Meet the Press   |  September 15, 2013

Paulson: 'It's much better off'

Former Treasury Secretary Hank Paulson touts the progress made in the American financial market since the 2008 collapse.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> brink of economic collapse , that was the state of the u.s. economy five years ago. what is our economic reality now and our future? joining me former treasury secretary hank paulson , he is the subject of a new documentary on netflix calls "hank," five years from the brink. also joining me former congressman barney frank , one of the co-authors of the wall street legislation known as dodd frank and cnbc's maria bartiromo . welcome to all of you. such a big topic and, hank paulson , i think the obvious question, we staved off collapse, but five years later is the economy better off than it was?

>> well, that's an easy question. it's much better off than it was. we avoided a very bad fate, things could have been as bad as the great depression but today the economy is growing at 2% and although that's not enough, it's -- in many ways it's something we can take satisfaction in given the amount of deleveraging that needed to be done, consumers and institutions. and capital markets are behaving as normal. we still got some problems we need to address.

>> barney frank , one of the issues that coming up in asking better off or not question five years later as senator elizabeth warren said, look, the banks are 30% larger than they were, too big to fail. she asserted is still a reality. could what happened five years ago happen today?

>> it could not happen in the same way. the biggest single cause of the problem last time i think everybody agrees was that mortgages were being given to people by institutions that shouldn't have given them to people who shouldn't have received them and then they packaged them and sold them to people who didn't know what what was in them. only one prohibition mostly pro-market, doesn't tell the financial community they can't do this or that. we do try to say if you take risks you should be responsible if they go bad. but we banned the bad mortgages. i very much admire senator warren but she's wrong if she thinks that. here's what the law said, this is bipartisan as this whole thing should have been. secretary paulson suggested the basic approach. some large institutions too big to fail out taking account of the consequences so have the power in federal officials to step in, put those institutions out of business. as i said i have one disagreement with sarah palin . she was right we enacted death penalties for big bank, not old ladies and the bank is abolished. some of the debts may have to be paid to prevent there from being contagion but any penny advanced by law has to be recover eed by the secretary of the treasury from the largest institutions in america. what happened with aig and other institutions that cannot happen again. can you not if you are overly indebted receive help from the federal government paying your debts and stay in existence.

>> here's the reality, maria bartiromo . you look at the favorability of wall street firms still very negative, 42% on the negative side in our latest poll. as i talk to ceos this week and bankers, they say, look, one of the issues we have to keep so much capital in reserve now there's not enough capital to invest. that ultimately hurts economic growth . we're not able to make as much money. make as many deals and we have tremendous income inequality . "time" magazine said did we win in all this.

>> i agree with all that has been said. on the capital front, capital has doubled. liquidity has doubled or tripled. i think the industry is in much better shape. we need to get beyond the conversation of is wall street evil? are the bankers evil? and causing pain? and toward the conversation of, how do you create sustainable economic growth ? that will answer the issue of inequality. because with growth comes jobs. so we need to come together and figure out how businesses, banks included, are actually going to spend that money. trillions of dollars on the balance sheet. you're right. they're signaturen 0 it but the idea that capital has been raised is absolutely a positive no a negative the fact that --

>> hear, hear.

>> i couldn't agree more. to me that's what it's all about, sustainable economic growth and i think the best thing --

>> what we're still -- our growth is so sluggish, right?

>> it is sluggish and so what we need to see is we need to see democrats and republicans coming together to deal with some of the big structural reforms we need. immigration reform , we need a new tax system. i could go on and on and so that's what washington really needs to focus on.