the president expected to speak about midday today about the financial crisis one year later. cnbc will carry that speech live. our special coverage begins at 11:00 a.m. eastern time. meantime, our guest host peter cohen, former ceo of shearson lehman. overall, peter, feeling good or not? you've got too many worries to be bullish out right? >> i'm not bullish.h. we have a lot of very difficult problems to work our way through as a country. >> are they going to play themselves out over years? >> over years and years, yep. >> it's good having you as always. a lot of good insight. >> thanks for having me. >> make sure you join us tomorrow. "squawk on the street" is coming up next. this is cnbc.com news now.

>> airlines gets a boost before the opening bell. carrier projects higher than expected profit margins due to lower than expected fuel s. good year tire stores over 5% along with other u.s. tire makers after the obama administration's decision to impose import duties on chinese tires. president obama goes to wall street for one-year anniversary of lehman's collapse. that's cnbc.com news now. i'm courtney reagan. live from the financial capital of the world, this is "squawk on the street" on a monday morning. and it is one busy day on wall street. i'm erin burnett along with melissa lee. we have an old-fashioned trade war shaping up. that is what is hurting futures this morning. u.s. imposing tariffs on chinese

tires. >> and as you probably figured out, mark haines is off today i have the privilege of sitting next to erin. >> mark, if you're watching. >> mark, you just got to view ounce this monday morning.g. one eye on china, wall streeters will be paying close attention to the president who is using the anniversary of lehman's collapse to make a case for financial reform. his speech at federal hall just about three hours away. >> and that has meant a very busy day literally right out here. and secret service, big event out there today. futures around the world are lower. you can see that in u.s. futures. a big part of that concern that one way out of this mess may be country is turning more and more pro to pro tekzism, melissa. >> absolutely. let's find out how this is laying out in the early morning action. we have it covered for you. let's kick it off with bob pisani who is on the floor of the stock exchange. >> that is part of the concern down here, talk about imposition of tariffs on chinese tires and

protectionist measures with the chicken situation. that's all cause concerns down here. everybody is quoting ben sti stiller's "ferris bueller's day off."" hale care up 7%. full-year aebtia guidance is up. report in deutsche telecom may be interested in the company. a lot of people down here thinks that does not make a lot of sense. they've been talking eight for many years. secondly, sprint is going to demand a prime yum which would cost billions of dollars for deutsche telecom. tradertalk.cnbc.com. >> a week off the open, most large cap technology stocks under pressurer in in premarket trading. google, apple, research in motion and microsoft down half a

percent. research in motion is down more than 1 mrs. microsoft, in terms of an upgrade, came from auriga. to buy to hold from 30 from $24 as well. selling 1.4% steak in alibaba.com for $150 million.n. that comes about two years after that company went public. yahoo! does keep the 40% stake in the unlisted parent company.. buy due this morning is down .2 of 6%. the six-month price target sin creased from 455 to 376 at goldman sachs. e-trade, big winner premarket. upgraded at citi. to buy. $2.30 from $1.50. cognizant technology is up half a percent on an upgrade at kaufman. first solar giving it back today, downgrade from sell to hold. i'll send it to rebecca jarvis down at the merck. >> thank you, scott. what do you know, the u.s. and

china are feuding over trade and all of a sudden the dollar is stronger, oil is weaker and demand fierce as far as how much we want of oil here in the united states and around the world have all of a sudden resurfaced. a lot of traders questioning over these last couple of days whether or not we got ahead of ourselves on price. after all, russia, the world's largest energy exporter is cutting its interest rates.s. they are seeing the largest contraction in their economy in a very long time. oil this year up 54%. a lot of people are asking, is this just a weaker dollar, stronger equity scenario or are we actually seeing a return in any kind of demand on eaten up of the supplies.. right now, what we have seen is supplies over these last three months, the summer months, are actually ahead of where they were before summer began when they're supposed to be eaten up over the summer months. that's certainly in people's minds.s. distillates right now, that's really the area that in the

business side of things, get eaten up. that area has also raised to record levels. 1983. the last time we saw stockpiles at these levels, there is one group, however, rick, as i send it over to you that is betting that prices will go higher from here. it's the hedge fund community, they're net long in their position. over to you in chicago, rick. >> well, thank you. i guess interpreting the cftc data is an art form in and of itself. if we look at the markets today, we see a bit of a rise in interest rates. mostly in long maturities. nothing too crazy ability. talking several basis points.s. there is no coupon supply next week. that will be next week in the form of 3s, 5s and 7s. today at 1:00 eastern we will auction off the same amount of three and six-month bills as last week. $29 billion for $58 billion. a one-month bill tomorrow and drive by will learn how much it's going to be in the morning. as far as the dollar today,

dollar index is a bit higher. of course, traders are going to continue to monitor that and the fact that gold is sitting very magically at that magic level of 1,000. erin, back to you. >> all right, thank you very much. we were at 999.99 for just a second there for gold. most asian markets did lose ground overnight. you can see the nikkei down more than 2%. the hong kong hang seng down about 1%. and shanghai composite did buck the trend, even though that's where the trade war is happening between china and a t. united states. in europe right now though it is red across the board as our open will be. so, let's see. we're down 1%. that's where we look like we'll be at the open. make maybe a little bit better. up next, president obama, as we said, marking the first anniversary of the collapse of lehman by making the case for tougher financial regulation. roger altman, who is a familiar face at washington and wall street will, be with us to talk about what changes must be made. and whether taxes have a red or

green arrow next to them. plus, your daily dose of the one and only david fab in today's "faber report." and is china rattling the market this morning. we will get the word on the street as well as buzz beyond. stay tuned. you're watching "squawk on the street" on cnbc.

the no slip white strips.

you are looking at a live picture of federal hall. that's on the left of your screen. that is where the president will be speaking in just about three hours from now. he's going to commemorate the one-year -- it's a hard -- we're trying to find the word here. he's going to acknowledge the one-year anniversary of the collapse of lehman and talk about what happens with finance regulation. two things he wants to get done this fall, health care bill and federal reform bill. he's going to set the stage for it to be about reforming the economy. he's going to try to remind americans just how close they came to the brink. how close we came to not being able to get money out of the atm. we're joined by roger altman, former deputy treasury secretary under bill clinton. thank you very much for being with us. >> great to be here. >> financial reform is a crucial and yet eyes glassed over sort of topic. how can he sort of bring it alive today, get momentum, and give specifics?

