Program | Speakers | Videos

Moderator:
Sanjay Yodh, Managing Director, Security Global Investors

The convergence between the retail and institutional landscapes is accelerating through the use of liquid, transparent and regulated vehicles, like 40 Act mutual funds, that do not require the investor to be accredited. Plan sponsors now have more dynamic solutions to efficiently manage risk in retirement plans, which can be critical in mitigating losses and meeting asset goals over a multitude of time horizons. This roundtable discusses the emergence of these liquid non-correlated investment options that are increasingly being made available to retail investors.

Moderator:
Sarah Lange, Managing Director, Guggenheim

Moderator:
Lorraine Spurge, Managing Director, Guggenheim

Moderator:
Michael Klowden, President and CEO, Milken Institute

The economy is clearly looker brighter and more stable than it did 12 months ago, but what are the prospects for building real momentum — and finally adding jobs?

The 2010 Global Conference kicked off with a panel focused on finding answers. An audience flash poll indicated some pessimism, with the vast majority of respondents saying it will be 2013 or later before Americans' net worth will return to its mid-2007 peak.

The panelists expressed major concerns about ongoing policy uncertainty, a growing deficit and the increased role of government. You can't keep changing the rules of the game, insisted Kenneth Griffin of Citadel. The mid-term elections will reveal whether Americans are willing to accept greater government control in the long term.

The consensus was for a real recovery in the next year or two, but Steve Forbes predicted it will be at "half-speed." Marc Lasry of Avenue Capital Group pointed to pent-up demand and good investment opportunities over the next 12-22 months. Longer-term issues like unfunded entitlements and a growing deficit will have to be dealt with, but in the short run, he believes assets will continue to perform. Liquidity is still a problem for small and medium-size businesses, but bank lending should return to this sector in the next year or two.

Our experts predicted a slight dip in unemployment by this time next year, but feel the jobless rate will remain unacceptably high. They worry that trend lines point to longer-term structural unemployment. U.S. productivity has been off the charts for two quarters, noted Griffin, but that hasn't translated into real job creation. He believes that the boom in construction during the bubble years masked the erosion of the U.S. manufacturing base. All panelists urged the administration to focus relentlessly on jobs, jobs, jobs.

We're on a bumpy ride to a new destination, and the old paradigm may not hold anymore, said Mohamed El-Erian of PIMCO. (He wondered how European investors are feeling today as they try to wrap their heads around what's gone wrong in Greece.) The old paradigm may not hold anymore. The Obama administration has a window of about a year to strike a balance between job creation and policies that deal with longer-term structural issues like the deficit.

Moderator:
Matthew Bishop, U.S. Business Editor and New York Bureau Chief, The Economist

The financial crisis has provoked a chorus of calls for increased regulation — and in the past, many laws and regulations were, in fact, created as responses to crises. Should new regulations and regulators be introduced in haste, or should we focus on enforcing existing rules? Should the shadow banking system be regulated, as commercial banks are? Is it to blame for what happened in the U.S. credit and mortgage markets, and does it represent a systemic risk in the future? Should the Fed try to identify and repress asset bubbles in the making? What sort of regulation are we likely to get, given the current political realities? How could governments all over the world better coordinate their rescue efforts when a crisis hits? This panel provides insights on how to reduce systemic risks and promote financial stability.

Moderator:
Adam Lashinsky, Senior Editor at Large, Fortune

What is the appropriate role for government in the economy? That was at the root of the discussion during "Jobs, Jobs, Jobs."

That core question was approached from a few angles. The panelists spent much of the early part of the session debating the effectiveness of the federal stimulus package and whether the government should have bailed out the banks and the automakers.

While Senate candidate Carly Fiorina said inaction wasn′t an option, she added that she would not have voted for the bailouts and would have approached the stimulus differently, focusing more on increasing access to credit for small businesses, the engine of most job growth. Treasury official Ron Bloom defended the administration′s actions as necessary and successful in stabilizing the financial system and the economy.

Then they discussed what should be done going forward. All four seemed to agree that government needs to review its outdated export controls, and they supported making permanent the research and development tax credit that has been allowed to expire.

As Ross DeVol of the Milken Institute put it, "All jobs aren't created equal," and the R&D credit will help stimulate growth in high-paying, high-tech, 21st century jobs.

Speaker:
Kenneth Feinberg, Founder and Managing Partner, Feinberg Rozen LLP; Special Master, TARP Executive Compensation

Interviewer:
Peter Passell, Senior Fellow, Milken Institute; Editor, The Milken Institute Review

From serving on presidential commissions to handling sensitive Agent Orange litigation, Kenneth Feinberg is no stranger to emotionally charged negotiations. An impartial and skilled mediator, he was presented with the defining challenge of his life when he agreed to take on the harrowing task of determining compensation for the survivors and families who lost loved ones in the 9/11 attacks. The compensation fund was set up with a clear-cut goal in mind: dissuading the families from suing. But its messy reality presented Feinberg with the agonizing and infinitely complex responsibility of calculating a dollar amount for each victim. In this riveting interview, Feinberg shares a deeply personal account of what it really means to place a value on an individual human life.

Moderator:
Paul Deninger, Vice Chairman, Jefferies & Company Inc.

Investment in renewable energy dropped in 2009 due to the overall downturn, but what's the outlook for the year ahead? How are projects and start-ups getting financed today? Are low electricity and natural gas prices driving down the sector's appeal? Which technologies are emerging as winners, and which are still a long way from maturity? Did Recovery Act funding change the dynamic? This panel provides insight into the best opportunities in the green energy sector.

