Eliot Spitzer on Confronting the Financial Crisis

Former New York Governor Eliot Spitzer came to The Commonwealth Club of California in San Francisco this week to talk about "The Cataclysm of 2008-2009."

Spitzer, who served as New York State's attorney general before assuming the governorship, had a reputation as AG for going after corporate white collar crime and Wall Street figures. That history has earned him more than a few enemies in the business community, but it also gave him a point of view on the large-scale financial meltdowns, chicanery, and mistakes that have come to light in the economic crisis.

Listen to audio of his speech here.

Robert Reich Gives 2010 Economic Forecast

Robert Reich, former labor secretary during the Clinton administration and currently a professor at UC Berkeley, gave the Commonwealth Club's annual economic preview. The Bank of America Walter E. Hoadley Economic Forecast saw Reich speak to a sold-out crowd on January 22, discussing how far we've come since the financial crisis began, what legislation can work and what won't, and what we can expect in the coming year.

James O'Keefe: The Case of the Senator's Telephone

Conservative activist James O’Keefe was arrested along with three accomplices on Monday this week after being caught tampering with the phones in Democratic U.S. Senator Mary Landrieu’s downtown New Orleans office. O’Keefe, 25, and cohorts Joseph Basel, 24, Robert Flanagan, 24, and Stan Dai, 24, have been charged with entering a federal building under false pretenses with intent to commit a felony – a charge that could carry a 10-year sentence.

If you’ve glanced recently at our calendar, you might already know that this could spell ominous news for O’Keefe’s speaking engagement at The Club next week, where we hope he’ll share his experience as an investigative journalist (or noisome muckraker, depending on where you get your news) in uncovering the alleged dirty side of a little organization called ACORN – the Association of Community Organizations for Reform Now. As of January 29, O’Keefe’s Club speaking engagement is still on.

In a series of online exposés, O’Keefe and partner in (uncovering possible) crime Hannah Giles visited ACORN offices in Baltimore, D.C., L.A. and New York posing as a pimp and prostitute (respectively) who were interested in starting a legitimized brothel that hinged upon successfully housing and “training” underage El Salvadoran illegal-immigrant prostitutes. The advice that O’Keefe and Giles received from the ACORN tax specialists – whose paychecks are heavily subsidized by taxpayer dollars – was certainly surprising: all of it involved tax evasion. ACORN has charged that O'Keefe edited the videos, removing portions in which the ACORN employees showed that they didn't take O'Keefe and Giles seriously.

The resultant furor was fairly sharply divided down party lines, with Republicans labeling ACORN a corrupt and evil institution and Democrats labeling ACORN a corrupt and evil—wait, wait, that’s not right. As ACORN was investigated and defunded by Congress, Republicans and Democrats instead got into a fairly catty debate as to whether or not O’Keefe and Giles’ work constituted “investigative journalism,” with right-wing pundit Andrew Breitbart of biggovernment.com taking them under his wing even as Fox News took care not to get too cozy .

With O’Keefe’s recent Louisiana episode (details remain scant as of this writing), we may have the FBI weighing in on the debate on his February 13 hearing. In the meantime, The Club's Inforum division is working on a remote conference with the undercover journalist on Monday, February 1. Check our web site for the latest. 


UPDATE: The James O'Keefe event at The Commonwealth Club has been postponed.


--By Andrew Harrison

Four More Years for Ben Bernanke; What Will He Do?

Ben Bernanke was confirmed by the U.S. Senate today for a second four-year term as chairman of the Federal Reserve. He was supported by 70 senators, which sounds like a lot but is actually the lowest support a Fed chairman has ever received.

His reactions to the financial crisis have been lauded and lamented; he has been criticized for being too slow, too fast, too interventionist, too power-hungry -- and all of that likely contributed to his relative unpopularity in the Senate chamber. At the same time, he is Fed chair at a time of economic troubles unmatched since the Great Depression, which just happens to be an era on which he is a scholar.

David Wessel, economics editor for The Wall Street Journal and author of In Fed We Trust: Ben Bernanke's War on the Great Panic (and perhaps the only person to compare speaking to The Commonwealth Club with Judge Judy), addressed The Commonwealth Club in September 2009 on the topic of "Ben Bernanke vs. the Great Panic." Watch the video above of that presentation to see what insight Wessel offers into Bernanke's decision-making, and what that tells us about how the Fed chief is likely to steer the economy in his second term.

