WEBVTT 00:01.700 --> 00:09.000 All right, I'm very pleased to have today Laura Cha, who is 00:09.000 --> 00:11.400 connected to us electronically, 00:11.400 --> 00:14.030 live from Hong Kong. 00:14.033 --> 00:15.903 It's 9 pm in Hong Kong. 00:20.167 --> 00:23.327 Well, we've already talked about Laura, she's one of the 00:23.333 --> 00:27.933 most distinguished executives in Asia. 00:27.933 --> 00:31.403 She is on the Executive Council of Hong Kong. 00:31.400 --> 00:37.200 She's a director at HSBC, she's served on the China 00:37.200 --> 00:41.130 Security's Regulatory Commission, and recently at 00:41.133 --> 00:46.773 the National People's Congress of China, which is a 00:46.767 --> 00:49.267 remarkable set of achievements for 00:49.267 --> 00:53.197 someone, for any one person. 00:53.200 --> 00:59.600 And I understand, that she is the first Hong Kong citizen to 00:59.600 --> 01:02.930 serve in the government of the People's Republic. 01:06.467 --> 01:11.467 But I guess, the really big thing that comes to my mind 01:11.467 --> 01:15.627 is, that HSBC is one of the most important and biggest 01:15.633 --> 01:18.073 banks in the world. 01:18.067 --> 01:21.467 And I looked it up and I found that five branch offices of 01:21.467 --> 01:27.567 HSBC are within a few miles of right here. 01:27.567 --> 01:29.397 Anyway, Laura -- 01:29.400 --> 01:32.270 I'm looking at you there -- 01:32.267 --> 01:38.567 why don't you introduce yourself, talk about what you 01:38.567 --> 01:42.397 do, and what your thoughts are about the financial situation, 01:42.400 --> 01:46.770 and then we will turn it over to questions. 01:46.767 --> 01:48.427 LAURA CHA: OK. 01:48.433 --> 01:51.403 First of all, good morning to you all. 01:51.400 --> 01:56.200 Thank you, Bob, for inviting me here, via electronically. 01:56.200 --> 02:02.230 It is my honor too have the opportunity to talk to you. 02:02.233 --> 02:06.633 When I was invited to give this talk, I went on the 02:06.633 --> 02:10.803 internet and saw that your course syllabus is very 02:10.800 --> 02:15.370 comprehensive, and I would imagine that at the end of the 02:15.367 --> 02:19.527 course you would have covered or will cover just about every 02:19.533 --> 02:22.633 aspect of the financial markets. 02:22.633 --> 02:25.573 And you will have a good idea of the function of the markets 02:25.567 --> 02:28.097 and how it works. 02:28.100 --> 02:31.630 What I want to do in the next 20 minutes or so, is really to 02:31.633 --> 02:36.233 give you an overview of what it is like to work in the 02:36.233 --> 02:40.473 financial markets, to have a job in the financial market, 02:40.467 --> 02:44.697 and perhaps, eventually, you may want to have a career in 02:44.700 --> 02:47.800 financial services. 02:47.800 --> 02:51.230 And then, after that I would be happy to answer any 02:51.233 --> 02:54.933 questions that Bob, you, or anyone of you want 02:54.933 --> 02:57.733 to raise with me. 02:57.733 --> 03:02.373 I think, when one talks about a career or job in the 03:02.367 --> 03:04.727 financial services, one tends to think 03:04.733 --> 03:06.873 about the private sector. 03:06.867 --> 03:11.367 The banks, the investment banks, the fund management 03:11.367 --> 03:18.497 companies, and, of course, the trading, the traders, both in 03:18.500 --> 03:22.100 terms of stocks, futures, options. 03:22.100 --> 03:27.400 Of course, in the last decade, hedge funds, private equity. 03:27.400 --> 03:29.070 There's no question that the private 03:29.067 --> 03:31.397 sector is very exciting. 03:31.400 --> 03:35.470 There's no question that a job or career in financial 03:35.467 --> 03:41.127 services in the private sector is, by the most of any 03:41.133 --> 03:44.203 standard, is very financially rewarding. 03:44.200 --> 03:47.870 But what I really want to talk to you about, is the other 03:47.867 --> 03:51.267 side of the financial markets, which is the public sector 03:51.267 --> 03:56.567 side, and I want to share with you my own experience in the 03:56.567 --> 03:58.697 public sector. 03:58.700 --> 04:01.830 When one talks about financial services, as I mentioned, we 04:01.833 --> 04:04.473 talk about the banks -- the intermediaries, what we call 04:04.467 --> 04:05.227 the intermediaries -- 04:05.233 --> 04:07.373 the practitioners, people who practice in 04:07.367 --> 04:09.567 the financial market. 04:09.567 --> 04:12.267 If you are a college graduate, typically, if you go to one of 04:12.267 --> 04:16.797 these firms, you start out as a research assistant. 04:16.800 --> 04:18.930 You do research. 04:18.933 --> 04:22.703 If you are in a bank you will learn to read, how to 04:22.700 --> 04:24.900 interpret balance sheets. 04:24.900 --> 04:30.330 How to decide, when people come to you for loans, how you 04:30.333 --> 04:35.073 evaluate them, and what is the creditworthiness of the 04:35.067 --> 04:37.027 potential client, whether you should or 04:37.033 --> 04:38.673 should not lend money. 04:38.667 --> 04:42.327 If you go to work for a private equity firm, you do 04:42.333 --> 04:44.033 the same kind of research, except 04:44.033 --> 04:45.703 that it's for companies. 04:45.700 --> 04:50.570 You will help the firm decide whether a particular 04:50.567 --> 04:54.867 transaction is worthy to take on. 04:54.867 --> 04:57.497 And in between, of course, there are all kinds of 04:57.500 --> 05:04.200 financial mechanisms, or tools, products, as one would 05:04.200 --> 05:08.070 say, that you devise, that the markets devise to facilitate 05:08.067 --> 05:09.827 these financial services. 05:09.833 --> 05:14.473 And those have been covered in your course, I can see that. 05:14.467 --> 05:18.167 But, as I mentioned, the other side of the financial 05:18.167 --> 05:20.567 services, the other side of the financial market, is 05:20.567 --> 05:22.197 really the regulators. 05:22.200 --> 05:26.630 The public sector side, the policy makers, the 05:26.633 --> 05:31.273 standard-setters, bodies such as the Financial Accounting 05:31.267 --> 05:33.397 Standards Board. 05:33.400 --> 05:37.370 And all of these are the other part of the equation, which 05:37.367 --> 05:41.027 help to make the financial market function well. 05:41.033 --> 05:45.973 And it is important for the public sector to have equally 05:45.967 --> 05:47.767 bright students. 05:47.767 --> 05:52.767 I think, some of us get a little worried. 05:52.767 --> 05:55.627 In the last decade, a lot of the bright students, who want 05:55.633 --> 05:57.603 to go into financial services, all go 05:57.600 --> 05:59.430 into the private sector. 05:59.433 --> 06:02.033 The public sector is important, because the 06:02.033 --> 06:06.133 regulators and policy setters help ensure that the market 06:06.133 --> 06:09.673 functions in an orderly fashion. 06:09.667 --> 06:12.427 We want to make clear as regulators and policy setters 06:12.433 --> 06:17.333 -- we want to make sure that the market not only functions 06:17.333 --> 06:19.073 properly -- 06:19.067 --> 06:22.897 that the playing field is level, that the rules are 06:22.900 --> 06:28.100 clear, so that financial service, and finance, can 06:28.100 --> 06:32.200 indeed perform its function in society. 06:32.200 --> 06:36.570 And that's where, in the U.S., when we have the SEC, the 06:36.567 --> 06:41.927 CFTC, the Fed, and of course the exchanges, and, not to 06:41.933 --> 06:44.333 mention, the Department of Justice, the State Attorney 06:44.333 --> 06:47.203 General's Office, et cetera, et cetera. 06:47.200 --> 06:51.700 What the public sector does, is really to make sure that 06:51.700 --> 06:55.830 people in the private sector, in the banks, in the 06:55.833 --> 06:57.673 investment banks, in the fund management, and so on, they 06:57.667 --> 07:02.167 behave properly, so that the investors are treated fairly 07:02.167 --> 07:03.297 and equally. 07:03.300 --> 07:07.330 So that everyone is entitled or is given in the same kind 07:07.333 --> 07:14.433 of information, so that no one particular group has an 07:14.433 --> 07:16.503 advantage over the other group. 07:16.500 --> 07:19.870 And that's where investor protection comes in, corporate 07:19.867 --> 07:21.397 governance comes in. 07:21.400 --> 07:23.500 And I myself -- 07:23.500 --> 07:28.770 my career has largely been in the public sector side. 07:28.767 --> 07:31.497 Although I started out as a lawyer -- 07:31.500 --> 07:35.870 I was trained as a lawyer and I practiced as a lawyer for 07:35.867 --> 07:40.927 seven, eight years in Foreign Direct Investment into China 07:40.933 --> 07:42.103 in the '80s. 07:42.100 --> 07:46.470 And I dealt with a lot of multinationals on the 07:46.467 --> 07:50.427 corporate side, on the finance side. 07:50.433 --> 07:56.273 My foray into the public sector as a regulator came out 07:56.267 --> 07:56.727 of the blue. 07:56.733 --> 08:02.403 I was headhunted to join the newly found Securities and 08:02.400 --> 08:04.070 Futures Commission in Hong Kong. 08:04.067 --> 08:06.027 That was 1990. 