banks are done with their big raises. the smaller banks will not be, you know, doing their deals with those big firms. second of all, the corporate debt window opened, so investment grade and high yield companies could issue in the first half and we had a lot of pent-up demand, as you could imagine and we harvested a lot of that so, i don't think we are going to have a continuation of those levels. and then thirdly, you know, the trade economics on your typical fixed income debt, you know, four times normal, starting the year now, down to about two times normal. still very good, but the math is on the same activity, you know, half. so, we expect generally capital markets revenue for the second half to be down, you know, 40 or 50% from where it was. >> what about risk here? you know, from what i'm hearing, morgan stanley chose to take a lot of risk off and they suffered as a result of that this quarter. goldman sachs got back to business as usual in terms of taking risks, both those

companies out of business on september 18th, given their leverage ratios. what's the appropriate amount of risk for one of these banks to be taking? >> you know, these are complex organizations and they are very different types of risks. the risks that got these companies in trouble was allowing the balance sheets to balloon through mortgage warehouse, through structure products being held on the balance sheet. that game is over now. really, the every day trading of, you know, corporate bonds, even mds now is a business we want to see these firms do, they can manage that. >> david, sorry to interrupt you, thanks very much. thanks everyone for watching. it is time to you for "the call." >> pleasure. this is cnbc.com news now. >> nbc news confirms that president obama will name alabama physician dr. regina benjamin as surgeon general. he will make the announcement official with the hour. microsoft will issue a free web-based version of its popular office software with, available the second half of next year.

goldman sachs shares up 3.5% after analyst meredith whitney upgraded the stocks to a buy. that is cnbc.com news now. i'm courtney reagan. good morning, welcome to the call, everyone on this monday, 90 minutes into the session. we are higher on the dow by 77 points, as one of the most important earnings seasons in memory gets under way. coming up in today's earnings central, we are going to discuss exactly what theurprises might be. ppy monday, larry. >> thank you, ish. i'm larry kudlo goldman sachs out wi its earnings tomorrow. the company apparently i on a roll, but will it satisfy investors? we will break out our earnings central team. >> i'm melissa francis. connecticut attorney general richard bloom is set to testify on capitol hill tomorrow on the consumer protection legislation but he will be on live this morning to tell you why he thinks you need more protection. this is "the call" on cnbc.

>> welcome back, ybody, markets on a roll this morning, i think investors are licking their chops over the expectation that goldman sachs going to have dynamite earnings no one particularly worried about the fate of the cit lender. the dow is up a percentage point, over 80 points. the s & p is up about 7 or 8 points, look at that 8.25 points. the nasdaq up 9 almost 10 points. we are rocking and rolling. oil is below $60. gold is off, ten-year treasuries down to 330 or thereabouts, trish. good morning. good to see you. >> good morning, larry, good to see you, too. okay, so, we have got some upside here, significant upside, a volatile session thus far this morning. some of the strength we are seeing is, in part, because of the financials this is ahead of goldman's earnings tomorrow, get to that in a second. i just want to mention that cit, the other thing hearing lots of chatter about, no is not weighing on the markets right now, but there is a lot of

questions -- there are a lot of questions surrounding the fate of cit and david neighborer is is going to be with us coming up after the commercial to talk a little bit more about cit. so, we will get to that head to mary, watching the internals on this market. like i was saying, we have seen a bit of a rocky start here. all of a sudden, started to take off. >> there is resistance or support, i should say 87875, to so when the markets pull back, the s & p hit 875, you can see it bounced off those levels, so getting a little bit of a technical bounce here. wouldn't read too much into it. the markets are up, the nice thing, but again seeing let-volume trading that we have seen last week as well. so there isn't a lot of conviction here, even though we are moving. >> [ inaudible ] let's talk about financials, because that's some good news today. >> certainly the strongest performers. there are a couple of things

