October 4, 2018 | By Brian Hanson, Sheila Bair

Deep Dish: Sheila Bair on the Anniversary of the Global Financial Crisis

Sheila Bair was front and center for the 2008 fiscal crises, as George Bush’s appointee to the FDIC. Notably, she was also among the small number of officials who voiced concerns about the dangers of subprime mortgages before the meltdown. On this episode of Deep Dish, we ask her what we’ve learned about the global crisis and how vulnerable we are today.



Brian Hanson: 00:01 This is deep dish on global affairs going beyond the headlines and critical global issues. I'm Brian Hanson and today I'm joined by Sheila Bair, who was chair of the Federal Deposit Insurance Corporation from 2006 to 2011 and appointed by President George W dot Bush. We just passed the 10th anniversary of the 2008 financial crisis in which Sheila played a critical role both during the crisis and in navigating the great recession that followed. Notably, she will was also among the very small number of officials who voiced concerns about the dangers of subprime mortgages before the financial meltdown, and today we're going to take a look back to that period, but also look at where we are today and how vulnerable the world might be for a new financial crisis. Welcome, Sheila. It's great to have you on. So let's start the conversation with the situation. A decade ago, and as we know the world was in really dire straits, Lehman brothers had just collapsed. There were concerns about more financial institutions going down and soon the problems extended throughout the entire economy. So briefly remind us, what was the problem, what was the driver of the crisis at that time?

New Speaker: 01:15 Yeah, well, there were, there were a lot of different factors. If I had to pick one, I would just say too much borrowing. So homeowners had hit, borrowed too much, banks had borrowed too much. I mean, banks were very unstable because most of them, not all of them, but a lot of them were heavily reliant on borrowed money, supposed to equity funding, defining themselves. And they had to borrow in a very short term basis to keep their funding. And when the markets started seizing up, they were unable to tap the, uh, the credit markets to keep fending themselves. And that was really, I think when Lehman failed, that was really the dynamic that brought this tremendous a crisis in front of us.

Brian Hanson: 01:52 So Sheila, I mentioned you were one of the few people to see this early on. So what did you notice and when did you start getting a sense that there was a problem? Well,

Sheila Bair: 02:01 the, the problem was the core of the problem was, um, you know, unaffordable mortgages that a lot of these, uh, you know, this is something I've been looking at in 2001 and 2002. Actually. I was the assistant secretary for financial institutions at the Treasury Department back then working with Ned Graham Lake who had the, uh, the consumer portfolio at the Federal Reserve. He was a governor of the Federal Reserve Board and we worked together, uh, we saw these predatory lending practices emerging back then. It was kind of a marginal players were doing this, so he would see low income frequently minority neighborhoods targeted problem in Baltimore as a problem. Boston to Chicago area. Some of this is going on in Ohio. They were, you know, hotbeds of, of uh, this activity where you had these very, um, a sheep payment shock loans that are being, you know, affirmatively marketed to a lower income families.

Sheila Bair: 02:54 And ironically, they really weren't expanding homeownership. Most of the people who were targeted for these mortgages are already had a mortgage. They had a nice safe fixed 30 year a fha mortgage. They got refinanced into these adjustable rate product. So, um, that was really the core of the problem. And I saw in the early two thousands I went to teach for four years in academia, came back in 2006 a to cheer the FDA. The FDA staff are, economists are already looking into it. They brief me. I got worried. We went out and bought a database to see what was going on because these mortgages were in securitization pools. They weren't on bank balance sheets. So, you know, we got reports of what banks held on their own balance sheet. That's not where these mortgages where as these are being, it's called originate to distribute it through her being originated and then sold off to investors in securitization pools. So we bought the data and just couldn't believe what we saw, you know, ver virtually no money down, virtually no income documentation, um, very high, uh, you know, a debt to income levels. Um, it was just steep payment shocks and it was just a parade of horribles. Everything wrong you could do with the mortgage we saw on these mortgages.

