uld someday run our cars on. in using algae to form biofuels, we're not competing with the food supply. and they absorb co2, so they help solve the greenhouse problem, as well. we're making a big commitment to finding out... just how much algae can help to meet... the fuel demands of the world.

president obama at federal hall on the anniversary of the fall of lehman brothers. the acquisition of merrill lynch by bank of america and the bailout of aig by the united states. let's listen in. >> -- back in new york after having just been here last week. it is a beautiful day. and we have some extraordinary guests here in the hall today. i just want to mention a few. first of all, from my economic team, somebody who i think has done extraordinary work on behalf of all americans and has helped to strengthen our financial system immeasurably, secretary tim geithner. please give him a big round of applause. [ applause ]

somebody who is continually guiding me and keeping me straight on the numbers, the chair of the council of economic advisers, christina roamer is here. [ applause ] we have an extraordinary economic recovery board. and as chairman, somebody who knows more about financial markets and the economy generally than just about anybody in this country, paul volcker. thank you, paul. the outstanding mayor of the city of new york, mr. michael bloomberg. [ applause ] >> and assembly speaker shelden silver is here as well. thank you.

we have a host of members of congress. but there's one that i have to single out. because he is going to be helping to shape the agenda going forward to make sure that we have one of the strongest, most dynamic, and most innovative financial markets in the world for many years to come, and that's my good friend, barney frank. [ applause ] i also want to thank our hosts from the national park service here at federal hall. and all the other outstanding public officials who are here. thanks for being here. thank you for your warm welcome. it's a privilege to be in historic federal hall. it was here more than two centuries ago that our first congress served and our first president was inaugurated. and i just had a chance to

glance at the bible upon which george washington took his oath. it was here in the early days of the republic that hamilton and jefferson debated how best to administer a young economy and ensure that our nation rewarded the talents and drive of its people. and two centuries later we still grapple with these questions. questions made more acute in moments of crisis. and it was one year ago today that we experienced just such a crisis. as investors and pension holders watched with dread and dismay, and after a series of emergency meetings often conducted in the dead of night, several of the world's largest and oldest financial institutions had fallen. either bankrupt, bought, or bailed out. lehman brothers, merrill lynch, aig, washington mutual, wachovia.

a week before this began, fannie mae and freddie mac had been taken over by the government. other large firms teetered on the brink of insolvency. credit markets froze as banks refused to lend not only to families and businesses, but to one another. $5 trillion of americans' household wealth evaporated in the span of just three months. that was just one year ago. congress and the previous administration took difficult but necessary action in the days and months that followed. nonetheless, when this administration walked through the door in january, the situation remained urgent. the markets had fallen sharply. credit was not flowing. it was feared that the largest banks, those that remained standing, had too little capital and far too much exposure to risky loans. the consequences spread far beyond the streets of lower

manhattan. this was no longer just a financial crisis. it had become a full-blown economic crisis with home prices sinking and businesses struggling to access affordable credit and the economy shedding an average of 700,000 jobs every single month. we could not separate what was happening in the corridors of our financial institutions from what was happening on the factory floors and around the kitchen tables.s. home foreclosures linked those who took out home loans and those who repackaged those loans as securities. a lack of access to affordable credit threatened the health of large firms and small businesses, as well as all those whose jobs depended on them. and a weakened financial system weakened the broader economy, which in turn further weakened the financial system. so the only way to address successfully any of these challenges was to address them together. and this administration under the outstanding leadership of

tim geithner and christy roamer and larry summers and others moved quickly on all fronts. initializing a financial stability plan to rescue the system from the crisis and restart lending for all those affected by the crisis. by opening and examining the books of large financial firms, we helped restore the availability of two things that had been in short supply. capital and confidence. by taking aggressive and innovative steps in credit markets, we spurred lending not y just to banks, but to folks looking to buy homes or cars, take out student loans or finance small businesses. our homeownership plan has helped responsible homeowners refinance to stem the tide of lost homes and lost home values. and the recovery plan is providing help to the unemployed

and tax relief for working families, all the while spurring consumer spending. it's prevented layoffs of tens of thousands of teachers and police officers and other essential public servants and thousands of recovery projects are under way all across america, including right here in new york city. putting people to work building wind turbines and solar panels, renovating schools and hospitals, repairing our nation's roads and bridges. eight months later, the work of recovery continues. and though i will never be satisfied while people are out of work and our financial system is weakened, we can be confident that the storms of the past two years are beginning to break. in fact, while there continues to be a need for government involvement to stabilize the financial system, that necessity is waning. after months in which public dollars were flowing into our financial system, we're finally beginning to see money flowing

back to taxpayers. this doesn't mean taxpayers will escape the worst financial crisis in decades entirely unscathed. but banks have repaid more than $70 billion.n. and in those cases where the government's stakes have been sold completely, taxpayers have actually earned a 17% return on their investment. just a few months ago many experts from across the ideological spectrum feared that ensures financial stability would require even more tax dollars. we've been able to eliminate a $250 billion reserve included in our budget because that fear has not been realized. while full recovery of the financial system will take a great deal more time and work, the growing stability results from these interventions means we're beginning to return to normalcy. but here's what i want to emphasize today. normalcy cannot lead to co

complacen complacen complacencesy. unfortunately there are some in the financial industry who are reading this moment, instead of learning the lessons from lehman and the crisis that is still recovering, they're choosing to ignore these lessons. i'm convinced they do so not just at their own peril but at our nation's. so i want everybody here to hear my words. we will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. those on wall street cannot resume taking risks without regard for consequences and expect that next time american taxpayers will be there to break their fall. and that's why we need strong rules of the road to guard against the kind of systemic risks that we've seen. and we have a responsible to

write and enforce these rules to protect consumers of financial products, to protect taxpayers, and to protect our economy as a whole. yes, there must -- these rules must be developed in a way that doesn't stifle innovation and enterprise. and i want to say very clearly here today, we want to work with the financial industry to achieve that end. but the old ways that led to this crisis cannot stand. and to the extent that some have so readily returned to them, underscores the need for change and change now. history cannot be allowed to repeat itself.. so what we're calling for is for the financial industry to join us in a constructive effort to update the rules and regulatory structure to meet the challenges of this new century.y. that is what my administration seeks to do. we've sought ideas and input from industry leaders and policy experts, academics, consumer

advocates and the broader public. and we've worked cle eed closel leaders in the senate and the house. including not only barney, but also senators chris dodd and richard shelby. and barney is already working with his counterpart, shelden bachus.. we intend to pass regulatory reform through congress. taken together, we're proposing the most ambitious overhaul of the financial regulatory system since the great depression. i want to emphasize these reforms are rooted in a simple principle. we ought to set clear rules of the road that promote transparency and accountability. that's how we'll make certain that markets foster responsibility, not recklessness. that's how we'll make certain that markets reward those who compete honestly and vigorously within the system instead of those who are trying to gain the

system.. so let me outline specifically what we're talking about. first, we're proposing new rules to protect consumers and a new consumer financial protection agency to enforce those rules. [ applause ] >> this crisis was not just a result of decisions made by the mightiest of financial firms. it was also the result of decisions made by ordinary americans to open credit cards and take out mortgages.s. and while there were many who took out loans they knew they couldn't afford, there were also millions of americans who signed contracts they didn't fully understand, offered by lenders who didn't always tell the truth. this is in part because there's no single agency charged with making sure that doesn't happen. that's what we intend to change. the consumer financial protection agency will have the power to make certain that consumers get information that is clear and concise and to

prevent the worst kinds of abuses. consumers shouldn't have to worry about loan contracts designed to be unintelligible, hidden fees ed to their mortgage, and financial penalties, whether through a credit card or a debit card that appear without warning on their statements. and responsible lenders, including community banks, doing the right thing shouldn't have to worry about ruin ous competition from unregulated competit competitor. there are some worried that will restrict the choices available to consumers. nothing could be further from the truth. the lack of clear rules in the past meant we had the wrong kind of innovation. the firm that could make its products look the best by doing the best job of hiding the real costs ended up getting the business. for example, we had teaser rates on credit cards and mortgages that lured people in and then surprised them be bwith big rat