happening. first of all, look at this group here, we have goldman sachs, very strong performance, 147. do you know it is very close to its levels last september, 150 at that time? we have seen recovery, meredith whitney raising it to a buy, of course, reporting earnings tomorrow, we have jpmorgan, bank of america as well as citi later in the week. as far as goldman goes, a lot of people are expecting a strong quarter by debt, equity underwriting, strong performance, fixed income trading unit, as far as the banks go, you want to watch a couple of things, charges for higher fdic assessments on the banks, charges for the t.a.r.p. repayments as well that will affect goldman, too. and also some gains on sales, particularly for citigroup and bank of america. so those are a couple of things to watch when these companies report their results. >> goldman coming out this morning [ inaudible ]. industrials, those are [ inaudible ]. >> worth noting that ge, the parent company of cnbc is up

just about 4%. it is reporting its results later in the week. basically, these companies move in tandem with the s & p 500, move off the 875 level, they basically followed suit. ge is one to watch because it too. >> all the good news out there. [ inaudible ] >> start with energy, because this has been -- they have come off the low for the session, continued to see weakness in oil and natural gas today but again, they have improved a little bit and then transport remains a bit of a trouble spot. one point today, the dow transportation average down earlier now 13, recovery there as well. >> mary thompson, thanks so much. melissa, back to you in earnings central. >> thanks, trish. it is shaping up to be one of the most important earnings seasons in a really long time. off the bat, goldman sachs reporting tomorrow the street looking for for a gain of 348 of a share on revenue of 10.6 billion. this morning, meredith whitney upgrade it had to 5 with a price target of 186 bucks. joining me at earnings is

central is "squawk box" host becky quick and carl quintanilla. hear what was said on your show this morning because it moved the market. >> you never feel like you know how goldman makes money because they change every quarter. the next couple of years it will be debt market focus. >> "the call" one of the reasons, if i understood correctly, not about the bank so much as the muni market, right? isn't that what she said? >> a lot of activity. the local municipalities and the states have to raise money now. >> issuing debt. >> they have got to do it. >> cut spending? no, why would we do that? sorry, a little commentary there. >> [ inaudible ] a lot of debt underwriting, a big story. overall, her call is not great about the economy at all. >> no. >> unemployment. >> problems of the consumer going to continue. she said once she figured out the model for goldman, the model, once she got her head around it they will be making money. interesting thing, tomorrow, the

street is looking for a consensus of 3.48 for earn goldman, a much higher number, she is looking for $4.65. the rest haven't gotten to the point where they see how they are making money. >> isn't there a charge related to paying down the t.a.r.p.? i heard people talking about that with jp morguen? >> she said to so many weird things going on this quarter, overall, if the loan modifications happen and they will happen probably 3 x, 4 x, all these loans get modified, the banks have lower loss provisions, higher earnings in the near term and tangible book goes up for just about every bank she covers, except for citi. >> bring up the goldman sachs chart, i want to ask you guys, buffet obviously got in early on. >> i think you see on the chart, back in september, right before the big pop, about the middle of september. >> september. >> right around the 18th of september. and you see where it kind of dropped down, i think almost at the bottom. >> home crying. >> that is where it hit them all the way up, 124 bought in, shot up to 135 on that news, but also

got the warrants, wasn't just the 5 billion he invested, he got the option to buy another 5 billion. >> buffett has written from september, right? do we think he has made his money back all the way back, do you think? >> the warrants in the money at 115. >> and we are at 147. >> so we don't have to worry about him going broke? >> probably not. >> didn't -- he also put money in ge, the parent company? we have that chart, too, roughly around the same time, another company hearing from late they are week? >> he got preferred stock in all these companies, 10% dividends back on them. for the goldman alone, for the goldman price, he is making, i think, i want to say something like $500 million every year for holling these on the 10% dividend. >> here is what meredith said in her note, since march of this year we believe the tangible book values begin to rise and so, too, the correspondenting stock prices that bore out during the first quarter earnings, we believe the second quarter would be no different. think become to the whole march rally that happened when wells fargo had a decent earnings

number, citi had a decent earnings number, jpm. all the earns were better than we thought it would be and we rode that to the middle of june. the question, can we do a repeat of that off the higher levels? >> that san important question i want to ask carl and becky two quick kiss. carl, number one, president barack obama and maybe governor schwarzenegger and other governors are going to be the greatest bond salesmen in history, to okay? the greatest, because of spending and deficits i and borrowing. however, that it's bad news. the good news is they play right into the hands of the banks, do they not? >> yeah. >> this is money in the bank for the banks because somebody's got to refloat those bonds to the public. >> you know they are not going to roll back their budgets to 1990, their spending to 1190 levels that would be the only other solution. >> only cap in trade they are rolling back 1990, setting new records on borrowing, my second question for becky quick. becky quick, how much did uncle sam help goldman sachs' earnings