Brian Hanson: 04:05 So this is interesting because a lot of people say that financial bubbles of various kinds are incredibly hard to identify and yet it seems that you had a pretty good sense that there was trouble here. Why do you think, and you sounded the alarm, right? Why you, why was that concern, if you could see it so easily in the data, why didn't others recognize what was going on? It's a good question.

Sheila Bair: 04:30 And uh, I, you know, and I, I think you can see bubbles. I think what you can't know is when they're going to pop, when they're going to turn, right? That's the hard part. But you can certainly see when asset values, whether it's homes or stock markets or whether or what whatever is starting to get over valued. And that was clear. I mean, home price appreciation was rather dramatically outpacing real wage growth. So housing was getting more and more expensive, right? We weren't expanding homeownership, we're just making it a lot more expensive. We did bump up a few percentage points into home ownership and in last that as a result of the crisis. But, uh, you know, he was, he was there and uh, you know, that's, and you can, you can deal with that. So we started calling for mortgage lending standards. We didn't have any mortgage lending standards.

Sheila Bair: 05:12 We wanted it for everybody, for banks and non banks because banks were doing most of this. The Fed had the authority, they didn't want to do it, so we pushed for bags, at least have some mortgage lending standards and thrifts that we're doing some of this, but it was, you know, the government moves slowly and it was a summer, 2007 before we get this lending standards in place. And by that point, you know, the horse was way, way far out of the barn. So, uh, I, I do think, and I worry now that I think things are getting a bit frothy and our economy and, and I think they're, the thing you do now is to tighten lending standards a bit and to ask banks to hold a little more capital to curb that froth, that you will see it an end of an economic cycle. And we're doing just the opposite now in DC. We're, you know, we're moving to deregulate again, even in banking sector, which I find astonishing after 2008.

Brian Hanson: 06:00 Yeah. And I want to get into that a little bit before we go there. What I would be curious to hear from you is, what do you think the most significant regulations put into effect after 2008 actually were what, what were the effective things? What were the two or three most important mechanisms that were put into place?

Sheila Bair: 06:21 Well, I'm a market disciplined person. I don't think, I believe in regulation and supervision, but I don't think they can do it all. I think you need market discipline. So two important things we did to try to reinstill some market discipline with these very large institutions was one require that they find themselves with a lot more equity capital. So they were, you know, they were taking big banks with borrowed money and not putting enough of their own owners a skin in the game. And so, uh, we and we have increased capital requirements significantly and that's just a way of saying we're, we're requiring that they funded themselves more with common equity. That I think is helpful. The other thing we did was put in, in law the dodd frank law is something called title two or, or deleted liquidation authority and that basically gives us new tools, gives the government new tools and the FDAC in particular working with the Fed and the treasury to seize an entire organism, financial organization and resolve it in a way that losses are imposed on shareholders and their creditors just as it would be in a bankruptcy process, but, but also continues the functions to the customers of that institution.

Sheila Bair: 07:26 So when a, when a big financial institution fails, you don't want to bail out their liability holders. You don't want to bail out the people that invested in them and maybe didn't do as much homework because they should have. But what did you want to do is make sure that the credit and payment processing functions that they do to the real economy. You want to make sure that a small business can make their payroll, can have access to the line of credit, you know that when somebody's going to close on their house or you know, the funding for their mortgage, I mean those are the kinds of services you want to keep going. So these tools allow the FDAC to seize the institution, keep the functions to the customers, go and while you impose losses on shareholders and creditors, and it also has a quite punitive and I think appropriately so a provisions to fire top management and board leadership clawback back three years of pay.

Sheila Bair: 08:13 So you know, there's a lot. I'm hoping now that as we get to the end of this cycle that those are the financial industry will understand. We didn't have title two. That's going to be the new period of time, not bailouts. And, and I said this before and I will say it again. I absolutely believe it. If we had title to, I don't think layman would have failed because I think dick fold, who's the leadership of of layman brothers would have seen, okay, I'm not going to get bailed out. I'm going to get titled to, I'm really used to lose my job in the years of pe and that's going to happen to my executive team and my board and my shareholders and bondholders are going to get wiped out. I need to go fix my own problems. Now to avoid that, he didn't have that kind of incentive. He was betting on a bail out and turned down opportunities for fresh capital or to sell themselves a because he thought he was going to get a government a handout and he didn't end. The rest is history as they say.