can he accomplish that? >> he's, as we saw last week, in his joint -- speech to the joint session of congress. he's a marvelous order and very inspirational. so i think what he'll do today is try to restart momentum for financial reform by reminding us, as you just said, how close we actually came, and we did, to a systemic meltdown. how the authorities, the treasury and the fed, especially the fed, acted hugely and heroically to pull us back from that. how reform, in light of that, near a tas strofy, is imperative and how i will assume he'll say restraint in financial markets, behavior in financial participants behavior makes sense in light of that. >> should he and will he, two very different questions, acknowledge the deficit and the amount of borrowing america is now in the midst of to deal with

this crisis and his agenda? >> i don't know the answer to that, but i would be surprised because i don't think, erin, this speech is about that. he did, of course, refer to that at the beginning of his speech last week. but i would be surprised if he went into that today because i think this speech is about financial reform and the importance of getting going on it. and so i think he would view that as extraneous today. >> has he missed a window of opportunity, mr. altman, in proposing financial reform? it's one thing on the brink and just coming out of it and you say we want to change the way the system does business.. it's another thing to wait a year later to wall street is practically back on its feet, goldman sachs again printing report profits, now we've got to change. the case seems to be harder to make now than say six months ago. >> the administration has had a very complex road to navigate these first seven months since he's been in office. we all know his first priority is health care. they've had to put emmens

amounts of capital behind that. i think there will be a bill. and then we lstz have -- some people forget. they have energy and climate change, which passed the house. has not yet come before the senate. it's not clear to me whether he had to choose between energy and climate change and financial reform pass health care. it might be to get energy and climate bill through the senate. they've had competing priorities. health care has sucked out so much air out of the room, so to speak, understandably. and i think financial reform has, to some degree, fallen victim to some of those realities. >> is that troubling to you? you've been in washington. now you're on the street. is it troubling to you that perhaps energy and climate might take a higher priority than financial regulation, something that almost brought this nation to its knees? >> having, you know, as you say, served twice, it's always difficult to sequence your

priorities and sequencing is one of the most difficult things in washington. health care had to come first. the president made that clear during the campaign, made it clear at the moment he came into office that that was his number one priority and he's had to do what he has been doing on that. if it's been at the expense of the financial reform uks it's been a necessity. i don't know how they will come down on the sequencing of the energy bill versus financial reform. i also don't know whether the o momentum in congress can be restarted. can he do it?? i don't know if he can do it because there's lots interests. >> barney frank is going to be our guest later on on "squawk on the street" to talk about that. you talked about the elephant in the room, though, which is, as i said in our town hall with treasury secretary last week, impacted. they don't have an answer on it. or maybe they do, but nobody wants to talk about it, which is probably more along the lines of it. you talked about a value-added tax. i'm under the impression the

administration doesn't think they need that, they don't think they need a revolution. but they haven't figured out exactly how to raise taxes. do you think value-added tax should be on the table? >> first of all, if i were in their shoes, i would be handling it the way they are handling it. >> you would be? >> i would be, yes. in other words, as we just discussed, they have some enormous immediate challenges, health care, energy, financial reform, just to name three, let alone afghanistan, iraq, and so forth. so the deficit, which the president i'm convinced will address, it isn't the moment to address that now. he has said many times, we will address that once the economy is on a more stable footing. i think that's the right thing, erin, for him to be saying. so if you were in their shoes or any of us were in their shoes, we wouldn't be saying here is our precise blueprint for the deficit right now in september '09 because come september '09 you're going to confront that. will taxes be part of the

solution? i think so. value-added tax, i don't know whether they would go that way or not. >> $300 billion of our $900 billion health care is going to come on taxes on drug companies and medical device companies and they'll tell us off the record, yes, we're going to pass that right along. in other words, prices are going to go up for regular people but we're not going to call that a tax increase? >> well, i think, everyone knows that there will be a high percentage of pass along on that. i don't think there's a lot of secrets on it. and they've had -- they've had a very difficult time figuring out how to pay for this. it still isn't clear how the $900 billion will be financed. it's murderously difficult to do that. you can see, i'm in favor of cutting them a little slack in terms of the extraordinary problems that they're facing. >> all right. fair point. thank you. >> thank you, mr. altman. time now for our monday dose of mr. david faber. david, what do you have cooking? >> thanks, melissa.

a week ago, of course, actually even less than a week ago we had that huge deal in the -- potential deal in the food industry. this morning rumors and talk that started over weekend of a deal in telecom industry. but don't move too quickly to hit the button when it comes to sprint. listen to what we've got here. this all started this weekend. and you'll take a look actually. stock looked up as much as a dollar in the early going. a dollar is not much for some stocks. it's an awful lots when you look at -- thank you, that is sprint. big move up. we're talking 50, 75 cents as much as that percentagewise. huge move. why? well, over the weekend britain's telegraph reported that deutsche telecom has hired bankerses to put together a potential deal in which deutsche telecom, t-mobile here in the u.s., would acquire sprint. that has, of course, helped to juice that stock quite a bit. what can i tell you at this

point? i can tell you having spoken to a couple of people close to the company who is familiar to what it does in the banking circles, sprint is not in talks with deutsche telekom and don't know what they're up to. none the less, they didn't say that there were talks. they simply said deutsche telekls tel telekom was in the midst of preparing a little bit. sprint/nextel deal widely acknowledged to be a failure, integration issues, oh, so many issues, management front. and the company has listen struggle for quite some time, which has given rise to takeover rumors from time to time. but, of course, the question is one of value and who actually would be able to do it. deutsche telekon/t-mobile an orphan here in the states and away. thought to need a partner in

some ways. there are there are plenty of reasons why this deal may not happen. take a look at what citi, for example, had to say this morning. the analyst citing significant integration risk. four or five different wireless technologies. regulatory risk, they put the probability for approval at only 50% to 60%. might need nextel's iden network and clear wire and a lot of financial risk because sprint's risk to cash flow declining post-paid subscriptions. and deutsche telekom obtaining an credit rating.g. clear water is the wi-fi solution for a lot of cable companies. 51% owned by sprint. comcast also owns part of it. it needs to raise more money. t-mobile doesn't have a 4g answer right now in terms of gaming world spectrum. is it possible that the telegraph just picked up on a to terrible investment coming from deutsche telekom and clear wire?

just a guess on my part. sprint though still going to be up this morning. be careful.l. back to you. >> thank you, mr. faber. breaking news on eli lilly, mike huckman is at the news desk with the headlines. what are you hearing, mike? >> because eli lilly has so many big selling drugs that are going on patent or generic over the next few years, a t least a couple of analysts are saying this drug maker needs to cut costs and/or do a big deal. but for now it is going to restructure and cut costs. eli lilly announcing this morning it hopes to take a billion dollars out of the 2 011 cost structure by getting rid of 35,000 staffers. going down to 35 employees by the end of 2011. a company spokesman tells me the company hopes to do this most he through attrition and retirements. and that layoffs will be an option of last resort. in addition, lilly is splitting itself into five major business

units, with the gold being, according to the spokesman, to speed drugs through the development pipeline, which is what it's all about because, as i mentioned, lilly has so many big-selling drugs going off patent over the next several years. back to you guys. >> thank you very much, mike huckm huckman. next, how the trade dispute between china and the u.s. is playing today. >> and one year after the meltdown, dow down 15% but up more than 45% since the haines bottom. he's not here but his bottom lives on. >> you're sitting where it usually sits. >> yeah. it feels --icy now that i think about it.. what will the market look like 12 months from now. we have your cnbc edge.e. and later, congressman barney frank here onset to discuss everything from financial regulatory reform to mortgage cram down 'the fed, and much more. stay tuned. you're watching "squawk on the street" on cnbc, first in business worldwide. could someone toss me

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right now we are joined by art cashin, director of floor operations at ubs. art, the big story of the day seems to be china. how do you interpret this? doesn't seem like a smart move for the u.s. to be antagonizing, to fund all sorts of things we want to do here. >> there are two theories on it. number one, it is a bad move and it is beginning of a minor -- hopefully minor tariff war.

but on the other side of it some people think it's really an attention getter, a shot across the bough to get the chinese to sit down for broader trade talks and work out some possible deal. we'll probably know by the end of the week which it is. but, you're right, it has the e market disturbed. >> that's the reason why the futures are sharply down this morning. >> yes. and a couple of things coming out of the japan indicate that maybe things aren't going as swimmingly with the new government coming in. so we'll wait and see. but clear topic of the morning is that tariff hike. >> there's also some skepticism creeping into the market. they said the summer and september of disbelief. is that the same feeling you get on the floor, especially as there are no more holiday weekends. pretty much the smart money, big traders are back on the street now. >> yeah. i think there is enough skepticism around. i wrote last week that some of the old fogy traders like me are

reminded of the spring and summer of 1987, when the market kept going up and the face of skepticism and the old veteran traders got run over because they were selling into strength and the market just kept going until it stopped. >> right.. do you buy the argument that there's so much money on the sidelines that it's got to come into the market and that's why we're going to have the bias to the upside? >> i'm not entirely sure about that. i do think some of it will come up. but the amount of money and money market funds are substantially the same as it was a year ago at this time. >> all right. interesting thought. if you mean by old fogies, wise. >> thank you for that. >> art cashin of ubs. final countdown right after the break.