Moderator:
Betsy Zeidman, Director, Center for Emerging Domestic Markets, and Research Fellow, Milken Institute

Amid the recession, traditional models of poverty alleviation (charitable giving and government aid) are being supplemented (and in some cases, supplanted) by innovative partnerships and novel blends of public, private and philanthropic capital. A new generation of social entrepreneurs and financiers is demonstrating that their investments can generate financial returns and social impact simultaneously, spurring real economic growth that creates sustainable prosperity. Program- and mission-related investing strategies, for example, provide foundations alternate tools to advance their goals; loan guarantees facilitate the flow of additional capital to urgent needs; public-private partnerships help stretch the funds to meet the demand. During this session, leaders in social finance describe how they are weathering the economic downturns and what tools enable them to do well while doing good.

Moderator:
Andrew Ross Sorkin, Columnist, The New York Times; Author, Too Big to Fail

Boards of directors in corporate America, having failed to stop companies such as Enron and Lehman Bros. from self destructing, will emerge from the financial crisis with enhanced clout, independence and diversity - and a new mandate to really use their new new role to stop abuses and recklessness. "We're entering into an environment where boards are going to be more accountable," said Clifton Robbins, CEO of Blue Harbour Group.

Governance changes are being fueled in part by popular anger over large payouts to bank executives who received federal funding to stay afloat, said Kenneth Feinberg, who on behalf of the Treasury Department determines compensation for the top 25 executives at the seven major financial institutions bailed out by the government. "One of the important lessons of the last two years," he said, is that "the American people want stronger executive compensation reform and regulatory reform to give government institutions more authority over how these corporations manage themselves."

Panelists agreed that boards have fallen short because they are often chosen by CEOs and because shareholders have few means to demand more effective management. Major problems include CEO compensation that is unrelated to performance, directors whose financial interests are not sufficiently aligned with those of the company, a lack of diversity and industry knowledge. Even after the financial crisis, the percentage of directors on bank boards with financial backgrounds rose from 32 percent in 2007 to only 46 percent in 2010, noted Christopher Ailman, chief investment officer of CalSTRS.

In addition to say-on-pay rules that would give shareholders a voice on executive compensation, a major change could come from majority voting rules that would require that a director receive a majority, rather than a plurality, of shareholder votes.

Moderator:
Steve Baffico, Senior Managing Director, Head of U.S. Retail Distribution, Claymore Securities/Guggenheim

Since their debut in 1993, exchange-traded funds (ETFs) have become a staple portfolio holding for retail investors and institutional investors alike, with worldwide holdings topping the $1 trillion mark. The darling of personal finance pundits, ETFs offer the average investor diversification, transparency and tax efficiency — not to mention greater liquidity and lower management fees than mutual funds. Capitalizing on this new popularity, firms have launched a wave of new product offerings in recent years, including ETFs focused on regions, sectors, dividends, currencies and commodities. We've even seen the advent of actively managed, leveraged and inverse ETFs. This session explores the evolution (and growing pains) of the ETF industry, its ongoing impact on the mutual fund market and future trends for this fast-growing product.

Moderator:
Shawn Baldwin, Chairman, Capital Management Group

Long marginalized, many Native American tribes across the country have amassed substantial assets in recent years. This panel takes an in-depth look at their sources of wealth, from gaming operations to lucrative land rights, and examine how these income streams can be used to improve infrastructure and educational opportunities. When significant wealth comes to a particular tribe, how does it alter the fabric of the community? The discussion also explores how tribes are preparing for the future as they attempt to diversify and invest to create independence.

Moderator:
Mark Bremer, Chief Operating Officer, Stax Inc.

Even before the economic crisis, some 20 million to 40 million Americans lacked full access to banking services. Why do these people turn to alternatives such as pre-paid cards, check-cashing stores and payday lenders? Are traditional banks too expensive for these consumers, or do they not offer the right products and services? Why do private equity investors see opportunity in this market? What could be the emerging business models?

Introduction By:
Michael Klowden, President and CEO, Milken Institute

Moderator:
Paul Gigot, Editorial Page Editor and Vice President, The Wall Street Journal

Ten years ago Mexico′s economy was bigger than Brazil's. A decade later, they've swapped positions.

Asked what Brazil has done right, Mexico′s former president, Vicente Fox, said during the "Global Overview" session that President Luiz Inacio Lula da Silva is the reason Brazil has seen such explosive growth and progress.

Under Lula, Brazil has improved the consistency and permanency of public policy, a key to increased investment from both domestic and foreign sources, Fox said.

In addition, Lula's government has "found a formula" to finance development and get out of the "middle-income trap" - that is, countries that are not technology-savvy enough to compete with rich nations and are not cheap enough to compete with countries like China.

Calling education the "forgotten issue" in South America, Fox said, Brazil has made a conscious effort to focus on developing human capital.

While Fox praised Brazil′s success, he couldn′t help but fly his country′s flag. "The BRIC countries should really be called MBRIC," Fox said with a slight smile.

Moderator:
Lewis Feldman, Partner/Los Angeles Office Chair, Goodwin Procter LLP

The commercial real estate market has taken a major punch; delinquencies and vacancies have risen across all property sectors. Falling prices have prevented owners from being able to refinance, while the recession has hit the retail sector hard and dampened tenant demand for office space. When will we see CMBS issuance revive? Will investors approach the CMBS market any differently in the future? Will banks create financing incentives for landlords to hold on to their properties? Should the government intervene in the commercial market to the same degree it has in the residential market? Are there opportunities to snap up newly distressed properties that were once overvalued?

Moderator:
Robert Shafir, CEO of Asset Management, CEO of the Americas Region, Credit Suisse

Even as the financial industry remains roiled by the tumultuous events of the past two years, a panel of leading investors reckons the fortunes of Wall Street firms will soon be reshuffled again by financial reform legislation, which is expected to become law next month. A more aggressive and risk-averse regulatory and legal environment will transform business models. While the risks are huge, so are the opportunities — especially for global firms with heft and smaller outfits offering more personal services.