Brian Hanson: 09:02 That's right. Although others did.

Sheila Bair: 09:04 They did. Yes, they did. Well, that's. That's the other advantage of title too, I think because it creates an even in a process for everybody there. There was no playbook. We had a process for insured banks, but most of these institutions will. Layman was an investment may get at a teeny tiny and thrift that had insured deposits, but it was mostly an investment bank. Bear stearns was an investment bank, so they really know where, no resolution tools for financial organizations and even a big outfit like city group, they had a, they had a national bank that was FDAC insured, but so much of where their problems were recurring outside and their financial insecurities, affiliates not inside their insured bag, so now titled to you can resolve the whole organization. Uh, and we did not have that playbook. And so you got this kind of ad hoc process, a case by case. It was, it was not optimal, but I think everybody did the best they could with the information they had at the time. So

Brian Hanson: 09:59 that's a really helpful basis to then bring us into the present day is, as you look at, uh, at, um, as you look at finance in the United States today, are there areas where you are concerned that there is the similar type of a building up too much debt and sustainably and where do you see those risks?

Sheila Bair: 10:22 Well, it's just pretty much everywhere except mortgages, mortgages, or the one area where we're not at historic highs yet, but if you look at certainly government debts at a story, guys, uh, and even adjusted as percentage of GDP, it's at historic highs at corporate data is really high. A non mortgage consumer debt is really high. A lot of that driven by all this excessive as student borrowing. So is, you know, commercial real estate's Frothy, leveraged lending, you know, to, to buy out my highly leveraged buyout financing that's she interested in that market had been deteriorating significantly. So I can see all sorts of all sorts of places where I think we are. We have too much debt already, which is why it's frustrating to me that you're hearing in Washington, Oh, we've got a lower bank capital and we get to loosen the volcker rule because we need banks to lend more to feed the real economy.

Sheila Bair: 11:12 And I look at all this denny's, I'm like, Gosh, you want to get them to lend even more? Uh, you know, and, and they can let them borrow more so they can learn more. I think that's a not smart as that's managing to the election cycle, not the economic cycle. So, uh, I see a lot of warning signs and of course emerging markets will, will continue to struggle. Anybody who's, you know, any foreign entity who's borrowed it would denton has to repay in US dollars is going to be having a continuing problems with interest rates going up in the U. S I think I support the fit and doing it. I think they're handling that quite well, but that's, that's going to create a potential, a potential risk and the situation to a I think has a lot of people concerned. So there are a lot of areas where, um, I think we need to be guarded. And again, right now I think we should be prudent and if anything requiring banks to tighten their lending standards have been increased their capital a little bit, not the other way around.

Brian Hanson: 12:10 So as you've mentioned, instead of that scenario, what we see as something that looks different where financial institutions are our organizing politically in order to draw back regulations. And you know, some people have observed that one of the other outcomes of the financial crisis was a concentration at the top of the largest banks have power. What do you think is really driving this a pullback on regulations and is there, is there a political check to it?

Sheila Bair: 12:42 Yeah, well, I think the only check is, is in November. You know, I think of the names are out there, um, members of Congress who are pushing, you know, and I know I'm a Republican and it saddens me to see a number of influential Republican members of Congress in the Senate running the Fed, asking them to take a look at the capital rules and worrying that we're you. Because our rules are tougher than Europe at, which is a good thing. Not a bad thing, that they're at a competitive disadvantage. And this nonsense are our banks are becoming globally dominant. I mean, it's not a European banks are still struggling frankly because they, they had, they were to leverage to begin with going into the crisis. So banks, US banks will ever admit that the stronger capital rules we had helped them. But I do think it did, but, you know, members of Congress not looking at the facts or the, or the, uh, the economic realities.