08:06.033 --> 08:11.573 And I thought, I would do it for a couple years, learn to 08:11.567 --> 08:14.327 broaden my horizon, and see what it is like to be in the 08:14.333 --> 08:15.973 public sector. 08:15.967 --> 08:20.667 And I enjoyed what I did, and I stayed 10 years. 08:20.667 --> 08:24.127 And then, I was made an offer by the central government, and 08:24.133 --> 08:29.133 I went to work for the Chinese regulator for almost four 08:29.133 --> 08:33.873 years, and became the first person outside of Mainland 08:33.867 --> 08:35.567 China to join the Chinese government. 08:38.067 --> 08:42.867 So, I had a total of 14 years of experience as a regulator. 08:42.867 --> 08:46.527 And I have to say that it has been hugely gratifying, 08:46.533 --> 08:52.473 because as a regulator and a policy setter I was able to 08:52.467 --> 08:56.327 facilitate the development of markets in Hong Kong. 08:56.333 --> 09:00.573 In the early days, Hong Kong was a -- 09:00.567 --> 09:03.197 in the early days, I mean in the '70s and the '80s -- 09:03.200 --> 09:07.430 Hong Kong was largely a local market. 09:07.433 --> 09:11.003 The international players like Goldman Sachs and Morgan 09:11.000 --> 09:13.900 Stanley, they came and they went, they took a look and 09:13.900 --> 09:18.430 decided the Hong Kong market was too small for them. 09:18.433 --> 09:25.633 All that took a change in 1992, when the Chinese 09:25.633 --> 09:29.433 government decided that they want to use the Hong Kong 09:29.433 --> 09:38.033 market as a way to help transform or reform the 09:38.033 --> 09:40.073 state-owned enterprises. 09:40.067 --> 09:43.797 And by that time, I was already at the Securities and 09:43.800 --> 09:46.170 Futures Commission of Hong Kong and because of my 09:46.167 --> 09:50.367 experience working in the Chinese market in the '80s, I 09:50.367 --> 09:53.427 became the only person who was the familiar enough with the 09:53.433 --> 09:58.303 Chinese market to take on that responsibility of really 09:58.300 --> 10:02.670 designing a structure for state-owned enterprises in 10:02.667 --> 10:07.667 China to become listed companies in Hong Kong. 10:07.667 --> 10:11.227 And it was ground breaking work. 10:11.233 --> 10:14.533 At the time, we knew that it was very important. 10:14.533 --> 10:20.333 We didn't know how important it would become later on. 10:20.333 --> 10:24.873 Some 20 years later, the Hong Kong market now is a totally 10:24.867 --> 10:26.327 international market. 10:26.333 --> 10:35.073 All the big players are here, and more than half of our 10:35.067 --> 10:40.727 market capitalization comes from Chinese enterprises. 10:40.733 --> 10:45.173 More than half of the turnover on our stock exchange are from 10:45.167 --> 10:48.727 Chinese related companies, Chinese companies directly or 10:48.733 --> 10:53.533 what we call ''red chips.'' So, the coming of the Chinese 10:53.533 --> 10:58.303 enterprises to Hong Kong really transformed not only to 10:58.300 --> 11:03.370 state-owned enterprises in China, but also the nature and 11:03.367 --> 11:06.427 stature of the Hong Kong market. 11:06.433 --> 11:10.803 I think today most people will recognize that Hong Kong is an 11:10.800 --> 11:12.870 important financial center. 11:12.867 --> 11:16.797 And I would say that, without the Chinese enterprises, we 11:16.800 --> 11:20.370 would still have been a very local market, because our 11:20.367 --> 11:23.727 economy itself, Hong Kong's economy, has 11:23.733 --> 11:24.773 not been that big. 11:24.767 --> 11:29.127 It really is what had happened in China that has propelled 11:29.133 --> 11:30.603 our change. 11:30.600 --> 11:34.070 And as a regulator, I was fortunate to have that 11:34.067 --> 11:38.997 opportunity and to help structure the market and 11:39.000 --> 11:40.830 spearhead changes. 11:40.833 --> 11:45.833 The other thing that I did as a regulator in Hong Kong was, 11:45.833 --> 11:52.873 in the late '90s, '98, '99, and 2000, there was a wave of 11:52.867 --> 11:54.997 demutualizations of stock exchanges 11:55.000 --> 11:56.570 throughout the world. 11:56.567 --> 12:00.467 And I helped demutualize the stock and futures exchange in 12:00.467 --> 12:03.567 Hong Kong, merged them together, together with our 12:03.567 --> 12:06.627 clearinghouse, and we became -- 12:06.633 --> 12:09.903 the Stock Exchange of Hong Kong became a listed company. 12:09.900 --> 12:14.830 Today, as an exchange, it has the largest market cap in the 12:14.833 --> 12:18.033 world, more than the New York Stock Exchange and the London 12:18.033 --> 12:20.603 Stock Exchange. 12:20.600 --> 12:24.100 And then, when I went to China, the market was in the 12:24.100 --> 12:29.670 nascent state, bearing in mind it was a socialist, 12:29.667 --> 12:31.267 communist-socialist, country. 12:31.267 --> 12:34.967 Capitalism was the new thing and stock market was an even 12:34.967 --> 12:37.967 newer thing in 1991. 12:37.967 --> 12:42.297 So, I kind of witnessed, and then later on was fortunate 12:42.300 --> 12:45.630 enough, when I went to work in the Chinese government, to 12:45.633 --> 12:49.533 participate in that grow of the Chinese market. 12:49.533 --> 12:53.873 And what I did in my almost four years as a Chinese 12:53.867 --> 12:58.197 regulator was to promote corporate governance. 12:58.200 --> 13:01.730 I introduced quarterly reporting, the requirement of 13:01.733 --> 13:05.803 independence of executive directors, and it 13:05.800 --> 13:07.800 was exciting times. 13:07.800 --> 13:11.130 What I want to say really is the public sector 13:11.133 --> 13:15.203 work that would -- 13:15.200 --> 13:18.370 at least for me, I felt that I was making a difference. 13:18.367 --> 13:26.627 I was able to help the market change, and if things were not 13:26.633 --> 13:34.603 right, I felt that I had the ability to make things right, 13:34.600 --> 13:36.170 to make things correct. 13:36.167 --> 13:38.667 Not always successful, I have to say. 13:38.667 --> 13:42.797 But what I want to really impress upon you all is that, 13:42.800 --> 13:46.970 while the private sector work in the financial services is 13:46.967 --> 13:50.327 extremely financially rewarding, in the public 13:50.333 --> 13:55.533 sector it's less so, but on a different level, I think the 13:55.533 --> 13:59.003 policymakers do perform a social good. 13:59.000 --> 14:04.000 And the good thing about the United States is, there is a 14:04.000 --> 14:07.730 lot of interchange between the public and private sectors. 14:07.733 --> 14:11.103 People do move from the private sector to the public 14:11.100 --> 14:13.870 sector, and back again. 14:13.867 --> 14:17.667 I think that's what makes the U.S. market vibrant, among 14:17.667 --> 14:18.927 other things. 14:18.933 --> 14:23.103 And I think, it is a tradition that many other countries and 14:23.100 --> 14:25.130 jurisdictions want to emulate. 14:25.133 --> 14:29.073 Namely, the people, who have been in the private sector, 14:29.067 --> 14:34.867 who have the market experience needed in the public sector. 14:34.867 --> 14:37.397 In other words, you cannot have regulators, who have very 14:37.400 --> 14:41.070 little knowledge of how the market works. 14:41.067 --> 14:43.197 At the same time, those people, who have been in the 14:43.200 --> 14:49.630 public sector, have kind of instilled on them the 14:49.633 --> 14:54.403 discipline of an orderly market, doing the right thing 14:54.400 --> 14:55.270 for the market. 14:55.267 --> 14:59.327 And that, when you have it transplanted or being brought 14:59.333 --> 15:02.773 back into the private sector, it is also a good 15:02.767 --> 15:03.967 thing for the -- 15:03.967 --> 15:07.127 and healthy for the market as well. 15:07.133 --> 15:11.303 The other thing that I want to really talk about, other than 15:11.300 --> 15:15.100 the public sector work, and as a career choice or a job 15:15.100 --> 15:22.300 choice in the financial services, is really the 15:22.300 --> 15:26.830 globalized nature of the markets these days. 15:26.833 --> 15:30.733 I think, in my days, when I was going to college and law 15:30.733 --> 15:36.173 school in the United States, the U.S. was, and I don't mean 15:36.167 --> 15:41.367 to say that it is no longer, everybody looked to the U.S. 15:41.367 --> 15:45.427 to be the center of the world. 15:45.433 --> 15:48.273 Particularly in financial services, everything happened 15:48.267 --> 15:52.167 in the U.S., and to a large extent it still does, but I 15:52.167 --> 15:55.097 think the world outside the U.S. has 15:55.100 --> 15:56.830 undergone a lot of changes. 15:56.833 --> 16:02.203 A globalized market means, that today young people will 16:02.200 --> 16:06.270 find equally interesting and exciting work opportunities in 16:06.267 --> 16:09.527 financial services outside of the United States. 