Panelists were guardedly optimistic that the final legislation will succeed in its most crucial task: ending a regulatory framework that has allowed financial institutions that are implicitly or de facto government-backed entities to speculate with borrowed money. That is the gist of the Volcker Rule, the plan proposed by former Federal Reserve chairman Paul Volcker, now the chair of President Obama's Economic Recovery Advisory Board.

"I think the wiser heads will prevail and we will see a system with higher capital requirements which are more closely correlated to risk," said H. Rodgin Cohen, a Partner at Sullivan & Cromwell, the Washington, D.C. law firm that is defending Goldman Sachs against the SEC's allegations of financial fraud. The risk, however, is that legislation will be too restrictive, driving activities deemed high risk to the least regulated areas of the marketplace. "That could be the prescription for the next financial crisis," he added.

Big hedge funds will likely gain share as reform legislations forces banks out of the hedge fund game and investors seek firms with sufficient scale to handle a growing asset base and have the ability to provide institutional integrity, transparency and liquidity, said James Dinan of York Capital Management. "In a post-Madoff world, nobody wants to be surprised the money's gone," he said. "The bigger firms will gather more market share. Regulation is expensive and a pain in the neck. But it always favors the big guys."

Even as big firms gain share, smaller firms will have the ability to compete by doing business the old-fashioned way. "Wall Street has gotten away from what many of us [did] in those days," said Kenneth Moelis of Moelis and Company. "Investors want transparent, unconflicted investment advice, so there's a huge opportunity to provide that."

Moderator:
Mark Shenkman, President and Chief Investment Officer, Shenkman Capital Management Inc.

The U.S. high-yield markets represent more than $2 trillion in investable assets for institutional and retail investors worldwide. High-yield bond and leveraged loan markets have been the preferred source of financing for many of the largest, most high-profile LBOs and acquisitions over the past decade. But they've also served as sources of income and total return for pension fund beneficiaries, endowments and foundations, insurance companies, family offices and mutual funds. One of the best-performing asset classes of 2009, high yield remains an attractive investment option for institutional investors and a unique source of financing for corporate borrowers. Mark Shenkman, CEO of Shenkman Capital and a pioneer in high yield, weighs in on the past, present and future of leveraged finance. What does the future hold, given our country's current economic and sociopolitical challenges? What opportunities and pitfalls still exist for high-yield investment in the near term? What role will high yield play among institutional investors?

Moderator:
Betsy Zeidman, Director, Center for Emerging Domestic Markets, and Research Fellow, Milken Institute

Even in good times, emerging domestic markets are often ignored by mainstream banks that wrongly consider them too risky. Today many moderate- and low-income areas have been disproportionately hit by the recession - but investment in these areas could spark significant job creation and a path toward recovery. This session looks at short-term measures, such as supporting community development financial institutions lending to small businesses, along with more ambitious paradigm shifts, such as creating green jobs and truly sustainable communities. Panelists discuss recent initiatives and the importance of emerging domestic markets to our nation's overall economic growth.

Moderator:
Matthew Eby, Chief Investment Officer, JAWS Estates Capital

Moderator:
Lorraine Spurge, Managing Director, Guggenheim

The volatility of the past two years has forced many high-net-worth families to reconsider how their wealth is managed. Faced with a diverse range of holdings and a complex, fast-changing marketplace, many family offices were unable to move on investment decisions as quickly as events demanded during the financial crisis. As a result, investors who adopted the single-family-office management model are taking a hard look at whether they have the right infrastructure in place. Can economies of scale offer a solution? How can they attract the best talent? This session addresses the broader trends in the wealth management industry and looks at how family offices can adapt to serve their clients going forward.

Moderator:
Liam Kennedy, Editor, Investment & Pensions Europe

Just a year after taking the helm of America's largest public pension portfolio, Joseph Dear said the California Public Employees' Retirement System (CalPERS) is radically rethinking the way it allocates its $213 billion portfolio. Dear told a panel of institutional investors Monday that by year-end Calpers aimed to allocate its assets according to risk factors instead of traditional categories such as stocks and bonds.

"Classic asset allocation uses assumptions that have little evidence supporting them. We're looking to decompose risk to various factors such as interest rates and growth," CalPERS' chief investment officer said.

CalPERS' board will decide its new asset allocation in December. If it adopts the risk-factor approach, CalPERS would be the first major U.S. public pension fund to follow the example set by the Ontario Teachers' Pension Plan (OTTP) more than 10 years ago. "It's hard to move away from (the classic approach), but it's so important after the crisis that we don't continue what we've done in the past," Dear said.

CalPERS has already made progress in its campaign to reduce fees it pays to alternative asset managers - although it has a long way to go to match the operational costs of Ontario's system. Its in-house private equity operation, which employs 55, generates annual returns in excess of 500 basis points compared with investments made as a limited partner, Eroz Uzemeri, senior vice president of OTTP's private capital division, told the panel.

On April 19, CalPERS said that its private equity partner Apollo Global Management had agreed to trim $125 million in fees over the next five years. CalPERS, in tandem with the Institutional Limited Partner Association, is working to rank private equity firms in accord with how well their interests align with those of investors.

"We want limited partners and general partners to make money at the same time," Dear said. "It drives me nuts when managers are making money off the management fee."

Dear, though, should be under no illusion that a risk-factor approach is the magic bullet that will close CalPERS' gaping funding shortfall. "It's not perfect," Uzemeri said. "It depends on assumptions, data and judgment."