when all the aig money was paid out and goldman was able to get back its credit default swap commitment? did we help goldman sachss with these fabulous earnings and bonuses? you know me, love prosperity, i just want to know is is there a government hook there? >> there always is. if you want to look beyond that on all the government programs helped out there, you have everything from help and beyond. not just t.a.r.p. helping these guys out. >> the aig in particular, becky? >> the pay back on the other side of the -- >> the blogosphere and opinion writers, we really helped goldman out, did we not? we, being the american taxpayer, you and carl. i don't pay any -- taxes. >> you have a better accountant. are you saying, larry, off problem with this? you don't like that, that action right there? you are complaining about that, right? >> no i love -- >> this is part of the intent, am i right? >> i love prosperity, i just want to note that for all of the

brilliance of the goldman sachs traders, and i concede that they are brilliant, they had a major leg up from uncle sam because t.a.r.p. took them out of the credit default swap commitments, under water, never know that full story, just laying that in there, that's all. >> government, we take your point, larry, government news, penetrating all of these earnings. >> yeah it is having an impact on almost everything -- jpmorgan later in the week, talked about how, you know, i have heard very different takes on how various forms of government involvement will impact the earnings like the -- having to pay back the t.a.r.p. >> plus the stock. when are they going to buy the warrants back from the government? >> i think the bigger overriding story what carl asked at the beginning, carl that is the $6,000 question. maybe it is the $64 trillion question. will stellar bank earnings lead stocks to another 30% ral willy? i think that is hugely important? >> asked curt, only hear from

one company this week, who would it be? he said probably a financial and bank of america. goldman for all the illustration it is gives you about the sector, --. mortgages there credit cards. >> one out of every two homes in this nation have one will some sort of banking relationship. i thought maybe american express that tells you so much about the consumer but would get more. >> take positive on the financials or no? i know goldman was positive, i know we have got to wrap, overall say positive? >> sees them going up potentially maybe 30% for the financials but does see a second leg down coming. >> guys, we appreciate it. more earnings central today on "power lunch," how our options traders see the official earnings seasons. "power lunch" has hot picks at onere on cnbc. up next, cit is in talks with regulators. how close the commercial lender

could be to collapse. by the way, tris they are a big small business lender and team obama says they want to put money out to small binesses. this is going to be a major too big to fail test for cit and the government. it really is. that is the big question, david is going to be on hand to kind of tackle that issue. plus, also going to talk about the battle in congress, larry that could have the government telling you what you can and what you cannot buy in financial services and beyond. we are going to have those ahead for yoonly o"the call." we wilwith be right back. but did you know you also get hotel price assurance?

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welcome back, everyone. cit which provides financials to many small and mid sized businesses, you heard dunkin' donuts mentioned, says it remains in talks with regulators to find ways to improve tradings, the stocks taking a big hit this morning, take a look there. down 24%, 1689 last trade, 37 cent he is, worry about this company's vie billity. heard over the weekend it hits higher, handle a potential bankruptcy. david faber has been all over this story answered joins us now with more. hi, david. >> we should mention, scatten a long-time adviser to the company, well-known law firm. so, with he will see. they do need some advice over at cit because they are facing what, frankly is a crisis that has been in the making for quite a long period of time. as you look at the stock, well down over 20% all this morning and of course, trading at only