16:09.533 --> 16:14.173 I think in my days, in the '80s, certainly people, when 16:14.167 --> 16:17.367 they say they want to work outside the U.S., it would be 16:17.367 --> 16:23.767 in a mature market like Europe, the U.K. or Japan. 16:23.767 --> 16:27.827 I think, increasingly more so in the last decade, 16:27.833 --> 16:31.433 opportunities in Asia and Latin American in financial 16:31.433 --> 16:35.973 services have become very exciting for 16:35.967 --> 16:38.267 young graduates anywhere. 16:38.267 --> 16:43.467 And I would say, if you are equipped as a young graduate 16:43.467 --> 16:47.067 and you wanted a career in financial services, I think 16:47.067 --> 16:51.967 you should not rule out the possibility of working in a 16:51.967 --> 16:55.967 foreign country, in the emerging market in particular. 16:55.967 --> 17:01.767 I think, in an emerging market you will learn, in a way, 17:01.767 --> 17:04.767 faster, because you would be given more opportunities, more 17:04.767 --> 17:08.397 responsibility, at an early age. 17:08.400 --> 17:11.300 Your learning curve will be steeper. 17:11.300 --> 17:17.170 And it is also interesting, as well as frustrating, I have to 17:17.167 --> 17:21.467 say, working in a developing market. 17:21.467 --> 17:23.567 There are things that you think that you can do, and 17:23.567 --> 17:27.767 then there are things, that the rules are not as clear, 17:27.767 --> 17:31.397 and the environment and the people around you are not as 17:31.400 --> 17:35.300 sophisticated or educated as you are. 17:35.300 --> 17:40.230 But I think, in today's world, the globalized market means 17:40.233 --> 17:44.073 that the opportunities are everywhere, and I think 17:44.067 --> 17:48.197 particularly the emerging markets will offer a lot of 17:48.200 --> 17:50.370 opportunities. 17:50.367 --> 17:54.927 Bob, I don't know whether this is enough as an introduction 17:54.933 --> 17:57.533 for us to carry on discussion, or how do 17:57.533 --> 17:59.973 you think about that? 17:59.967 --> 18:01.027 PROFESSOR ROBERT SHILLER: Yes, very good. 18:01.033 --> 18:03.573 I'll turn and face the class. 18:03.567 --> 18:07.427 I can't see you very well, but I thought it was very 18:07.433 --> 18:10.873 interesting hearing your comments. 18:10.867 --> 18:15.367 What particularly struck me was your emphasis on the 18:15.367 --> 18:17.167 public sector and about regulators. 18:20.067 --> 18:21.497 And it reminds me -- 18:21.500 --> 18:25.170 I visited the SEC once, recently, in the U.S., and I 18:25.167 --> 18:28.327 had lunch with people there, in Washington. 18:28.333 --> 18:30.633 And I found that a lot of them had worked in the private 18:30.633 --> 18:34.333 sector in the past, and I was starting to wonder they 18:34.333 --> 18:36.603 must've taken a big pay cut. 18:36.600 --> 18:40.000 Why are you here at the SEC? 18:40.000 --> 18:43.000 It crossed my mind, maybe they're losers, maybe they 18:43.000 --> 18:45.600 didn't make it in Wall Street, they can't -- 18:45.600 --> 18:48.970 but when I talked with them, I got a different idea. 18:48.967 --> 18:53.197 Maybe they're here, because they find all aspects of 18:53.200 --> 18:57.500 finance exciting, and maybe the purpose of life isn't to 18:57.500 --> 18:59.300 make a huge amount of money. 18:59.300 --> 19:02.300 So, I wonder if you agree with my assessment. 19:02.300 --> 19:07.670 I mean, why do people work in the public sector anyway, if 19:07.667 --> 19:08.327 pay is lower? 19:08.333 --> 19:12.103 And that's a very open and big question, maybe you have a 19:12.100 --> 19:15.170 response to that. 19:15.167 --> 19:21.127 LAURA CHA: I think, there are a couple of reasons for that. 19:21.133 --> 19:26.673 I think, one, that a career in the public 19:26.667 --> 19:28.997 sector need not be permanent. 19:29.000 --> 19:31.670 You can work in the public sector for a number of years, 19:31.667 --> 19:34.367 and then go out into the private sectors. 19:34.367 --> 19:38.767 And your public sector experience is hugely 19:38.767 --> 19:42.067 marketable, if we could use that term. 19:42.067 --> 19:45.067 I know that, particularly in the U.S., if you had 19:45.067 --> 19:49.227 experience with the CFTC and the SEC or the Fed 19:49.233 --> 19:50.103 you are very -- 19:50.100 --> 19:52.470 I mean, provided that you're not really just in the 19:52.467 --> 19:56.727 technical aspect and you are in the broad policy aspect. 19:56.733 --> 20:00.403 I think that you have a very marketable skill that people 20:00.400 --> 20:04.670 in the private sector don't necessarily have. If you 20:04.667 --> 20:07.567 change jobs in the private sector, one bank and another, 20:07.567 --> 20:11.327 one private equity and another hedge fund, they would be more 20:11.333 --> 20:14.173 or less the same, but I think in the public sector that's 20:14.167 --> 20:15.567 where the difference is. 20:15.567 --> 20:16.627 That's one. 20:16.633 --> 20:20.203 The practical aspect is, of course, it 20:20.200 --> 20:21.530 is more steady work. 20:24.633 --> 20:25.903 The financial -- 20:25.900 --> 20:26.770 how should I say? 20:26.767 --> 20:31.027 Yes, the financial reward is huge in the private sector but 20:31.033 --> 20:34.803 also it is subject to a cyclical -- 20:34.800 --> 20:38.870 when the market is down, there are massive layoffs. 20:38.867 --> 20:42.327 And the public sector is a little more steady. 20:42.333 --> 20:46.603 So, I think it could be a different 20:46.600 --> 20:48.570 phase in one's career. 20:48.567 --> 20:51.567 A certain phase you might want to have a more steady -- 20:51.567 --> 20:54.827 or you want to accumulate enough experience before you 20:54.833 --> 20:57.433 go out into the private sector, or vice versa. 20:57.433 --> 21:01.233 And I have seen, among my friends, among the regulators, 21:01.233 --> 21:04.833 some people felt that they have made enough money, enough 21:04.833 --> 21:08.173 is a relative term, they make enough in the private sector 21:08.167 --> 21:12.167 and they want to go in the public sector for a few years. 21:12.167 --> 21:14.267 I think that's also one of the reasons. 21:18.000 --> 21:19.570 PROFESSOR ROBERT SHILLER: Listening to what you said, it 21:19.567 --> 21:24.097 seems to me, in some sense, working in the public sector 21:24.100 --> 21:28.030 is an opportunity but also maybe a mission. 21:28.033 --> 21:32.233 When I'm thinking of what you helped achieve for China, I 21:32.233 --> 21:35.673 think it's a really important mission in that you are 21:35.667 --> 21:39.397 getting the financial markets working right. 21:39.400 --> 21:41.700 And the things you talked about, like independent 21:41.700 --> 21:45.100 directors on Chinese companies, is a way of 21:45.100 --> 21:47.670 combating the problem of corruption -- you didn't use 21:47.667 --> 21:50.097 the word corruption, maybe that's too strong of a word. 21:50.100 --> 21:52.230 But when things aren't up an up. 21:52.233 --> 21:55.273 And I thought that part of the motivation that maybe -- 21:55.267 --> 21:58.197 I'm sure you have, and maybe you can confirm this, it's 21:58.200 --> 22:01.800 just a sense of being part of history and part of making 22:01.800 --> 22:03.230 things right. 22:03.233 --> 22:05.573 LAURA CHA: Yes. 22:05.567 --> 22:07.367 I think, absolutely. 22:07.367 --> 22:11.727 When I became a regulator, I thought it was just going to 22:11.733 --> 22:13.073 be two, three years. 22:13.067 --> 22:17.767 I was going to broaden my horizon, and it would help my 22:17.767 --> 22:21.497 career in the law, and then just one thing led to the 22:21.500 --> 22:25.070 other, and I found that it was extremely -- 22:25.067 --> 22:25.997 how should I say? 22:26.000 --> 22:30.300 It was very gratifying for me to be in a position, where I 22:30.300 --> 22:33.270 feel that I was really participating in the 22:33.267 --> 22:36.927 development of a market. 22:36.933 --> 22:41.103 I'm sure, colleagues in the SEC and CFTC feel the same way 22:41.100 --> 22:44.370 in a different manner, because obviously the U.S. market is 22:44.367 --> 22:45.327 at a different stage. 22:45.333 --> 22:48.973 And even among the regulators, there are the people, who are 22:48.967 --> 22:52.827 in enforcement, where they try to catch the bad guys, the 22:52.833 --> 22:56.103 insider dealing cases that we see nowadays. 22:56.100 --> 22:57.300 Those on the enforcement -- 22:57.300 --> 23:01.030 and of course the Department of Justice, the Attorney 23:01.033 --> 23:02.303 General's Office -- 23:02.300 --> 23:08.270 those people also feel that there is a mission. 23:08.267 --> 23:11.997 I think that's also a very important aspect of a 23:12.000 --> 23:13.370 financial market. 23:13.367 --> 23:16.997 I just don't want young people nowadays to think of financial 23:17.000 --> 23:19.470 services as purely in the private sector. 23:24.500 --> 23:25.800 PROFESSOR ROBERT SHILLER: Another of our outside 23:25.800 --> 23:29.900 speakers in this course this semester was Hank Greenberg, 23:29.900 --> 23:36.500 who actually succeeded C.V. Starr as the founder of what 23:36.500 --> 23:39.800 was then the world's biggest insurance company AIG. 23:39.800 --> 23:45.200 And one of the things that he told us was, how did AIG get 23:45.200 --> 23:46.570 so successful? 