Moderator:
Timothy Lappen, Founder and Chairman, Family Office Group, Jeffer, Mangels, Butler & Marmaro LLP

The events of the past 24 months, especially in the capital markets, have rocked the lives of many investors. They're concerned not only about their capital but also about the structures of their family offices, where to turn for advice and which institutions will be around in the long term (or even the short term). This panel explores the best practices utilized today - by family offices and others - regarding such disparate issues as family governance, succession planning, choosing and retaining top talent (whether in-house or outsourced), and oversight/supervision of all of their varied interests (financial and otherwise).

Moderator:
Lewis Feldman, Partner/Los Angeles Office Chair, Goodwin Procter LLP

This session convenes leaders in the real estate industry and the capital markets for an off-the-record roundtable discussion. It has been a grueling two years for real estate — but as we emerge from the Great Recession, many avenues for opportunity are presenting themselves, from buying distressed CMBS to purchasing FDIC assets to executing on loan-to-own strategies. Participants discuss these and other approaches, and analyze new capital market paradigms for real property investing.

Moderator:
Ross DeVol, Executive Director, Economic Research, Milken Institute

The U.S. government took extraordinary measures in late 2008 and early 2009 to stabilize the economy. With the benefit of hindsight, panelists in the U.S. Overview session were asked what worked and what they would have done differently.

Donald Marron of Marron Economics: The bank bailout worked well, especially in concert with the stress test for institutions that restored confidence in the financial system, he said. But better capital controls could have prevented the crisis in the first place.

David Simon of Simon Property Group: The bank bailouts stabilized the financial system, and commercial real estate saw residual benefits from that. But the effects will be short-lived if governments can′t raise more revenue, he said. Simon advocated taxing Internet sales as a way to increase government coffers while also leveling the playing field for brick-and-mortar businesses.

John Engler of the National Association of Manufacturers: He supported the stimulus package′s focus on infrastructure investment, though he′s not certain the chosen projects will have the most impact. Speaking as the former governor of Michigan, Engler said the recovery act helped stabilized state economies, but he is concerned with what will happen post-stimulus. In retrospect, he thinks more of the package should have gone to infrastructure.

Ron Bloom of the U.S. Treasury: He agreed that more infrastructure spending could have been beneficial, and that not all "shovel-ready" projects that were funded were ideal. However, he said, the economy has clearly improved since the bottom, and the administration will continue its efforts.

Moderator:
Robert Bucklin, Chief Corporate Banking Officer, Executive Vice President, Rabobank International

Commodity trading definitely isn't for the faint of heart — but it can offer dramatic rewards. The past few years have been nothing short of a roller-coaster ride. What's the outlook going forward? Can gold continue its amazing run? What are the prospects for global commodity demand and supply? Will we see spikes in food prices as we did in 2008? Panelists discuss price trends, the most promising sectors and the impact of China's growing appetite for energy and materials.

Moderator:
Michael Milken, Chairman, Milken Institute

In a panel that gathered several giants in the world of philanthropy, tennis great Andre Agassi spoke movingly of why he dedicated himself to transforming the lives of children that society has written off.

"There's a child out there that literally doesn't know where the poverty line is, but they definitely know they're beneath it. This child is living in circumstances that I can't even imagine. I don't know what he sees . . . maybe he sees a small apartment, maybe he sees bars on the window. I'm not sure what he thinks . . . maybe he thinks confusion or anger, or maybe he thinks hope. Maybe he feels that if he was given the chance, he could be competitive . . . Education is the only way to make systemic change in a child's life. It's by giving them the tools."

Agassi has done that, all right. His charter school academy, located in an underperforming school district in Las Vegas, recently celebrated its first graduating class — and every single one of those kids is headed to college.

Moderator:
Omar Wohabe, Partner, Wohabe Law Offices LLP

Last spring, President Obama visited Cairo and delivered a landmark address to the Arab world. A crucial part of his strategy to launch a new era of engagement was the announcement of a multi-million-dollar technology fund for Muslim-majority countries, designed to jumpstart a new knowledge economy and forge business ties that can bridge cultures. Indeed, the Arabic-speaking world represents a vast untapped customer base of more than 325 million people, with a global market size of $5 billion and a steep forecasted growth rate. Entrepreneurs, investors and representatives from multinational corporations convene in this panel to discuss high-tech opportunities in the Arab world and the most promising new media and IT ventures that are already under way.

Moderator:
Joel Kurtzman, Senior Fellow and Executive Director of SAVE, Milken Institute

A massive transformation is under way in many of the world's largest global industries — in energy generation, management and transmission, as well as lighting, building materials, transportation and water. Clean tech is bringing about rapid modernization through technological innovation and will fundamentally reshape these industries for the 21st century — giving rise in the process to a new set of pioneering companies that will emerge as powerhouses. This private meeting was designed to help major institutional investors understand how to best identify and participate in clean-tech opportunities — and how to prepare for the risks as the status quo is shaken up. In addition to outlining the size and expected growth rates of the key sub-sectors within clean tech, this invitation-only session addressed the fundamental drivers behind the transformation and identified which technologies and markets are approaching near-term maturity and are capable of delivering attractive returns over the coming decade.

Moderator:
Maria Bartiromo, Anchor, CNBC's "Closing Bell With Maria Bartiromo"

The economy may have entered a slow recovery, but the market for private equity has snapped back so dramatically that buyout firms are struggling to find bargains. "There are still opportunities, but a lot of the low-hanging fruit is gone," said Leon Black of Apollo Management.

Unlike a year ago, when uncertainty was rampant, Black and other industry leaders were bullish on the U.S. and global economies: "The market is telling us things will get a lot better," said David Bonderman of TPG Capital. "Leverage is back in a significant way, at least for good companies, and the bond markets are white hot."