1.17. you need look only at the last 10q, the one that was filed for the first quarter of 2009 to see what i'm talking about, these problems only exacerbated the last couple of months, so much of the collateral ci it has declining in value. said listen we need liquidity, funding, including the ability to issue unsecured term debt. private capital hard to come by for the likes of cit, they tried get around that saying fdic, allow us to come into your tlgp program, temporary liquidity guarantee program, we can issue debt backed by you. they haven't done that the fdic seems to have said no thanks to cit's application, hey, we are still talking to the fdic, became the bank holding company, they continue to try to transfer assets from cit to their cit

bank, which, of course works lessen their own funding requirements at cit, as for the funding requirements go back to the 10q, 10 billion for the month that will end next march, they have a debt payment due next year they are worried about. estimated liquid i had, 6.4 billion, need 10, only got 6.4. by the way, also have 5.3 billion in unfunded financing commitments. in order, they have said to a company we will lend you this money, the company hasn't pulled it down there is a fear right now that those companies, seeing the distress that cit is in is going to say i want my money, make sure it doesn't go away. that will only serve to make things worse for cit as it tries to struggle through this period. now, you saw the stock prices, more indicative of the financial health of the company would be the bonds, if i can show them to you, not trading -- trading at distressed price bus nots the for a company about to go bankrupt. this is what we got from tim geithner, treasury secretary,

u.s. government has the authority and ability to address the crisis at cit group says mr. geithner, speaking with a group of reporters in london, england, this morning. see what happens from here. again, the talks continue. the root of the cause, of course, the continued decline in the level of the lateral they have. they buy receiverables for a business those receivables, people aren't paying their bills, those businesses, worth less money. there has to be an answer, including continued asset sales and shrinking their balance sheet. perhaps more than that is going to be needed and needed soon. back to you guys. david, isn't the issue here for the fdic whether or not cit is systemically important enough to the entire system? in other words, they are not going to backstop cit unless they feel like the entire system could be in jeopardy and then i

guess the next question is how important is cit in the overall scheme? >> the question of systemic risk is one regulators take into account, as you know, does not appear in this case, cit would represent a systemic risk, there may be a broader risk to the economy given they do provide a lot of fund for a lot of small businesses and medium-sized businesses in the country. they certainly would claim that is the case and why they should be worthy of that fdic program that would help them issue debt. >> would the government then say, well, you know what, they can get that money from another bank? it is not like there is no source of funding out there? >> nobody wants to lend to cit. >> a run on the bank? is that the bottom line? >> you have got a concern here, larry, as i said, businesses that have a financing line with them will pull it down to grab that money. that creates, obviously, a lot more pain for cit, simply questions as to whether other businesses will simply start to pull away from cit in terms of

doing business with it. those are key considerations. >> what about the taxpayer in this? the taxpayer invested quite a bit of money with cit in the first round do we all stand to lose that investment if cit goes down? >> they did take t.a.r.p. money, didn't they? >> mm-hmm, they did. >> 2.3 billion in t.a.r.p. money. >> thank you, larry, i love that. >> he knows every one's tally for t.a.r.p. >> that would be certainly something that might be at risk, we become a creditor it is preferred, not quite sure how it would be dealt with if there were, in fact, a bankruptcy. no doubt, trish, there would be lost value for the taxpayer there. the question is really whether the government wants to try to prop this thing up yet again because it does not appear that cit was going to access the private capital it would desperately seem to need. >> an argument? >> geithner is on his way to sell bonds to saudi arabia. he spoke about cit in london. did he say anything? you know, the short run we could put them out of business and

into bankruptcy, i suppose, but in the short run, as "the wall street journal" reports this morning, got 700 million companies, $4 billion in debt and over the weekend, the administration talked about helping small businesses. so, do we know what geithner is thinking? say anything in london worth -- >> not that i'm aware of, larry, excerpted the quote that simply said we can deal with this crisis and as -- as far as i'm aware, there was not any larger context there or any more of an answer to reporters' questions at that time. that is the key? what they do they them to do? is there an orderly transition here that you don't discontrol kate, as you said, all the small businesses that need the financing that cit is providing. >> what happens to the bond holders? >> the bond holders in the bankruptcy, trish, get badly, badly hurt, but again, recovery value, all of this is conjecture at this point, we don't know. bonds trading well off, trish but not trading at levels would

you see for a company that was in a state where they were about to file. >> trish, remember how john mclaughlin used to close his program? bye bye. that's my answer to the bond holders. sorry. >> oh, dear. >> oh, dear, is right. >> do it again, larry, i like that. >> bye bye. >> that was good. coming up, for better or for worse, big earnings reports out this week sure to rock the markets. find out where the second quarter surprises could be. first the battle brewing on capitol hill that could impact goods and services for all americans. i believe that is goods and services. do we need a consumer protection agency? that's right, another regulator. we wilus is discuss it all straight ahead, only here on the call. bybye. fa, straight-forward pricing. that's what td ameritrade stands for.

