(MONEY Magazine) – On June 16 and 17, CEOs, government regulators and money managers from more than 100 firms, representing more than $10 trillion dollars in assets under management, convened in New York City for MONEY's second annual Summit. A lot had happened since MONEY's inaugural Summit last June. There was a war in Iraq, a historic tax cut, regulatory changes, settlements, indictments and, more recently, a stock market rebound. Sorting through the impact of those issues on the financial services industry and discussing what's next made up the agenda for this gathering of leading governmental and business figures.

The event kicked off with an interview of Secretary of Homeland Security Tom Ridge by author Steve Brill at the Summit's opening dinner. The next morning, Bank of America CEO Kenneth Lewis and Charles Schwab CEO David Pottruck debated unresolved issues such as board independence and excessive use of executive stock options. In a lunch speech, Treasury Secretary John Snow discussed his view that an impending recovery would be powered by the country's 23 million small businesses. Smith Barney CEO Sallie Krawcheck, Ameritrade CEO Joseph Moglia and Northwestern Mutual CEO Edward Zore then addressed the rise of "The New Investor Class." Next up: "The New Enforcers," a panel that included New York attorney general Eliot Spitzer and the Securities and Exchange Commission's Paul Berger. The following pages offer a sampling of insights and analysis from the Summit.

During the Summit, attendees were asked a series of questions. A panel of MONEY readers were asked similar questions a week earlier. Here are some results.

OPINIONS

How much confidence do you have in the following financial providers? Here's what MONEY readers said.

78% Mutual fund companies 60% Discount brokerage firms 58% Financial planners 49% Full-service brokerage firms 42% Insurance companies

Source: All poll data from MONEY Summit and MONEY Online Subscriber Panel.

HEAD-TO-HEAD Tort Reform

JOHN SNOW Treasury Secretary

"The tort system probably stands as the biggest risk a company faces, because any company can face a jury verdict larger than its net worth. Setting some new standards seems like a good move. But it looks like the obstacles to getting tort reform are high. The poster child for tort reform are doctors retiring because they can't afford to stay in business."

WILLIAM LERACH Partner, Milberg Weiss Bershad Hynes & Lerach

"Attorney general Eliot Spitzer certainly deserves a lot of credit for standing up to all of the investment banks. But while attorneys general have plenty of power--they can inflict fines on companies--private litigation is the only vehicle to recover the damages that many investors have suffered."

OPINIONS

Do you think the U.S. economy will improve over the next 12 months? The response of Summit attendees was overwhelmingly optimistic.

Improve 70% Get worse 7% Stay same 19% Don't know 4%

SUMMIT INSIGHTS

JOSEPH GRUNDFEST, professor of law and business, Stanford Law School "It's easy to explain a large percentage of the unfortunate experiences of the last two years with two words: Winona Ryder. She knew that when the cashmere sweater went in the hat and out the door, she was breaking the law. So why did she do it? She likely figured the odds of being detected were low, the speed of detection was slow, and the consequences were weak. Look what happened at HealthSouth and WorldCom. The people engaged in those acts used the Winona Ryder calculus: They figured they wouldn't get caught."

BERNARD BEAL, CEO, M.R. Beal & Co. "Financial transparency will increasingly occur in all markets but especially in the bond markets. This will allow individual and institutional investors to trade with better disclosure and will reduce transaction costs and trading spreads."

DAVID POTTRUCK, CEO, Charles Schwab "None of us in the industry wants more regulation. There's an inevitable drift toward bureaucratic red tape and inefficiency as regulations mount. That said, if the industry does not take further steps to improve, then I would not be surprised if there was more regulation."

OPINIONS

Do you think the Wall Street settlement will enable investors to get better research on stocks and companies, worse research or the same level of research as before? The majority of MONEY readers polled expect no change.

61% SAME 36% BETTER 3% WORSE

Where are you investing?

STEVE GALBRAITH, chief U.S. strategist, Morgan Stanley "One of the places I'm investing is companies that will benefit from tort reform. Tort costs per capita in the U.S. are almost equal to China's GDP per capita. That strikes me as a problem. We're looking for signs of stress and going the other way. So we're looking at companies like Altria, Dow Chemical and Halliburton."