increases. by setting ground rules, we'll increase the kind of competition that actually provides people better and greater choices. if companies compete to offer the best products, not the ones that are the most complex or the most confusing. second, we've got to close the loopholes that were at the heart of the crisis. where there were gaps in the rules, regulators lacked the authority to take action. wheth where there were overlaps, regulators often lacked accountability for inaction. these weaknesses in oversight engendered systematic and systemic abuse. under the existing rules, some companies can actually shop for the regulator of their choice.. and others, like hedge funds, can operate outside of the regulatory system altogether. we've seen the development of financial instruments like derivatives and credit default swaps. without anyone examining the risks or regulating all of the

players. and we've seen lenders profit by providing loans to borrowers who they knew would never repay. because the lender offloaded the loan and the consequences to somebody else. those who refused to game the system were at a disadvantage. one of the main reasons this crisis could take place was because many agencies and regulators were only for orr sight of individual financial firms and their subsidiary, but no one was responsible for protecting the system as a whole. in other words, regulators were charged with seeing the trees, but not the forest. and even then, some firms that posed a systemic risk were not regulated as strongly as others, exploiting loopholes in the system to take on greater risk with less scrutiny. as a result, the failure of one firm threatened the viability of many others. we were facing one of the largest financial crises in history, and those responsible for oversight were caught off guard and without the authority

to act. and that's why we'll create clear accountability and responsibility for regulating large financial firms that pose a systemic risk. while holding the federal reserve fully accountable for regulation of the largest, most interconnected firms, we'll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don't fit neatly into an organizational chart. we'll also require these financial firms to meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior. that's one of the lessons of the past year. the only way to avoid a crisis of this magnitude is to ensure that large firms can't take risks that threaten our entire financial system and to make sure that they have the resources to weather even the worst of economic storms. even as we've proposed safeguards to make the failure of large and interconnected

firms less likely, we've also created -- proposed creating what's called resolution authority. in the event that such a failure happens and poses a threat to the stability of the financial system. this is intended to put an end to the idea that some firms are too big to fail. for a market to function, those who invest and lend in that market must believe that their money is actually at risk. and the system as a whole isn't safe until it is safe from the failure of any individual institution. if a bank approaches insolvency, we have a process through the fdic that protects depositors and maintains confidence in the banking system. this process was create during the great depression when the failure of one bank led to runs op other banks which, in turn, threatened the banking system as a whole. that system work. but we don't have any kind of process in place to contain the failure of a lehman brothers or aig or any of the largest and

most interconnected financial firms in our country. and that's why when this crisis began, crucial decisions about what would happen to some of the world's biggest companies, companies employing tens of thousands of people and holding trillions of dollars of assets, took place in hurried discussions in the middle of the night. that's why we've had to rely on taxpayer dollars. the only resolution authority we currently have that would prevent a financial meltdown involved tapping the federal reserve or the federal treasury. with so much at stake, we should not be forced to choose between allowing a company to fail into a rapid and chaotic dissolution that threatens the economy and innocent people, or alternatively forcing taxpayers to foot the bill. so our plan would put the cost of a firm's failures on those who own its stock and loaned it money. and if taxpayers ever have to step in again to prevent a second great depression, the financial industry will have to

pay the taxpayer back every cent. finally, we need to close the gaps that exist not just within this country, but among countries. the united states is leading a coordinated response to promote recovery and to restore prosperity among both the world's largest economies and the world's fastest growing economies. at a summit in london in april, leaders agreed to work together in an unprecedented way to spur global demand, but also to address the underlying problems that caused such a deep and lasting global recession. and this work will continue next week in pittsburgh when i convene the g-20, which has proven to be an effective form for coordinating policies among key developed and emerging economies and one that i see taking on an important role in the future.e. essential to this effort is reforming what's broken in the global financial system. a system that links economies and spreads both rewards and risks. for we know that abuses in

financial markets anywhere can have an impact everywhere.. and just as gaps in domestic regulation lead to a race to the bottom, so do gaps in regulation around the world. what we need instead is a global race to the top. including stronger capital standards, as i've called for today. as the united states is aggressively reforming our regulatory system, we're going to be working to ensure that the rest of the world duoes the sam. this is something secretary geithner has already been actively meeting with finance ministers around the world to discuss. a healthy economy in the 21st century also depends on our ability to buy and sell goods in markets across the globe. and make no mistake, this administration is committed to pursuing expanded trade and new trade agreements. it is absolutely essential to our economic future. and each time that we have met, at the g-20 and the g-8, we have

reaffirmed the need to fight against protectionists. but no trading system will work if we fail to enforce our trade agreements. those that have already been signed. so when this happened this weekend, we invoked provisions of existing agreements. we do so not to be provocative or to promote self-defeating protectionism. we do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system. and just as we have to live up to our responsibilities on trade, we have to live up to our responsibilities on financial reform as well. i have urged leaders in congress to pass regulatory reform this year.. and both congressman frank and senator dodd, who are leading this effort, have made it clear that that's what they intend to do. now, there will be those who defend the status quo. there always are. there will be those who argue we should do less or nothing at

all. there will be those who engage in revisionist history. or have selective memories and don't seem to recall what we just went through last year. but to them i say only this. do you really believe that the absence of sound regulation one year ago was good for the financial system? do you believe the resulting decline in markets and wealth and unemployment, the wrenching hardship that families are going through all across the country, was somehow good for our economy? was that good for the american people? i have always been a strong believer in the power of the free market. i believe that jobs are best created not by government, but by businesses and entrepreneurs. willing to take a risk on a good idea. i believe that the role of the government is not to disparage wealth, but to expand its reach. not the stifle markets, but to provide the ground rules and level playing field that helps to make those markets more

vibrant and that will allow us to better tap the creative and innovative potential of our people.. for we know that it is the dynamism of our people that has been the source of america's progress and prosperity. so i promise you, i did not run for president to bail out banks or intervene in capital markets. but it is important to note that the very absence of common sense regulations able to keep up with a fast-paced financial sector is what created the need for that extraordinary intervention. not just with our administration, but the previous administration. the lack of sensible rules of the road so often opposed by those who claim to speak for the free market, ironically led to a rescue far more intrusive than anything any of us, democratic or republican, progressive or conservative, would have ever proposed or predicted. at the same time, we have to

recognize that what's needed now goes beyond just the reforms that i've mentioned. for what took place one year ago was not merely a failure of regulation or legislation, it wasn't just a failure of oversight or foresight. it was also a failure of responsibility. it was fundamentally a fail where you are of responsibiliyu of responsibility that allowed washington to become a place where problems were ignored rather than solved. it was a failure of responsibility that allowed home buyers to take reckless risks they couldn't afford to take. it was a collective failure of responsibility in washington, on wall street and across america that led to the near collapse of our financial system one year ago. so restoring a willingness to take responsibility, even when it's hard to do, is at the heart

of what we must do. here on wall street, you have a responsibility. the reforms i've laid out will pass. and these changes will become law. but one of the most important ways to rebuild the system stronger than it was before is to rebuild trust stronger than before. and you don't have to wait for a new law to do that. you don't have to wait to use plain language in your dealings with consumer.. you don't have to wait for legislation to put the 2009 bonuses of your senior executives up for a shareholder vote. you don't have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains. the fact is, many of the firms that are now returning to prosperity owe a debt to the american people. they were not the cause of this

crisis. and yet american taxpayers through their government had to take extraordinary action to stabilize the financial industry. they shouldered the burden of the bailout. and they are still bearing the burden of the fallout in lost jobs and lost homes and lost opportunities. it is neither right nor responsible after you've recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity. so i want to urge you to dh demonstrate that you take this obligation to heart. to help small business owners who desperately need loans.s. and who are bearing the brunt of the decline in available credit. to help communities that would