Sheila Bair: 13:32 It is, it's, I, I, I'm sorry, but I can't explain it. Other than that, it's political contributions or you know, jobs. Would you leave office or jobs to your staff and you leave office or, or what have you, but you know why or, or just, you know, it, we blind, uh, assumptions that if somebody from the banking industry comes in and says they need this and it's got to be right and not listening to people like me who say, no, that's not right. They were saying that 2006 and we listened and we shouldn't listen now. So I do wish they would a step back and, and you know, their job is to protect taxpayers and voters is not to protect bank shareholders and we can in capital requirements now us that's just going to, you know, add more fraud to the system and in probably lead to more capital distribution to bank shareholders.

Sheila Bair: 14:20 Most of him, you know, a lot of the bank shareholders of the bank executives, they hold a big chunk of equity in these large institutions. So I really wish congress would be more thoughtful about this, but they, they don't seem to be. And um, you know, in Republicans they used to be a strong bipartisan consensus on capital capital is capital is a market driven solution to um, fragility and the financial system and even Republicans did not support dodd frank, but the alternatives that Republicans were putting forth had capital the center piece and now we're seeing Republicans lead the charge or for weaker capital and in that really saddens me.

Brian Hanson: 14:56 So are there other things people should pay attention to in addition to reducing the capital requirements banks should hold? Are there other important?

Sheila Bair: 15:04 Yeah, well, you know, yeah, I mean I think just directionally I think you want to say no, not at all. These rules are perfect. So they've talked, people talked about simplification and some of it is true simplification but so much just a stocking horse for, for uh, for, you know, weakening the rules, not simplifying them. So I think the best message to send your, your elected representative is let's just, these rules are in place. Let's see how they work. Well, let, let's not weakened them or tamper with them right now. Let's see how they work. They've not been tested in a cycle yet and, uh, in, to taper with them now, we can live now. Is, is quite dangerous. Um, you know, I worry about the consumer bureau. I think there, if you look, there is a connection between consumer protection and in economic and financial stability.

Sheila Bair: 15:50 Loans that are unaffordable loans not only hurt consumers because they can't pay them back, but the defaults are at the broader economy as we saw in 2008. So we need some basic consumer protections, ability to repay standards, uh, that's important to not just because it's the right thing to do, but because it's important to, or our economic health of the Volcker rule, I think has some important, uh, restrictions on inappropriate risk taking by a financial institutions that are in the safety net. You know, you don't want them using deposits, insured deposits to speculate, make, you know, make market bets with insured, muddy. And so, um, that's an important principle and I, I think it's important to, to maintain the integrity of, of that rule. Um, derivatives oversight, frankly, we should have done some more. They're a bit to there. Again, I think having more transparency in centralized clearing and settlement of derivatives is very, very important. Uh, and so those are, you know, there's this whole framework is, was responded to the things that we knew were problems during the crisis and I just wished congress and the regulators just leave it alone and let it, let's see if it works and adjust it later if we need to.

Brian Hanson: 16:59 Terrific. We've focused the conversation so far very much on the US and kind of the conditions in the US. You've alluded though in some of your answers to the broader global economy that's out there. Um, and you know, that previous, that decade, the financial crisis a decade ago was driven by the U S, right? But we shared it with the world and presumably we're vulnerable to similar, similar pressure. So I'm one of the things that people raise as a concern is China and the debt problem in China. Do you share the concern about the, uh, about China being over leveraged, and if so, how could that end up affecting people in the United?

Sheila Bair: 17:43 It's why there's a big problem with corporate debt. Um, so, uh, actually, uh, their consumer debt levels are significantly lower than we have in us and uh, but the, the government debt is as well, but they're, the corporate debt is quite high course, a lot of that's held by state owned enterprises. So it's an estate exposure. There is well in the corporate sector, you don't have that same situation here in the U s. So the bad news is I think this is a tremendous drain on their economy because there's been a lot of, uh, you know, lending to the state owned enterprises that are, a lot of them are legacy industries. They're in decline. It's kind of a waste of economic resources. So that's the bad news. But the good news is, is that because they are a state owned, I'm the government can control if and when they default, you know, the timing, the severity of that.