MYRA DRUCKER, chief investment officer, GM Trust "We're looking at real estate. In the commercial real estate area you can find some high-quality assets at prices that would produce annual returns of 8% or more."

HILDA OCHOA-BRILLEMBOURG, CEO, Strategic Investment Group "The expected real rates of return in the emerging markets are twice those of the U.S. You have 5% dividend yields, a number you seldom see in emerging markets. Emerging markets are definitely the place to make money over the next five years."

Top Guns

Attendees were asked to name the three most important people in the world of money. Here are the results.

NAME NO. OF VOTES

Alan Greenspan................49 Chairman, Federal Reserve Board

George W. Bush 28 President of the United States

Warren Buffett 26 CEO, Berkshire Hathaway

William Donaldson 21 Chairman, SEC

John Snow 9 Treasury Secretary

Eliot Spitzer 9 Attorney general, State of New York

Investors 7

Sandy Weill 7 CEO, Citigroup

Wim Duisenberg 5 President, European Central Bank

Bill Gross 5 Portfolio manager, Pimco

Junichiro Koizumi 4 Prime Minister, Japan

Toshihiko Fukui 3 Governor, Bank of Japan

William McDonough 3 Chairman, Public Company Accounting Oversight Board

Franklin Raines 3 CEO, Fannie Mae

Phil Angelides 2 Treasurer, State of California

Osama bin Laden 2

John Bogle 2 Founder, Vanguard

Jack Brennan 2 CEO, Vanguard

Dick Cheney 2 Vice President of the United States

Abby Joseph Cohen 2 Managing director, Goldman Sachs

Bill Gates 2 Chairman, Microsoft

Richard Grasso 2 Chairman, NYSE

Hu Jintao 2 President of China

Ned Johnson 2 Chairman, Fidelity Investments

Sallie Krawcheck 2 CEO, Smith Barney

Gerhard Schroder 2 Chancellor, Germany

Ariel Sharon 2 Prime Minister, Israel

George Soros 2 Chairman, Soros Fund Management

OPINIONS

Do you think the Wall Street settlement will cause Wall Street firms to be more impartial in their investment recommendations, less impartial or act the same way as before? Here's what MONEY readers said.

54% SAME 41% MORE 5% LESS

What will boost the economy?

MARTIN COHEN, president, Cohen & Steers Capital Management "If the government established an initiative to free the U.S. from imported oil, we would have a boom in the economy. We can do this by dedicating vast resources toward fuel-cell technology and expanded domestic exploration and production. It's expensive, but we are better off subsidizing these programs than our enemies. This will also make us highly independent while helping our balance of trade and keeping inflation in check."

MARK DAWSON, portfolio manager, Rainier Investment Management "New technological innovations will be the most important factor in reviving economic growth and investor confidence. Technological innovations that were adopted on a mass basis, such as personal computers and cell phones, were central to the success of stock markets in the 1980s and 1990s."

HAROLD EVENSKY, chairman, Evensky Brown & Katz "A major reduction in marginal income tax rates and an elimination of the capital-gains tax (in conjunction with an elimination of the step-up in basis upon death). Of course, given politicians' penchant for deficit spending, the long-term result may be disastrous."

OPINIONS

Financially speaking, how are you doing vs. two years ago?

Better

Summit attendees 14% MONEY readers 31%

Worse

[Summit attendees] 65% [MONEY readers] 34%

Same

[Summit attendees] 27% [MONEY readers] 35%

HEAD-TO-HEAD Economic Recovery

Richard Bernstein Chief U.S. Investment Strategist, Merrill Lynch

"The Fed is contributing to the deflationary forces. The Fed is lowering the cost of capital for the marginal players in the economy and keeping excess supply alive. This is more of a supply situation than a demand one--the consumer was never really weak in this recession.

Generally, there's a disconnect between the stock market and what's going on in the economy. The markets are priced for an economic boom and the odds of a boom are very, very slim. There's still tremendous overvaluation."

Robert McTeer CEO, Federal Reserve Bank of Dallas

"I do not see deflation on our doorstep at all. Price indexes are still positive. There is easy money, a weaker dollar and easy fiscal policy. We are more willing to front-load policy these days. We've gone all the way from 6.5% to 1.25% on the federal funds rate and been very aggressive. I expect that the economy will turn around, but you do not see that showing up in the numbers yet. Nevertheless, the economy will be stronger in the second half of the year than it is in the first."