Still, panelists were dubious about the outlook for conventional buyouts. Traditionally, these have been based on an attractive investing environment characterized by low prices, robust financing and stable economic growth. "I posit that we're really missing all three of those today in the U.S.," said Black. Instead, he saw "a lot of good opportunity" in selected distressed real estate investments.

Ted Virtue of MidOcean Partners, a middle-market buyout specialist, said growing government intervention in the economy had become a new risk. "Our industry likes certainty, and the government has now become an event-risk," he said, adding that "wacky" and "populist" legislation is creating uncertainty.

Bonderman cautioned his colleagues "not to be too U.S.-centric." There's a mini-boom underway in almost every Asian economy, he noted, though he warned that China was "on the edge of a bubble again." Black added that he was adopting a more flexible strategy that would allow Apollo to diversify away from plain vanilla buyouts to different areas of credit, such as mezzanine finance, distressed real estate loans and commodities.

Ironically, the downturn in traditional stock and bond markets is a good omen for fundraising. Public pension funds, the backbone of the private equity industry, will be compelled to invest more in the asset class to achieve the high rates of return necessary to prevent government and employee contributions from rising.

"Equity returns over the past decade were effectively zero," noted Bonderman. "But they know that if they want to hit their bogey's, they'll have to shift more funds away from fixed income. In time, it will turn out to be a good thing for private equity and other asset classes which tend to outpeform, especially if you believe inflation is coming."

Moderator:
Daniel Casse, President, G100; Managing Partner, High Lantern Group

Having an effective infrastructure is crucial to any nation's ability to compete in the world economy. Facilitating the movement of people and goods can spark growth and recovery. Here in the United States, many observers have been calling for a greater focus on infrastructure maintenance and investment, especially while nations like China are embarking on ambitious building projects. For emerging nations, infrastructure development takes on critical importance — not only to improve transportation and trade, but also to deliver water, electricity, communications, education and health care to growing populations. The ability of rising powers such as India and Brazil to fulfill their potential will be directly linked to their ability to modernize aging and inadequate infrastructure. Which nations are taking the lead in infrastructure development, and which ones are falling behind? How are they absorbing the huge costs? How quickly will these projects pay off? What are the opportunities for investors?

Moderator:
Michael Milken, Chairman, Milken Institute

CDS. CDO. CLO. ABS. MBS. CMBS. ETC.

It's one of the fallouts of the financial crisis. Acronyms for financial products have gotten a bad name. "All acronyms are evil in today's world, but not all are," Tony Ressler of Ares Management said Tuesday. Structured products, as they're called, are "just assets in a box," said Todd Boehly of Guggenheim. The key is looking beyond the acronym to the credit quality of the assets in that box. "We've lost sight of that in this country," he said.

It's a dangerous trend, according to panelists discussing the crucial role lending plays in job creation. Although large companies are once again enjoying easy access to credit, small- and mid-size business that are the engines of job creation continue to have difficulty borrowing money. In the U.S., just 500 companies are judged to be investment grade, said moderator Michael Milken. Between 1970 and 2000, these companies shed a total of 4 million jobs. In contrast, non-investment-grade firms generated 62 million jobs.

Yet when put together by non-banks such as loan funds and business development corporations, securities backed by receivables from loans, a.k.a. collateralized loan obligations, or CLOs, are disadvantaged by accounting rules that differ from those of larger banks. During the financial crisis, for instance, financial institutions had to mark down the value of CLOs based on values in the secondary market, unlike larger financial institutions which could continue to value the assets at their original price.

"When people needed lending the most, we were restricted by accounting," said Milken, adding that regulatory change was essential to enable lending that would support companies that would generate jobs.

Moderator:
Bradley Belt, Chairman, Palisades Capital Advisors LLC; former Executive Director, Pension Benefit Guaranty Corp.

Thanks to increased longevity and falling fertility rates, the work force in the developed world is aging rapidly. Yet many governments, companies and individuals alike are financially unprepared as the baby boomer generation hurtles toward retirement. National and local governments rely on public pension systems, many of which are underfunded. Some private pension plans are also falling short of their obligations, while the recent recession has eroded individual retirement plans. All of this raises the question: How will we pay for everything that retirees expect? What are the realistic prospects for bringing public and private obligations in line with revenues? Can we create new incentives for future retirees to increase their own savings? Will we have to adjust our entire notion of what it really means to retire?

Moderator:
James Guidera, Managing Director, Crédit Agricole Americas

It has become painfully apparent that U.S. infrastructure is strained and aging: The American Society of Civil Engineers estimates it would take $2.2 trillion over the next five years to fix all of the nation's infrastructure issues. Infrastructure investment offers a particularly compelling solution for immediate job creation — and it cannot be neglected if the U.S. is to remain competitive on the global stage. But spending on vast public works is a daunting prospect in a time of soaring federal deficits. Policymakers are increasingly coming around to the idea of public-private partnerships (PPPs) as the new paradigm for economic development. The PPP model for accomplishing major public infrastructure projects is well-established in Europe and Canada, but has been slow to take hold in the United States. Has its moment finally arrived? Panelists with a wide range of expertise exchange views with domestic stakeholders on the possible pros and cons of applying this approach to meet the tremendous capital needs for investment in U.S. infrastructure.

Moderator:
Glenn Yago, Executive Director, Financial Research, Milken Institute

Economic models were a casualty of the subprime collapse. How could the frameworks used by Wall Street's tech whizzes discount the possibility that home prices might fall? When markets collapsed, ostensibly uncorrelated asset classes fell in tandem and liquidity dried up.

A panel of financial economists contended that economic models are necessarily imperfect depictions of reality. But models failed miserably this time because quants too often built models in isolation, without a broad understanding of markets. The models' failure also revealed two fundamental problems — their inability to account for liquidation values and the dynamics that result when traders make similar bets.