Earthquakes Near and Far: California's Everyday Readiness

As Californians, we have become accustomed to the reality of earthquakes. All of us learn from a young age that the next “Big One” is just around the corner, any day. While the shocking images captured during the Great Quake of 1906 from which San Francisco gets its reputation have only been viewed by most today in pictures, the majority of us recall vividly the terrifying image of the destruction to the Bay Bridge during the Loma Prieta quake of 1989. Though total protection is impossible, Californians are, for the most part, prepared for the inevitable temblors that will hit us.

But what happens when they hit places unprepared? Just look at Haiti. The 7.0-magnitude monster that rocked the island on January 12 revealed the unprecedented havoc such natural disasters can wreak on nations that are structurally, politically and financially unstable. Northern California’s Humboldt County experienced a smaller – though still substantially sized – quake just days before Haiti’s, but the damage there was infinitesimal compared to that of the one that hit the Caribbean nation, which has been attributed largely in part to an almost total lack of building codes.

Haiti, the most impoverished country in the Western Hemisphere, was caught entirely off guard. California, on other hand, has long known that, being precariously situated on the San Andreas fault, it must be prepared through local organizations and have near-constantly updated building codes. Most of the thousands of earthquakes we experience each year are small enough to go unnoticed – 92 were recorded by the USGS in the California-Nevada region the same day as Haiti’s quake, but the undisputed fact that we live in earthquake county looms over every resident.

So it only makes sense that Californians have particularly felt the need to reach out to those affected by Haiti’s earthquake. “San Franciscans have a deep understanding of the devastation caused by natural disasters, and we stand ready to assist Haiti in providing relief to the residents in the difficult days and months ahead,” said Mayor Gavin Newsom on January 25.

The city of San Francisco has unveiled a way to make sure many employees don’t overlook the opportunity to help out. On Monday, Newsom announced a citywide payroll deduction program that enables city employees to donate money to the San Francisco Haiti Relief Fund directly from their paychecks.

Relief efforts have been difficult with organizations and governments around the world scrambling to help repair the already fragile area, and San Francisco has done its part to streamline its local relief funding by use of the payroll deduction program, a partnership with California-based Safeway, Inc., to place coin counting machines in city buildings to collect spare change for Haiti, and use of the city’s 311 as a resource for Haiti donation referral.

The reliability of rescue and relief efforts should disaster strike is important when living in an area so prone to natural disaster. According to the 2008 Uniform California Earthquake Rupture Forecast, compiled by the USGS, Southern California Earthquake Center and the California Geological Survey, there is a probability of more than 99 percent that in the next 30 years California will experience a quake of magnitude 6.7 or greater, and the Bay Area has a 63-percent chance of experiencing a magnitude 6.7 earthquake or greater within the next 30 years.

And it doesn’t stop at earthquakes. The yearly wildfires that occur up and down the state are a constant threat during dry seasons, and the winter prompt landslides and flooding, requiring California to be declared in a state of emergency. The tragedy of Haiti has reiterated the need for awareness, preparedness, and organization.

Listen to audio of a Commonwealth Club program on the centennial of San Francisco's 1906 earthquake.

--By Heather Mack

California Governor Race Pares Down

Former U.S. Representative Tom Campbell’s departure from California’s gubernatorial race last week has shaken things up in the Golden State… kind of. While he’d been arguably the best qualified of the GOP candidates – with a Harvard law degree, a Ph.D. in economics, a long history of public service – his financially magnificent adversaries Meg Whitman (former eBay chief) and Steve Poizner (state insurance commissioner) have already brought to bear a collective $50 million in campaign funds, an amount that the former dean of UC Berkeley’s business school was simply unable to match.



For a taste of Campbell's approach to public finances, watch the video above, in which Campbell gives The Commonwealth Club's 2008 economic forecast. Whitman will discuss her plans for the governor's office in a February 16 speech to The Commonwealth Club in Lafayette.

As Campbell moves on to less-competitive pastures (on the other hand, now he’s contending for a Senate seat with former Hewlett-Packard CEO Carly Fiorina? hmm), Whitman and Poizner are preparing to square off in earnest.