HEAD-TO-HEAD Fund Regulation

ARIANNA HUFFINGTON Political Commentator

"Mutual funds currently serve two masters. As owners of huge amounts of stock, mutual funds should hold self-interested management accountable. But they receive massive fees when corporate executives award them 401(k) and pension fund assets to invest. In the past, the debate has focused on accounting firms not mixing auditing with consulting and investment banks keeping research independent of banking. It is now time to hold mutual funds accountable."

ROBERT REYNOLDS COO, Fidelity Investments

"Much of the regulatory and political attention to mutual funds has been politically driven and, frankly, counterproductive. The industry was already very well and highly regulated, with standards for price and performance disclosure higher than other financial service businesses. Regulators and politicians might do well to use our industry's standards as a benchmark, and shouldn't see our standards as a base on which to add new burdens."

SUMMIT INSIGHTS

ROBERT GLAUBER, CEO, NASD "What we're doing with all these rule changes is raising the cost of doing research. That's going to affect small companies. So we're trying to fashion rules in a way that won't strangle research done on small firms."

THEODORE ARONSON, managing principal, Aronson Johnson Ortiz "Wall Street people do pay for research--they pay with soft dollars. Until they stop doing so, the entire field will be sleazy."

KENNETH LEWIS, CEO, Bank of America "When it comes to succession, we have a policy that when the CEO goes, he goes. When I came on as CEO, it would have been more cumbersome to have the outgoing CEO stick around in some capacity."

CHRIS DAVIS, CEO, Davis Advisors "There's an enormous stalling tactic going on with the idea that if we can just get the markets going, all these executive compensation issues will go away. It's staggering to watch CFOs say they don't know what stock options are worth. The 'too complex' excuse is a classic stall tactic."

BILL MILLER, manager, Legg Mason Value Trust "The single most effective reform would be to have true shareholder democracy. If the stock exchanges had a listing requirement that any shareholder proposal that got a majority of the vote had to be implemented, companies would be forced to consider what was in shareholders' interests. If democracy is the right way to govern our country, it's the right way to govern our companies."

OPINIONS

MONEY readers were asked how much they worry about each of the following issues. Here are their major concerns.

Rising health-care 64% U.S. economy 45% Corporate corruption 44% Integrity of Wall Street 41% Stock market 31%

ON HEDGE FUNDS

"I DO NOT SEE STRUCTURAL ISSUES THAT REQUIRE FUNDAMENTAL REFORM. AS THE HEDGE FUND INDUSTRY BEGINS TO MARKET ITSELF TO SMALL INVESTORS, THERE SHOULD BE ADDITIONAL DISCLOSURE" --ELIOT SPITZER, attorney general, State of New York

ON INSTITUTIONAL SHAREHOLDERS

"IT'S SHAMELESS WHEN OWNERS JUST PLAIN DON'T GIVE A DAMN ABOUT GOVERNANCE. AND WHEN OWNERS DON'T CARE, WHY SHOULD ANYONE ELSE?" --JOHN BOGLE, founder, Vanguard

ON STOCK RESEARCH

"I TEND TO BE BULLISH ON RESEARCH RIGHT NOW BECAUSE I CAN'T FIND ANYONE ELSE WHO IS. ALL GREAT INVESTMENT IDEAS ARE ANTI-CONSENSUS" --SALLIE KRAWCHECK, CEO, Smith Barney