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capital of the world. and today it truly is because a man that runs the political, of t. other financial capital of the world, in washington, is president obama. he's going to be right here outside speaking shortly. and there they are, the bells. two network programs, ace of cakes. and at the nasdaq, mayor of london, boris johnson. he's always picking a little on the mayor with new york, the mayor of london. >> we also like to make a lot of it. it's fun, this competition between new york and london. >> now what are we competing for? >> maybe it should be washington versus london actually these days. all right. our market reporters standing by. let's kick it off with bob pisani here on the floor of the stock exchange. good morning, bob. >> good morning. of course, president obama is imposing tariffs on chinese tires, importers. talk that the chinese are now

looking at u.s. exports of chicken as well as autos. quesz about a possible trade war, it's early to say that. but the street is worried about those kinds of things. quoting "ferris bueller's day off" ben stiller, anyone, anyone. so that's a big stock topic on the minds of people down here today. let's talk about other things. goodyear tire trading on the upside. cooper is trading on the upside. goodyear just opened up 5%. tenet health care doing well, 7%. raised their full-year ebita, a little bit of a surprise. let's go over to here to sprent. i hope you listened to david's comment. it echos on the street the skepticism and the possibility that deutsche telekom might be interested in sprint. there was a report in the british pap there morning. it's opening on the upside, 43

cents. stock now at $4.20. the important thing here, all sorts of risks, regularer to risks, financial risks being the two biggest ones. we'll talk more about that in the next hour. right now, let's go over to the nasdaq, see how things are looking over there. how is it looking for the opening over there? >> similar picture, bob. thank you. we open eed down half a percent. large cap tech, modest loss, half a percent. almost across the board. microshares are down that amount. upgraded over buy to hold. yahoo! shares down about 1%. selling of 1.14% stake in china's alibaba.com, $150 million. that's still have a 40% stake in the unlisted parent company. china is in focus with baidou shares. fixed price target increased at goldman sachs. the stock does remain on conviction buy list. upgraded and comes from citi. and the call is also to buy. target is also to 230 from 150. they believe that loan loss

trend has improved there. cognizant technology is getting a boost. upgrade coming from kaufman. first solar under a little bit of pressure. downgrade. and rosetta resources is down 7% on a suntrust robinson downgrade. 14 bucks. let's go to rebecca jarvis at the nymex. >> with the dollar firming up, traders have the option of refocusing their attention to the bearish fund menial picture where we see supplies continuing to decline and demand no, real sign at least in traders' terms of a return in terms of that demand picture.e. right now where we see supplies is actually firmer, stronger than where we began the summer driving season. according to stephan shork of the shork report. that's the reason in his opinion to be barish. opec supplies are at the highest level they have ever seen them.. and more support for that fund

mentally bear risish thesis.s. keep in mind here, russia is the world's largest energy exporter. when you look at that in combination with the data that we're seeing here in the united states in terms of demand and supply, people are putting it together for a bearish picture.. one last thing to keep in mind here, though, we are seeing range-bound trade. as we have seen throughout the last month, between that $65, $75 a barrel level, oil continues to challenge those levels and until it breaks s through to either side, many traders are saying they're not really sold on the particular direction of this trade. chris says to watch the thursday options expiration. one last thing we're watching here, natural gas. it is an out liar. it is retired today. we'll tell you why coming up next. rick santelli, over to you in chicago. >> thank you. of course, we talk about supply a lot. on a week when the u.s. treasury is going to have fuel supply, there's many corporations and entities outside of government that are going to be potentially tapping the corporate market,

whether it's textron, century linked, directv, then, of course, there are sovereigns getting involved. germany is going to sell 4 billion in supply.. not denominated in euros. they find that the dollar is moving makes it a little better for them to issue in dollars. they say it's cheaper to issue in dollars. look at the price of the dollar. and remember, there's been several countries in the last couple of weeks in europe that are doing the same thing, worth paying attention to. rates are several basis points higher along maturities. at this point not making a big move after last week's big voli volitity, moving from higher back to lower rates as the week progressed. back over to erin. >> thanks very much, rick. stocks open to the downside. dow is down 50 points one year on this one-year anniversary of the lehman collapse. only three dow components are trading higher. travelers which wasn't in the e dow 12 months ago, jpmorgan as well as 3m. what happens next?

let's get your cnbc edge. joining us, jamie cox, managing partner, christopher zook. welcome to you both. christopher, i want to start it off with you. even one year after the collapse of lehman brothers you say that you want to short some of the regional financials. we all know that the next shoe to drop or conventional wisdom is that the next shoe to drop is commercial real estate. if everybody acknowledges that as the next shoe, can it be a shoe and then a reason to short these names? >> the reality is that so much of what they're saying in commercial real estate is pretty obvious. the light at the end of the tunnel is a train coming at us and people are ignoring it right now. there's no way to avoid the contraction we're going to see in commercial real estate. the big banks, the two big too fail banks, they're going to be all right because they've rebuilt their balance sheet and gotten enough capital. the problem is on the regional side there's simply not enough capital available to support the losses they're going to endure. not only commercial real estate but also in just their primary

lending book. >> does is this a trade for you, cyhristopher christopher? are you along the banks too big to fail? >> we're not doing that ourselves. that's something that you could look at. personally we think the short regionals is a much better play. a lot of commercial real estate problems could cause a delay or a weight if you will, on the shoulders of the money center banks in addition to the regionals. we would not be doing a pair trade right now. >> jamie, you are much more bullish. >> yeah. you know, the thing about how far we've come from a year ago.. a year ago, a couple weeks pass the fall of lehman and we couldn't get any corporate issuance. look what we're doing this week. corporate issuance. we have a lot of things that have changed. i think time will heal a lot of the problems, particularly in that corporate commercial real estate. the longer we can let the economy heal, i think the less that t. thesis for things going completely wrong again falls apart. >> and where would you put money, jamie??