Whitman, who has delivered a strong message to Californians with months of radio spots and campaign advertisements, has a lead of 45 percent to 17 percent over Commissioner Poizner in a recent Field Poll. The same poll indicates that Whitman’s campaign clearly benefited the most from Campbell’s exit, picking up moderate, financially conservative voters and putting her even further ahead of her remaining, quiet challenger.

The balance will doubtlessly change as Poizner finally loosens his purse strings – but after Whitman’s shock-and-awe strategy, will it be too late? Thirty-eight percent of Republican voters remain undecided, yes; but 20 percent say they view Poizner unfavorably. That’s 17-percent positive versus 20 percent negative. It’s a simple metric, sure, but it looks like the California GOP may actually prefer Poizner to run for the other team.

Would it be too impish to suggest that the Democrats are also working toward a GOP win? All of its candidates have successively dropped out of the race against a man who hasn’t even announced a formal candidacy, yet: former California Governor (1974-1983) and current California Attorney General Jerry Brown. The mayor of L.A., the mayor of San Francisco and the lieutenant governor were all able to assess their collective chances as less than excellent against the man who fought Clinton all the way to the Democratic National Convention in ’92.

But then, Brown did it almost on a dare, using only a $100-per-person contribution limit and an 800 number. Maybe he is the one to challenge Whitman — the most likely GOP candidate, at this time.
Perhaps predictably, both sides of the party line are acknowledging the economy as a primary issue in the gubernatorial election. The impact of Republican Scott Brown’s recent Senate win in Massachusetts, too, reveals an important shift as voters begin leaning away from Washington and toward small-government, fiscally conservative candidates – campaign finances aside, of course.

--By Andrew Harrison

The Story Behind Bank Re-Regulation

President Obama threw down a challenge to the banking industry yesterday when he announced plans to increase regulation on large banks, undoing decades of deregulatory efforts that reached their height in 1999 with the repeal of the Glass-Steagall Act. Glass-Steagall was a Depression-era law that separated commercial and investment banking. In making the announcement, the president was adopting the plan long advocated by former Federal Reserve Chairman Paul Volcker.

Richard Kovacevich, the now-retired chairman of Wells Fargo & Company, explained the long history of banking deregulation during a major speech to The Commonwealth Club in San Francisco on October 21, 2008. He discussed the competition between banks and non-bank financial organizations, and the restrictions on how banks could do business, that left big banks feeling as if they had to compete with one hand tied behind their backs.

In the United States, up until the 1980s, banks were highly regulated, with severe restrictions on what products could be offered. Regulators determined the maximum [interest] rates that could be paid on deposits -- known as Regulation Q -- and state usury laws dictated the maximum amount you could charge for loans. Since banks were not allowed to pay a market rate of interest, they gave premiums, so-called "toasters," to open or increase deposits. Banks were restricted to branches in only their home state, and only very few states had statewide branching. This made all banks geographically concentrated.

The large banks then began to find innovative ways around restrictions, creating new financial products and lobbying for legislative changes. That work reached its apex in the 1999 Glass-Steagall repeal.



You can watch Kovacevich's complete speech -- plus his Q&A with the audience -- in the video above.

In the wake of the worldwide financial panic of the past year and a half, governments around the globe have reacted with various announced plans to try to reign in banking systems they deem to have overstepped their bounds. On November 10, 2009, former Goldman Sachs Managing Director Nomi Prins told The Commonwealth Club that the risks posed by these "too big to fail" institutions is even greater today and that a deep re-structuring of banking is necessary. Listen to the audio of Prins' speech here.

The Financial Times notes that this will be a long process, and the end result is not yet known. "Bankers  said the lack of detail and the likelihood of a protracted debate in Congress would give them the chance both to lobby for changes and to adapt their businesses, with, for example, Goldman [Sachs] possibly givin gup the financial holding company status it adopted in the financial crisis," the paper reported today.

Was Massachusetts Senate Race a Game-Changer for Government Ambitions?

With the upset victory by Republican Scott Brown in the Massachusetts special election to fill Democrat Ted Kennedy's U.S. Senate seat, there is much chatter in the news media about whether this will bring an early end to the Obama administration's agenda. Will the president just be playing defense for the rest of his time in office? Will he refocus, triangulate, like President Clinton did after losing the House in 1994? Will the agenda be set by the Senate's 41 Republicans?