ATTENDEES

HOWARD ABNER--CHARLES ALBERS--WILLIAM ANTHES--THEODORE ARONSON--MANUEL ASENSIO--RICHARD ATKINSON--JAMES AWAD-- RENE-PIERRE AZRIA--HENRY BABCOCK--PETER BAIN--SHAWN BALDWIN-- SUNNY BANERJEA--ROBERT BARRY--B.R. BATEMAN--KARI BAYER-PINKERNELL--BERNARD BEAL--LAURIE BENEZRA--BEVERLY BEPPLER--PAUL BERGER--RICHARD BERNSTEIN--JESSICA BIBLIOWICZ-- MARK BIDERMAN--ERIC BILLINGS--RONALD BLAYLOCK--JOHN BOGLE--JOE BORG--STEVEN BRILL--J. ALFRED BROADDUS--CHRISTOPHER BROWNE-- SUSAN BYRNE--JEAN CHATZKY--ABBY JOSEPH COHEN--MARTIN COHEN-- TIMOTHY CONNELLY--ROBERT CRISPIN--CATHERINE CUMMINGS--RAVENEL CURRY--JULIE DAUM--SUSAN DAVIS--CHRISTOPHER DAVIS--MARK DAWSON--MARY DENNIS--LOU DOBBS--DOUGLAS DONAHUE--PETER DONOVAN--ALEX SASHA DORIAN--ARLENE DRISCOLL--MYRA DRUCKER--JOHN DUFFY--MICHAEL DUKMEJIAN--PATRICIA DUNN--JOHN DWIGHT-- CHARLES ELLIS--SARAH EMERSON--HAROLD EVENSKY--MICHAEL FASCIANO-- MATTHEW FISCHER--FREDERICK FRANK--STEVEN GALBRAITH--BRETT GALLAGHER--DIANE GARNICK--ERIC GELMAN--ROBERT GLAUBER-- LEONARD GLYNN--JOSEPH GRUNDFEST--JACK HAIRE--ROGER HERTOG-- BRAD HINTZ--MELLODY HOBSON--HENRY HU--ARIANNA HUFFINGTON-- KEIZO IIJIMA--STEVEN INSALACO--RON INSANA--KENNETH JANKE--KEN JAUTZ--ANTHONY KARYDAKIS--JEFF KAUFFMAN--MICHAEL KLINGENSMITH-- DAVID KNOWLTON--SALLIE KRAWCHECK--STEPHEN LACKEY--MARIA ELENA LAGOMASINO--KEVIN LANDIS--BARBARA LEAVITT--DOUGLAS LEBDA-- ALEXANDRA LEBENTHAL--CLARENCE LEE--WILLIAM LERACH--KENNETH LEWIS--HOWARD LICHTENSTEIN--A. MICHAEL LIPPER--DON LOGAN-- ELIZABETH MACKAY--J. THOMAS MADDEN--MARION MANEKER--RUTH ANN MARSHALL--JOSEPH MASTERSON--KENT MATHY--CRAIG MATTERS--ELLYN McCOLGAN--WILLIAM McLUCAS--ROBERT McTEER--WADE MEADOWS--ANN MILETTI--BILL MILLER--JOSEPH MOGLIA--ANN MOORE--LARRY MOSCOW-- JAY MUELLER--JOHN MURPHY--ARTHUR MURTON--ANNE NAVASKY-- DAVID NELMS--DANIEL OAKLEY--HILDA OCHOA-BRILLEMBOURG--TERRANCE ODEAN--FRANCOIS PAGES--NORMAN PEARLSTINE--DON PHILLIPS--REX PINGLE--CHRISTOPHER POLEWAY--DAVID POTTRUCK--RICHARD PUGH-- MARIA FIORINI RAMIREZ--W. ALLEN REED--ROBERT REYNOLDS--TOM RIDGE--ED RODDEN--JOHN ROGERS--J. PATRICK ROGERS--ELAINE SAAB-- KENNETH SAFIAN--ROBERT SAFIAN--HOWARD SCHILIT--JEREMY SCHWARTZ--STUART SCHWEITZER--LISA SHALETT--MURIEL SIEBERT-- ALLEN SINAI--JOHN SMITH--ROGER SMITH--JOHN SNOW--NEAL SOSS-- ELIOT SPITZER--HEIDI STEIGER--GILBERT STEIN--ROBERT STEIN-- WALTER STERN--RICHARD SYLLA--RICHARD THIELEN--PAMELA THOMAS-GRAHAM--FRANCOIS TRAHAN--SHERYL TUCKER--MARVIN TUTTLE-- LAURA UNGER--WALTER UPDEGRAVE--WAYNE WAGNER--RALPH WANGER-- ROBERT WATSON--RICHARD WEISS--MARK WHISTON--DAVID WILLIAMS-- DAVID WRAY--R. STEVEN WUNSCH--KATHRYN WYLDE--RICHARD YAMARONE-- GEORGE YEAGER--DAVID YESKE--MARK ZANDI--EDWARD ZORE--JASON ZWEIG