i know you look for dividends. obviously that used to be mean you were in financials. that clearly has dramatically changed. you're saying outside the u.s., you have seen a huge increase in the companies paying dividends.. is that really true during this crisis, you've seen an increase globally in dividend payers? >> yeah. particularly in asia. asia and companies have really never had good dividend policies. what we're seeing now is particularly in the small and mid cap space, companies really committing to a nice dividend policy. which is expanding the universe of companies for us to invest in. for example, for years and years and years we kind of consolidated up in financials, health care, and utilities. now we're actually seeing consumer staples, consumer discretionary and industrial companies outside. even s&p as an index now to track dividend payers in asia. so they just released it in april of this year. so even most of the index players start to see this as a trend as well. this is something to look at for the future. >> and chris her, i want to get back to the other sector that

you are looking at right now. and that health care. you say that's one of the only sectors you would be comfortable with. given all the talk about reform, it seems like your tolerance for discomfort could perhaps be high. w where are you investing in health care? sglin side of health care we feel like a lot of insurers are going to be better off than people are afraid of. reality is we are beginning to see a softening of the tone out of washington. we're beginning to see things maybe come through in legislation that's not going to be as bad as people were expecting. as a result, the very, very sharp discounts a lot of these stocks were trading at is now going to come off. and these stocks are going to really focus more on their core earnings power. once we know what the health care reform is going to be. health insurers, some of the pharmaceutical, bio technology, less price sensitive, is where we would be interested. >> thank you so much for your time. >> my pleasure. >> thanks. up next, lehman, had it not failed, would the crisis have happened anyway? i think we all know the answer to that. the great depression and

economic senator of the economist great ifs have thoughts on how much worse it might have been.. and how we can prevent another catastrophe. >> plus, the meltdown one year later from one of the most influential central bankers of our time. the ecb's jeanne claude trichet. europe watching "squawk on the street" on cnbc. gecko vo: you see, it's not just telling people geico

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on this one-year anniversary of lehman's collapse, president obama is getting ready to deliver a key address on the economy. so what can we expect? really, how far have we come over the past year and is the financial reform package that he will advocate for today enough to prevent lehman part two. weighing in, author of "the forgotten man" which questions whether the government's involvement there. and u.s. economic editor or the economists, his article is titled "what if." wall street and one year on what changed. good to have both of you with us. appreciate it. amity, we know we were so close to the brink and possible to say how close, but we all know

pretty darn close. the question is, where are we now? i believe your grade of both the bush and obama administrations are not so good. >> that's right. i think i gave them a "c." the question is now for the market about uncertainty. markets don't like change and they don't like regimes changing. you want to get to a point where you know what the rules are and move forward. we haven't reached that point yet. we're very concerned today, for example, the president's remarks will be good insofar as they establish a certain rejooem. we don't have to like all the details. they'll will be bad insofar as they leave it all open. kick it down the road. it reminds me of 1937, which is the year the depression just was not going away. because the government kept changing plans, making a lot of plans, and didn't give certainty to the market. >> and what do you say, greg? >> well, i think that amity is right. certainty is important at this stage. that is the thrust of the plan.

if we go back a year ago and see why was lehman's failure so convulsive, it's because it wasn't a back ard forth in support of the crisis. bail we'd bear stearns and fannie and freddie but when lehman came along, they let it fail. that maximized the shock to the system. so what's the answer? you can't really say never a bailout because you know when push comes to shove and you're staring into the abyss the temptation may be overwhelming. it makes it less likely a firm is going to be pushed to the edge. number two, when they are pushed to the edge, able the government to come in, control and predictable manner to take it over, wind it down with minimum cost to the taxpayer. >> greg, at the same time, yes, the bailout did have an impact, yes, and there are more regulations these day nsz terms of capital requirements on many banks because of that. at the same time, it is business as usual on wall street and wall street has recovered and they did a lot of their own sort of

standards these days. for instance, not many ceos on wall street have r. saying 30-1 the leverage is good anymore. 15-1 is what they like now. there are, is there a need, is there a. when we have recovered without it? >> i think there is, because this crisis will pass, as all crises eventually do. when that happens, memories of what happens fade. people who lived through it will retire or move on or die. the new crew of people who say this time it's different will be in place. they'll say they mastered the mistakes that brought us to pass crisis. we're condemned to talk over and over again. there are steps that can mitigate that risk. i think that that unique kind of strike right now while the cries is fresh in people's minds because once that sort of sense of urgency passes the o constituencies and lobby groups and cap requirements and

penalties that basically make it more costly to run your firm the bigger it gets. >> amity, david faber. in your book you start with 1937. it's become a parlor games for many people to try and make analogies between the period you focus on so well in your book even today. the actual performance of the stock market. do you see a lot of analogies between then and now? >> well, i think we're moving faster. and we need not have such a great, deep depression. but the market did have a tremendous rally, 30 more percent after roosevelt came in. very similar to president obama. and then that uncertainty, 35, 36, 37 the depression followed. what you mentioned earlier, well, some companies are no longer levering 30-1, that's great. but it's exception. most americans are still very unclear, market or main street, what washington will do. and therefore, expect probably a lot. maybe even, you know, look across the debate.

markets as well as health care, regulation, there's an effect expectation of continued bailouts. that has to be quelled. we're hoping the president will define and limit what the government will do this afternoon. >> greg, what's your sense of obama's political capital and getting vested regulation down. we had a guest on earlier that said the push for health care reform seems to be abating, therefore does it mean that political capital is drawing up a bit and he doesn't have the strength he might have had six months ago to pass robust regulation? >> i'm a bit optimistic on this front than six weeks ago. number one, after the president's speech last week there has been additional momentum on the health care front. he seems to have backed away from insistent of public option. that increases the odds that they get something through, albeit may be in a partisan fashion. getting health care done is so important to establishing the president's bon nids in terms of getting stuff done. that will replenish a lot of political capital.l. the second thing is that chris

dodd, chairman of the senate banking committee, came out and said he will retain that post. there was speculation he would switch over and take over health after ted kennedy died. the fact that dodd has made that commitment to suggest that he's going to make that a priority, barney frank on the house side has made that a priority. if they in congress align with obama, albeit difference on the details that increases the odds we get something on regulatory reform in the next six months. >> thank you very much, grig ip. and you mentioned barney frank. he's going to be our guest in 20 minutes time to talk about that very issue. next up, stocks on the move and cell phone maker and a biotech company. and we are going live to federal hall where president obama will make his case for regulatory reform in just a couple hours' time. you're watching "squawk on the street" on cnbc. could someone toss me

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ladies and gentlemen, welcome back to "squawk on the street." i want to show you some stocks flying here today. this has been dead money for four months.. stock upgraded from buy to

neutral this morning. they also raised dennison.. only health care and utilities are on the rise here today. boston scientific an exception amid strength cut from neutral to buy at ubs here today. motorola on the rise, upgraded at ubs to buy from neutral.l. up about 1 1/2% in early going here today. halliburton, alongside of weatherford, slchlumberger and smith. schlumberger and smith go from sell to neutral. cocoa, 5% higher. it's a buy rated stock now at argis. also lay, mosaic and potash, erin, i love to talk to you about pot, cut from hold to buy at citi group.p. the ball is in your court, as they say. >> i would know nothing about pot. >> or tennis. >> the financial meltdown, a

once in a lifetime event, steve liesman sat down with the ecb, chief of the european central bank, jean-claude trichet. steve asked mr. trichet whether the regulatory reform is going away. as we get further and further from the brink of collapse. here's a little piece. >> it would be the major mistake we could do, and always a danger because we took decisions that were extremely bored, extremely not conventional in many respect. we could avoid a meltdown. we could be absolutely stupid to say now business as usual, the market are functioning as a force. we are bound to take in the public, decision, and we are not authorized to do that again. i would say it would be very, very abnormal.