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take a look at crude oil now, well below the $68 mark, down $1.11 on the day, down 2%. maybe you noticed the price at the pump has fallen, down 50 cents in the past month according to aaa. >> talked to your best friends? >> they are crying. >> crying? >> come on. >> sorry. the senate banking committee holds a big hearing tomorrow to debate president obama's proposed consumer financial protection agency and critics say the consumer watchdog is

unnecessary. so, do we need another regulator? let's ask connecticut attorney general richard bloomen-than-thal, who testifies before the bank's committee tomorrow and james, reuters money columnist. we have a consumer pro-it tex commission at the ftc, why do we need another regulatory layer here? >> neither the. if it tc nor any of the federal agencies has really been an effective watchdog. what we need as much as anything else is full disclosure, transparency, intelligible and understandable pitches and promotions and documents for consumers so they know what they are committing to do i can tell

you as a fairly high trained lawyer i'm unable to see understand the credit card documents and mortgage documents that consumers are presented with. the system hasn't worked and very rarely to date authorities advocate stronger federal powers. i think there is a real opportunity for an historic partnership here. >> jim, here is the problem i see with something like this. we are going to say there are some financial products that are too complicated for the regular consumer and going to bar them from get nothing these products then going to have people who are sophisticated vinnesters get in and make a huge amount of money, the exact opposite problem, protecting consumers from making good money. >> two things, you are right, end up with a a two-tiered system. >> yeah. >> these financial institutions like glorified utilities, offering vanilla products then boutique firms going to cater to the wealthy. let me get back to what mr.

bloomenthal was saying. as if warren buffett wrote it this up t is not no about the disclosure it treats people as if disclosure is not enough, uneducatable. great disclosure requirements, your financial institution can still be sued if people end up in the wrong investment. people make the wrong choices, you can be sued that is the problem. >> dick bloomenthal, i want to you respond to jimmy p. and add on, the federal he reserves, regulatory staffing central planners, they have outside boards, they have consumer boards. how can this improve upon what is already out there, dick? >> very good point that have been made. part of a what is needed is to coordinate the very disparate and sometimes competing sources of federal power.

we know that stronger rules of the road are absolutely necessary it is a little bit like an intersection at a highway. after a while, you need a stop sign. with more traffic, may need a traffic light to prevent the -- >> why not use the ftc? it is all there. you have the ftc and the federal reserve board. why not use what's there for existing? why do we need a new layer of red tape which, as jimmy p. has said, look, elizabeth warren is a brilliant woman but she is not going to stand still and take complaints. she is going to to regulate credit. >> i don't think there will be regulation of credit what is needed is enforcement. the ftc hasn't done the job on enforcement, doesn't have the authority to do t this new regulatory agency would make sure those rules of the road are known. >> of course there is going to be regulation of credit. the fear factor for these organizations, make the wrong decision, they put somebody in something they shouldn't have or

don't put somebody in a mortgage or credit card they should have. either way, they are going to get sued. i bet your office is already ramping up, adding office space and staff this is going to be a gold mine for attorneys. >> jimmy, take us down that road, regulating credit what are the negatives externalities for that? >> cost credit will go up? people will pay more for mortgages than they have to. >> less credit out there? >> how about no credit? let's call a spade a spade. if you -- if you control the price and the quality and no credit. dick, let me -- >> only the wealthy get credit. once again -- >> elitist. >> all going to lead to the wealthy having more and everyone else getting nothing, right, dick bloomenthal? >> what i'm hearing here is kind of unreal it is as though we have no regulation of credit right now. after all we do have regulation of credit rates for mortgages and for credit cards. we have a new law that has just been passed, signed by the president that will regulate

