Remarks at the Small Investors and Retirement Security Session of the President's Economic Forum in Waco

The President. Welcome to Texas.

Participant. Nice to be here.

The President. Thanks for coming.

Participant. It's a long ways. It's nice to be here.

The President. It is a long ways. It's going to be a great day. I appreciate you all being here, and I look forward to hearing what you have to say.

[At this point, Council of Economic Advisers Chairman Glenn Hubbard made brief remarks and introduced Assistant Secretary of Labor for Pension and Welfare Benefits Ann Laine Combs.]

The President. Ann, thanks. Good to see you.

[Ms. Combs summarized the administration's efforts to improve pension security, increase opportunities for retirement savings, and restore confidence in the markets. She then introduced Charles R. Schwab, chairman and co-chief executive officer, Charles Schwab Corp., who expressed confidence in the stock market and discussed ways to increase investor confidence. Mr. Hubbard then asked if the President wanted to comment.]

The President. Well, I think what caught my attention was this business about confidence. I'm spending some time in Crawford, Texas. I think about how people in Crawford look at Wall Street and the numbers. And one of the things I hope that comes out of this discussion is, how do we simplify the numbers so that people can understand what they're looking at? People in this part of the world get a little suspicious of the fine print. But yet, a lot of them are now investing for the first time. And I think Chuck brings up a great point, is how can people not only on the east coast or the west coast feel confident about what they see but all throughout America can feel confident about what they see and hear?

Part of it is—I remember going—working a ropeline in New York, and a business professor said, "Thank you for mentioning in your speech on corporate responsibility that business schools need to learn how to teach right from wrong." Evidently, there's this kind of nervousness about being clear about teaching young MBAs right from wrong. And a guy walked up to me and said—it was a laboring man—and said, "Well, the best way to teach a lesson is to put some of them in handcuffs. That's the best way to send the message for corporate responsibility"—which we're doing. So we'll enforce law, but confidence is more than just Government enforcing law. Confidence is an industry policing itself as well as understanding the new customer.

And I'd be curious—first of all, I love your ideas about how to account for loss and/or double taxation dividends. That makes a lot of sense.

But another question I would have for the panelists and look forward to hearing the recommendations is, how do we take care of the new investor? Chuck does a good job of it by recruiting them and then helping them invest. But throughout the system, how do we understand that the nature of the investor has changed?

[Mr. Hubbard introduced Muriel "Mickey" Siebert, chairman and co-chief executive officer, Muriel Siebert and Co.]

The President. How do you like being known as a legend, Mickey? [Laughter]

Ms. Siebert. As long as I'm a living legend—[laughter].

The President. You look living to me. [Laughter]

[Ms. Siebert discussed the need to protect investors from deceptive corporate practices.]

The President. Well, thank you, Mickey. You bring up a very interesting point that Chuck alluded to, and that is—you know, you talk about some of these fancy financial instruments being designed to inflate revenues, for example, and it takes a fairly sophisticated soul to figure out what's going on. And the fundamental question: Who is that sophisticated soul? And it seems like to me, the sophisticated soul is the recommenders of the stocks. And Chuck brought up a very good point, and that is, the industry itself is culpable of not blowing the whistle on practices that aren't—that kind of deceive, I guess, is the best way to put it.

And my question is how best to—you know, apart from Government, how best may an industry police itself? How best for—as I one time said, I said, they'll sell or buy you depending upon what's in their interest—and how best to protect the unsophisticated now, a person accumulating a lot of assets from these practices that are pretty darned sophisticated.

[A participant suggested that to protect customers, the CEOs and compliance officers of companies providing help and advice need to sign a statement that they have no conflicts of interest. Mr. Hubbard then introduced Sylvester Schieber, vice president, Watson Wyatt Worldwide.]

The President. Excuse me for a minute. So here's what happens. I'm going to four of these; the Vice President is going to four of them. I can assure you, however, that we look forward to hearing the recommendations—Hubbard or somebody is going to be a note-taker. We will look at everything you say.

Again, I also want to tell you how much we thank you for coming, and I'll see you at lunch. We've got a great group of our fellow Americans here that really goes to show that people are concerned about the future of the country. I really want to thank you for coming. I know it was a stretch for a lot of you to come, but the fact that you're here is really meaningful for the country. So thanks from the bottom of our hearts.

Again, I look forward to what you have to say. In the meantime, I've got to leave here. Thanks.