Even though financial models proved inadequate, society's need for them has only increased. "We need more skill, more modeling and more technology, not less, to run our modern financial institutions," said Myron Scholes, who won the Nobel prize in 1997 for a new way to value derivatives.

Bruce Tuckman, who heads financial markets research for the Center for Financial Stability, said models have two main blind spots. One is that values given to portfolios often fail to account for the difficulty of liquidating them. This is especially the case with large portfolios. Whereas the price of a marginal trade in a $10 billion portfolio of assets can be determined, the ability to unload a huge portfolio at marginal prices doesn't exist. If liquidation values were taken into account by regulators, institutions with larger portfolios would be required to have higher capital ratios than they do, Tuckman said.

A related modeling problem is the inability to assess risks related to "crowded trades." That's the dynamic that occurs when a lot of investors are in exactly the same trade and exiting at the same time. "Tails in distributions in financial markets are created by crowded trades," Tuckman said. "We have to model this in trading."

The subprime meltdown underscores the essentially chaotic essence of financial markets. Models require continual calibration; risk cannot be avoided. Yet that presents a conundrum to policymakers keen to instill confidence in consumers and financial markets. "Politicians are saying we'll be safe after passing financial reform, but this is actually the last thing we want them to say," Tuckman said.

Moderator:
Duncan Goldie-Morrison, Senior Advisor, Crédit Agricole; Chairman, Newedge

Post-crisis, it's clear that the landscape for banks and other financial institutions has been fundamentally altered. What are the critical issues for operating successfully in this new and rapidly changing environment? What are the types of investment opportunities arising from this dislocation and how are some firms capitalizing on the market dislocation while others are on the sidelines? Will firms stick to their core competencies going forward? This panel explores the dramatic changes that are transforming the financial sector and the current investment environment, with an eye toward learning from the past and preparing for the future.

Moderator:
James Moglia, Executive Managing Director, BMO Capital Markets

More than 1 billion people around the world go hungry every day. Erasing this tragedy is one of the great moral imperatives of our time — and finance can play a pivotal role. In 2009, the G-8 nations put forth a three-pronged strategy for improving food security, focusing on strengthening long-term agricultural development, emergency food assistance, and safety-net and nutrition programs. Panelists discussed the best mechanisms to improve food security, the strategies that are working and how financial tools can help.

Moderator:
Scott Minerd, Chief Investment Officer, Guggenheim

The muni market is an integral part of the capital markets, giving state and local governments an efficient means to raise capital for infrastructure. This formerly staid field has been transformed by a series of dramatic events: the monoline bond insurance meltdown, the American Reinvestment and Recovery Act of 2009 (which included the Build America Bond Program), and the creation and issuance of tax credit bonds. At the same time, tax receipts have declined, several municipal bonds have defaulted and some issuers have publicly threatened to file bankruptcy. The situation has become more tenuous as the gap between revenues and obligations grows increasingly unsustainable. This session addresses the changes that have reshaped municipal finance and how the various participants are adapting, with special emphasis on the new relationship between the municipal issuer and the federal government.

Moderator:
James Williams, Vice President, Chief Investment Officer and Treasurer, The J. Paul Getty Trust

Bernie Madoff continues to cast a shadow over the hedge fund industry. "The presumption is of guilt, not innocence," said Anthony Scaramucci of SkyBridge Capital. He and other experts at a panel on hedge funds said investors are stepping up their due diligence, scouring the finances and personal histories of hedge funds and their managers as never before.

Scaramucci, for instance, routinely hires private investigators to check out people his firm hires to manage money. Recently, he learned that a well-regarded manager had lied about having graduated from UCLA. "Money will corrupt. Greed will corrupt. If we haven't learned that in the 2008 financial crisis, when are we going to learn that?"

Hans Hufschmid of GlobeOp Financial Services, which provides independent verification of the existence and pricing of assets hedge funds manage, said that business jumped 30 percent in 2009. "Hedge funds lost money through markets, a crook and bad credit," he noted. "The focus is on who the manager is doing business with, the firm's credit exposure and how it's all managed."

To gain more control over their assets, many investors are trying to set up managed accounts with hedge funds. Unlike pooled investments, assets in managed accounts are segregated from the hedge fund's main account. Investors control the account, leaving no doubt as to how the assets are performing. Yet few institutions have successfully converted to managed accounts because of the hassles involved in negotiating trading agreements and setting up risk-measurement systems, Hufschmid said.

Without a doubt, the relative immaturity of the hedge fund industry has contributed to investor jitters. Firms are typically small, with only one or two individuals calling the strategic shots. Derivatives and other instruments that hedge funds commonly trade also are not transacted openly, although that may change with financial reform legislation now pending in Congress.

Still, the lesson of Madoff is that there's no substitute for hard work. "We're always learning," said John Claisse of Albourne America, a firm that specializes in due diligence of hedge funds.

Moderator:
Alec Ellison, Global Head of Technology Investment Banking, Jefferies & Company Inc.

Venture capitalists were treading lightly in 2009, with deal volume down sharply from 2008 levels. But the VC industry is showing signs of a rebound. With entrepreneurs clamoring for capital, will this glimmer of momentum continue throughout 2010? Which green technologies are investors betting on? To what extent do VCs now help to drive the R&D process for breakthrough medical treatments? When will the serious money start flowing again? Will these funds be invested in the U.S. or will more go to China, India and other overseas locations? Has the recession created a greater focus on company building? A panel of experienced venture capitalists shares insights and predictions.

Moderator:
Glenn Yago, Executive Director, Financial Research, Milken Institute

Could it be that the best way to find the next emerging asset class is to look beneath the ground? In communities from Peru to Italy to Israel, the potential financial return from assigning a real value to archaeological heritage is vast — and yet thus far untapped. From tourism to infrastructure to education, investing in preservation represents a unique opportunity to promote local community development, generate job creation and rescue fragile cultural assets that bridge thousands of years of human history.