23:46.567 --> 23:51.997 Part of it was, because it embraced the emerging world, 23:52.000 --> 23:53.670 even when it wasn't popular to do so. 23:53.667 --> 23:55.797 AIG was founded in -- 23:55.800 --> 23:57.330 I think it was Beijing or Shanghai 23:57.333 --> 24:01.073 maybe, a long time ago. 24:01.067 --> 24:05.697 And I thought that maybe he and you have a similar -- 24:05.700 --> 24:11.000 it seems like the emerging world is obviously more and 24:11.000 --> 24:17.100 more a part of our economy and will continue to be. 24:17.100 --> 24:21.200 And that business being connected -- 24:21.200 --> 24:22.030 we are getting more and more 24:22.033 --> 24:24.503 international, as you were saying. 24:24.500 --> 24:27.100 It kind of makes for a different life. 24:27.100 --> 24:28.000 One thing that AIG -- 24:28.000 --> 24:31.970 and Hank Greenberg emphasized to us is, that he has a life 24:31.967 --> 24:33.797 of diplomacy in some sense. 24:36.300 --> 24:40.270 He became a diplomat, or like an ambassador from the 24:40.267 --> 24:43.397 business community, because to work with all these different 24:43.400 --> 24:47.500 countries requires a certain sense of mission and purpose 24:47.500 --> 24:50.530 and skills. 24:50.533 --> 24:55.773 And I don't know if this is a well-framed question, but it 24:55.767 --> 24:59.127 seems like what you were saying implies an interesting 24:59.133 --> 25:05.073 career in the emerging world and a career that involves a 25:05.067 --> 25:09.527 broad scope of skills, not just narrow finance skills. 25:09.533 --> 25:11.733 Does that prompt you? 25:11.733 --> 25:13.003 LAURA CHA: Yes. 25:14.833 --> 25:17.803 I very much agree with Hank Greenberg's view. 25:17.800 --> 25:23.070 I think, when you work in an emerging market or you work in 25:23.067 --> 25:27.297 emerging markets, you develop a different set of skills. 25:27.300 --> 25:32.500 And I think, in today's globalized world there are 25:32.500 --> 25:37.700 more and more multicultural, global professionals. 25:37.700 --> 25:42.030 I think, we're talking about 20, 30 years ago, U.S. 25:42.033 --> 25:46.103 expatriates, for that matter, any other expatriates from the 25:46.100 --> 25:49.870 U.K., for example, would go out to the emerging market. 25:49.867 --> 25:54.397 And people kind of use it as a stint, you work for five, six 25:54.400 --> 26:00.600 years, and you go back to your homeland, and your roots will 26:00.600 --> 26:02.470 be in your homeland. 26:02.467 --> 26:04.467 Which is perfectly fine. 26:04.467 --> 26:06.427 And that's what most people do. 26:06.433 --> 26:10.273 But I think in the last decade, I have seen and I have 26:10.267 --> 26:12.897 come across more and more young professionals who -- 26:17.500 --> 26:21.600 because of the education and because of the background what 26:21.600 --> 26:23.730 I would call global professionals. 26:23.733 --> 26:28.103 They're multicultural, many of them are multilingual, and 26:28.100 --> 26:33.830 they will move job to job in the overseas market. 26:33.833 --> 26:38.733 And people look upon it as life's adventure. 26:38.733 --> 26:42.273 You live in a country for five, six years, and then you 26:42.267 --> 26:45.367 move on, and the skills that you acquire along the way 26:45.367 --> 26:47.967 really enrich yourself. 26:47.967 --> 26:51.567 Enrich oneself, and eventually, if you do go back 26:51.567 --> 26:55.027 or not go back to your homeland, it is some skill 26:55.033 --> 26:58.303 that will stay with you and change your perspective. 26:58.300 --> 27:02.030 And I think that kind of skill is becoming increasingly 27:02.033 --> 27:06.033 important, when we have more and more cross-border 27:06.033 --> 27:09.873 transactions, and globalized markets, where, when something 27:09.867 --> 27:13.227 happens in one market, it has an effect 27:13.233 --> 27:14.603 way beyond the borders. 27:14.600 --> 27:16.800 And that's what we're seeing more and more nowadays. 27:20.200 --> 27:21.730 PROFESSOR ROBERT SHILLER: I was going to ask 27:21.733 --> 27:23.303 the class for questions. 27:30.167 --> 27:32.197 While you're thinking for a moment, let me ask one more 27:32.200 --> 27:33.100 question of you. 27:33.100 --> 27:34.570 LAURA CHA: Sure. 27:34.567 --> 27:38.427 PROFESSOR ROBERT SHILLER: I just wondered about HSBC, 27:38.433 --> 27:45.073 which is of another bank, like AIG, it originated in Hong 27:45.067 --> 27:51.167 Kong and Shanghai, but it has become such a world force. 27:51.167 --> 27:53.997 And I kind of wondered, when did that happen, 27:54.000 --> 27:55.100 how did that happen? 27:55.100 --> 27:57.900 Can you give us a nutshell, because it doesn't happen to 27:57.900 --> 27:59.670 every Asian bank. 28:02.233 --> 28:07.403 LAURA CHA: HSBC started in Hong Kong in 1865, and within 28:07.400 --> 28:10.300 a few months the Shanghai branch was 28:10.300 --> 28:12.330 set up the same year. 28:12.333 --> 28:18.673 So, we've been here 160 years or so. 28:18.667 --> 28:21.727 Originally it was trading -- 28:21.733 --> 28:23.533 dealing with trade finance and so on. 28:23.533 --> 28:25.603 And it became the largest bank in Hong 28:25.600 --> 28:27.870 Kong over many decades. 28:27.867 --> 28:33.597 And the international push really started in the early 28:33.600 --> 28:41.930 '90s, when HSBC started acquiring different banks. 28:41.933 --> 28:46.833 It acquired the Marine Midland Bank in the U.S., and it 28:46.833 --> 28:52.333 acquired the Midland Bank in the U.K. And from a bank, from 28:52.333 --> 28:56.603 a financial institution, which was largely local in Hong Kong 28:56.600 --> 29:04.100 with businesses in Asia, it became an international 29:04.100 --> 29:07.770 organization by acquisition. 29:07.767 --> 29:12.897 So, the head office moved from Hong Kong to London, I think, 29:12.900 --> 29:19.030 around '92, '93, when HSBC acquired the Midland Bank in 29:19.033 --> 29:24.173 the U.K., and the Bank of England required the HSBC to 29:24.167 --> 29:27.997 have the domicile in London to be regulated 29:28.000 --> 29:30.170 by the Bank of England. 29:30.167 --> 29:35.527 Since the '90s, the HSBC had acquired one of the largest 29:35.533 --> 29:41.733 banks in France called CCF, it's now called HSBC France. 29:41.733 --> 29:47.433 It has acquired Bank of Bermuda in Bermuda, and it has 29:47.433 --> 29:48.803 made a lot of acquisitions. 29:48.800 --> 29:52.230 Of course, the most famous, or infamous, acquisition in the 29:52.233 --> 29:57.673 U.S. was Household Finance about 10 years -- less 29:57.667 --> 29:59.167 than 10 years ago. 29:59.167 --> 30:02.797 So, HSBC became an international financial 30:02.800 --> 30:05.570 institution really in the last, I would 30:05.567 --> 30:08.067 say, 15 to 20 years. 30:08.067 --> 30:18.367 Now, today, 1/3 of our profit comes from Hong Kong, 1/3 30:18.367 --> 30:23.367 comes from the rest of Asia, 25% or so from the U.K. and 30:23.367 --> 30:28.667 Europe, the U.S. is about 6% and Latin 30:28.667 --> 30:31.367 America is about 9% roughly. 30:31.367 --> 30:39.127 So, Asia is a hugely important market for HSBC, and the 30:39.133 --> 30:42.203 acronym is Hong Kong and Shanghai Banking Corporation, 30:42.200 --> 30:48.000 which was the original name when we were set up in 1865. 30:48.000 --> 30:52.470 So, we do not have a controlling shareholder, we 30:52.467 --> 30:55.827 are truly diversified in our shareholder base. 30:55.833 --> 30:59.073 A larger shareholder holds no more than 3% to 4%. 30:59.067 --> 31:02.197 It is an institutional investor, so they represent 31:02.200 --> 31:04.300 many smaller investors. 31:04.300 --> 31:07.630 So, it is really run by the management, professional 31:07.633 --> 31:10.803 management, and it has done a, I would have to say, a very 31:10.800 --> 31:13.130 good job in the last two decades. 31:17.400 --> 31:18.630 PROFESSOR ROBERT SHILLER: OK, any other -- 31:26.600 --> 31:29.270 STUDENT: Hi, thank you for coming. 31:29.267 --> 31:32.627 I was just curious, a lot of people have mentioned that the 31:32.633 --> 31:36.333 lack of regulation and enforcement of contracts is a 31:36.333 --> 31:38.103 main barrier to foreign investment 31:38.100 --> 31:40.070 in Asian bond markets. 31:40.067 --> 31:43.467 How do you think China will address this, and what are the 31:43.467 --> 31:46.397 primary differences in the regulation between China and 31:46.400 --> 31:49.470 the United States? 31:49.467 --> 31:52.867 LAURA CHA: Can you say your question again? 31:52.867 --> 31:54.067 I didn't catch it. 31:54.067 --> 31:57.897 I only heard regulation, can you tell me 31:57.900 --> 31:59.500 your question again? 31:59.500 --> 32:00.300 STUDENT: Yes. 32:00.300 --> 32:03.900 Many people have mentioned that the lack of regulation 32:03.900 --> 32:07.800 and enforcement of contracts is a main barrier to foreign 32:07.800 --> 32:10.400 investment in Asian bond markets. 