we have to get things fixed. >> and that was jean-claude trichet speaking with steve liesman. president obama using the anniversary of lehman's collapse. michelle caruso-cabrera is at the federal hall. >> erin, you are right to highlight the physical address of this presidential address because it is symbolic important. you can see the new york stock exchange from the steps. the president is expected to use the speech to highlight all the steps his administration took to stave off a second great depression. in addition to that, he's hoping that this is going to jump-start what has stalled legislation in congress when it comes to regulatory reform. congress has been distracted by health care reform which is also enormously complicated. as we've gotten closer and closer to perhaps an economic

recovery, perhaps there is less of a sense of urgency. the president has outlined and probably will reoutline his visions and goals for regulatory reform. he wants to give the federal reserve more power to the asystemic regulator. this is very controversial in congress. a lot of people in congress say the fed failed previously.. why should we give them more power? a resolution regime that would allow the federal government to shut down huge institutions if necessary. right now it's just the fdic that is shut down simple banks. when it comes to major, major conglomerates, what do you do, especially when they have subsidiaries all over the world? consume proer tekz agency would oversee the marketing of financial products to individuals. and then finally, less controversial, a clearinghouse for derivatives. perhaps less controversial and yet the most important, maybe that's why. also the argument goes that even if congress doesn't get to that, the federal reserve could do that by simply placing margin requirements on over the counter derivatives that would choke a

horse and lead to more comparable traded derivatives. thank you. coming up, one of the most pressing issues out there, certainly is regulatory reform.. and so we will have the chairman of the house financial services committee, barney frank. he's in the house. he will join us in just a few minutes. >> that's on the other side of the break. tdd#: 1-800-345-2550 if i'm breathing, i'm thinking about trading. tdd#: 1-800-345-2550 i always have my eye out for a stock on the move. tdd#: 1-800-345-2550 doesn't matter if a company sells computer chips

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live from the financial capital of the world in the heart of lower mntd. this is the second hur our of t "squawk on the street." i'm erin burnett. let's look at the market may jor averages as we await the president's speech right here. you can see stocks are lower. although, what i think we should emphasize is that they are not as low as futures had indicated. they are not as low as europe was. and take from that what you will. but it appears some of that early worry about old trade wars and concerns not feeding through here. >> there's probably also a wait and see attitude as we are expecting the president to unveil some sort of financial regulatory reform proposal, which, of course, has wall street a little bit on edge this

morning. let's find out how the news is playing out in the second hour of trading. we kick it off with bob pisani at the big board. time really flies when you're having fun, huh, fwob? >> one year. it's not the regulatory reform speech the president that has people talking, it's the tariffs on chinese tires and potential retaliatory action that is getting much bigger play down here. let's talk about what stocks are moving p financi moving. financials, they underperformed last week. once again today, they're underperforming the major markets. big names are down 2%, 3%, 4%. did you notice that nationural is up big here today? they have announced that they are again issuing new shares. they stopped on concerns that the future commodity trading issues might stop it. but the funds are trading at a premium to natural gas and that premium appears to be largely collapsing. we want to know what we've been

talking about, sprint/nextel report that deutsche telekom hired them for a bid for sprint nextel. a lot of speculation and thinking about this down here. financial risks associated with that. demand a premium that will cost him billions of dollars. regulatory risks. technology risks. they use two different kinds of technologies. several different kinds of competing technologies. tradertalk.cnbc.com. scott, how are we at the nasdaq? >> some improvement, bob. we're still down .2 of a percent, down five points or so. the the large cap technology stocks, showed modest losses off of the open has since turned positive. google up 3/4 of 1%. microsoft got upgraded. that call was to buy. took a little bit of time to function into the stock this morning. it's about .3 of 1%. well off the lows. the last time i saw you this morning research in motion was down a touch of 1% but now it's just a fractional move, almost flat on the session.

yahoo! down 1 1/2% after selling its 1.14% stake in alibaba, the chinese internet company. $150 million there. they still do have that 40% stake in the unlisted parent company. sme speaking of china, baideu shares increased from $455. goldman sachs remains on the conviction bye list there. e-trade is ahead by 5%. the call there is also to buy. target increased to $2.30 from $1.50. let's go down to the nymex and rebecca jarvis. natural gas is climbing here while the rest of the complex is falling. what's going on? stockpiles right now make everything look quite bare bearish. stockpiles are at 17-year highs -- 17%, rather, higher versus the five-year averages. that's certainly a bearish signal. given the price volatility we've seen to the downside, over this last year, where prices have

dropped 60%, we could really be putting in a bottom here. goldman sachs out with a note today that says that prices in natural gas are poised to hit $6 by the end of the winter and $7.50 by summer 2010. interesting to note, folks, where we've seen oil climb 55% here to date, things in large part to the dollar volatility, we've seen natural gas fall 60% due to weak supply and demand. let's get over to rick santelli who is standing by in chicago. hey, rick. >> well, thank you, rebecca. listen, if you're looking at commodities, pay particular close attention to the dollar today. the dollar came in looking pretty nice, like it was going to bounce. haven't had many of those lately but it starting to give it up. getting much closer to unchanged.d. unchanged being a one-year low basically. every day last week, pretty much, we made a new stab at push that comp further backward in time. why is it important?t? well, for a variety of reasons.. not the least of which is a lot

of stories out there now saying the dollar replaced in the yen is the carry trade, meaning a weak dollar is cheap. so you use that dollar in transactions to procure much higher yield lean investment and go out of that dollar strayed which could continue to keep it under some pressure. now, let's go back to erin burnett. obviously as we await the president's speech. >> we are just under two hours away from that, rick. one of the people who is going to be there is the chairman of the house financial service committee. president obama in the speech expected to tell americans that there's a whole lot more to be done to ensure that the problems of not just the past 12 months, frankly, it's almost two years at this point, don't happen again. congressman barney frank is here in new york. he will be with the president on the steps of the federal hall for the address. chairman frank, good to have you with us. >> thank you. >> you say people are ush rush toog quickly to say financial reform,may not happen?n? >> yes, i know there's a -- it's a better story fits bad news.

in fact, we are very much on track. it is true, earlier this year i said i thought we would get this done in october because i thought we would be adjourning for the year in october. we won't be adjourning now until december. as i just said, december is a new october. this will be done, the committee that i chair is going to begin hearings this week on particular legislative issues.. the schedule is for us to be voting on it in committee in several pieces. derivatives, an ability to have non-bank financial institutions be dissolved without a crisis or without having to pay everybody. a systemic risk regulator, forming agencies, a requirement to securitize 100% of loans but there's some risk potential. already begun to deal with perverse incentives. my counter part in the senate, chris dodd, is a very smart man. he just passed up being chairman of the health to stay in banking. people don't understand, that's a sign that chris is determined

on his side to get this thing done. and, yeah, we will get the -- it one last point. there has been a delay. i said to somebody who reminded me i said it. our problem was that 2008 wouldn't end. originally i hoped that we could hope doing this new regulation starting in march or april.l. we were busy until june dealing with the things you mentioned. we are now -- we believe it's under control and all our energies now are under regulation. >> are you the person doing everything? i mean, one thing we keep hearing are these issues are complicated, it's tough.h. very few people in the industry under rif tives and what went wrong and how to deal with that. you may be the only person in washington who really some people say is capable of drafting a reform bill. is it really all you? >> no. by the way, warren buffett, i've asked warren to come in and he spoke with my staff.f. he said, i have a rule. i won't bye anything i don't understand. my people bought one thing and