Sheila Bair: 18:33 So, um, that's, uh, I think that precipitated a financial crisis. I don't worry about that so much. Um, I do worry more generally bad just to longer term about a trade war and deteriorating relationship in our country. Not that China's perfect, it's not, but I do think our longterm prosperity and theirs are intertwined and they've done a good job of growing their middle class, growing real wage growth. Those are markets for US companies, they have provided access to a lot of US companies, you know, you walk down any street, you'll see a pizza hut and KYC and everybody on their apple phone. I mean, it's, so, it's not like we don't have. American companies don't have significant, uh, growth potential there. And in similarly as their industries mature, they want to sell more to us and uh, but importantly they want to stimulate their own domestic demand that they want.

Sheila Bair: 19:24 They want to stop being so export driven because it makes them, it's like us relying on foreign investment for our government debt, right. There are so reliant on foreign economies to buy their exports. They want to stimulate their domestic demand, you know, a net net that's going to be a win for everybody. So yes, some of these discrete issues like technology transfer need to be dealt with and I support the administration and trying to grapple with those, but now it's, we're kind of hearing this well we just need to disengage completely from China and I, I think that would be very bad for the US economy, the world economy.

Brian Hanson: 19:57 Is there any concern? You actually took a fairly benign view on, on trainees that basically that the state, because of the nature of that, that control that the state has, that they can manage what could be

Sheila Bair: 20:09 difficult situation and I don't want. It's a huge problem from an economic resource allocation standpoint. This is a drag on their growth, so I don't want to. It's a, it's a bad problem they've acknowledged that they're dealing with, but in terms of being a source of a financial shock, no, I don't. I don't see it. Yeah,

Brian Hanson: 20:24 yeah. Is If the trade dispute trade war that's growing, um, continues to go in the direction it is, could that get, could that overwhelm the ability of the Chinese government or not really,

Sheila Bair: 20:41 you know, if you can print your own money so you know, you have a, you, you always have the fallback of course. Second, create a lot of undesirable inflation. Know it's a good question. I, I think, uh, it's, it's hard for me to know how all of that might spin out if things really deteriorated and, and we really started decoupling from China's economy. I think it would be very harmful for their economy that could be harmful for ours. And so I, I guess I don't know, but I think it's the result that we should try to avoid at all costs and everybody should be grownups and sit down and work out our problems so we can move both of our economies forward.

Brian Hanson: 21:18 Terrific. So moving on from China to other, other countries that have, um, that we've witnessed some financial vulnerability. Turkey's been in the news recently. Argentina has been in the news, I believe their currency is about worth half what it was at the beginning of the year. So repaying debt denominated in dollars, it becomes twice as expensive. Right? Right. Yeah. And well, none of these countries alone is probably large enough to trigger a global crisis. The concern is of contagion that investors get scared if this country is in bad shape. Maybe there are other countries that I don't know about. I want to get my money the heck out of them before other people do while the getting's good. Right. Do you see that as a plausible scenario for how a global financial crisis could build? Or is that too overblown by the folks who emphasize it?

Sheila Bair: 22:08 Well, I think it's certainly a point of stress where would, there could catalyze a global crisis? I don't know. I think, um, those are, those are still countries, uh, they're not insignificant or not. Not a big part of the global economy as some more than others have done a better job stimulating domestic demand for their debt to, um, so it's not all, it doesn't all have before and repaid, but you're right, a good chunk of it does, which they will struggle to do, um, as a dollar strengthened. So, uh, I think it's a stress point, whether it by itself a driver crisis, I wouldn't be surprised, but it's definitely a stress point and two other things go wrong. Uh, it could, it could be a big problem. It also though I think underscores. Why'd I hate to sound like a johnny one note here, but it's true.