32:10.400 --> 32:12.400 How do you think China will address this? 32:16.067 --> 32:19.727 LAURA CHA: How do I think what? 32:19.733 --> 32:23.173 STUDENT: How will China address this issue? 32:23.167 --> 32:25.467 The lack of regulation. 32:25.467 --> 32:30.467 LAURA CHA: Right, I think China does not have a lack of 32:30.467 --> 32:32.427 regulation. 32:32.433 --> 32:34.773 There are lots of regulations in China. 32:34.767 --> 32:37.327 What I would say is, that there has to be better 32:37.333 --> 32:41.733 application and enforcement of regulations, rather than 32:41.733 --> 32:45.833 periodic and not consistent regulation. 32:45.833 --> 32:48.873 I think one of the most important things for the 32:48.867 --> 32:52.227 market in terms of regulation is, that they have to be 32:52.233 --> 32:56.273 clear, they have to be consistently applied, and they 32:56.267 --> 32:58.467 have to be fair. 32:58.467 --> 33:04.067 It is not a lack of regulation that is the major problem. 33:04.067 --> 33:09.867 I think, as in many emerging markets, China is still trying 33:09.867 --> 33:14.297 to cope with the issue of stringent enforcement. 33:14.300 --> 33:17.770 And I think, the regulators in China recognize that there's a 33:17.767 --> 33:22.127 lot that they need to do better in terms of 33:22.133 --> 33:23.933 enforcement. 33:23.933 --> 33:27.403 And the problem that I see in China is, that it is 33:27.400 --> 33:32.530 developing so fast, the market is way ahead, developing 33:32.533 --> 33:38.433 faster and quicker and bigger than the government and the 33:38.433 --> 33:39.973 regulators have anticipated. 33:39.967 --> 33:44.967 If we put ourselves back in the U.S in, let's say the 33:44.967 --> 33:48.527 crash of the late '20s, and when the SEC was set up in 33:48.533 --> 33:54.733 1934, I would say, China is probably slightly better than 33:54.733 --> 33:56.903 the U.S. in those days. 33:56.900 --> 34:01.070 But if we compare with the development of the U.S. market 34:01.067 --> 34:05.527 in the last five decades or so, of course, the U.S. has 34:05.533 --> 34:09.703 developed a lot more, and China does not have the luxury 34:09.700 --> 34:12.700 to wait 50 years for its rules and 34:12.700 --> 34:14.970 enforcement culture to develop. 34:14.967 --> 34:16.967 And it is catching up. 34:16.967 --> 34:20.067 Whether the lack of regulation is therefore an impediment to 34:20.067 --> 34:23.597 foreign investment, I think you'll have to look at it from 34:23.600 --> 34:26.430 several angles. 34:26.433 --> 34:31.003 China to date is the largest recipient of foreign direct 34:31.000 --> 34:36.100 investments, so, in a way, if the conditions in China are so 34:36.100 --> 34:38.530 bad, it would not have attracted so much foreign 34:38.533 --> 34:39.873 direct investment. 34:39.867 --> 34:44.027 I'm not saying that the environment in China is really 34:44.033 --> 34:47.173 top notch, compared with the developed markets, but there 34:47.167 --> 34:50.367 are probably enough opportunities, and people do 34:50.367 --> 34:54.167 make enough money, so that it is by statistics the largest 34:54.167 --> 34:56.197 recipient of foreign direct investment. 34:56.200 --> 35:03.000 And that is a fact compiled by international agencies. 35:03.000 --> 35:06.000 So, I don't think that it has been an impediment, it is an 35:06.000 --> 35:10.600 impediment when we talk about individual cases, it is far 35:10.600 --> 35:11.870 from satisfactory. 35:14.267 --> 35:15.397 PROFESSOR ROBERT SHILLER: Can I just 35:15.400 --> 35:17.370 interject a question there? 35:17.367 --> 35:20.727 Some people say that the SEC in the United States could use 35:20.733 --> 35:23.503 much more resources. 35:23.500 --> 35:27.500 Does China give enough resources to enforcement? 35:27.500 --> 35:31.170 It seems to me that there is a problem in emerging countries, 35:31.167 --> 35:34.127 or everywhere, that it's expensive. 35:34.133 --> 35:37.703 And the country has a budget, right, which is still 35:37.700 --> 35:38.870 attracted to other things. 35:38.867 --> 35:44.067 So, do you think that China devotes enough resources to 35:44.067 --> 35:45.597 enforcement? 35:45.600 --> 35:50.300 LAURA CHA: I think that every regulator would tell you, that 35:50.300 --> 35:52.200 they need more resources as far as 35:52.200 --> 35:53.270 enforcement is concerned. 35:53.267 --> 35:57.597 I think China could certainly do with more. 35:57.600 --> 36:04.070 I think one aspect is that you have to have enough people to 36:04.067 --> 36:05.727 carry out enforcement. 36:05.733 --> 36:09.003 And it is trying to catch up. 36:09.000 --> 36:13.900 And, as I said, because the market is developing so fast, 36:13.900 --> 36:18.800 that the regulators are always trying to play catch up, and 36:18.800 --> 36:20.200 that is not ideal. 36:20.200 --> 36:23.470 I think the SEC could do with more resources, I would 36:23.467 --> 36:25.527 absolutely agree with that. 36:25.533 --> 36:31.503 Any regulators you go to, they always felt that the 36:31.500 --> 36:33.130 under-resourced aspect is the enforcement. 36:37.600 --> 36:40.030 PROFESSOR ROBERT SHILLER: Other questions? 36:40.033 --> 36:41.303 Right here. 36:43.133 --> 36:45.803 STUDENT: I was wondering, if you think that there are any 36:45.800 --> 36:48.800 impediments to development in the Chinese or Hong Kong 36:48.800 --> 36:51.700 markets based on the government of China. 36:51.700 --> 36:54.000 You mentioned earlier that there was a communist 36:54.000 --> 36:57.400 tradition, and that a lot of the businesses that you worked 36:57.400 --> 37:01.270 with were state-oriented or state-owned. 37:01.267 --> 37:02.967 So, I was wondering, if you think that that will have to 37:02.967 --> 37:07.097 change in the future, or if the market will change or in 37:07.100 --> 37:10.030 some way adapt to allow those to continue to 37:10.033 --> 37:12.933 operate as they do now? 37:12.933 --> 37:17.003 LAURA CHA: Do you mean the state-owned enterprises? 37:17.000 --> 37:21.300 When you say impediment, what you mean by that? 37:21.300 --> 37:26.030 STUDENT: You mentioned that there was a tradition of 37:26.033 --> 37:30.003 communism and state-owned enterprises, that a lot of the 37:30.000 --> 37:33.630 businesses were a little bit weary of a capitalist system, 37:33.633 --> 37:36.673 and that you played a pivotal role in introducing that idea 37:36.667 --> 37:38.197 and really implementing it. 37:38.200 --> 37:42.670 Do you think that type of change will continue? 37:42.667 --> 37:43.967 LAURA CHA: Very much so. 37:43.967 --> 37:48.327 I think capitalism has taken deep root in China already. 37:48.333 --> 37:51.403 If you go to China nowadays, the state-owned enterprises 37:51.400 --> 37:54.800 very much operate as any other enterprises. 37:54.800 --> 37:59.030 The difference is that the controlling shareholder is the 37:59.033 --> 38:04.033 state, is some sort of government entity. 38:04.033 --> 38:07.703 But it operates, if you look at some of the larger 38:07.700 --> 38:14.330 state-owned enterprises, like China Mobile, Petrol China, 38:14.333 --> 38:16.073 China Telecom -- 38:16.067 --> 38:17.927 they are still state-owned enterprises, no question, 38:17.933 --> 38:20.203 because their majority shareholder, their controlling 38:20.200 --> 38:22.930 shareholder, is the state, but they operate in 38:22.933 --> 38:24.773 a commercial way. 38:24.767 --> 38:31.797 Of course, some people would say that there are policy 38:31.800 --> 38:34.970 preferences, advantages, to being state-owned enterprises. 38:34.967 --> 38:38.627 But I think, by and large, now the state-owned enterprises, 38:38.633 --> 38:41.973 particularly those that are listed on the exchange and 38:41.967 --> 38:45.527 some of those are listed in the U.S. market as well, they 38:45.533 --> 38:49.033 do have to operate in a completely commercial manner. 38:49.033 --> 38:50.733 They have shareholders to answer to 38:50.733 --> 38:51.703 other than the state. 38:51.700 --> 38:53.600 They have minority shareholders, who are public 38:53.600 --> 38:56.200 shareholders, and I think that's where the discipline 38:56.200 --> 38:58.770 comes in, the market discipline comes in. 38:58.767 --> 39:04.027 So, when you say, whether any change will take place, change 39:04.033 --> 39:06.903 has already taken place and will continue to take place. 39:10.333 --> 39:11.573 PROFESSOR ROBERT SHILLER: Is there another -- 39:14.033 --> 39:15.533 Let me just add something. 39:15.533 --> 39:19.403 It occurs to me that, at least in the U.S., there has been a 39:19.400 --> 39:24.430 policy going back to the 1930s of trying to encourage little, 39:24.433 --> 39:25.833 start-up companies. 39:25.833 --> 39:28.533 We created the Small Business Administration, which 39:28.533 --> 39:32.973 subsidizes -- the idea has been that big things grow out 39:32.967 --> 39:34.767 of small beginnings. 