showed me a multi-thousand page per expect us the and i said, nobody understands it. please don't get into things you don't fully understand. i'm kind of the coordinator. i've inherited from my predecessor and i've hired first rate people been you know, one of the great bargains the american people get and don't understand are the staff that works for congress. i have people on the staff of the financial services committee who can be down within a block or two of us making seven or eight times what they're making. i'm delighted they want to stay with us. and we have treasuries. i think treasury secretary and his staff, i think sheila bair and ben bernanke has shown a great understanding and gary gensler. i think the administration has put a good team together. we're going to have a tough new regime controlling derivatives based on cooperation between myself, the chairman of the agriculture committee, mary schapiro at and gary. >> i think getting to the heart of the question, though. can you reassure wall street as well as the american people out there that every member of

congress may be as well versed as your staff in all of these things, in things like d derivativ derivatives? >> no, look, i'm not as well versed in some of the aspects of the national, aeronate ticks and space. we do delegate. i can say that the decision-making will be in the hands of people who understand what we are doing. by the way, i think the financial intermediation function is very important. i think we've gotten away from it. there was a very important function. it is to akreet from a large number of people in relatively large amounts and make it available to a smaller number of people, the money you need to fuel the system, to acrete the capit capital. the means have become the end to some people. i'm committed that we're we're doing, we're going to give investors confidence that they don't now have. if you are a legitimate individual running a legitimate

company, you're under enormous pressure. when chuck prince said to me when i asked him why they weren't on his balance sheet, he said, i can't put them on my balance shoo sheet because if i do i will be at a disadvantage vis-a-vis goldman. we have to have rules that make it fair for everybody. >> what will the most important component of this legislation be? there are so many moving parts here. >> i tell you what i personally think is important. a lot of us have come in debt, not in equity. 30 years ago if you were conservative you bought debt. if you had a high-risk profile, you bought equity. that's kind of been flipped. equity, although the market went down, but the real trenches, debt has gone to zero. i think the problem came -- really began with securitization. securitization is a good thing. it multiplies the money. but 30 years ago almost all loans were madey people who expected to be paid back by the borrower. recently that became a much smaller percentage, much less than half.

it turns out that people aren't as careful with other people's money than their own. we're going to take the concept of insurance, risk retention. the other piece is -- >> you can't sell 100% of the mortgage that someone else -- >> yeah. and i don't think they did a good job but how could they have? how could you as the rating agency check on hundreds of thousands of millions of mortgages that were given? you say two other important pieces. one, we have to get away, because we're here on the anniversary of lehman, we have to have a method whereby you can dissolve a nonbank of a major financial institution peacefully. we know how to put banks to sleep without turmoil. last year, first lehman and aig. we didn't have the legal method. straight bankruptcy is not sufficient. >> with all due respect, on the rating agencies topic. enron, we all thought the ratings agency will change they way they do business..

and this comes along and we say, again, the rating agency has got to change the way they do business. tell us why this time it's going to happen? >> because we're going to legislate. one thing we do is we mutt the pusle of the government behind the rating agencies. you can't sell or buy certain things if they don't have a rating. we're going to leave it to the market. i think people have become too re reliant on the government. there are a lot of things we were working on to try and encourage that. bipartisan agreement on this, we have exalted the rating agencies too much and put in people's minds that they can put too much confidence in it. i hope to repeal all the statutes that mandates the use of rating agencies. >> one final question on the tax front. big issue. maybe we can put the day off of deelg with it a little bit. last week you said one way would be to cut spending a little bit. do you think there is a way to

really avoid a broad-based tax increase in america over the next few years? >> i think we do have to raise the taxes on most of the people who would throw things at me from down there if they heard this, if they're not watching. >> they are watching. >> i do think the -- >> yes. i vote with bill clinton to raise the top marginal rates from 36% to 39%. add zero observal negative affect on the economy. correct myself, we can cut military spending a lot. if we haven't gone to war in iraq we could pay for health care with no sweat. i wish they liked each other better. i wish a lot of things. it's not worth $50 billion of american tax mpayers to say tha. let's get out of iraq and samon. >> when should the ethics committee rule on charlie rang until. >> i'm not on the ethics committee. they can subpoena you to be

before the ethics committee but not to be on it. i don't know.. and i think it's best to leave it to them. they are honorable, decent people from both parties. i have confidence in their proce process. >> chairman frank, we appreciate you being with us. up next, one of the most pressing issues facing the market today. state of consumer sentiment. just minutes, result of independent advisory outlook survey in another cnbc exclusive. financials, of course, at the heart of the meltdown. the index of stock down 30% since last september. more than doubled since the haines bottom find out what's in store for the group. that's next.

you are looking at a live picture of andrews air force base. the president will arrive there. then he will be flying to new york. there will be helicopters involved on both sides. there will be cars involved on both cars. the only thing missing might be a train. he will be arriving here at federal hall giving his financial reform and the economy. that is at noon. we will be live here on cnbc. i believe our coverage begins at 11:00. the speech, yes, 12:10 eastern standard. of course, it is the one-year anniversary of the lehman collapse. we're taking a closer look at the health of the financial sector. since september, the index is down 30%. it is up more than 130% since the march bottom.

so where do we go from here? joining us is paul miller, group head of financial service at sbr capital market, and chris wailer. gentlemen, great to have you both with us. paul, i do want to start off with you. is it an investment risk looming financial reform? >> with financial reform, depends on what the details are. the consumer of financial protection agency could have a lot of problems for the simple fact you're going to have a regulator regulating products. what type of products can be -- we're afraid of is they could come up with products that are not safety and soundnesswise for the banks to own. i think this financial reform package is important and how it's going to play out and how much capital it's going to have to hold. these stocks have run really well over the last six months. some of them probably greater than anybody would have anticipated. very rich, relatively speaking. and you have this over-regulation risk that's

coming down the pipe. >> chris, paul mentioned certain products might be the product of regulatory reform. can you break it down in terms of the most likely product that could be the sukt of reform as well as, you know, which companies, which bank stocks market the most of those, which have the downside risk? >> well, clearly, residential mortgages. the consumer angst and the economic damages due to the mortgage bubble is vast. that's where the political constituency is obviously. chairman frank's comments about the ratings agencies is great news for reformists like myself. i may become a barney frank supporter if he starts that way. >> you're lucky he can't hear you. >> we wrote last week the talk about higher capital for banks is really i think a dead end. these banks can't generate any more capital.. they're going to be repaying the fdic. they're going to be

recapitalizing their 18 balance sheet. >> you think it's a bad idea? >> it's not going to happen.. it's almost like the equivalent of smooth hally. we don't want to be deleveraging banks any faster than they're already shrinking. >> tim geithner seems dead set on it though. >> well, only if government is going to fund it, because investors are not going to accept lower equity returns. i'm sure paul would agree with me. there's no way you can turn to people and say we're going to increase the capital of jpmorgan 50%, come buy the stock. it's not going to work. >> paul, hasn't that effectively been happening? when you look at the leverage ratios now versus a year ago, banks have deleveraged themsz. >> they had deleveraged themselves because there's really not that many good loans out there. we continue to see good business loans. banks are still trying to strengthen their own capital base. but you know, i do differ with chris here a little bit. i think the government wills for these guys but it's going to

take a long period of time. they're not going to make them go out and raise it but there's not going to be dividends for the next couple of years. >> absolutely. you can't squeeze blood from the stone. at the end of the day when you talk about both rebuilding bank balance sheets and replenishing the insurance funds, which is going to take years, we're going to be out 10, 15 years before you see capital ratios really measurably increased, unless, of course, you want the industry to shrink faster.. we shrank in assets in the second quarter. that's foot knot good for t-- n economy. >> we did a survey of regional banks we're going to have on "street signs." pretty grim on that. >> interesting you ask. the top four banks have been greatly reducing their unused corre credit lines for the last four quarters. the largest bank of the peer group has been increasing some of their credit availability.. there's a symmetry in the smaller banks versus the very large institutions which are