Sheila Bair: 22:54 When you had these kinds of risks are emerging, that's why you want a lot of capital in your financial system because of those bags start taking more losses in whatever exposure they have to emerging markets. And some of them have not insignificant exposure. They need to have enough of a capital base to absorb those losses. If they don't, then you got, then you've got no small losses generated by a perimeter country of generating is, you know, instability issues. The very large financial institution in the U, s and you got a real problem, which is why it's so important to make sure those capital buffers are strong.

Brian Hanson: 23:26 Yeah, I'm old enough to remember continental bank, this is not a new issue. Is it? Take us to one other part of the world, which is Europe, which has political instability. They're going through a brexit process which has implications for at least the distribution of services inside Europe. You've got a government in Italy, which is a, you know, a populist government concerned there. Are there important risks in Europe that we should pay attention to?

Sheila Bair: 23:59 Well, Europe's been a disappointment for a long time now. I, I think, um, you know, and, and they're, they're, they're an important market for us and I think their struggles have had, have hindered our growth too and they just can't see every time you think this is going to be your sheer. They kind of, you know, fall back. So I don't think, uh, I don't, I don't see any a buildup and risks. Again, the could catalyze a crisis. My peers, they just keep bumbling along. And, uh, um, so, you know, it's very low growth rates a bit, but nothing that's going to be a, any kind of an economic or financial disaster. I do worry a bit about consumer debt, household debt in the UK. It's quite high and uh, that there's not been much commentary on that because there's so much distraction on brexit and how it's going to impact the financial sector. Just looking at consumer debt in the UK, um, that has been a significant contributor to the economic growth and, and, uh, I worried that has gotten too high now.

Brian Hanson: 24:56 Terrific. So let me then come back to the United States. We kind of circled the world and you're really, there are risks out there, but nothing seems to be, um, you know, close to triggering a, a big crisis. Um, and at the same time you pointed out a number of risks, significant risks that, that exists in the United States. And I want to, I want to bring one more up and get your take on it, which is lending from non bags. You can't, I can't watch a football game without seeing the quicken loan, the quicken loan ads, right? So there are new folks, a lending who aren't part of the regulatory structure. Right? How big an issue is this? Is this something that we should be concerned about?

Sheila Bair: 25:41 Well, it's a good question. It's a mixed bag. I mean, I think a lot of that lending is in the end and secure what we'll call the unsecured consumer market, right? So these are loans that are, do not have collateral behind them. They're, they're, they're backed by the ability that Barbara's a borrower to repay. And this is a market where we've needed more competition because, um, you've seen in the past, especially for people who have less than pristine credit histories, it's very, very hard for them to borrow in that space. So I think technology in a lot of these internet providers have performed and there's, there's good research on this, how it's, is brought down the costs of credit. And it's also, you know, as bank branches have closed, um, there's been A. Philadelphia fit actually did a good, a good report that showed that marketplace lending had helped fill the void for credit when, when, when bank branches are closed, it closed in particularly in rural areas.

Sheila Bair: 26:33 So that, that's the plus side. We also have the CFPB now. So they do. They are such regulation. I'm sorry, the consumer financial protection bureau. I'm defaulting into my Washington DC speaking. Actually, I think, I think Mr Mulvaney renamed it. So using the original right, the consumer protection financial protection bureau, this would, I still call it and uh, they, they have. This was a problem prior to the crisis, most of the regulation was just for the FDAC insured bag. So there, so these non bank lenders do have consumer regulation nail, which is important, but the more they become, they are marketplace funded. And so what? So what that means is they don't use insured deposits, they go to the markets and raise money, which they turn around. And Lynn and that source of funding tends to dry up when you get into a downturn. Uh, this is for.