To give you some background on what's at stake in all the talk about government ambitions and battles over big government vs. conservative populism, watch this video of William Eggers speaking to The Commonwealth Club on "When Government Works and When It Doesn't." His December 9, 2009, speech and the Q&A covered the highlights of his review of more than 75 government undertakings in the U.S. and abroad in an effort to find out what works, what doesn't, and why.

Eggers is the co-author of If We Can put a Man on the Moon ... Getting Big Things Done in Government.

Jonah Lehrer Video: Financial Decision-Making in the Brain

Science blogger Jonah Lehrer returned to The Commonwealth Club in January. In this excerpt, he discusses the psychology of financial decision making. Did you buy or sell a good stock? Lehrer might know more about why you did it than you do.

Captain Chesley "Sully" Sullenberger on Airline Safety

"Hudson Hero" Chesley Sullenberger is using his place in the spotlight to push for improved safety regulations for airline pilots -- and thus for passengers. "Sully," as he's widely known, appeared in conversation at The Commonwealth Club in San Francisco with KGO-TV anchor Dan Ashley November 30, 2009; they spoke about Sully's heroic piloting of U.S. Airways Flight 1549, which was forced to make an emergency landing in the Hudson River after its engines were knocked out of commission by a flock of birds. "This flight was completely normal," he said. "It was unremarkable in every way -- for the first 100 seconds."

What happened after that first 100 seconds has rocketed Sully to national fame, as he and his co-pilot safely landed the plane without the loss of a single life. Sully and Ashley recounted the entire story, which you can watch in the above video; Commonwealth Club members can also read it in the February/March issue of The Commonwealth magazine, due out at the end of this month.

But Sully isn't just going around the nation telling people about his adventure; he's also using his stature to talk about airline safety and reminding people that "commercial aviation is ultra-safe; it's safe and getting safer" -- a message that likely helps reduce fears brought on by any story of airline crashes or emergency landings.

In his Club program, Captain Sullenberger also talked about the need to update rules governing things such as the amount of time pilots have to rest between flights. "We're living with decades-old rest rules, rules that were written generations ago, in a different world, at a different time, when, on the short-haul flying end of the scale, pilots weren't flying as many flights per day as they do now," he said. "On the long-haul end of the scale, the technology did not yet exist to have 15- or 16-hour nonstop flights to Mumbai."

He said that public awareness and political will are needed to make changes in the system. He's doing his part with the public awareness.

White House Settles Dispute Between U.S. Spy Chiefs

The White House has "issued a classified order to resolve mounting frictions" between the CIA and the national intelligence director, Adm. Dennis Blair, reports the Los Angeles Times. At issue was who had final authority in intelligence activities, including the conduct of covert operations.

The White House reportedly largely backs the CIA's desire to avoid more control by Blair, but the memo "includes language detailing the agency's obligation to work closely with Blair on sensitive operations," according to the Times.

CIA Director Leon Panetta alluded to the conflict during a recent presentation to The Commonwealth Club, but he suggested that he and Blair had a smooth working relationship. During his October 23, 2009, program, Panetta noted that lines of authority in the U.S. intelligence agencies hadn't been clear in the post-9/11 era. He said that Congress didn't develop "clear lanes in the road as to how the director of national intelligence and the CIA and the rest of the intelligence agencies" interact, and that led to years of conflict. "Having said that, both Admiral Blair and I have a good relationship," Panetta said. "We talk with each other, we try to ensure that we communicate on the issues that he is confronting. There clearly is a responsibility for a national intelligence director for coordinating the intelligence community.... At the same time, those of us who are within the intelligence community have to have the operational authority to do our job."

That interpretation doesn't sound far off from what Blair himself told The Club on September 15, 2009. He said that his job involves "setting priorities, providing leadership on the cross-cutting issues that affect more than one agency."

There was apparently significant room for disagreement within that larger umbrella agreement.

Watch parts of their presentations below, or members of The Commonwealth Club can read extensive excerpts from their programs -- plus FBI Director Robert S. Mueller III's October 7, 2009, program at The Club -- in the new issue of The Commonwealth magazine.