benefit from the financing you could provide or the community development institutions you could support. to come up with creative approaches to improve financial education and to bring banking to those who live and work entirely outside of the banking system. and, of course, to embrace serious financial reform. not resist it. just as we are asking the private sector to think about the long term, i recognize that washington has to do so as well. when my administration came through the door, we not only faced a financial crisis and costly recession, we also found waiting a trillion dollar deficit. so, yes, we had to take extraordinary action in the wake of an extraordinary economy crisis. but i am absolutely committed to putting this nation on a sound and secure fiscal footing. and that's why we're pushing to restore pay as you go rules in

congress. because i will not go along with the old washington ways which said it was okay to pass spending bills and tax cuts without a plan to pay for it. that's why we're cutting programs that don't work or are out of date. that's why i've insisted that health insurance reform, as important as it is, not add a dime to the deficit. now or in the future. there are those who would suggest that we must choose between markets unfettered by even the most modest of regulations and markets weighed down by onerous regulations that suppress the spirit of enterprise and innovation. if there is one lesson we can learn from last year, it is that this is a false choice.e. common sense rules of the road don't hinder the market. they make the market stronger. indeed, they are essential to ensuring that our markets function fairly and freely. one years ago, we saw in stark

relief how markets can spin out of control. how lack of common sense rules can lead to excess and abuse. how close we can come to the brink. one year later it is incumbent upon us to put in place those reforms that will prevent this kind of crisis from ever happening again. reflecting painful but important lessons that we've learned. and that will help us move from a period of reckless irresponsibility, a period of crisis, to one of responsibility and prosperity. that's what we must do, and i'm confident that's what we will do. thank you very much, everybody. [ applause ] >> president obama in federal hall across the street from the new york stock exchange in the heart of wall street, the financial district in new york city, in front of financial

industry executives talking one year after the demise of lehman brothers and the debacle in the economy that came after that.. we've got quite a peanut gallery assembled here to go over what he did say and the response he got to all that. larry kudlow is here. steve liesman. i've got david faber there in washington. john harwood is listening in. michelle caruso-cabrera is down on wall street as well. john, we were struck by the number of times that he got applause. once. the only time when he mentioned the creation of the consumer financial protection agency. other than that it was a very, very quiet hall, john harwood. >> well, look. he had a chasening message for wall street. he was saying you cannot fall back into old habits. we're going to prevent the same situation from arising. and, in particular, try to make wall street through the new regulation that he's pushing for congress to enact safe for the failure of individual firms. he said the taxpayer stepped in to break the fall of some of those firms a year ago.

but the goal of his regulatory reform is not to have that happen again, to make it okay systemically for individual firms to fail. >> michelle, you heard groans on the floor of the new york stock exchange during this speech. >> there was one particular r line, bill, when he said i've always been a strong believer in the power of the free market. we did hear groans from the floor of the nyse. not a lot. when he finished now, we also heard clapping. obviously he's got supporters down here as well. that groans in reference to the free market, obviously there are some critics who doubt that. >> steve liesman, i guess what they saw. you know a lot of the people in the audience. they see this as a lecture, taking them to task for what happened last year. >> somebody just said -- >> his mike is off. >> think about the position of those in the audience.

the financial system is essentially right now and in many ways in receivership to the political system. when the receiver comes to lecture you, you sit there and you listen and there's not a whole lot they can do about it either way. >> but, you know, there are two problems with this, larry, as i see it. one, how do you eventually define systemic risk, what is too big to fail. the other is these almost the last line, these reforms will prevent this crisis from ever happening again. i don't think i've talked to anybody on wall street these days, the pundits who say you can regulate yourself out of a future crisis. >> i don't think so either. secretary geithner said that the other way in the cnbc town hall. i think that's very naive thinking. on the other hand, i want to go back to this firms too big to fail. i hardly appro ll ll lly -- heae

thought behind this from president obama. is he talking about the large banks already regulated by the fed which everyone believes are too big to fail, or is he talking about other nonfinancial, nonbank institutions? i don't know. >> part of that -- larry and steve, part of that, i still ask and people can't seem to answer, when we say too big to fail, what is the problem? does the federal government not have the regulatory power to do so? or even if they did, when you've got a citigroup that's got 500 subsidiaries all spread in 171 countries is it impossible to do? >> he said it in his speech. the president said it in his speech. the fdic already has resolution authority.y. now, he's worried about nonbanks. i'm worried about nonbanks. but i'm still worried about banks. would we allow city fwrup to fail? would we allow bank of america to fail?

would we allow wells fargo to fail? that is a terribly important question. because free-market capitalism includes failures as well as success. >> david? >> think what you do here is you raise capital levels to a level that makes a lot of those businesses not particularly profitable in the hopes that ultimately -- they take risks that are less.. i think that is going to be the lever when it comes to these larger banking regulator. it's going to have to be capital -- >> i totally agree.. leverage ratios. if something happens, we don't know about it. i don't believe we'll never not have another crisis again. i think we will have another crisis again. when that happens -- >> larry, congress doesn't have to do anything -- >> i want to know that that is the case and i want to know what defines -- what defines too big to fail? and what defines -- >> larry, you know it when you

see it. one more point to what sue said. sue, you are correct. >> favoritism. >> one should not not pass laws about too big to fail because the definition is not all that clear. i think there are things that are clear.. i want to make one important point, larry. >> what about "the wall street journal's" editorial today? >> i read that today. >> specifically what is systemic risk? what is it? how do we know it when we see it? >> systemic risk is the ability to make me pay for your mistakes. that's systemic risk. >> why? i don't want you to pay for my mistakes. >> i want to make one point. this idea about preventing the next crisis. by definition we cannot prevent the next crisis. what we can do, though, and what is unconsciousable that we have not done is put in place the rules to prevent the last crisis. tomorrow, you could be in a situation where bank x will not lend to bank y because of fears

of the name around the collateral. we have not done the basic reforms that were evident from the last crisis. >> i know we need to go to a commercial break here. let me just bring john harwood in. one last question before the break here. the question is when do we get this regulation? barney frank was on our air this morning and said this will get done. he's confident it can happen this calendar year. but it is known that senator chris dodd, who, of course, has got his hands full with health care reform as well, is not so certain we're going to get it this year. what are you hearing? >> my impression is exactly as you said, bill.. the house may be able to act t this year. the house is always capable of acting more quickly than they want to than the senate. the senate isn't likely to move on this in a serious way until 2010. which will put it in the election season. the good news is senator dodd has a very tough fight for re-election, which gives him a great incentive to get this accomplished so he can go back to his voters and say look what

i just did. >> the federal reserve can do that. when it comes to trading over the counter derivatives, they can pose capital requirements everywhere that leads to the incentives that make banks not too big to fail, make them not trade over the counter.r. it can get done. >> the president did say you shouldn't have to wait for legislation to do a lot of these things. are they likely to? probably not. >> they've got to keep this between the fed and fdi. they've got to work that out. this is what president obama during the campaign said he would specialize again. he's got to knock some heads.s. they're at war with each other. as long as they're at war with each other, you're not going to get any of this decided. as long as they're at war with each other you're not going to get resolution authority or defining systemic risk. they need to do that on their own. that's all i'm saying. >> wall street has destroyed trust from average americans. i think to promise you can regulate your way against another crisis -- >> oh, i agree. >> and have americans believe that. >> nobody believes that. >> if it happens again -- >> but in the next crisis the

hope is at the very least those that took the risk will be made to pay. we won't ultimately have to bear it. that's a powerful incentive. >> i have a powerful incentive to get to a commercial break. @%s

welcome back to "power lunch." breaking news. a u.s. judge has rejected bank of america's settlement with the u.s. securities and exchange commission. in fact, he has remanded that to trial. he's ordering a trial. that's according to to a court document. right now bank of america is down 1.5% at 16.68. >> that settlement involving the acquisition of merrill lynch and the documents on the risk

involved in all of that, whether they knew about it and disclosed it in a timely fashion. >> and the proposal was a $33 million settlement, i believe. >> that has now been rejected. we'll continue our coverage for this monday. the dow, the other major averages struggling to get some momentum. we'll see if that can happen into the afternoon. dow down 17 points right now. this might not be the best time to sell a home. but we just can't wait for the market to heat up. (woman) need to sell? re/max agents have the experience to get the job done. nobody sells more real estate than re/max. where do you want to be?

