CNBC assembled a crew of "the greatest minds in business" - former GE CEO Jack Welch, BlackRock CEO Larry Fink, PIMCO CEO Mohamed El Erian, Citi CEO Vikram Pandit, AQR Capital Management Founding Principal Clifford S. Asness, Ph.D., Ogilvy & Mather Worldwide Chairman Shelly Lazarus, and National Urban League CEO Mark Morial - to discuss the future of capitalism on Monday night.
Fink was exceptionally honest in his assessment of the financial crisis, taking blame for his part, and challenging Welch's attempt to point fingers at the government:
Fink: Capitalism went way too far and there was no one governing the tails, the excesses of capitalism and im blaming the investors too...
Welch: and government enjoyed it because they got a lot of revenues from it
Fink: But government accepted this, regulators accepted it, lets be honest Citi was reviewed every quarter by...but it was the investors too...I'm guilty, Mohammad, we're all guilty everybody here was guilty we accepted that model
Read further excerpts of the discussion:
FINK ON GOVERNANCE
Fink: The biggest issue we have, what I am frightened of going forward is we have told all the banks that they have to have 10-1 leverage or less. It can't be more leverage. We're telling all the shadow banks you can't be 40-1 leverage, you have to be 10-1. So we have changed the capitalist structure we are now changing the bankruptcy rules, rights of senior lenders versus junior lenders, of secured lenders versus unsecured lenders
Welch: Larry its no different than it has been
Fink: Let me finish, this is really important we as a nation whether we are 1.5, 1.7 trillion dollar deficit with lower leverage ratios we are going to be more dependent on the capital markets in the future then ever before.
PANDIT ON PAIN
Pandit: There has been a lot of pain. People have paid for it and are paying for it in a significant way we have reset the world we reset the world in a variety of different ways and what we really have to look to do right now is not the retribution but what can we do to drive growth going forward.
ASNESS ON ACCOUNTABILITY
Asness: You talk about trust I want to see someone in government someone who was telling us Freddie and Fannie were fine three weeks before they were incredibly not fine ever say anything sounding like a mea culpa. Jack called it a hair shirt, we're all...I apologized to my clients we are all walking around apologizing.
LAZARUS ON TAXES
Lazarus: If we could talk about tax policy within the context of growth within the context of we will have this tax policy because we think this direction is going to create jobs then all of a sudden you start to communicate with the people in a way that means something to them that they understand.
PANDIT ON GROWTH
Pandit: I think the solution is to refocus away from just stabilization wchih i think we have to continue for a period of time towards more of an ideology about whats going to drive growth and judge policies against those that drive the right kind of growth not the kind of growth that we had which was credit driven but the kind of growth that comes from services, exports, manufacturing, innovation.
WELCH ON RESILIENCE
Welch: One of things about being older is that you have been through it before and if you lived here in '81 '82 and you were running a corporation and I was and the Japanese were going to take over the world, unemployment was 13%, inflation was double digits, we were going to lose, we were gone, Japan owned everything they were buying downtown they were buying pebble beach, they were doing all this and we were done...we're not done, we've been through this before we will come back as long as we recognize giving opporunity and spirit to everybody and taking care of those who can't make it
WELCH AND FINK ON AUTOS
Fink: We've got to work on education, we've got to work on building new factories, you know there is a positive silver lining to what's going on in the auto industry we are going to have a competitive auto industry now
Welch: Come on Come on- you think bailing out Chrysler and GM is going to create a competive...and the government running...
PANDIT ON PAY
Pandit: I hear the president talking what America's feeling. They're feeling exactly what Mark said, a lot of things went wrong, a lot of people are involved, but the bankers and the banking systems was at the heart of this and there has to be some retribution and by the way there is a strong sense of belief that we didn't have the guardrails to control capitalism, therefore we didn't have the right governments and compensation was a big part of having the right governments in place. And if you want to shift to the right kind of compensation governance, the right kind of incentives, such as what Jack designed at GE. Sometimes you need shock therapy.
FINK ON PAY
Fink: The issue is how to we get our country back on its feet. How do we rebuild capitalism. There's way too much focus on compensation. We need to focus on what is the best model on balance between government and business. We need to creat tax policies that encourage long-term investing. We have created tax policies to encourage short-term investing. We need to really re-think this balance between government and business.
FINK ON THE ECONOMY
Fink: The economy is in much better shape today than on May 15th or 14th or wherever we are today versus where it was in February. We've moved the dial. No one saying we have armageddon here, I don't believe. I think people think armageddon is behind us, but if we had this session three months ago, we'd be questioning that option.
MOHAMED EL ERIAN ON RULE OF LAW
El Erian: The most important thing for capitalism is trust. And the trust has to go both ways... the government has to trust that the private sector will behave according to a certain rule of laws, ethics and morality. And the private sector has to trust that the rule of law, property rights, contracts and the capital structure.
WELCH ON BIG GOVERNMENT
Welch: So the questions going to be, with almost 50 percent of the people not paying federal income taxes. Now I know about payroll taxes and other things. Why are they gonna want anything but big government? How are we, is this gonna be a hundred years of democrats?