credit. we are past the point of making that decision. the question is how do we compel disclosure? >> no, no, no, we are not past the point of doing anything. now, laws can be undone. laws -- you can go the other direction with this and act like it is all done. just as voting is essential for democrat circumstance access to credit is essential as one of your economic rights. this is going to make access to credit far more difficult by treating people like you are i had dots and you cannot inform them. >> can i ask mr. bloomenthal, our special guest, there are a lot of rumors coming out of hartford, connecticut, and washington, d.c. that you are going to run -- you are going to primary senator chris dodd for next year's senate seat. are you going to run against chris dodd? >> absolutely not. i'm supporting chris dodd. he will be nominated and he will be re-elected as united states senator. >> that is assuring that statement, the door is closed. you will not run against chris dodd is that right, dick? >> he didn't say never. >> didn't say never. >> the rumors are all over the

place. >> good for you. thanks for joining us, guys, we appreciate it. >> thank you. okay. coming up next, the crucial earnings season, critical one, what you need to know to make smart investment decisions now. where will the second quarter is surprise us? find out, our guests have some ideas for you nexmelissa. plus, white collar crime a punishment. are we cracking down too hard on financl fraud perpetrators? is that possible? coming up, only here on the call. so, tyicked off the confence call... but weissed the first half tryingo download the docs. which turned out be the old-new docs...

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welcome back to the call, i'm trish regan. get you caught up on the market. we are at session highs on all three indices, the dow up 120 points, a gain at one point almost 5% in part being fuelled by that goldman upgrade and part being fuel bade more optimism over earnings. s & p 500 trading higher by about the same, 1.44% there. 891. the nasdaq up %, 19.17. here we are, earning seasons upon us, a flurry of reports on the way, how can you cut through the clutter and figure out which companies you should b now? here to weed us through this and tell us where the second quarter surises will be we have the cio of global equity test and managing director at jefferies, welcome to both of you, terrific to see you. mr. off, i will start with you. you say that you think that we

are going to see a number of surprises here, specifically point to the financials, interesting to see this optimism, especially last week, where a lot of people were concerned, worried this season might really turn out to be a rather dull one and set the stage for thing. you said just the opposite. >>? battle between people looking at the cycle and secular pressures there are a lot of secular long-term issues with our ability to recover but i think the next couple of weeks, people back to the cycle and you will see either on the industrial side, a lot of cost-cutting. saw some of that in alcoa, that is going to help them meet their numbers tech stocks, many of the tech stocks a similar pattern. >> that is not necessarily good news, steve. no one can really sort of save their way to prosperity, if you have companies cutting costs what, will that mean for their

performance the next three to six moments? >> financia trading, all three will be, all low-quality, but we think typically, the early stages of quality, so-called low quality beats that help you. the second half we are expecting an economic cycle here, the stimulus plan all the stuff the government is doing, we are going to have a bounce back from the freeze jove they're occurred in q 4 and q 1 that will surprise people and a little bit of a top line breeze behind the cyclical companies that have done this cost cutting earnings number be will be good. art hogan, let me come to you, i don't know about the top line revenues, let me ask you, going become to the terrible job reports we have had, a certain gloom about economic recovery. let me ask you, is it possible with corporations cutting jobs left and right and cutting back

on hours left and right, that those cost savings may be a forecaster of better-than-expected earnings? >> the quality of earnings, you are right, corporate america, right sizing, what you are supposed to do in this part of the cycle. you have corporate america poised for growth coming in the second half and the first half of next year because of that, inventory levels are down, right sides the cost cutting is important as part of the ask. you have to make an argument against the quality of earnings debate that is going to go on the next couple of weeks. to your point, the point you are bringing up, the right sized corporate america, cut costs to the point where they have to replenish inventories, start rehiring, that will happen in 2010, be in position for explosive growth. >> profits are, there was a leading indicator of the economy

and i think that's very important here, but i want to ask you this. outside of the banking sector, where is the best upside surprise, in your judgment, art? >> i think technology, across-the-board. if you look at technology, you have to look at the fact that not only the right side but toke nology in slow/growth economy in 2010. underestimated how much it has gone in technology and certainly underestimating the effect of net books and things that go into that,. probably the most clear cut than other technologies in the s & p 500. >> like both of your takes going forward. we want to know what the next three months look like. where are we going to haesh the most optimisc news? >> guidance is conservative. nobody wants to stick their neck out. i think a lot will be surprised by the cycle.