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 tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody tdd#: 1-800-345-2550 who knows what i'm trying to do.

tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

we are back with your -- our distinguished pan el. recapping the president's speech down on wall street, in federal hall to the financial industry executives. michelle's there in the gallery at the new york stock exchange. bob pisani has joined us on the floor there. let me bring you in very quickly there. michelle heard some groaning on the floor there as the president's speech was under way. we've seen no action to speak up in the stock market today here. >> i'll tell you why. there's a general impression that regulatory reform has stalled and taken a backseat to health care reform. the big debate down here, a lot of people think the president is unlikely to make a dramatic play, put in a lot of capital for regulatory reform, given the issues that he has with health care.. remember, energy is coming up as well.. yes, you'll get a banking reform. you'll get a systemic risk regulator. you'll get some kind of reform. but not a lot of the more radical reforms that some of

these people want. >> steve liesman, we were having that conversation during the commercial break.k. >> the cynics at the table here think he's just making this speech because it's the anniversary. >> well, there's not much new in the speech. >> there's nothing new in the speech. geithner put out a document earlier today saying there's a new phase of regulatory reform going on right now. we're into the second phase here when things are winding down. but i just wonder if now there's a time when they're going to shift some political capital. >> this is his first statement, so far as i know, his first statement about the trade war with china and the so-called safeguard decision that he made. he had a whole paragraph in here. and i think it was very a very inadequate paragraph. he did not have to agree with this decision. george bush had plenty of opportunities where the international trade commission recommended import protection and safeguards and bush said no. he stirred up a hornet's nest fighting with china. that's going to overhang financial markets. >> well, it is today. >> this is a very weak defense

by mr. obama. >> bob, early on it spooked the asian markets, of course. european markets suffered a bit. we've taken it in stride, though, here. >> i think the important thing, though, is that it is a very important issue early on. there are people already who are out there saying this morning, who are passing around those old quotes about the whole remember what was going on with the whole controversy with -- in 1930. >> anyone? anyone? >> that's what that was all about. they were passing that around this morning. >> larry will say this all the time, right? what made the recession the great depression? we raised taxes and we imposed tariffs at absolutely the worst time. >> there was some hope down here that the president would make a show ing. he's literally 200 feet away. i've been out front of the door. there's no sign he's going to be coming in. normally when president bush

came there were secret service agents appearing right at the front door right below me here stairing malevolently at all of us for a good half hour before. there is no secret service here today. >> didn't look like there's anybody outside the new york stock exchange right now. at least not the kind of crowd that you would expect if the president is making his way across the street there. >> you know what else is in here? he says, look, we're going to have pay go rules. pay as you go rules for budget restraint. there's really no evidence that either the congress or the white house wants those rules to be enforced. i think when you put these things out there and you don't take any action or -- you've cut down your credibility. this is the odd part of this speech. i actually find myself basically in agreement with the president on much of the regulatory stuff. it's the trade stuff and the budget stuff which got paragraph mentions that i do not agree with. i don't understand why they're in there. >> was this speech, larry, about

regulatory reform. right? >> i think his statements on personal -- listen. his statements on responsibility go back to dave faber's point earlier before the break. his statements on being responsible are terrific. i agree with them. that's why i think too big to fail should be abolished. i really agree with that. >> you know, perhaps -- >> are they fighting this stuff behind the scenes or promoting it? my understanding is they're fighting it behind the scenes. that's a huge question. john harwood is going to talk to the president one on one this evening at 6:30 p.m. eastern time. see that here on cnbc. we'll take a break here. we'll come back, talk to the chair of the council of economic advisers, chris teen romers down on wall street.t. she was in the audience for the president's speech and we'll get her take on the forum this regulation may take. [ horns hon]

♪ today ♪ must have been one of the strangest days ♪ everyone may face the same uncertainty. ♪ some would say that you won't find ♪ protecting yourself, however, requires good decisions. find strength and stability with mass mutual, a company owned by its policyholders. ask your advisor or visit massmutual.com.

waterboarding back. welcome back. we welcome christine romer the chair of the president's council of economic advisers. madam chairman, good to see you

back. welcome back. >> it's great to be here this morning. >> we were all listening to the president's speech and we're struck by way of color by the e lack of enthusiasm measured by the lack of applause to the president's speech. it would appear he had a pretty tough audience when he talked about the need for more reform on wall street. it would appear the wall street executives are reluctant participants in this progress, would you agree? >> i'm not sure i'd go there. i think, in fact, in audiences that small, often people don't interrupt the president. i know talking to people afterwards there was a lot of enthusiasm.. >> the one time there was applause, when he did mention the need for the creation of the consumer financial protection agency, there does seem to be an acceptance of a need of some kind -- to find a way to protect the consumer in the future, yes? >> i think absolutely. i think the idea that we need to have one agency that just thinks about consumers i think is

something that resonates both with those inside the industry and outside, and it is certainly one that we feel very strongly about. >> miss romer, one of the issues we are discussing before we went to the break is some definitions, if you will. if, indeed, regulatory reform does get completed by the end of the year or soon after into the new year, how would the definition of systemic risk be reached? and do you really think you can regulate your way against the next crisis? i haven't talked to anyone who thinks that you can actually prevent an economic crisis by regulation. >> oh, i think you can absolutely lessen the chance of crisis. of course, you can't ever take away the risk completely, but what you can do is put in place sensible rules of the road that make this much less likely to happen. the other thing that the president has mentioned is how important it is to have resolution authority to make sure if you ever find yourself in a situation again with a company like aig, there's a mechanism by which it can be dealt with quickly, efficiently,

and not with taxpayers' checkbooks. >> what about the issue of systemic risk? that's what has some people on the street worried. is bank of america systemic risk? is citigroup still systemic risk? how is that going to be defined? >> of course, regulating any firm that poses a risk to the overall system that's interconnected with other firms, that is something that's going to be important. we have proposed that the federal reserve play that role, would also play the role of identifying any one of these institutions it feels needs to be regulated because it does pose a systemic risk, and that's so important, to regulate firms by what they do, how important they are, not by just what their definition is. >> dr. romer, it's michelle at the new york stoke. there was a protester outside saying wall street reform first. when i talked to him, he said wall street reform should come before health care reform. there seems to be this belief

that congress just can't do it all, that the president needs to make a choice. what is more -- doesn't he need to make a choice? and if so, what is more important, health care reform or regulatory reform on wall street? >> i feel the president does not need to make a choice. it's just the administration and the congress has to work twice as hard, but both these issues are issues that are absolutely central. we need health care reform for the future of the american people's health and future of the economy. we need regulatory reform to make sure that we don't have another lehman brothers, another meltdown of our financial system. we're just going to have to double our effort and get them both done. >> the timing though of the reform package for wall street i'm talking about, you know, barney frank says it can get done this year.. it looks like maybe in the house they will. senator chris dodd is a little skeptical, it will maybe have to wait until next year. what does that do so the administration's strategy of maintaining a relationship or an interest in wall street? do you have to wait for

regulatory reform before you start the exit strategy for your administration? >> you know, of course, as we said, we're going to be working as fast as we can on both health care reform and regulatory reform. you know what the president was talking about today is the degree to which we were seeing some exit, the winding down, financial firms that are healthy enough paying us back. but, of course, you know, there are still firms that need our help. we stim hall have an ongoing hog program. we're not going to be withdrawing those crucial sinki of support. i think it's important to emphasize how different things are this september than last september. >> but as far as those things that you would plan to do as an exit strategy, that's going to be put on hold until we do see a bill out of congress as far as a regulatory structure? is that what we're saying here? >> i think that was not what i