obviously the most troubled. >> jpmorgan, bank of america, citi group are the ones shrinking availability. >> precisely. give you an idea. at citi have $2 of unused credit worth a dollar of loans they have. wells fargo, 50 cents worth of unused for every dollar worth of loans they have. totally different business model. overall, the large banks are letting good loans run off. retain that cash because they know they're going to need it. that's the key point about economic recovery. we are continuing to see shrinkage in available credit. the only way we're going to get this economy on its feet is to figure out a way to reverse that trend. >> paul, quick question for you. sort of a tactical question for investors out there. goldman sachs hit a 52-week high on friday. is it a buy at this point? >> you know, goldman sachs is one of those -- probably the big wib winners of this whole thing because they don't have the balance sheet that citi has and

because there's less competitors like, no more lehman no, more bear, there's a lot of really investment banking side of business is really doing well. so goldman sachs is one of those outlyers. they will benefit. because of lack of competition and they don't have that risk on their balance sheet. so, yes, they are a big winner here. >> funny thing is, i have a positive on goldman right now but the political risk is the wild card with that firm. they are so over-exposed politically that nobody even in their league right now in terms of political risk. >> got it. chris, paul, thanks so much for your time. >> thank you. >> thank you. >> aig payback, $13.2 billion, it's just there. people, you know, raise the questions. up next, did the government save the day and do the feds have an exit strategy? find out what's being heard on k street and wall street. >> later, one year after the meltdown, are we out of the woods? we're going to talk to two inviders, farmer lazard banker and former lehman vp.

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presence in washington today.. president obama will be speaking at federal hall in just under two hours. about an hour and 45 minutes, if they're running on time. what is on the administration's agenda? we've been talking a lot about this. you just heard from the chairman of the the house financial service committee. next guest is talking about the bailout and all other things on the list, jon hilsenrath. jon, you heard what barney frank has to say. we're getting ready for the president's speech. do you think that he will stray far from the topic of financial regulatory reform? >> well, i mean, he's going to be talking about financial regulatory reform and he's also going to be echoing what tim geithner was trying to say late last week, which is that the government has a plan to exit from all these extraordinary measures that it took last year. now, you know if you ask me, i think the government gets a mixed grade on this exit strategy. he's going to be making the case that he's going to get good grades. >> is he going to, i don't know. is he going to be successfully

lay out why regulatory reform is something americans should focus on, care about, in a way that people understand? >> well, you know, it's a hard case right now just in terms of getting congress' attention because it's so tied up in health care reform. you can make a very critical argument that a year after lehman brothers collapsed, there is still not a plan in place for dealing with a major financial institution if another one comes along. that's the main argument, they still don't have a plan in place. >> did he miss the opportunity though, jon?n? there's an interesting article in the sunday "new york times" saying that essentially that people forget the longer it goes, if there's a fire in the living room right now it's easy to make a case that smoke alarm is in. if the fire a out and it's been cold for months and months and months, it's hard to revisit that. >> a lot got kind of caught up in the smoldering this summer on health care reform, but also on financial regulatory reform. tim geithner was very upset because even among the

regulators there is an agreement on how to do this. so you know, you couldn't do it last year because you were still putting out the fire. there's going to be some time to do it. but it certainly lack of momentum has gone from a fast track to a medium or slow track issue. you know, the other thing we're not talking about, which actually i have the president's documents here. the treasury secretary's document they're putting out today, it's about the next stage of stabilization. the word budget doesn't show up here. you're not going to be hearing the president talk much about that. but that's really what a lot of people in financial markets want to hear about. >> certainly true. thanks so much, jon hilsenrath. we appreciate it. >> okay. well, now, the other focus, how investors fairing a year after the meltdown.. the dow is down 15%. we have your exclusive first look at schwalb's adviser outlook survey. it's a survey done twice a year that gauges sentiment. we are at san diego with the survey results and special

guest. good morning, tyler. >> hey, erin, thank you. if you want to take a pulse on what the financial services business feels, you come here to san diego to the schaub impact conference where they are gathering this. schwab twice a year ask them what they feel. around barney clark is the senior vice president at schwab for advisory services and sort of spearheaded this survey. this time around, you do it twice a year. you see that most investment advisers are relatively more optimistic about the economy than the recession ending, right? >> tyler, we do. we certainly some 1200 advisers representing, 300 billion in assets. we see that 72% believe that the s&p is going to rise in the coming six months.. good sign. recession, 72% again saying in the next 12 months should be over. may more importantly, 36% believe that in the next three or four months they see it ending as well.

>> and consumer spending, a big part of the fkt that the economy has not been growing, they also see that coming back in a big change from what they were saying six, seven months earlier. >> clearly. 45% believe spending will increase up from almost 14% of the low six months ago. also starting to understand that clients are becoming a bit more savers as well. we have to see how that plays out. >> what about housing? >> housing, much more positive on the housing front. 35% believe that housing will decline. that number looked more than 69% in the prior survey. >> any split between east and west, north and south in terms of sent snmt. >> clearly there's a split in country. more optimism at the local level. only 39% believing that they see it -- 39% positive energy about the economy getting better. whereas the west is only at 18%. >> do they expect higher inflation, higher interest rates in the future?? >> they do to some degree.

it's early but we're seeing both inflation and interest rates on the radar. >> how do they grade bernanke? >> bernanke is a favorite. the chairman has done a fabulous job. 80%, 90% acceptance throughout all of our surveys. but within the survey we saw that the unity within the political pro ves dropped down to a bit of a low. >> six months it was right before the inauguration and everybody was feeling that we were coming together. not so much now. they like etfs. they like stocks more than bonds. >> absolutely. we're starting to see that movement we wanted to see. fixed income, 25% thinking do more there. 8% thinking they'll do more in cash. and large cap and small cap really starting to take the day on the domestic front. large cap international emerging, starting to play into that. >> thank you very much. and i was here last year at this impact conference.. you can see, erin, and melissa, that the whole spirit is very different here. this was the eyewall of the hurricane last year. and right now i would say the spirits are better. back to you guys.

>> thanks very much, tyler. special report of some very special guests coming up throughout the day. coming up, ceo of eli lilly on his company's announced restructuring this morning. john lechleiter is coming up. you're watching "squawk on the street" on cnbc first in business worldwide. carol, when you replaced casual friday with nordic tuesday,