39:34.767 --> 39:38.767 I wonder if you could comment on China. 39:38.767 --> 39:46.367 Does China support young start-ups adequately? 39:46.367 --> 39:48.127 LAURA CHA: It does. 39:48.133 --> 39:51.103 It has been now two years, since the Growth Enterprise 39:51.100 --> 39:54.870 Board has been set up in the Shenzhen Stock Exchange, what 39:54.867 --> 40:03.097 we call the ''gem board.'' And it has lower listing criteria, 40:03.100 --> 40:08.200 and that is more or less a ''buyers beware'' market. 40:08.200 --> 40:11.870 I mean, it is like any other ''buyers beware'' market, it's 40:11.867 --> 40:19.097 fraught with a number of high profile, high PE companies, 40:19.100 --> 40:24.030 which may or may not develop into something more concrete. 40:24.033 --> 40:29.133 But I think the idea is to use the capital market to nurture 40:29.133 --> 40:32.703 the small business, that's the growth enterprise market. 40:32.700 --> 40:35.500 Shenzhen Stock Exchange, which is across the border from Hong 40:35.500 --> 40:38.130 Kong, also has a -- 40:38.133 --> 40:42.173 part of it's board is called Small-Medium Enterprise Board. 40:42.167 --> 40:45.167 So, if you are not a growth company but you are a small- 40:45.167 --> 40:47.697 or medium-sized company, then you are listed 40:47.700 --> 40:50.000 on this other board. 40:50.000 --> 40:54.900 So, there are two specific boards addressing exactly the 40:54.900 --> 40:58.570 question you raised, namely to nurture the smaller companies. 41:12.967 --> 41:17.397 STUDENT: Hi, could you give a couple of examples, maybe, of 41:17.400 --> 41:21.100 the skills you learned in the public sector that helped you, 41:21.100 --> 41:26.900 now working at HSBC, or maybe a situation, where, because of 41:26.900 --> 41:30.700 what you learned in the public sector, you had a better 41:30.700 --> 41:33.300 decision making? 41:33.300 --> 41:34.830 LAURA CHA: That's a good question. 41:34.833 --> 41:41.673 I think, what I took away most from my years as a regulator 41:41.667 --> 41:47.597 is really to look at an issue from the macro level. 41:47.600 --> 41:51.470 I think in the private sector, when you are given a problem, 41:51.467 --> 41:55.127 when you are, let's say, in a private firm, in a bank, or a 41:55.133 --> 42:00.603 law firm, or any professional firm, you're given a set of 42:00.600 --> 42:04.930 problems, perhaps a client has a certain problem, and your 42:04.933 --> 42:07.503 role is to help solve that problem. 42:07.500 --> 42:13.070 And within the contacts of that client alone, and in the 42:13.067 --> 42:14.797 confined of that problem. 42:14.800 --> 42:21.400 And most of the time, you help the client to overcome some 42:21.400 --> 42:25.570 either legal issues or other commercial issues, so that the 42:25.567 --> 42:28.297 client can get to where he wants to go. 42:28.300 --> 42:33.070 Whether it's acquisition or merger or disposal, et cetera. 42:33.067 --> 42:37.267 In the public sector as a regulator, how you learn to 42:37.267 --> 42:41.697 look at the issue that is presented to you from a more 42:41.700 --> 42:46.500 macro level in the sense that, how does this particular issue 42:46.500 --> 42:49.930 impact on the market as a whole? 42:49.933 --> 42:58.103 I'll give you an example: A group of companies in Hong 42:58.100 --> 43:01.870 Kong came to the regulator in Hong Kong and asked for 43:01.867 --> 43:03.667 certain exemptions. 43:03.667 --> 43:08.767 The reasons that they put forward are quite cogent and 43:08.767 --> 43:11.767 not unreasonable from the client's point of view, from 43:11.767 --> 43:14.297 the company's point of view. 43:14.300 --> 43:18.630 Now, if I were in my role as a lawyer, I would fight very 43:18.633 --> 43:22.173 hard for the client to get that exemption, but as a 43:22.167 --> 43:24.897 regulator I have to look at what does this -- 43:27.633 --> 43:30.803 if I give the exemption what kind of knock-on 43:30.800 --> 43:31.730 effect will it have? 43:31.733 --> 43:34.473 Will it set a precedent? 43:34.467 --> 43:36.067 And is it a good precedent? 43:36.067 --> 43:38.297 Or is it not a good precedent? 43:38.300 --> 43:42.100 If it is a good precedent, then it should not be just 43:42.100 --> 43:44.270 given to this one particular company. 43:44.267 --> 43:48.527 Then, perhaps rules should be amended in such a way, that 43:48.533 --> 43:51.803 what this client, what this particular group of company 43:51.800 --> 43:56.900 wants, should be given to everyone who wants 43:56.900 --> 43:59.300 to apply for it. 43:59.300 --> 44:02.770 But if it is not, and if it is just purely for the benefit of 44:02.767 --> 44:06.527 this one particular group of company, then you really 44:06.533 --> 44:10.373 should not give in to that exemption. 44:10.367 --> 44:13.827 And you have to recognize that there are different 44:13.833 --> 44:17.273 considerations, such as the size of the group, the impact 44:17.267 --> 44:21.227 that it may have on the market, et cetera. 44:21.233 --> 44:24.773 So, the skills that one learns as a regulator is really to 44:24.767 --> 44:28.997 look at the problem presented you from a more -- 44:32.967 --> 44:39.067 at a higher level, you look at the entire scenario and how 44:39.067 --> 44:42.067 this piece would fit into a bigger picture, whereas in the 44:42.067 --> 44:43.997 private sector you don't need to. 44:44.000 --> 44:48.170 And how it's helpful to me now, in my current position, 44:48.167 --> 44:55.197 is that I am able, I think, to interpret policy and to 44:55.200 --> 44:59.470 anticipate policy, because I could see that certain things 44:59.467 --> 45:04.367 are happening a certain way that those are the issues that 45:04.367 --> 45:06.967 the regulators are likely to address. 45:06.967 --> 45:09.827 And therefore, from the private sector we should be 45:09.833 --> 45:13.833 prepared for the changes that will take place. 45:13.833 --> 45:15.403 So, that's in a very abstract way. 45:15.400 --> 45:19.070 I can't quote you exact examples for obvious reasons, 45:19.067 --> 45:21.097 but that is -- 45:21.100 --> 45:25.900 In a nutshell, I certainly find it helped me as a person 45:25.900 --> 45:33.830 to look at matters from a broader point of view. 45:43.067 --> 45:44.597 STUDENT: Hi, thank you. 45:44.600 --> 45:45.400 You spoke about the 45:45.400 --> 45:47.970 demutualization of stock exchanges. 45:47.967 --> 45:51.997 And one of the outcomes you're seeing of that is the mergers 45:52.000 --> 45:54.470 and acquisitions of stock exchanges themselves. 45:54.467 --> 45:57.067 And I think, in the last one year itself we've seen a whole 45:57.067 --> 45:59.297 bunch of very interesting deals, Singapore and 45:59.300 --> 46:02.070 Australia, New York and Deutsche Boerse, et cetera. 46:02.067 --> 46:04.667 And one of the one's that really caught my attention was 46:04.667 --> 46:07.467 the Shanghai-Brazil link-up. 46:07.467 --> 46:10.597 So, perhaps I want to hear your views on, do you think 46:10.600 --> 46:15.470 this wave of tie-ups is going to carry on, and if so, what 46:15.467 --> 46:18.997 form do you think it will take in the coming years? 46:19.000 --> 46:24.100 LAURA CHA: I think in that last decade, the exchanges 46:24.100 --> 46:28.230 around the world have really taken on -- 46:28.233 --> 46:32.633 or more than a decade now, the landscape 46:32.633 --> 46:33.933 has completely changed. 46:33.933 --> 46:37.033 It used to be, an exchange is kind of 46:37.033 --> 46:39.133 like a national symbol. 46:39.133 --> 46:43.403 Each nation has it's own exchange, and that is almost 46:43.400 --> 46:45.700 like a national -- 46:45.700 --> 46:46.430 how should I say? 46:46.433 --> 46:50.103 It's a utility that cannot be taken over 46:50.100 --> 46:54.000 by a foreign country. 46:54.000 --> 46:57.500 We saw that went by the wayside, when the New York 46:57.500 --> 47:05.170 Stock Exchange acquired Euronext, and of course NASDAQ 47:05.167 --> 47:08.997 have alliances, and just different ways. 47:09.000 --> 47:12.700 And now we're into a second phase, where these already 47:12.700 --> 47:17.100 consolidated and aligned exchanges are forming even 47:17.100 --> 47:20.070 more consolidation. 47:20.067 --> 47:21.997 That may or may not happen, there's a lot 47:22.000 --> 47:23.270 of talk about it. 47:23.267 --> 47:31.997 And I think, what drives this latest wave of exchange 47:32.000 --> 47:37.730 acquisitions and alliances are really the easy end, the 47:37.733 --> 47:42.403 electronic networks, that are driving the cost of trading 47:42.400 --> 47:48.430 down, that leave the larger exchanges like the NYSE -- 47:48.433 --> 47:51.303 a lot of the volume has gone to the easy end, and they 47:51.300 --> 47:56.030 really have to align with others to get the business up. 47:56.033 --> 47:58.833 The other is products. 47:58.833 --> 48:05.203 I think the merger of exchanges will only make sense 48:05.200 --> 48:10.300 when there are mutually complimentary products. 