was saying, but exit strategy, of course, will all be determined by the state of the economy, by the stit of tate of financial system. all of that is central. we will be taking whatever actions we can as the economy is healthy enough. we certainly would never withdraw support when it needs it. >> before we let you go, let me get your assessment. economy and the financial system right now. what -- are we healthy enough at this point? >> you know, i think i have seen very good signs that we are starting to grow again. that's a wonderful sign, but we know that there are still risks. there's still areas of weakness. we still know that lending is not where it needs to be for american business, and so we're certainly going to be watching this thing very closely. >> miss romer, along those lines, one of the issues the president wants addressed in this reform is to increase capital requirements for banks.. there are those who argue you should do one of two things, either increase capital

requirements or encourage lending. if you encourage both at the same time they're at odds with each other. can you increase -- require increased capital for banks and also encourage them to make loans? >> well, you know, one of the things we feel very strongly is what makes banks feel comfortable, safe enough to lend is that they have enough capital, that they know they're sound and secure. that's why i go back to one of the reasons why the stress tests turns out to be so helpful. one of the things that happened right after is a tremendous amount of private capital raising. i think bringing that capital back into the system has been absolutely crucial for getting lending going again. so that's certainly been a wonderful development. >> christine romer, always good to see you. thank you for your time. >> great to be here. >> a reminder at 8:00 p.m. eastern time it's a two-hour cnbc special event, one year later, the week that shook the world. a look back at last september's historic financial meltdown with some of wall street's biggest players. we'll also talk about where we

are today and where we are heading. tonight on cnbc. >> looking forward to that. we'll continue our special coverage of this day on wall street in just a moment after this quick break. stay with us. [screeching] [dejectedly] oh. [screeching] [barks] (man) if you think about it, this is what makes the ladders different from other job-search sites. [screeching] we only work with the big talent. [all coughing] welcome to the ladders-- a premium job site for only $100k-plus jobs and only $100k-plus talent.

to its employee storbenefits package at no direct cost to the company... it was a perfect fit. find out more at aflac!... ...forbusiness.com

welcome back. we continue our coverage now of the president on wall street for this monday. i'm bill griffeth. in the past hour president obama did make his case for financial regulatory reform urging congress to pass sweeping legislation and perhaps this year, and he warned wall street not to expect another bailout from washington. we'll get reaction from a financial task force we are convening as well as from a couple of congressmen from different sides of the aisle. and i'm sue herera. stocks continuing to move to the downside, kind of backing and filling following the president's remarks. bank of america, cisco, alcoa

dragging the blue chips lower. g a and coca-cola are among the dow winners. >> i'm michelle caruso-cabrera.. here at the new york stoke, what's the buzz down here regarding the president's remarks? we'll get trader reaction coming up. >> if you missed, it the president did make his push for financial regulatory reform during his speech in federal hall across the streetm where michelle is at the big board within this last hour. included in his remarks, a warning for wall street. listen. >> we will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. those on wall street cannot resume taking risks without regard for consequences and expect that next time american taxpayers will be there to break their fall. >> our task force, including david trone, banking consultant

burt ely is with us. and james papacoucus. we noted the last of enthusiasm as noted by the one time he got applause during this speech. this is not a happy crowd listening to the president, i gather. >> it certainly did not seem like a happy crowd. i think it's interesting that he doesn't then go visit the floor of the he cexchange. you have to pli ay it tough. >> are you saying it's an insult he don't come across the street? >> pardon? >> is it an insult he didn't come across the street? >> i think he's trying to play it tough. i think it would have been a bad image for him to give this tough

lecture and then walk over to the exchange and start shaking hands and pats on the back and all that kind of thing. >> what do you think, greg? >> you are one of the most astute political watchers i know. what was the purpose of this speech? there was really nothing new of substance in this speech today. >> bill, i think he wanted to give them hell, and i think he is hoping on the evening news tonight, brian williams and tomorrow in the newspapers, search going it say obama gave wall street hell. i think they paid attention to that protest on saturday.. they'd never admit it, but a lot of people are saying, you know, big government, socialism, spending too much.h. i think he wanted to make it clear that wall street gets a lot of the blame. >> you know, jimmy, a lot of people don't think that he can accomplish health care reform and financial services reform. do you think they can accomplish both and was this just the use of the anniversary of the financial meltdown to make a speech or do you think that it indicates that there's renewed life in the ability to get a bill through on financial reform this year?

>> listen, i think getting a bill through is hard and as his approval rating goes down, it's getting ever harder. i thought it was interesting he led with the consumer finance portion of it. i think that's a weigh-in after talking to the folks in the administration, the consumer portion of this, which he emphasized, is a way of reengaged the public in this issue. their attention has drifted a bit between health care, high unemployment. that's a way of getting them still involved with the issue. it's not just wall street lobbyists paying attention. >> david, the president said to those executives in federal hall, you don't have to wait for legislation to be better -- to better serve your customers out there and find ways to protect them in the future. do you sense, david, that wall street is it likely to come up with some self-regulatory structure ahead of whatever congress produces? >> well, i don't know. that's pretty complicated as a practical matter. the 95% of wall street people had absolutely nothing to do with the mistakes that caused

the crisis. so i think if you're an m & a banker, you're still saying you're going to pay me when i produce a dollar of revenue? i think on the actual securitization side and some of the areas which were right in the middle of it, you know, look, i think wall street firms blew themselves up, lost a lot of personal wealth and paid a big price. so, yeah, i think all the firms are looking at themselves and saying how can we avoid this pain to our ourselves. >> when it comes to the consumer protection finance agency, i understand why congress needs to get involved. i've been asking this throughout the morning, when it comes to two of the other key issues, capital requirements and the regulation of derivatives and whether or not they're going to be over the counter, et cetera, can't the federal reserve do that already? we don't have to wait for congress, do we? >> well, the regulators can do a lot, but the problem with higher capital levels is it will just

provide that much more incentive to wall street to figure out how to get around those higher capital starts. i think that's really naive on the part of the president and others to think they can impose higher capital standards on financial products if there are no adverse consequences of it. >> burt, can i ask you a question? in my notes it says you think the perspective regulations might increase the likelihood of another financial crisis. >> without question. it's like squeezing a balloon. you squeeze on that which you know is there today, you create incentives to the markets, to the financial engineers, to create new ways to get around those rules, to create new financial products. >> handicap this legislation, greg. as i pointed out here often now, barney frank said likely to happen in the house this year and maybe not in the senate until next year. is that what you're hearing as well? >> it's a long way away, bill.

i think they may have to do it piecemeal like barney frank has done with executive compensation. it's going to be well into 2010 i think before anything makes it out of congress. just one other really quick point i would make, i agree with larry kudlow, and i often don't. i think the president should have said more about trade. the idea that we could be entering into a really rocky stretch with the chinese is a very negative story to the markets. >> gentlemen, thank you all for joining us. bottom row is now excused. thanks for joining us today. >> you bet. >> we'll mention again, john harwood will be sitting down this afternoon for a one-on-one with the president following that speech on wall street on the need for regulatory reform.. you will be able to see the full interview tonight in a half hour cnbc special report beginning at 6:30 p.m. eastern time right here on cnbc. coming up next, the investment verdict on the

president president's wall street speech. find out how two congressmen, a republican and a democrat, are grading the president's remarks. you are watching "power lunch," a special edition, and we are first in business worldwide. in the south. i'll never forget. it used one tank of petrol and i had to refill it twice with oil. a new car today has 95% lower emissions than in 1970. exxonmobil is working to improve cars, liners of tires, plastics which are lighter and advanced hydrogen technologies that could increase fuel efficiency by up to 80%. tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there.

tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.

