MONEY magazine held a summit of government and financial leaders in New York during the last two days. Among the participants from government were Thomas Ridge, Secretary of Homeland Security, John W. Snow, Secretary of Treasury, Eliot Spitzer, New York State Attorney General, and Paul R. Berger, Associate Director, Enforcement Division of the Securities and Exchange Commission.

Participation in the summit is by initiation only and the number of participants is maintained sufficiently small to allow dialogue and interactions between the guests and speakers. Discussions are monitored by members of MONEY magazine's editorial staff and by Lou Dobbs, Steven Brill and Ron Insana. Asensio & Company, Inc. was invited as a participant.

There was a general belief that the U.S. economy is recovering and Secretary Snow's prediction of 3% growth in the second half could be realized. However, many participants questioned whether valuation levels had become overly enthusiastic. Secretary Snow's tactics were questioned. He was asked about the sustainability of low interest rates in an economy experiencing large, persistent budget and trade deficits. Also some participants questioned the wisdom of using such aggressive monetary and fiscal actions to create such vast liquidity that may salvage marginal producers, which they felt would cause over capacity problems. While deflation did not appear to be a concern among participants, it was suggested that over capacity could be a source of weak pricing power. Overall, we felt that participants believed that the nation's economic problems are workable.

Investor confidence, corporate scandals, the global settlement with the large brokerage firms and pending private litigation were central topics of discussion. We were impressed by Mr. Spitzer's understanding of Wall Street and clear speak. Prior to the summit we were concerned that Mr. Spitzer might not have understood the depths of the problems at the SEC or the self-regulatory organizations, or that Mr. Spitzer had been co-opted by the strong anti-investor forces of industry. Listening to Mr. Spitzer's candid and open discussion, led by MONEY's Eric Gelman, changed our opinion of the individual and the significance of the global settlement. It is our belief that Mr. Spitzer is acutely aware of the securities regulatory system's weaknesses and the legal and political constraints on his ability to do more for investors.

The discussions concerning investor confidence made us aware of the political enormity of changing investment business regulation. We felt that genuine and fair attempts have been made to protect investors from large corporate scandals. However, we realized that little could be done to increase the system's effectiveness in dealing with companies that issue misleading technical information to investors and cause capital misallocations that damage the economy. Of course, these are the thoughts of an investor who profits from such miss-pricings but is frustrated by the regulator's inability to exterminate the most serious serial offenders.