Moderator:
Betsy Zeidman, Director, Center for Emerging Domestic Markets, and Research Fellow, Milken Institute

As the economy slowly starts to recover, investment opportunities in small and medium-sized businesses (those with $5 million to $1 billion in annual revenues) are emerging. Providing capital to these companies can provide attractive risk-adjusted returns to investors while helping to rebuild a critical segment of the U.S. economy. The credit crunch has definitely increased the challenge for these firms in accessing conventional debt and equity capital, but innovative strategies are providing new structures and sources of capital that engage institutional investors in small and medium-sized businesses. This interactive session explores fresh solutions, including specific products - such as revenue participation certificates, and partnerships that leverage institutional, public and philanthropic capital - and ideas contributed by attendees.

Moderator:
Louis Lévesque, Deputy Minister of International Trade, Canada

As the world economy continues to recover, building new trade and investment relationships is essential — especially for an export-dependent nation like Canada. There is a direct link between Canada's economic recovery and the efforts of its businesses, investors and innovators to create new partnerships around the world. In this session, Canada's deputy minister of trade joins some of the nation's most forward-thinking financial experts to analyze current trends within the broader context of Canada's economic, trade and productivity performance over the last decade. The panel also highlights how the Canadian banking system successfully navigated the economic downturn, and the many programs and initiatives in place to help Canada successfully compete in the world economy.

Moderator:
Maria Bartiromo, Anchor, CNBC's "Closing Bell With Maria Bartiromo"

The balance sheets of large American banks are weaker than advertised, and the institutions are at serious risk of losing market share in key business lines, a leading bank analyst said.

"They're not dealing with their problem loans," Meredith Whitney of Meredith Whitney Advisory Group said. "They're at serious risk of atrophying."

Whitney said problem loans were impeding bank lending. Banks also suffered from unprofitable core operations, notably credit cards, where the market is "shrinking dramatically." "It's just like Japan's banking crisis. Banks stopped lending, and the predatory lenders came in," she said.

While major banks are focusing on lending to those with the lowest risk profiles — mostly the elderly — Whitney said a generation of young people, with no loyalty to banks, are receptive to new technologies such as mobile payments and prepaid cards.

"The business of finance is changing," she said, adding that there's an "amazing opportunity for periphery players … to gain market share." She projected that the number of Americans with no banking relationship would jump from 26 percent to 35 percent over the next four years.

Her comments prompted panel moderator Maria Bartiromo of CNBC to ask Whitney: "Why do you hate the banks?"

Panelists generally agreed that the economic recovery — and the rally in stocks — was vulnerable to high consumer debt and constricted credit, problems that would ease only with job growth. "Unless the job situation improves … it will be hard to sustain consumer spending," said Patrick Edsparr of Citadel Securities.

Another threat: the budget crunches impacting the majority of state and local governments, which employ 15 percent of the U.S. work force, forcing them to cut jobs and raise taxes. "It seems to me that confidence and markets have gotten a little bit ahead of themselves," Edsparr said.

Still, panelists were cautiously optimistic about the economy and the stock market. Many of those who toiled in the housing sector — the single biggest driver of jobs during the past 15 years and a sector that now faces 20 percent unemployment — could find work building clean energy and infrastructure projects.

They also expected fast growth in emerging markets to provide a new source of demand for U.S. exports. But investors need to be cautious because growth in Asia and elsewhere would fuel a bubble in financial assets and commodities.

Foreigners also would continue to finance America's budget deficit, if only because U.S. markets remain the deepest and most liquid. "I don't think the holders of our debt are going to be as irritable as everyone expects them to be," said Thomas Joyce, CEO of Knight Capital Group, Inc.

Moderator:
Michael Milken, Chairman, Milken Institute

Providing credit to small and medium-size business would go a long way toward boosting the economy and the housing market. Small firms generate most new jobs. Yet their ability to raise capital and expand remains crimped, unlike large corporations for whom credit is plentiful.

"The credit markets are not working for most of the companies outside the Fortune 500," said Colin Fan, Global Head of Credit Trading and Head of Emerging Markets Debt Trading at Deutsche Bank.

With large banks reluctant to lend, a panel of experts urged investors to support alternative means to channel funds to small firms. One idea is the business development company, or BDC, a publicly traded equity that operates similar to a real estate investment trust. "These have terrific potential," said Steven Shenfeld, President of MidOcean Credit Partners. Another idea is to have cash-rich outfits such as Intel and Cisco go into the finance business.

Although rich in potential, both approaches face challenges. Equity investors have yet to warm to BDCs, which are restricted from using leverage and have no access to government subsidies. And large companies entering the lending business would create a regulatory mess.

"Companies with less than $1 billion outstanding debt haven't been able to participate in this economy," Shenfeld said. "What we really need is innovation."

Moderator:
Dennis Kneale, Media and Technology Editor, CNBC

Who knew this question would provoke such fireworks?

In one of the more freewheeling and contentious debates of the conference, a panel of experts wrestled with one of the biggest questions looming over the global economy: Is China's growth sustainable? Or do we need to wary of a giant bubble?

As the video shows, things got pretty heated between the bulls and the bears . . . but the panelists did agree that the best way for investors to play China is to do so indirectly, concentrating on U.S. companies that do business with China, Australian currency and commodities from both Australia and Brazil.