welcome back to the floor of the new york stock exchange. "power lunch" reporting live from here today because president obama made this historic speech on wall street

across the street at federal hall. the ceo of the nyse just putting out a statement saying the president's address was welcome and timely and they wholeheartedly agree with the president that financial regulatory reform is necessary. so once again the ceo of the nyse saying that they support the president. however, bob pisani is standing by with a report and also to highlight the fact that he did not come across the street. there was a lot of speculation that he would and a lot of people are trying to read into that whether or not that's a sign of something. >> i don't think you should read too much into it. it was a little difficult for him. this is a completely -- he'd have to come across the street. it would be a little bit of a security issue. last time president bush came it was a much different situation and there were secret service men all over throughout the morning. that was sort of the tip-off he wasn't coming. >> jimmy suggested that photo-op is just something the white house didn't want to see in the paper the next day. >> i think people down here on

the floor kind of felt that he -- this had very much taken backseat to the whole health care reform issue. there's some question whether he will expend the political capital necessary to get meaningful reform through here. the important point is tariffs and a big trade war with china was a bigger issue than what he was going to say here today in his speech on regulatory reform, as important as that may be. financials, they were lagging the whole market last week and again today they are lacking the market. the big names all to the downside, although fraction ide ally. our parent company, ge, is knocking at the door of $15 and they haven't been there in a long time. finally, what led the market off of the lows and the dow is down about 70 points at the open, was largely the material names as well as some of the industrial names. we saw the dollar weakened at the open.

that helped some of the materials stocks here. trader talk.cnbc.com for more. scott, how are we looking at the nasdaq? >> a flat market right now. very mixed in terms of widely held technology stocks. i'm show you what we're talking about. apple and microsoft to the plus side. dell and cisco are to the downside. goggle is positive, yahoo!, negati negative. microsoft is trading to the upside just shy of a half percent. yahoo! has sold its entire stake in alibaba.com for $150 million. it has the 40% stake, and that's in the unlisted parent company. baidu is up. e trade getting a nice upgrade. the stock is up 5.5%. citi calling that stock to a buy. >> commodities are mostly weaker

across the board except for one notable outlier. natural gas. natural gas prices today are soaring. randy rothenberg, a floor trader at the new york merck says he's seen a lot of short covering in the name. goldman sachs out saying there is a bull case to be made in the longer run for prices to go higher w thhigh er. >> with this 60% reduction in production, there's a lot of companies that have cut back on infrastructure. if and when demand resumes, we will see a pickup of prices as a result. also of note, traders are looking at this idea of protectionism. natural gas is more of a local trade than oil is, and as a result of that, they're looking at the fact that perhaps if we become more protectionist, natural gas may be more in favor with our regulators. rick santelli, over to you in chicago. >> thank you very much, rebecca. we had two bill auctions today, and there's something that hasn't changed much in a year.

oh, actually, it has. bill yields tonight to actually move lower if you lock at long-term chart. we had a 429 bid cover on both of our three and six-month bid auctions. intraday of ten year, not a huge day. we have some supply. outsi let's look at a six-month chart of the dollar index. doesn't look too great. there's words, there's actions, and then there's almost neglect. you can see this show up in the dollar chart. look at the dollar versus the yen. there are many stories about the dollar being the new carry trade. look at the euro currency versus the yen. completely different pattern. seems like the reserve currency isn't really under attack. it's an orderly decrease, but it continues to be orderly very often in a row. sue, back to you. >> thank you very much, rick. we'll take a quick break and then when we come back, lessons to be learned from the financial meltdown and where you should put your money right now. tyler mathisen talks exclusively

with investment gurus live from the schwab impact conference in san diego. >> the dollar is slightly higher. that has pushed gold prices back down today and oil as you saw as well back below $70 a barrel.l. the dow is down 28. we're back with more for this monday after this. ♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything. i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at chase.com/sapphire.

i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t. was it really for fun, or to save money on heat? why? don't you think nordic tuesday is fun? oh no, it's fun... you know, if you are trying to cut costs, fedex can help. we've got express options, fast ground and freight service--

you can save money and keep the heat on. great idea. that is a great idea. well, if nordic tuesday wasn't so much fun. (announcer) we understand. you need to save money. fedex i think one of the most important is how to get our compensation policies so they are, a, long term, and, b,

performance based because we have a situation in which the compensation is very short term and the problems come later. >> very true perhaps, but, you know, michelle, one of the things we found is a lot of firms on wall street are getting around the bonus issue by simply increasing salary and changing the bonus structure because of the criticism about the bonus structure as it stands now. >> they're absolutely working around it, sue. what i also found striking about the president's speech, you didn't actually talk all that much about bonuses or pay on wall street. he made one reference to bloated bonuses, but when you look at all the things that he was suggesting in print when it comes to regulating derivatives, capital requirements, he didn't actually focus on pay. >> but i am struck though -- i mean sha mean, i don't know if pete peterson, if he speaks for the majority on wall street, but this is exactly the kind of

self-regulatory policy i was talking about. if wall street wants to get ahead of congress, they need to address before congress does and compensation has been a hot button issue for main street as far as wall street goes. if they're listening to anybody, maybe pete peterson is one voice they need to listen to right now. >> certainly s let's talk more about investors now and how are they faring one year after the financial meltdown. in a cnbc exclusive our tyler mathisen joins us from the charles schwab impact 2009 conferences with a lot of insight for where they're putting their money to work. >> hi, ty. >> thank you, sue. we have been looking and listening just as all of you have to the president's speech and also talking about how far we've come back from the abyss in just this past year. talking now with michael yoshicami, bill gurton, and tom

meier of meier capital group. you guys saw what the president said. it felt to me a little bit like a finger wag, a scold. how about you, tom? >> i think what i took from that is that he finally came out and said the lack of responsibility from not only wall street but he actually mentioned main street and washington is, it's the first time i actually heard that because it wasn't just about wall street there. was a lot of greed going around. it's nice to say, hey, there are other parties involved, not just wall street. >> bill, you saw highlights. >> i would agree. i think the key thing and key aspect is responsibility. it is important that there is responsibility across the board. >> michael, when we look at the regulatory response since the meltdown of last september, really nothing has happened.. not a thing. >> there hasn't been -- >> do you expect there will be now? >> i think there probably will be. i think the speech really has tipped his position and has

really spread the blame across the industry as well as main street in order to really try to set the table for new regulatory refo reform. it's facing tremendous opposition right now as you know from industry leaders and i think the response really from the audience was not exactly rousing if you watch the speech. >> bill, we spent a lot of time talking about the equity markets, but your specialty is fixed income. here last night mohammed al aryan said what happened fundamentally in the past year is that the balance sheet problems that were in households and on wall street have now been transferred in many ways onto government balance sheets. >> yes.s. >> there is a lot of people out -- are a lot of people out there who invest in municipal bonds. do they need to worry about problems in their portfolios? >> i think you have to be aware of the changes that have gone on in the municipal industry over the past year, two years.

two years ago the municipal industry was generic.. it was essentially perceived as a aaa industry. there's been a demise of the bond insurers. you no longer have that safety net. and the final arbiter of credit tends to be in the retail market, the ratings agencies. >> should i trust them? >> i think that on the municipal side they haven't had major problems yet. however, they tend to rate in silos, and they rate government or state bonds relative to other states. hospital bonds relative to other hospitals. you have to recognize that a state credit is far better likely because they have control of their own destiny. they have taxing power.. than aa hospital. so you have to be aware of what you own. >> you have to be highly selective here. >> highly selective, but there are opportunities. >> do you agree with that? >> i do agree with that.

i think there are not only opportunities for income, but this is one of those rare opportunities where investors can have capital appreciation on some of the fixed income when we move out of what i perceive to be a bubble in treasuries. that will move into more risk assets, corporate as well as municipal debt. i think there's some capital appreciation opportunities. >> if there's a bubble in treasuries, is now the time to be getting out? >> there's been a bubble in treasuries. i have been saying that for the last nine months.. let's talk about the high yields. $200 billion has now gone into bond funds. it's almost like individual investors backing to the risk pool at least to the corporate side. we have now had five years' worth of growth in three quarters of one year. talk about capital appreciation. now is the time to take a little bit of that, a few chips off the table. let's face it, i don't think we're going to see this bond market. you might agree with this or not but i don't think we will see this type -- >> i think the key point here is that money is flowing in to

government funds, and the one thing people are not respectful of is duration, and you can see long-term rates coming down. you can see it coming down across the board because people want to be in high-grade securities, but they're not recognizing that if they buy a 30-year bond there's tremendous risk to it.. >> they have gone from a risk return of capital to now they want a return on capital. instead of going into the equity market they will go into the corporate bond market. >> michael, jump in there. >> i think really what the issue is that if you look at gains that have happened over the last six, eight, nine months, they've been very significant. many municipal positions are up 5%, 10%, plus the yield. i still think there's tremendous risk, tremendous money. i will tell you there is billions, i don't know maybe trillions i suppose, sitting in cash and money market making, what? making nothing right now. when that money moves back into fixed income markets, you will get more yield.