that will be the bearish case. we think the top line will be there in the second half, i think -- that was the leader in the '90s this last second, obviously, the financial -- the techs may be one sector, you got good balance sheets, you got good products, good positions, come through this pretty well, they could be the leader. >> okay, art? >> the fact this we are going to get guidance will be a difference the last three-quarters, that will be anary-term positive. i think less reticent. corporate america less reticent to give us guidance easier compare the is second half of this year. anything will be better the second half of this year. upside surprise there is in the early cycle industrials. >> good news from both of you. >> appreciate it. >> bringing it up to alan stan

ford, crime wave not subsiding. and the theory is outn how to punish fraudsters. some say we are crackingown too hard. find out why next in thecall of the wild. we will be right bk. g b you're the colon lady!

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microsoft will release a free version of its office sort wear htac. how do you say that? users can access this over the web to catch up with products that archrival google launched three years ago. look how they are both trading, both up today, of course, we heard last week that google is going to launch its own operating system to challenge microsoft. i don't think microsoft's operating system is all that -- >> it comes in every single computer that whole monopoly thing, difficult to battle. >> what did i say, market share down to 60%? used to be 90. fire "fox and moz zil la doing well. stocks are up. 2009 could go down in history as the year of the ponzi scheme, bernie madoff gets 150 years and announces he won't appeal sentence and allen stanford's $8 billion scheme, his cfo in court as we speak, cooperating witness. who know what is sort of prison

term sir allen will get. prosecutors will ask for 145 year for mark drier who defraud investors out of mere $400 million. are feds doing themselves a disservice asking for hundreds of years? should we throw them all in jail and throw away the key? let's ask a white collar courtroom nal defense attorney and a securities law attorney. thanks to both of you for joining us. steven, our gut tells us, throw the book at these guys, what they have done is terrible, at the same time, you can make the argument that it disincents criminals to come forward, admit wh they have done and recoup the money? >> that isbsolutely rit. the problem here is if we change the rus, people who do these nds of white colr crimes the sentees we get for murderers and rasts what, is going to happ none is goi to plead guilty, nerave a guy like bernard madoff ormark drier pleading guilty. instead, them going to trial, making the governmts prove bend a reasonable doubt, very

long, complicated trials that ese people committed crimes. that is going to take a huge amount of resources away from investing new crimes. >> that where you were going, melissa? i thought you were going the other identify? >> obviously, i believe in the other side of the story, but i'm trying to be the devil's advocate and say there is something to it. every single time you throw away the key or throw them away what is the incentive to ever come forward and -- >> so, tom, melissa francis is making a strong case we should leave them in their penthouses. >> no, that's not what i said. >> no, no, no. >> words in her mouth. >> drier pled guilty caught red-handed, not going to go on

trail in this case, same with madoff, both caught red-handed, not worried about that, this is not going to disincentivize people to plead guilty. these crimes are just as bad as physical crimes like burglary murder, rape version terrible crimes, you have deprived thousands and thousands of people of their life savings of their medical care, of their college tuition, for their children, of their mortgage payments in many cases, so look at the size and scope, the number of people adversely affected by these crimes, 150 years-plus is justified. >> what was kozlov ski's prison term? >> upwards of 10 years. i can't remember the exact number but in a system where he maybe will get time off, he might be out a lot sooner, he was at the beginning of that corporate crime wave, didn't get as much time as like jeff skilling from enron got and -- >> what did skilling get? >> skilling got 25 years.

ebbers 25. >> 25 years, skilling 25 years. >> the judge just set the bond for the ex-cfo in stanford financial at $500,000, pertinent to the conversation we are hearing this now. go ahead. >> so, take ebbers, ebbers is a gay who was an $11 billion accounting fraud, went to trial, didn't cooperate in anyway way, didn't admit he was guilty. it was a long, drawn-out trial, takes a huge amount of resources, he got 25 years. you are talking about someone like dryer, i disagree with jim completely, drier, 145 years for pleading guilty doesn't matter if you are caught red-handed, might as well make the government go through all the work of proving each detail of that case beyond a reasonable doubt. >> what does the public think? this is about the public perception that white collar criminals get treated better than -- >> the money back. >> minority people, also trying to get him to sing, you know, a lot of people like myself are still annoyed, madoff never did