Moderator:
Rick Newman, Chief Business Correspondent, U.S. News & World Report

Small businesses are the lifeblood of the U.S. economy: They've generated 64 percent of net new jobs over the past 15 years, accounting for more than half of nonfarm private GDP. The United States needs to focus on the small-business sector in order to achieve a broad-based and sustainable recovery. While credit markets have thawed, providing a boon for the corporate bond market, and venture capitalists are slowly reentering the market, capital remains scarce for most small enterprises; even home equity loans and credit cards are increasingly harder to tap. As long as capital access remains restricted, these firms are unable to hire — and yet, with fewer employees on board, they still have to deal with increased federal regulation and stiffer competition from overseas. Our panel explored how small businesses are navigating the recession by doing more with less. What's still clogging the credit pipeline? What are the pros and cons of pending small-business legislation? And what practical strategies can help smaller companies thrive in tough times?

Moderator:
Gordon Crovitz, Co-Founder, Journalism Online; former Publisher, The Wall Street Journal

Where are single-family housing prices headed one year from now?

Experts on the housing overview panel made this and several other predictions. View the video for their opinions on financial regulation, what will happen with home sales in the coming years, how immigration will affect the market and whether the next generation will see housing as shelter or an investment.

As for home prices, here′s what the panelists said.

Larry Mizel of MDC Holdings Inc.: For new homes, "flat to trending down, with a slight degree of inflation for those products that are creating real value to the consumer when they buy it."

Donald Brownstein of Structured Portfolio Management: "I′m going to use a quote, I think it was J.P. Morgan, who was asked about what′s going to happen to the stock market. ‘It′s going to fluctuate.′ … That′s what prices should do, right?"

Mark Buckland of City Ventures: In the urban parts of the United States, "flat to slightly up."

Lewis Ranieri of Hyperion Private Equity Funds: It will depend on the region. As much as 6 percent to 7 percent higher in some areas and as much as 6 percent lower in others.

Ross DeVol of the Milken Institute: Up in some places, down in others, but overall up 2 percent.

Moderator:
Irwin Gold, Co-Chairman and Co-Head of the Financial Restructuring Group, Houlihan Lokey

Struggling companies in any sector can be held hostage by inflexible capital structures (especially when liquidity dries up), obsolete lines of business and antiquated organization. But the restructuring process can reduce losses and realize value, relieving distressed balance sheets. In the current climate, when cash flow and competitiveness can make all the difference in a firm's survival, it's become crucial to understand when corporate restructuring is needed and how to manage the process. How will value be created in the year ahead? This panel of financial practitioners identified and discussed the opportunities in the year ahead as well as the risks of investing in distress across a variety of sectors and companies of various sizes. Which sectors are likely to see the most significant bankruptcies, breakups and buyouts?

Moderator:
Anne Walsh, Senior Managing Director, Guggenheim

The financial crisis changed the way investors look at their portfolios. Long-duration portfolio managers - in particular, life insurance companies and pension funds - have had to rethink asset allocation going forward. This session explores pre- and post-crisis strategies used by institutional investors to manage their portfolios and what changes they are making in their return expectations, investment strategies, liquidity needs and overall approach to funding their liabilities. Did the 2009 rebound in the financial markets solve their asset challenges? How can we better identify where vulnerabilities lie in the future?

Moderator:
Sean Cleary, Chairman, Strategic Concepts, South Africa

The rich oil deposits in West Africa have been attracting foreign investors for years, but recently nations to the east have also been quietly increasing their share of FDI. Chinese investment in the region has increased significantly in the past decade, and it's likely to double (if not triple) in the next. With the influx of investment, the region is taking steps to implement policies that will build on this momentum. January marked the launch of the East African Community (EAC) customs union, with the common market on its way later this year. As further encouragement, the International Finance Corporation has been making strategic investments in mining alongside firms in developed countries. Despite these positive signs, the region still needs to address systemic challenges such as poor infrastructure, opaque financial regulations, corruption and the rule of law. This session explores ways to overcome those hurdles and pinpoints the region's most promising opportunities.

Moderator:
Matthew Winkler, Editor-in-Chief, Bloomberg News

The ballroom was buzzing with anticipation as two of the most knowledgeable minds in economics and finance sat down for an in-depth conversation about everything from sovereign debt to "super-McMansions."

So where do we stand today?, asked moderator Matthew Winkler of Bloomberg News. Deleveraging has started in the private sector, said Roubini, but his real worry is that public debt is now climbing. He referred to Greece as the tip of the iceberg and warned that if sovereign debt is not tackled by nations around the world, the result will be either default or high inflation.

For the U.S. in particular, a $10 trillion deficit over the next decade is simply not sustainable. But gridlock is Washington is preventing any action: Republicans won't raise revenues, while Democrats won't cut spending. The bond markets are forcing an adjustment in Greece, but we have yet to wake up to the magnitude of the problem here. We're living a delusion, said Roubini: Americans want social spending, but they're not willing to pay for it.

Michael Milken felt strongly that the best guide to what's going on today is careful study of how things unfolded in 1973-74. Debt is cheap right now, and companies should be locking in low rates while they can. The recession has also forced cities, states and companies alike to find efficiencies in the way they do business.

The big question for Milken is whether the U.S. can muster the will to deal with long-term issues like unfunded pensions, Social Security, energy security and health care. There are solutions that are ready to deploy in all these areas if we're willing to act boldly. For example, focusing on prevention and cures — by tackling the obesity epidemic and investing heavily in the biosciences — can bring down health-care costs dramatically.

Both men agreed that ending U.S. dependence on foreign oil is crucial, and imposing a carbon tax is probably the way to go. They discussed how lifestyles in the U.S. have gotten out of whack, with Americans investing too much in oversized houses and not enough in education (a ratio that's reversed in Asia). According to Roubini, sprawl has had massive negative effects, and the federal government has to stop subsidizing housing and gasoline. It's more important, he said, to invest in human capital, capital stock and R&D.

Check out the full video for greater insight into the forces that will shape the global economy in the years ahead.