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you know, a year ago or in the weeks following this day one year ago, many people expected that the compensation that would be afforded the likes of investment bankers would be permanently or certainly for a long period of time changed and not changed for the better.. of course, there were a lot of layoffs associated with the bankruptcy of lehman brothers. although many of those employees

ended up going to barclays and many others have found jobs elsewhere. none the less, with the prospect at least of a number of other investment banks going out and business all by stopping, a lot of bankers were looking for work. interesting then to note that just in the last couple of weeks, in speaking to investment banker, as i often do, and to the people who run the investment banking divisions at many of the big banks, there's a lot of hiring going on. and the numbers are starting to go up and, yes indeed, the return of multi-year guaranteed pay packages has also been seen. really, surprising in some ways so soon, it would seem, after, well, look, in march, people were thinking nothing was ever going to be the same again. and here we are six months later, wall street is hiring and hiring hard. and they're even hiring people where you're going to pay them for '09 in terms of the guarantee, but they're going on

garden leave and not working for you until the end of the year. typically, many investment banks will save their hiring for certainly even the early year or spring period when at least you've got somebody if you have to pay them a guarantee. you're going to have them for most of the year when you include the garden leave which is three months time for a lot of these bankers. that doesn't seem to be the case.. now, a number of foreign banks do seem to be getting aggressive. i've heard the name amora and duf ba deutsche bank but you're also hearing bank of america, when it merge with merrill lynch and any of those bankers went to various places, also. perhaps this will make it's more difficult for a lot of those boutiques out there to compete. but it is certainly worthy of mention, that things ended up being not nearly as bad as many would have thought when it came to the investment banking world. and right now, you can gets

three years guaranteed if you're a banker with some -- with a few trophies at least on your wall. erin, back to you. >> david, just a quick follow-up there. the whole point of this regulatory reform, what geithner proposed, one thing that died, would be guaranteed. the word guarantee, right? you're saying they're still squeezing it in while they can. >> absolutely. it's been said to me with some surprise by those who were competing to buy that talent, guaranties are back. two years, even as much as three years. this is for bankers as opposed to those trade iing, for exampl where there's so much concern about somebody who doesn't care at all about the future. they've got a guarantee. they want to eliminate that. but this is more for investment bankers. none the less, yes, guarantees are back, at least for now. >> thanks, david. up next, wall street, is it still at risk? back from the brink, but are we really two insiders with us, lazard banker and former vp.

but first, trish regan with what you can expect only on "the call." >> good morning, melissa, cominging up at the top of the hour, we begin our special coverage of president obama on wall street. we're going to preview his speech and tell you what investors are looking to hear from him. we're going to talk about, among other topics, whether or not the administration has lost its will to initiate some real meaningful reform when it comes to this financial system. we have a cast of here for you all here to debrate it, discuss preview. at the top of the hour, the president coming to wall street, our special coverage. but first,"squawk on the street" will be back right after this break.

one year ago, 745 700 in manhattan, lehman brothers headquarters. these became familiar pictures for everyone across the country. here at 745 7th avenue today. you can take a look. you'll see barclays pop up there

because that now is the company that owns that building. the financial world has changed over the past 12 months. the question though, is it still at rask? i want to bring in two wall street insiders in that story. lehman brothers vp mcdonald, author of "colossal failure" and now managing director of capital management and williams cohan, author of "house of cards" formerly of lazard and jpmorgan. david faber is going to be in this conversation as well. i guess i just want to start off with, do you think that we're done? i mean, i know we have massive issues for the economy. in terms of the crisis, the abyss, is it really as easys a we're okay now? >> pumping $12 billion into the economy and saying we're okay? i think that the crisis of confidence has been reduced. we pulled back. as bernanke said out of jackson hole a few weeks ago that it was

really a crisis of confidence that got us into this.s. i think that's true. people are feeling a lot better about that. but there are huge looming issues, as you guys talk about all the time. whether it's commercial real estate or the inability of small businesses to getting a cess to loans, to looming mbo debt out there put on during 2006, 2007. there are real issues. but i think we're doing better than we were, which is probably positive. >> lehman landed most of them on their feet, would you say? >> i would say it's about 50/50 right now. at first, it was much less. i would address that, you know, i would say the president obama, he's in new york today. i would say read my lips, these banks, they're not too big to fail. they're too big to succeed. they're too big to be managed. lehman brothers was allowed to become a grossly mismanaged monarchy. and really in essence, a giant deadly domino that hurt so many

people watching out rigs nouthe now. we have these dominos that are allowed to become bigger and bigger and closer and closer together. i mean, merrill lynch today, now, is essentially acquired by bank of america, that's a more organization than lehman. i think going forward we have to break up these big banks. >> david? >> yeah. this will be a leading question. but are you surprised at how little things have changed on wall street in the last year? >> well, you know, i think it's the french who have an expression, david. the more things change the more they stay the same. i am absolutely shocked at how little has really changed. aside from the fact that there are three fewer competitors and people like goldman sachs are making tons of money because of that, and they're taking risks that others won't take and their raw material, i.e. capital from the fed is free, basically, i

think is astonishing to me how little it's changed. as rahm emanuel has said, why waste a good crisis in terms of having some reforms? and at the moment we're wasting a good crisis, i'm afraid. >> if things have not changed, then we can see another collapse on par with lehman brothers. >> if you ask me, i think we're already planting the seeds for that now. if you don't change, you know, the compensation and what people get incentives to do on wall street, they're just going to continue to do what they've always done. we don't know what it'll be. it won't be mortgage-backed securities. won't be internet ibos. but it will be something else. >> david raised that point earlier, about more guaranteed bonuses. that really is one of the shock things th ing things. >> i think we need -- we need bonuses in our bureaucracies. securities and exchange commission, the fdic. we need a shot of testosterone

there. these buick roreaucracies are g, grossly -- there's not enough incentives. they were uncoordinated. i think going forward, if someone at the rks ec uncovers the next bernie madoff let's give that gentleman or lady a $5 million bonus. i talked to 45 senior managing directors up and down the firm. 150 people. people are reaching out to me on twitter, facebook. there's so much pain out there. i talked to someone the other day, run out of her health insurance, run out of her unemployment benefits, run out of family members. really so much pain out there. >> yeah. thanks so much to both of you. we appreciate your coming in, especially on this day. coming up next, the ceo of ely lilly and another cnbc first. do not miss that.

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welcomeback. i'm mike huckman. shares of drug maker eli lilly

are actually the biggest dollar and percentage gainer in the sector this morning after it becomes the latest big pharma to do a restructuring as this industry faces a huge wave of multibillion dollar drugs going gener generic. lilly is getting rid of 13% of the work force over the next two years or so. joining me live from headquarters in indianapolis is lilly chairman and ceo. good morning and thank you for being here. >> good morning. thank you. >> your competitors as you well know have been about the business of cutting costs for several years now. why did you wait so long? >> mike, i think we're doing this at just the right time. we have a series of patents that run later than in of our competitors. with the exception of prozac we haven't faced any of them yet. we will be facing them at tend of 2011. the sweeping series of changes we've made today are in essence to enable us, to position ourselves to go through a challenging period that lies up ahead. but first and foremost, to help

us really accelerate the flow of new products out of our pipeline. >> speaking of new products, , does it have anything to do with the positive data recently unveiled by one of your competitor competitors? is that why you're doing this now? >> absolutely not, mike.e. i think forecasts of effient are all over the place. we think the benefits stand on their own based on the clinical data where we did the head to head superiority trial and prevailed versus plavix in that study. >> and you bristol mire squib are the only american big pharmas that aren't getting married this year. pfizer buying wyeth, merck buying sheering plow. is this an attempt to make your company look more attractive to a potential acquirer.

>> we have no interesting with mike, in a major large scale combination. that hasn't changed. we've been very consistent on that over the past several years. instead, the changes we're making will enable us to do what we think we do best. to discover and develop innovative new medicines. we want to advance our pipeline. we're making some changes in our lilly research lab and development area to help move us forward.d. by going to five or four pharmaceutical business units we hope to get better aligned with the needs of our customers and be more come pestive in areas like oncology and diabetes that we know are going to be important long-term businesses for us. >> finally, john, and quickly, your thoughts on the president's health care reform speech last week? is the $80 billion the big pharmas putting up going to be enough as well as the ad campaign you guys are doing in support of it? >> right now, obviously we feel we're well positioned in that discussion. we came to the table. we've been constructive in terms of offering solutions and