>> thank you. sue, back to you. >> that was a terrific discussion. thank you very much, ty. look forward to much more from you in san diego. tonight at 8:00 p.m. eastern time, you don't want to miss this, it's a two-hour special event "one year later: the week that shook the world." a look at last september's financial meltdown. where we are today and where we are heading.g. it begins tonight at 8:00 p.m. in the meantime, president obama has spoken to wall street. what is capitol hill's view of his remarks on regulation of the financial services industry? two congressmen from opposing sides of the aisle will join us live on that in just a moment here. it's quiet on the home front-- not a lot of activity. you read the news. and yet, some people need to sell and other people want to buy. this is a moment of challenge and opportunity. fortunately, re/max agents have the experience to help you meet the one and recognize the other. thanks.

because the future's counting on us. nobody sells more real estate than re/max.

dow jones industrial average lower by 24 points. we're going it talk about why with steve grasso on the floor of the new york stock exchange.. welcome back to "power lunch." we're here because president obama made a historic speech across the street at federal hall. never did come over here. when he said, i have always been a believer in the free markets, i heard a groan on the floor. >> because you can't say something and then do the opposite. we've seen that -- we heard a

lot of rhetoric, but we haven't seen any proof behind it. i think that's why you heard the groans behind here. >> i heard clapping when he finished. >> because he finished. >> not a clap of support? >> i don't want to be so anti-obama, president obama, but the truth is i don't think there's any supporters on the floor for what's coming down the pike and what we've already seen from this president. >> i want to highlight to the viewers, it's not the clapping or groans was loud or boisterous -- >> right. wasn't any real conviction. i think they were happier to see you than president obama. >> that's sweet. flattery will get you everywhere. there's a fear of a trade battle between china and the u.s. >> there's nothing in the free market system that allows for tariffs to be a good thing. president bush tried to do it with steel. >> a horrendous move. >> this is an equally bad idea.

this is another dead end. >> what's the next thing for the markets? >> the markets weren't very shocked either way. i think we're still looking forward to see what's going to be the closure with health care? what's going to be the closure with the energy policies?? and i think the market is rallying every time he's been trumped. so i think, unfortunately, that's why we've been rallying versus his policies. >> whenever legislation stalls. >> rights. >> thank you, steve. steve grass sew o on the floor e nyse. >> he president called for regulatory reform. did he make a convincing case and what form might this legislation take? joining us veteran democratic congressman brad sherman of california and first-term congressman jason shafiss from utah. >> you're on the financial services committee, the spot where this legs laying will come from. i'm curious from your perspective, what are the hot button issues that you feel this

legislation will cover, compensation, capital requirements, who the regulator is going to be? can you give me a sense of the framework you folks are working on right now? >> i think one hot button issue is consumer protection where i favor the president's proposal. another sleeper is that the bill contains within the resolution authority portion permanent bailout authority for are financially important inst institutions on wall street. >> a structure that would give regulators the ability to bail a company out if it is in trouble a la lehman brothers last year? is that the idea? >> unlimited amount. t.a.r.p. was limited to $700 billion. this proposal, the 1700 pages submitted to us, is t.a.r.p. on steroids. >> are you okay with that? >> absolutely not. >> i didn't think so. >> and i have voted against t.a.r.p. twice, but at least that bill had oversight

provisions, a few ephemeral limits on executive compensation. >> i'm guessing congressman, that this is not going to sit well with you either. >> holy cow, i had no idea it had unlimited amount of money. an open end to the administration to just throw money at these problems. absolutely not. there's absolutely no way i can imagine that any right-minded person would support that. >> what would you support in the legislation? ideally, if you could craft your own bill? >> we need openness, transparency. the republicans put forward a bill in july. we need personal accountability. we need our regulatory structure to do the job it was intended to do. we have a number of regulatory agencies out there. . if we need to give them more resources to do their job, great this. so-called consumer protection agency scare the daylights out of me. >> why? >> it gives authority to tackle anything that has anything to do with anything in the financial markets. that he is no end in that. i don't believe in the president's plan, which is essentially let's go further

into debt. remember, they've got all-time record spending going on.n. the second part is another layer, a new layer of bureaucracy from the federal government. i just don't think that's the way to -- >> representative, can congress do both, health care reform and financial regulatory reform, at the same time? should you make a choice?? should the president make a choice? >> i don't think you have to make a choice even for those of you who don't think any one of us can walk and chew gum at the same time. there are 435 of us in the house and 100 in the senate. we do have different committees. for example, i'm on financial services. i'm not on the committee that's writing the health care legislation. >> let me ask you on this anniversary of the fall of lehman, we're all looking back, playing 20/20 hindsight.t. we're all second guessing and so forth. congressman chaffetz, i'll start with you, was it the right thing to start lehman fail? >> markets have to go through these adjustments. sometimes it's exceptionally

difficult but i believe in the markets and i believe those types of corrections have to take place.e. if i was here, i would have voted against the t.a.r.p. i would have voted against the stimulus, and the stimulus came up in the 11th congress, i voted against it. again, we need reg -- >> but knowing what happened in the financial markets after lehman was allowed to go under, you would still support a company like that and maybe even aig with such a tremendous systemic risk that it posed to the whole financial system, you would still allow it to go under? >> i think what we have learned from this and will continue to learn is there are things that should have been done before they went under. if the regulators had been in there doing thour job and we had been taking care of things in the derivative markets and hedge funds and those types of things, then the markets would have been much better off. clearly, there was a failing there and we have to correct that. i don't think we need to overreact and create this new agency. >> congressman sherman, much is being made about the fact that the president did not go across the street to wall street.

he kind of scolded wall street today, yet at the same time he called on them to take some personal responsibility and reform their own way of doing business. should he have gone across the street and extended a hand to some of those on wall street? wall street has lost a lot of jobs. >> well, first, i don't know what the logistical considerations are. we walk across the street. presidents have security. they have this hundreds of press following them and -- >> yes, but if the president wanted to walk across the street to wall street, they would have made it happen. come on. don't you think? >> the president went to wall street. he didn't walk across the street perhaps, but he hasn't come to my district. he did go to the wall street district. >> go ahead. >> what did you think of the tone of the speech? does he see wall street as friend or as foe? >> well, i just worry that the rhetoric doesn't actually match

the actions and he may say he's for open and free markets, but at the same time he's proposing a brand new regulatory agency that would have unilateral control to dip its fingers into most everything. >> you wouldn't call him a liar, would you? >> no, i didn't do that. >> congressman sherman, let me get back to the policy e, you obviously -- you're one more of the more conservative democrats that's out there when it comes to a lot of the spending that's discussed here. but as far as allowing lehman to go under and the aftermath we saw there, were you in favor of that? >> well, i opposed the t.a.r.p. bill. frankly, paulson came before us and said he would not buy preferred stock. he would only buy toxic assets and he did the exact reverse. i think buying the preferred stock and getting warrants made much more sense than what paulson swore before our committee he was going to use the t.a.r.p. bill to accomplish. >> but the question is about too big to fail and systemic risk