48:10.300 --> 48:13.470 And geography also makes sense. 48:13.467 --> 48:16.467 And how will I see the outcome? 48:16.467 --> 48:24.367 I think, many markets still look upon their exchange as a 48:24.367 --> 48:27.127 national symbol and they do not necessarily want -- it's 48:27.133 --> 48:31.203 more a matter of the local politicians' sentiment, rather 48:31.200 --> 48:33.870 than looking at the commercial side and looking at the 48:33.867 --> 48:35.497 political side. 48:35.500 --> 48:39.400 Someone once told me about this Singapore and Australian 48:39.400 --> 48:40.800 stock exchange -- 48:40.800 --> 48:43.930 the pending merger that has been announced -- 48:43.933 --> 48:46.103 I don't have the latest, I don't know whether it's going 48:46.100 --> 48:47.530 to go through. 48:47.533 --> 48:51.403 Somebody in Australia told me, well, it is almost like Qantas 48:51.400 --> 48:55.400 being taken over by Singapore Airlines. 48:55.400 --> 48:59.670 In the commercial world, well, if that makes sense, why not? 48:59.667 --> 49:03.297 But I think, there is still a lot of sentiment that a stock 49:03.300 --> 49:06.000 exchange is something very national. 49:06.000 --> 49:09.200 So, I don't know how that will play out, because all these 49:09.200 --> 49:12.400 mergers are subject to the votes of the local 49:12.400 --> 49:13.670 politicians. 49:13.667 --> 49:16.667 And so, they may have different considerations than 49:16.667 --> 49:18.397 just purely the commercial side. 49:23.333 --> 49:24.603 STUDENT: Hello. 49:24.600 --> 49:26.700 Hi. 49:26.700 --> 49:28.130 Thank you for your time. 49:28.133 --> 49:31.233 I have sort of a two-part question. 49:31.233 --> 49:36.203 The first part, in regards to all these Chinese companies 49:36.200 --> 49:42.170 that are registered overseas, that sort of complicates the 49:42.167 --> 49:44.797 regulations, so I was wondering, if you could talk 49:44.800 --> 49:49.730 about Chinese companies being registered overseas and being 49:49.733 --> 49:52.733 listed in overseas exchanges. 49:52.733 --> 49:57.373 And the second part, the question is, I've heard, at 49:57.367 --> 50:00.327 least I've read that there's a new international board that's 50:00.333 --> 50:02.833 being set up in China to encourage these companies to 50:02.833 --> 50:04.833 come back to mainland China or Hong Kong. 50:04.833 --> 50:10.173 So, I was wondering if you could talk a little bit about 50:10.167 --> 50:13.967 how it's going to be shaped, some of it's challenges, and 50:13.967 --> 50:16.097 what do you think would be most important for success? 50:16.100 --> 50:17.530 LAURA CHA: OK. 50:17.533 --> 50:19.873 The first part of your question, Chinese companies 50:19.867 --> 50:23.597 that are registered overseas and listed overseas. 50:23.600 --> 50:26.900 There is no rule that forbids Chinese companies to be 50:26.900 --> 50:30.000 registered anywhere. 50:30.000 --> 50:34.130 I think, let's say a company in China, they can elect to 50:34.133 --> 50:37.773 register themselves in Hong Kong, in Bermuda, Cayman 50:37.767 --> 50:41.267 Islands, wherever, U.S., Delaware. 50:41.267 --> 50:46.097 And the matter of listing is really up to the issuer 50:46.100 --> 50:49.800 itself, if they decided that a listing in the U.S., whether 50:49.800 --> 50:52.830 it's NASDAQ or the NYSE, makes sense, that's where they would 50:52.833 --> 50:56.573 list. And once they are listed, they are subject to 50:56.567 --> 50:59.897 the rules and regulations of the SEC just like anybody 50:59.900 --> 51:03.630 else, just like any of the other foreign companies. 51:03.633 --> 51:09.833 So, I think the place of listing really determines the 51:09.833 --> 51:12.573 kind of rules that would be applied to that company. 51:12.567 --> 51:16.197 Once a company is listed, let's say on the New York 51:16.200 --> 51:18.600 Stock Exchange, then the U.S. rules will come in, and 51:18.600 --> 51:24.100 whether it is a Chinese company is kind of irrelevant. 51:24.100 --> 51:27.370 It will have to be complying with the U.S. rules just like 51:27.367 --> 51:29.197 everybody else. 51:29.200 --> 51:31.130 So, that's the first part of your question, I don't know 51:31.133 --> 51:35.133 whether that answers it. 51:35.133 --> 51:36.803 The second part of your question, about the 51:36.800 --> 51:39.230 international board in Shanghai. 51:39.233 --> 51:43.033 Yes, there has been a lot of talk about the Shanghai Stock 51:43.033 --> 51:46.573 Exchange setting up an international board. 51:46.567 --> 51:51.997 Meaning a board, where companies registered outside 51:52.000 --> 51:55.230 of China such as the red chips, which are not listed in 51:55.233 --> 51:59.003 China, would return to the Shanghai Stock Exchange. 51:59.000 --> 52:01.200 Because they are not registered in China, they are 52:01.200 --> 52:04.200 therefore not a Chinese company, they are therefore 52:04.200 --> 52:06.230 kind of like a foreign company, because they 52:06.233 --> 52:10.373 registered in Hong Kong or Bermuda or wherever. 52:10.367 --> 52:13.997 The idea of the international board is to attract not only 52:14.000 --> 52:17.130 these types of Chinese companies that have been 52:17.133 --> 52:19.803 registered outside, but for companies, that are 52:19.800 --> 52:25.400 multinationals, that are already listed in the outside 52:25.400 --> 52:28.330 market, to be inside China. 52:28.333 --> 52:36.803 And the major reason that I can discern is, one, to give 52:36.800 --> 52:41.400 the Chinese investor a wider variety of products. 52:41.400 --> 52:46.300 Because the renminbi is still a non-convertible currency, 52:46.300 --> 52:50.870 the vast majority of Chinese investors can only invest in 52:50.867 --> 52:54.267 the domestic market, only in the Chinese companies that are 52:54.267 --> 52:57.427 listed there. 52:57.433 --> 53:01.733 They cannot easily invest in, let's say Microsoft, HSBC, 53:01.733 --> 53:05.733 IBM, General Motors, et cetera. 53:05.733 --> 53:08.403 So, I think the Chinese government has thought, well, 53:08.400 --> 53:13.130 maybe we can bring some of the companies to China, for these 53:13.133 --> 53:17.503 companies to raise capital and issue shares in China, so that 53:17.500 --> 53:21.700 the Chinese investors will be able to asses it. 53:21.700 --> 53:27.370 The second part is really to raise the profile and the 53:27.367 --> 53:31.597 standard of the Shanghai Stock Exchange. 53:31.600 --> 53:33.900 The Shanghai Stock Exchange has ambition to be an 53:33.900 --> 53:35.330 international financial center. 53:38.233 --> 53:41.473 Domestic documents have said that they should be developed 53:41.467 --> 53:43.027 into an international financial 53:43.033 --> 53:45.733 center by the year 2020. 53:45.733 --> 53:49.573 And one of roots of reaching that goal is to have an 53:49.567 --> 53:53.327 international board for international companies, and 53:53.333 --> 53:56.803 that is, what, I think, the Shanghai government and the 53:56.800 --> 54:00.700 Shanghai Stock Exchange are setting out to do. 54:00.700 --> 54:05.230 But to date, the rules have not yet been promulgated. 54:05.233 --> 54:07.873 We don't know when it will. 54:07.867 --> 54:11.497 I was a delegate to the National People's Congress, 54:11.500 --> 54:14.530 and we met in March [addition: 2011], 54:14.533 --> 54:17.503 earlier this month, and there's no discussion or 54:17.500 --> 54:19.800 timetable that has been set. 54:19.800 --> 54:21.630 Many people think, it would be a good thing. 54:21.633 --> 54:25.633 Some people inside China think that it will not be such a 54:25.633 --> 54:30.533 good thing, because it will divert the savings to foreign 54:30.533 --> 54:33.303 companies, but I think most people think that it will be a 54:33.300 --> 54:35.830 good thing for China. 54:35.833 --> 54:38.873 So, I don't know whether that answers your question. 54:38.867 --> 54:41.297 Do you have a second part to the second question? 54:41.300 --> 54:44.200 I might have missed it. 54:44.200 --> 54:46.130 STUDENT: No, I think that really answered my question. 54:46.133 --> 54:48.833 But the first part, actually the reason why I asked the 54:48.833 --> 54:53.703 first part of the questions was, because a lot of the 54:53.700 --> 54:57.930 recent frauds that came up happened or were discovered, 54:57.933 --> 55:00.003 because a lot of Chinese companies registering with the 55:00.000 --> 55:04.430 New York Stock Exchange had a filing with the SEC, whereas 55:04.433 --> 55:07.803 they also have a filing for their own government, the 55:07.800 --> 55:08.200 Chinese government. 55:08.200 --> 55:12.270 And then these filings for their annual reports, their 55:12.267 --> 55:14.397 numbers, would not match. 55:14.400 --> 55:17.230 And I just thought, there would be some kind of 55:17.233 --> 55:21.673 complications in terms of regulation, when the 55:21.667 --> 55:24.667 government's regulating these companies. 