sing. we don't know the full story. how do you deal with that? >> the federal court in manhattan, 90% of the criminal defendants plead guilty. imagine if there was a real change in that number. you just wouldn't have enough prosecutors. you wouldn't have enough judges. you would spend all their time prosecuting people who are already call the red-handed, due in court, if trial for those people instead of investigating and putting new people on trial and in jail. our system would ground to a halt. >> this is the role of the government attorneys is to prosecute people and they are very good at t more than enough government attorneys. we don't have a problem with the number of investigations, what we have up to this time at least is a problem with investigations being stopped in the middle of them, not having a very aggressive ftc, things like this. >> we got to get out. >> when office federal prosecutor, we were working our tails off with 90% pleading

guilty, if you think you can get the same results by putting everybody in jail for their lives, you are deluding yourselves. >> guys, thanks so much for a lively debate. appreciate it trish. a quick market check, because the dow is now up about 130 points, gape of 1.6%. financials leading the way here, some of the standouts, bank of america and goldman sachs. "power lunch" is at the top of the hour and sue herera is here for us today to tell us what is in store. hi, sue. >> hi, trish. good to see you, talk about the options strategies you might want to put in place ahead of earnings that are coming out. then first on cnbc, we know about california's budget tary problems, the treasurer of that state, bill lock year will join us. is this an investment or a luxury? we will talk to the ceo of louie vuitton north america. business is pretty good, many people are apparently thinking this is a good investment. then we talk about whether or not the stimulus that is being put in place is still working. i've never had one of these.

but i just heard -- oh, my god. >> i need that i'm all over that. >> oh, my god, i need that. >> behalf of the american taxpayer, i want you to get t.a.r.p. money to purchase that louie vuitton. >> you know what, larry, the price of this bag, i think i might need t.a.r.p. money. >> telling you, t.a.r.p. money. have a great show, sue. a quick break and signs of hope for the california budget crisis, signs of hope. jane wells standing by in los angeles. hello, jane. >> hey, larry. buy a california iou or louie vuitton bag? the vibe out of sacramento today is keep hopealive. should we, when come back.

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okay, we have breaking news, president obama speaking at the white house on health care. let listen in. >> we can't afford 14,000 americans losing their health care every single day. we can't afford a future where our government will essentially spend more on medicare and medicaid than what we spend on everything else. during the campaign, i promised health care reform that would control costs, expand coverage and ensure choice. i promise that americans making $250,000 a year or less would not pay more in taxes. these are promises that we're keeping as reform moves forward.

this is no longer a problem we can wait to fix. this is about who we are as a country. health care reform is about every family's health but also about the health of the economy. so, i just want to put everybody on notice, because there was a lot of chatter during the week that i was gone. we are going to get this done. inaction is not an option for those naysayers and cynics who think this is not going to happen, don't bet against us. we are going to make this thing happen, because the american people desperately need it. and even those who are satisfied with their health care right now, they understand that if premiums keep on doubling and employers keep on shedding health insurance because it is unsustainable and if you look at the trajectory of where medicare and medicaid are going, then inaction will create the biggest crisis of all.

so i understand people are scared an nervous about making change. the muscles in this town to bring about big changes are a little atrophied but we are whipping folks back into shape. we are going to get this done. if there is anyone who understands the urgency of meeting this challenge in a personal and powerful way, it is the woman who will become our nation's next surgeon general, dr. regina benjamin. the list of qualifications that make dr. benjamin an outstanding candidate to be america's leading spokesperson on issues of public health are long, indeed. she was in the second class at moore house school of medicine and went on to earn an md from the university of alabama at birmingham and an mba from tulane. she served as associate dean for rural health at the university of south alabama clem of medicine and in 1995, she became

the first physician under 40 and the first african-american woman to be named to the american medical association's board of trustees. in 2002, she became president of alabama's state medical association and she has received numerous awards and recognitions, including the macarthur genius award. that's very impressive. but of all these achievements and experience, none have been more pertinent for today's challenges closer to regina's heart than the rural health clinic she has built in bayou la batstreet. say that right? tell me how to say it. bayou labattery. that's in alabama, people. bayou la battery is a rural town of about 2500 people t is a shrimping town, where a lot of people work for themselves, ra