The stabilization of the consumer is very important. Consumption accounts for, as you know, two-thirds of the U.S. GDP. It's going to be important for businesses to see some improvements in their profits and profit margins, and improvements in their order books, to give them a greater degree of confidence. It is turning out that banks are healing, even with these toxic assets on their books. They certainly appear to be rebuilding capital. That process has got to continue. What about small businesses? The Administration has been talking about helping them, yet a lot of small and mid-cap companies feel they still don't have access to credit. What kinds of incentives should be on the table for banks to start lending to them again?
This is all intertwined. So as banks and small businesses see consumers starting to feel better, as the businesses themselves start to see their profit margins increase, then the banks, I think, will understand that it is safe to make appropriately priced loans to creditworthy counterparties. What about a company like [struggling lender] CIT? Should the government be supporting it?
That's a big policy call, and I understand the arguments of both sides. If CIT fails to extend credit, then obviously a number of banks are going to have to step up and increase their credit provision to small and medium-size enterprises. So you think there are companies out there that could pick up the slack if CIT were to go away?
There have been a number of regional banks that have had a history of doing this kind of lending, and certainly community banks really understand that their local small and medium-size enterprises have had such lending as a core of what they do. I wouldn't dispute that CIT is a very important player. On the other hand, there are other financial institutions that, when they see a credible business opportunity, are likely to step in and try to profit from it. That, after all, is what drives American capitalism. How would you rate Ben Bernanke's performance?
I think he's done a good job. I give him credit for the creativity, the nimbleness, the speed with which he has moved. I'd also give him credit for speaking directly to the American public. You know, he went down to Morehouse College and did a town hall in front of the students there. He was on a network TV show speaking directly to the American people. I also give him credit for showing an ability to speak not just to the experts and the cognoscenti but to the average person on the street. Tell me about your role at TIAA-CREF and how you see investing the money that is under its umbrella.
Our role is, in some fundamental sense, unchanged. We have always invested for the long term, recognizing that we're dealing with individuals' retirement incomes. We've always put a high premium on risk management, and we continue to focus in on that. One thing we're going to be doing more of is speaking out about retirement. It's painfully obvious that 401(k)s have become 201(k)s, as people say when they're joking. It's less obvious that now is the right time to start to think about restructuring retirement for the 21st century. Some of the things I think are necessary are an automatic enrollment into a stable system, clearly having some sort of guaranteed income option as part of the payout, and—something I've talked about many times—broad diversification of risk. If you were offered it, would you take Bernanke's job?
[Laughs heartily] I am going to stay at TIAA-CREF. I enjoy what I do here. But I'm honored that you would ask the question.