55:24.667 --> 55:30.027 LAURA CHA: I think that, whenever a company is listed 55:30.033 --> 55:34.933 on a foreign market, it is subject to the full rules and 55:34.933 --> 55:38.573 regulations of that market. 55:38.567 --> 55:40.497 There is no if's and but's. 55:40.500 --> 55:45.400 I think, the U.S. authority would take action against any 55:45.400 --> 55:47.800 fraud or misstatement. 55:57.467 --> 55:58.727 PROFESSOR ROBERT SHILLER: OK, right here. 56:02.500 --> 56:07.000 STUDENT: What type of law did you study, and how difficult 56:07.000 --> 56:10.030 did you find the transition from the legal world to the 56:10.033 --> 56:12.803 business world? 56:12.800 --> 56:19.700 LAURA CHA: In law school, I took a lot of courses in 56:19.700 --> 56:24.470 corporate law, tax, corporate finance. 56:24.467 --> 56:27.927 I think the business world always interested me and the 56:27.933 --> 56:30.673 transition from law to -- 56:30.667 --> 56:34.167 I think it was a two-step thing. 56:34.167 --> 56:36.927 I was a lawyer, and then I was a regulator, and then I am 56:36.933 --> 56:40.403 completely in the private sector now. 56:40.400 --> 56:42.870 So, the transition from a lawyer to a regulator wasn't 56:42.867 --> 56:45.467 that difficult. 56:45.467 --> 56:49.697 I remember distinctly that, when I moved over to the 56:49.700 --> 56:53.430 Securities and Futures Commission, what I wasn't used 56:53.433 --> 56:56.573 to was, I always wanted to correct every document that 56:56.567 --> 56:58.327 came before me, I wanted to improve it. 56:58.333 --> 57:00.073 I mean, it was just the lawyer in me. 57:00.067 --> 57:04.827 I wanted to make it written better, clearer, et cetera. 57:04.833 --> 57:09.333 And then, I had to kind of restrain myself, because I 57:09.333 --> 57:15.373 wasn't there to correct and make a presentable document, 57:15.367 --> 57:18.227 but to really solve the problems. 57:18.233 --> 57:21.873 And then, having been a regulator and mostly really 57:21.867 --> 57:25.067 regulating the corporate world, I became quite familiar 57:25.067 --> 57:28.297 with the corporate finance side. 57:28.300 --> 57:30.530 And when I was at the securities and futures 57:30.533 --> 57:33.673 commission in Hong Kong, I was the head of the corporate 57:33.667 --> 57:36.527 finance division for five years, and during that five 57:36.533 --> 57:40.833 years I came across all kinds of corporate transactions. 57:40.833 --> 57:43.803 Mergers and acquisitions, takeovers, and of course the 57:43.800 --> 57:52.170 IPOs, so that kind of helped me in where I am today. 57:52.167 --> 57:55.427 I wouldn't really call me a banker per se, because I'm not 57:55.433 --> 57:59.133 in the operation side, I'm on the board, and I provide 57:59.133 --> 58:06.403 advisory service to HSBC, but I'm not really operating as a 58:06.400 --> 58:08.300 banker per se. 58:08.300 --> 58:11.730 So, I would say it wasn't difficult, it was an 58:11.733 --> 58:13.273 evolution type of -- 58:13.267 --> 58:15.627 throughout my career from one thing to the next. 58:19.300 --> 58:23.970 [SIDE CONVERSATION] 58:23.967 --> 58:28.467 STUDENT: Hi, I was wondering, having worked on the 58:28.467 --> 58:30.567 regulation side and, now working for the private 58:30.567 --> 58:32.797 sector, I think that puts you in a unique position to 58:32.800 --> 58:35.970 determine what the impact of internationalization of 58:35.967 --> 58:38.927 regulation will have on the financial services sector. 58:38.933 --> 58:41.903 So more specifically, what do you think the regulatory 58:41.900 --> 58:44.070 impact of Basel III will be? 58:44.067 --> 58:46.027 Because a lot of private sector individuals have come 58:46.033 --> 58:48.503 out and said that some of the requirements, in terms of the 58:48.500 --> 58:50.070 capital adequacy requirements and so on, 58:50.067 --> 58:52.897 have been very harsh. 58:52.900 --> 58:56.300 So, first of all, I guess, how do you think it'll be phased 58:56.300 --> 58:59.930 in and, second of all, do you think it's the appropriate 58:59.933 --> 59:01.203 level of regulation? 59:03.800 --> 59:06.130 LAURA CHA: Basel III, I think, it is 59:06.133 --> 59:08.133 very costly to implement. 59:08.133 --> 59:14.133 I think, the banks have largely accepted that more 59:14.133 --> 59:17.633 stringent regulations will have to come our way because 59:17.633 --> 59:21.833 of the financial crisis of the last two years. 59:21.833 --> 59:25.703 But not all banks are alike, and certainly at HSBC we felt 59:25.700 --> 59:28.630 that we have been thrown in with the rest of them, whereas 59:28.633 --> 59:32.673 we had not taken any government money and we have 59:32.667 --> 59:35.167 done reasonably well, we have weathered the crisis 59:35.167 --> 59:36.397 reasonably well. 59:36.400 --> 59:41.770 But having said that, I think one has to accept that, 59:41.767 --> 59:45.197 whenever there's a crisis, regulation will come in more 59:45.200 --> 59:47.400 stringently, and the pendulum will tend to 59:47.400 --> 59:49.870 swing too far one way. 59:49.867 --> 59:52.297 And then gradually, the pendulum will come -- in the 59:52.300 --> 59:56.130 boom market, then the pendulum will swing back, and then it 59:56.133 --> 59:58.473 would be too lax, and then another crisis will happen, 59:58.467 --> 59:59.767 and then more rules will come in. 59:59.767 --> 1:00:03.127 It has always been like that, if you look at the history of 1:00:03.133 --> 1:00:07.673 any market, they always swung to the extreme. 1:00:07.667 --> 1:00:11.927 Sarbanes-Oxley, I think, is a good example. 1:00:11.933 --> 1:00:14.333 Sarbanes-Oxley came about, I don't need to tell you, as a 1:00:14.333 --> 1:00:16.603 result of the Enron crisis. 1:00:16.600 --> 1:00:20.170 And of course the last crisis, which was the subprime crisis, 1:00:20.167 --> 1:00:21.427 was nothing like Enron. 1:00:23.867 --> 1:00:26.167 When I was a regulator, we always said, we're always 1:00:26.167 --> 1:00:28.967 correcting yesterday's problems. When a scandal 1:00:28.967 --> 1:00:31.827 happens, when a crisis happens, we think of rules to 1:00:31.833 --> 1:00:36.473 address what had gone wrong, but the next time something 1:00:36.467 --> 1:00:38.527 happens it's not going to happen the same way. 1:00:38.533 --> 1:00:42.273 You are preventing the old problem from repeating itself, 1:00:42.267 --> 1:00:44.797 but the new problem will be entirely different. 1:00:44.800 --> 1:00:49.270 So, that's just the way things are. 1:00:49.267 --> 1:00:52.867 And that's the other reason, why I think some of the young 1:00:52.867 --> 1:00:55.227 and bright students should not always be 1:00:55.233 --> 1:00:56.103 in the private sector. 1:00:56.100 --> 1:00:58.770 The public sector needs a balance of that. 1:00:58.767 --> 1:01:02.267 And then, as far as international regulations are 1:01:02.267 --> 1:01:04.967 concerned, the regulators have talked for a long time about 1:01:04.967 --> 1:01:06.967 harmonization of standards. 1:01:06.967 --> 1:01:11.327 I don't think it will happen, because different regulators, 1:01:11.333 --> 1:01:16.003 different national regulators, have their own priorities, and 1:01:16.000 --> 1:01:20.600 they don't always have the same priorities. 1:01:20.600 --> 1:01:24.570 And the best example is really the Financial Stability Board, 1:01:24.567 --> 1:01:28.727 which came out of the last Asian financial crisis. 1:01:28.733 --> 1:01:32.303 It was called Financial Stability Forum, it is now a 1:01:32.300 --> 1:01:37.230 Financial Stability Board, and the idea is to ensure that 1:01:37.233 --> 1:01:40.673 there is financial stability globally, but that 1:01:40.667 --> 1:01:41.967 takes a lot of work. 1:01:41.967 --> 1:01:48.627 I think, the G-20 is trying very hard, and of course the 1:01:48.633 --> 1:01:52.803 regulatory agencies as well as all the central bankers are 1:01:52.800 --> 1:02:01.130 now hopefully in a better cooperative mood, but I think 1:02:01.133 --> 1:02:04.773 to have one set of international and harmonized 1:02:04.767 --> 1:02:08.327 standards is very hard. 1:02:08.333 --> 1:02:11.203 PROFESSOR ROBERT SHILLER: OK, I think we're out of time. 1:02:11.200 --> 1:02:13.670 Laura, I just want to thank you. 1:02:13.667 --> 1:02:17.267 I think this was very good. 1:02:17.267 --> 1:02:20.997 Hearing the details of your career, and hearing all the 1:02:21.000 --> 1:02:23.630 different things you've done in both the public and private 1:02:23.633 --> 1:02:27.573 sector reminds me of -- 1:02:27.567 --> 1:02:31.027 we're going through a period of development of the world 1:02:31.033 --> 1:02:34.903 and expansion, and somebody has to get the details right. 1:02:34.900 --> 1:02:39.130 And I'm very impressed that you are one of those people 1:02:39.133 --> 1:02:40.803 who's making things work. 1:02:40.800 --> 1:02:43.000 So, I'm glad that you were able to convey these thoughts 1:02:43.000 --> 1:02:45.000 to our students here today, and thank you very much.