right now. >> break them up. too big to fail is too big to exist. >> okay. >> we should set a limit, perhaps at with 1, 1.5% or 2% of gdp and that's the maximum any institution should have in liabilities to american persons. >> are you talking about that in football services right now? >> i'm talking about it, but you can't go up -- it's tough to go up against wall street. they almost always get wh they want. not so much because of their lobbyists but because they created this new religion that involves jen fleting in the directi -- genuflecting in the direction of wall street and believing if they don't get what they want, we're going to be creating for rat meat in the streets. they've created this ethos. >> if you look at where we are right now versus three years ago, you have three financial institutions that have consolidated about 30% of the assets compared to where we are three years ago. again, i worry that congress is in a terrible position to have

any credibility on this issue because they seem to continue to enact legislation that does the exact opposite. >> are you saying there's too much concentrated in too few hands. >> there have. actually the result of this is they've had a concentration of assets into a few -- >> but isn't that what happens -- >> but institutions have only gotten bigger.. what's happened? the biggest institutions are only bigger than what they were three years ago. >> isn't that what happens in a free market when you've had the kind of crisis we've had here? the healthy buy up the unhealthy. >> what you've had is the government -- you've also had the government intervention to the point where we're picking winners and losers. that's a deep concern. there is clearly room for regulatory reform. everybody i have talked to understands it needs to happen. but we've also got to figure out a way it get out of this massive debt that we're in because we're $12 trillion in debt. pretty soon the congress will have to raise the debt limit and we'll have to do some other things to stop spending at the federal level if we're going to

truly stimulate the economy. >> congressmen, thank you. >> take a look at section 1204 of this bill, jason. >> will do. >> there you go. >> a little homework there. >> and by the way, it bears repeating, john harwood sits down with a one-on-one with president obama following that speech. you will be able to see the full interview tonight in a hf a -- half hour cnbc special report. up next a unique look at the collapse that shook wall street. it is the fall of lehman brothers. we'll take you to the firm's former headquarters in new york for a live report.

[ birds squawking ] [ moos ] [ man announcing ] if you think about it, this is what makes theladders different from other job search sites. we only want the big jobs. welcome to theladders. a premium job site for only $100k+ jobs and only $100k+ talent.

it was one year ago that the financial world found out lehman brothers wasn't going to survive and wasn't going to be bailed out by the government. cnbc's bertha coombs is live outside the former lehman building now the epicenter of barclays capital in new york. bertha? >> reporter: thanks very much, michelle. you know, the core of barclay's capital is very much built on a lehman foundation because many of the traders who were here a year ago working for lehman are back at their desks today, though a lot of them thought they'd be gone. >> we kind of prepared for the worst all week watching the stock slide. >> that's bond trader jeremiah

stafford. you recall last year he had d already begun exploring new options and was prepared to go somewhere else, but he has stayed on.. they held on to virtually all 10,000 of lehman's banking and trading staff. by early this year some of those who had packed their bags the first night, did end up leaving. 3,000 jobs were cut. barclays ceo says lehman's acquisition has been transformational. >> for the people who work in barclays capital today who were part of the lehman operation, there is some difficult emotional when every day you pick up the paper, turn on the tv, and people are talking about the one-year anniversary of lehman in a negative context.t. >> as emotional as it may are for those still working here, it is tougher still for those 3,000 who were let go, many of whom

are still looking for positions. but but clays arclays is startie again. they expect to add another 1,000 positions in am coulding months. back to you. >> that would be good news. tonight at 8:00 p.m. eastern a two-hour cnbc special event. one year later, the week that shook the world. we'll look back at last september's historical financial meltdown, where we are today.y. more importantly, where are we headed. it is a jam-packed two hours that begins tonight at 8:00 p.m. eastern time. up next, european central bank president with some eye-opening comments. our steve liesman spoke with him exclusively. >> the dow has pared its losses. it's down about nine points on the trading session. you're watching "power lunch" on cnbc. we are first in business worldwide.

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 tdd#: 1-800-345-2550 or, i don't know, fish and chips. tdd#: 1-800-345-2550 i'll look at all kinds of stocks before i settle on one. tdd#: 1-800-345-2550 if i think i'm onto something i'll check it out, tdd#: 1-800-345-2550 you know, see what other traders are up to. tdd#: 1-800-345-2550 when everything feels right though, tdd#: 1-800-345-2550 that's when i get serious. tdd#: 1-800-345-2550 and the minute i get into something, tdd#: 1-800-345-2550 i already know when i want to get out. tdd#: 1-800-345-2550 of course, every now and then i'll talk with somebody

tdd#: 1-800-345-2550 who knows what i'm trying to do. tdd#: 1-800-345-2550 (announcer) switch to schwab today. tdd#: 1-800-345-2550 you'll get the tools, the technology tdd#: 1-800-345-2550 and the support to trade your way. tdd#: 1-800-345-2550 go to schwab.com/trader tdd#: 1-800-345-2550 or call 1-800-540-7304 tdd#: 1-800-345-2550 right now. tdd#: 1-800-345-2550 but opportunities can vanish like that... tdd#: 1-800-345-2550 ...so most days, i'm right there tdd#: 1-800-345-2550 when the market opens.

one yir year later you may think you know everything about

the demise of leemans, but you don't. steve liesman sat down with an exclusive interview with the president of the european central bank about how the crisis was viewed on the other side of the pond. hi, steve. >> we will have been extended portion of this on our special at 8:00. very well-spoken, very engaging. i wanted to play the portion that related back to the discussion we had in the past hour. could it happen again? and that wide ranging exclusive discussion about the historic lehman weekend, i asked him about whether we've made any progress. can you say with certainty that today an event like lehman brothers could not cause another global panic? >> i mean, again, today we are in a different universe. today i think that the private sector is much more aware of

course of all the risk that is at stake and i urge them to continue to improve their risk management and all their behavior. of course, we are in a world where we could demonstrate in the public sphere that we had the capacity to cope with this enormous risks. ly quiddi i we are not in a universe where it is likely we would have the same problems. but when time passes, of course, if we don't do the job now, then we would have the same kind of risks. so that would be possible. and we wouldn't be forgivable if we are putting ourselves in this new situation. i think our people will not forgive us, and they would be right in my opinion. >> interesting. jean-claude's comment is that in a democracy, people are really calling for this.. they do not want to be in a

similar situation where they would be again. it's the obligation of these public servants to put together the system where maybe not the next one as we said in the last hour, but we should be able to solve the last one. >> all right. you have had a number of exclusives lately. kudos to that. you talked to bill dudley, mr. trichet. i would be curious, i'd like to hear from the fed itself, from the fed and the board of governors and, you know, why have -- >> he left out bill dudley and tim geithner from the treasury -- >> i said bill dudley. and geithner. >> the board of governors has been kind of quiet throughout this whole thing. >> they should talk to you. >> i don't know y i think it may have something to do with a sense of responsibility for how much they have to talk to the public. i think there are differences there.e. i didn't mean dudley. what i went to say was axel faber from the bundes bank. i think it's interesting the

differences. >> it's striking the openness you got. >> looking forward to hearing your comments. >> thank you. >> we'll take a break. come back. getting ready for "street signs" with erin burnett at the top of the hour. we're back with more in just a moment. the dow is down ten points. - ( classical music playing throughout ) - wireless can bring

even more freedom to the freest country on earth. so why should you be penalized for talking to someone, just because they're on another network.

shouldn't you be able to call any mobile... on any network, at any time? it's a free country. knock yourself out. announcer: introducing the revolutionary any mobile, anytime. now on the sprint network you're free to call 250 million mobile phones nationwide without worrying about the meter running. only from sprint. the now network. deaf, hard of hearing and people with speech disabilities access www.sprintrelay.com. why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally-- that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express

welcome back to cnbc here on "power lunch." guys, we were wondering why president obama didn't come across here to the nyse to meet with some of the traders or shake hands with them. we now know he went to have lunch with president bill clinton at a astronarestaurant been more than for more than 20 years and it's tough to get into. >> i find it very interesting, the president takes the time to come to wall street to commemorate the one year anniversary of the demise and all that's been done to try to save wall street. don't you think it would have made sense for them to have lunch with wall street executives as long as he's going to be having lunch in the financial district?? >> i would think so. i also think if you're going to wag a finger at wall street, and