s playing hardball on tariffs, what better options, wherewithal, or conviction [can] the next generation of global policymakers have to remedy the next possible financial crisis than the last one. And to what extent will China be able to offer a remedy again, say, by sacrificing some relative gain in exchange for some relative power, a capacity this administration may not be happy to see, if not undermine it now?
CHRIS DODD: Hank, you take that one, will ya? [LAUGHTER]
HANK PAULSON: So I'm gonna make this—I’m gonna go very simple and very big on this, because I think you always have to assume that, you know, the world is a much more uncertain place today than it ever was. And the world is increasingly smaller, because it's interrelated, and what happens in one part happens in another. And so to me, I start with the U.S., and I do think we need to fix our problems here. We've got less economic problems than any other major country, but we will be able to withstand a future crisis if we've got a strong, resilient economy. And so all the things I'd want to do here are, you know, rather than getting into all of the policy prescriptions, you know, we need–we have an economy that's growing at a good pace, but a good portion of the people are being left behind. Wages have been flat for a long time.
You know, I look at it–when I say, what was one of the causes of the crisis, you know, for years before the crisis hit, productivity had been declining, you know, wages had been flat for years, household borrowing—people were borrowing more than they could afford because, you know, to try to keep up and maintain a standard of living. So I happen to think the kinds of things we need to fix are things that let more people participate in the success of our economic system. If we don't do that, our political system isn't going to work and we're not going to be well-served. I also happen to believe we have to lead and be open outside of the U.S., because if the U.S. doesn't help shape the world we live in, it's going to be a very dangerous place and it's going to hit us.
I get asked a lot about China and financial risks coming from China. That was one of the questions you asked, or was it are we going to lose ground to China? Which was it—were you concerned about financial–? I happen to believe, for what it's worth, you can't predict where the next crisis will come from, but I don’t think we want to fight the last war. I don't think it's going to come from our banking system. The danger may be if banks are too regulated, we force the risk out into other areas, but I think it's more likely to come from outside of our country. But when I look at China, I look at, you know, a lot of issues that we had in the U.S. in terms of shadow banking markets, you know, lack of transparency, short-term debt financing long-term investments, and so on. But there—that is all in their local currency, they don't have an open capital account, I think they've got plenty of room to deal with these issues,
and you know, in China, their situation is the opposite of ours. It takes political courage to do a bailout in the U.S.—it's unpopular. In China, that's their go-to move, you know, so it takes political courage not to do a bailout. So, you know, you create all kinds of moral hazard. So I'm not predicting a crisis coming from outside of the U.S., but I think for younger people today, the key is to get a political system in this country that works, is not dysfunctional. It's got to be bipartisan, nothing lasting is done that's not done on a bipartisan basis. And we all need to be working to fix the political system, and the political system is a little bit of a catch-22. It's hard to fix the political system if you've got a dysfunctional economic system, and it's hard to fix the economic system if you've got a dysfunctional political system. I tend to be an optimist because I'm an American, and I think we're gonna—I keep expecting the leadership to emerge. [LAUGHS]
CHRIS DODD: I know! Let me just mention a couple of things in response to what you said, because it's–I’ll share what I was thinking about, particularly in writing the financial reform bill. Nobody's been aware of this, but in April of 2008, the G20 came out with a series of recommendations on financial reform. I didn't go around issuing a press release that I was sort of curious about these ideas that the G20 had recommended, but we followed them to a large extent, and you can imagine the political reaction if someone had suggested we were following some international set of criteria. Two things about what we tried to do with the bill: one was restore confidence, which had been shattered, and so I can't legislate confidence, but hopefully some of the things we did would bring confidence back to the system. And the other was to try to harmonize where possible, internationally, some of the rules. I didn't want to see our country become—we'd been leading in financial services for decades.
克里斯·多德：我懂你。让我再顺便说几点，回应一下你刚才说的，因为它—我分享一下我的想法，特别是撰写金融改革法案时的想法。（注：即《多德-弗兰克法案》全称《多德-弗兰克华尔街改革和消费者保护法》（Dodd-Frank Wall Street Reform and Consumer Protection Act），它是在众议院与参议院分别通过的法案版本基础上整合而成的，分别于2010年6月30日和7月15日获众议院和参议院通过，最后由美国总统签署，被认为是20世纪30年代以来美国改革力度最大、影响最深远的金融监管改革。该法案旨在通过改善金融体系问责制和透明度，以促进美国金融稳定、解决“大而不倒”问题、保护纳税人利益、保护消费者利益。）当时没人会意识到这点，但是在2008年4月时，G20峰会期间提出了一系列金融改革的建议。我当时并没有刊发什么以表示我对这些G20提出的建议感兴趣，但是我们采纳了大部分的改革建议，你可以想象一下政界的反应，如果有人建议我们在跟进一系列国际标准。我们主要围绕法案做了两点：首先，修复动摇的信心，我当然不能立法恢复信心，但是我希望我们做的事能让人们重拾对金融体系的信心。再就是在协调，在国际上可能协调的地方，协调一些规则。我不希望看到美国变得——我们几十年来一直引领金融服务领域。
To give up that leadership would've been catastrophic, in my view. And so one of the reasons for writing this bill—the Financial Reform Bill—which by the way, I remember the Secretary actually talking about the importance of re-writing the rules, the tool-chest, in a sense, but you could never get Congress to do it in the absence of a crisis. We never, ever could have never passed the Dodd-Frank legislation in '06, '07, '08, and you couldn't have passed it again in 2010 or '11. The window opened up because of TARP—what we went through—and so there was an opportunity to do that and get it through. But the harmonization was something I really wanted to see us come out leading on. We'd set sort of some ideas and rules, and maybe the rest of the world would follow, in a way. So hopefully today, in the absence of—when the President talks about being a "nationalist" and talking about "we're gonna go our own route and own way," I think raises some serious questions that does pose some serious risk, financially and politically, with that mentality.