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Lori Rothman: Let's head back to Cooper Union where we find Mark Crumpton, my colleague, to get a little more reaction to today’s speech, President Obama talking about financial regulatory reform and why it needs to get done. 

Mark Crumpton: Lori, thank you very much. We are joined by Robert Nichols. Rob is a friend of Bloomberg, he has been on a few times out of Washington, first time I have had the pleasure to talk to you.  He is President of the Financial Services Forum.  And you listened to President Obama’s speech.  What were some of the highlights of the speech that you took away today? 

Rob Nichols:  Sure, well obviously the President delivers a fantastic speech, he did so again today.  A couple of immediate takeaways, one, the rhetoric was a lot more conciliatory. 

Mark Crumpton: Very muted, Peter Cook and I discussed that it wasn’t as strident as a lot of people had been anticipating. Why do you suppose that was? 

Rob Nichols: Well part of it is we are getting closer to agreement on both parties on Capitol Hill, we are moving, Mark, towards an agreement on financial sector modernization, so elevated rhetoric really does not do any good in terms of getting there. He also touched on a couple things that are important for us at the Financial Services Forum, resolution authority, wind down authority, being able to take down, heaven forbid if we get into another crisis and we lose a large institution, we need to do it in a way that can be non-chaotic, careful and does not cause harm to the global capital markets or put taxpayer on the line, that was a highlight of his speech. 

Mark Crumpton: How key is that, was that one of those things that you and your colleagues felt that if that wind down authority, the way it is, that things would spiral out of control?  That it was too chaotic? 

Rob Nichols: That is really one of the most important pieces of regulatory reform that is being discussed in Washington right now, by far. There is a huge deficiency in our current rules, that we can only take down a small bank, but then if we have a large bank failure, we didn’t have a way to do it. That is why Secretary Paulson and Chairman Ben Bernanke had to make some, sort of, last-minute calls, at the line of scrimmage so to speak, because there wasn’t protocol to do it. So the fact that we are moving closer towards agreement on resolution authority is critically important, the fact that we are moving, the idea of a systemic supervisor in the form of this committee that would overlook the entire financial system and not just individual legal entities, that is a good idea. There are still some important details that need to be worked out. 

Mark Crumpton:  Rob let me ask you, because one of the questions, one of the criticisms of this is that there might be government overrates. There might be too much of regulatory authority that might stifle the capital markets. How do you respond to that? 

Rob Nichols:  There are a couple of pieces that I think require a little more focus and a little more attention. One for example-

Mark Crumpton: And a little less government.?

Rob Nichols:  Well, I’ll give you a couple examples, the idea of the Volcker rule -- I would say there are some things that regulators could to do to oversee large financial institutions in a way that they can still engage in these activities, I think if we ban these activities all together we might lose, we might put ourselves in a competitive disadvantage internationally. So I think that would be one area…

Mark Crumpton: Does that disadvantage also extend to derivatives? You know, Senator Lincoln, yesterday in the Agriculture Committee-- 

Rob Nichols:  That’s another, that, the Volcker Rule coupled with, Mark, this derivatives reform that would require the  large U.S. banks to spin off their derivatives desks altogether and just get out of the business …that I think will put us at a competitive disadvantage that would  send the business away or perhaps into the more lightly regulated areas. One thing, the large institutions are now going to be the most heavily and highly regulated entities. So I think if we take, if we put aside the ability to engage in derivatives, obviously that is very important for small, medium and large companies to be able hedge risk, so they could, with regards to fluctuations in commodity costs, and interest rates, and foreign exchange, we want to be able, to be able to have derivates actually reduces risk in the system.

Mark Crumpton: And Rob, I am sorry we are going to have to leave it there. And it’s always a pleasure to see you.  Rob Nichols, the President of the Financial Services Forum, joining us here,talking about President Obama’s speech here at Cooper Union.