Sheila Bair: 27:23 We certainly saw this during the crisis we had, again, most of the toxic subprime mortgages were being made was by non bank lenders who were not using insured deposits. They were using market sources. They almost all, they do all go belly up. They all failed in all the credit they providing collapse back into the regulated sector, putting strains on that system and there was a corresponding credit contraction. So, you know, I'm actually in favor of a, be more broad minded about who can be a bag if they're willing to have solid capital, good management, you know, abide by all the regulations, the fact that they're an internet lender versus brick and mortar at and bothered me at all. Um, I think it's more important to have that stable source of funding for, for credit because a lot of people rely on that in a downturn and you want to continue that credit flows.

Sheila Bair: 28:15 So, uh, I think that there's both the good news in some risk, as you say, with regulation that you need to keep a close eye on. Uh, but, uh, you know, asset managers to another area more on the business side, we're um, you know, obviously at black rock now, I've been taking a lot greater role in credit intermediation where it was focused in bags in the past and they're, they're not. I have it concerns them. I think they're everything I can tell that they're a fine organization, but that's again, a huge financial player that's really doesn't have any kind of significant prudential oversight.

Brian Hanson: 28:51 Terrific. As we closed, I'll ask you a two part question, which is having lived through the financial crisis and men in a key position and navigating through it, um, first part of the question is what is the most important lesson to carry forward? And the second question is, what is the most overlooked lesson that we should be caring?

Sheila Bair: 29:17 Um, so, so the most important lesson in the most overlooked, less than they can be the same, I guess, right? Absolutely. Oh golly. So, you know, I think again, it, you know, uh, thinking longterm and, and again this gets back to using debt to drive growth in, in getting over your head with debt. It is not sustainable whether you're a consumer, whether you're a business where a government at some point you got to the bills and we're forgetting that I'm. So, I do think that I'm the most important that we need limit overarching limits on the amount of leverage that big financial institutions can take. We need some common sense standards for consumers to, in terms of how much they can, uh, they can assume and, and uh, so an investors need to be very worry, uh, when they're looking at companies to invest in about how much leverage they have.

Sheila Bair: 30:06 So there, there needs to be market discipline there and in some government action, but we need to think long term too. And I think we've lost a lot of that. I'm so much earnings growth now. You know, I worry about the stock market, why worry about it? Somebody told me a worry for living is probably true, but those, those kinds of skills will serve you will, uh, in periods like these. But so much of the stock market growth has been done by, you know, improve margins by lower financing cars, plus issuing just issuing debt to do buybacks and dividends distributions as not sustainable as interest rates goes up, go up. That's a, that's party's going to a stop in. So looking for sustainable ways to grow our economy and, and that really, you know, comes back to a healthy middle class, real wage growth, real innovation, real productivity.

Sheila Bair: 30:53 We have seen that as much as we should have that too much financial engineering, I'm afraid from low interest rates. So I, I do think that the, the, the risk of debt, the, uh, the, the instability of debt is the most important lesson and probably the most overlooked lesson because we did, we really have used debt to get ourselves out of a recession that was caused by too much debt. And I, I hope I'm wrong, but I fear history, you know, 20, 30 years from now are going to be looking back and think that we did not make such a good decision.

Brian Hanson: 31:24 Well, this episode will be archived for people to look back on 30 years. Sheila, thanks so much for coming on with dish. Yeah, definitely and thank you for tuning into this episode of deep dish in global affairs. As a reminder, the opinions you heard belonged to the people who express them and not the Chicago Council on global affairs. You can find our show under deep dish on global affairs wherever you listen to podcasts. If you like the show, please let us know by tapping the subscribe button so that you can get each and every new episode is it comes out. If you think you know someone who would benefit from today's episode, please tap the share button and send it to them as well. If you have any questions about anything you heard today or if you want to submit questions for upcoming guests and episodes, join our facebook group, deep dish on global affairs. This episode of deep dish was produced by Evan Fazio. Our audio engineer is Andy's Czarnecki. I'm Brian Hanson and we'll be back soon with another slice of deep dish.


The Chicago Council on Global Affairs is an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. We convene leading global voices and conduct independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

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