good morning. big changes at bank of america. ceo ken lewis stepping down by the end of the year. his tenure at the helm of the financial giant, a topic of our interview with lewis last may. >> the range seems to be that i'm 62. it's 65 is when we usually leave the companies as ceo and then

you've got this issue of getting out of the t.a.r.p. somewhere in that range is when i would like to go, but i -- the easy way out would just be walk out now and let somebody else have this problem. but i owe it to my teammates to see us through this. ♪ >> thanks have obviously changed since then. good morning. welcome to "squawk box" on cnbc. i'm michelle cabrera with carl quintanilla. joe and becky are off today. charlie gasparino first broke yesterday the 62-year-old lewis tells employees he's retiring voluntarily. lewis has been under fire for a series with the government

investigations into the company's acquisitions of merrill lynch last year. no replacement has been named. six internal candidate res seeing as vying for the job. stocks are called higher this morning when you look at the bid ft in the act. >> it's going to be big news all day today. joining us for some analysis, dick bove, jonathan finger of b of a shareholder and a managing partner. guys, i appreciate you getting up early to walk us through this. dick, the journal's piece, and a lot of coverage talks about how he's going out like a goat. is that fair? >> no. it's totally unfair. if you think about the fact that 25 years ago, the laws were changed in the united states to allow banks to become -- to go across state lines and about 50

banks charged out to become the first national bank in the united states and won the game and that was bank of america. and the reason why bank of america is the biggest, most powerful bank in this country and is a dominant factor in any financial product sold in the united states is because of the brilliance and the success of ken lewis in putting together the right team, the right systems to make it work. the guy has been phenomenally good. and because of the economies that he operates in, to push him out now because of a witch-hunt is totally inappropriate. >> jonathan, is that what's going on, a witch-hunt? >> i don't think it's a witch-hunt. i think ken lewis may have come in afterwards to tighten down the operations. but a year ago, i think they did one or two deals too much and destroyed a lot of shareholder value. they overpaid dramatically for

merrill lynch. in the course of a year, for earnings per share to be the same as they were before, pretax earnings have to go from something like $18 billion to $40 billion. >> jan, i want you to put the sins of ken lewis as you see them in in some kind of context here. was it just merrill lynch or was it countrywide, too, or even before that, was he a bad executive? i mean, you came in and you took a rather substantial stake in bank of america while ken lewis ya was ceo, correct? >> we acquired our shares in 1996 when we sold our bank to what was in nation's bank. so hugh mccall was in charge at that time. >> and you maintained your shares at that time? >> we did. >> when did the sins of ken lewis begin, in your opinion? >> the countrywide deal was not a great risk. but the merrill lynch deal was a very bad deal for shareholders.

they did that deal with almost no due diligence. they paid a very full price when we don't think they had to and very importantly, they did not structure the deal so that if things change materially, that they could exit the deal or renegotiate the deal. and so they got stuck into a deal that they couldn't get out of and they've had to raise substantial amounts of capital which has been dilutive to shareholders. >> all that information is factually incorrect. the fact of the matter is that when bank of america bought merrill lynch, they paid $17.5 billion for the company and that's just a factual number. the company, merrill lynch, will add over $20 billion in revenue to bank of america in the first year. >> but they could have gotten it much cheaper the next day or the day after. >> no, i don't agree with that. no, i don't agree with that. the fact of the matter is, if you want thousands of people at merrill tloirchb be fired, if you want all sorts of people to not pay taxes in new york state, if you want merrill lynch to move its focus to north carolina or london, maybe that's correct. but the fact is, if you want to

keep merrill lynch as a vibrant company, you keep it in new york and you pay the price that you paid. in addition, anyone who dares to look at the financial statements, which nobody cares to do, will find that this deal was immediately creed from day one and that the countrywide deal wab immediately acreeded. >> what about the failure to disclose? >> what did they have to des close? >> the law says -- and it took a month between the time -- >> they were loss toes merrill lynch. >> at merrill they were acquiring it, right? >> the fact of the matter is, bank of america benefited by the fact that merrill lynch took those losses prior to the acquisition. i don't understand why people can't figure out that if a bank makes money on an acquisition, that it's good for the bank. if the stock goes up after the acquisition, it's good for the shareholders. if the company doesn't go out of business, i.e. merrill lynch, and stays in new york state, it's good for new york state.

if the financial system doesn't collapse -- but jonathan, what about the fact that -- all those facts may be correct, but in the end, ken lewis felt the need to go to treasury and say, i don't necessarily want to do this deal. he told that to the feds, but he never actually told that to the shareholders. do you feel that he should have disclosed that to you? >> they had a legal duty to disclose that to shareholders prior to to shareholder vote. we think there was a material change in the condition of merrill lynch prior to the shareholder vote. they had lost $13 billion pretax before december 5th. none of that was disclosed to shareholders. that's what the new york attorney general is taking a look at. that's what the s.e.c. is taking a look at. and the cost of the merrill lynch deal was way in excess of $17 billion. they paid $19 billion for the common stock. they assume $9 billion of preferred. they paid $3.6 billion in bonuses to merrill lynch employees. they paid another $3.5 billion to the brokerage just to retain them. >> and jonathan, what about the

fact that now bank of america is now leaderless? what do you think about the fact that -- >> i think they've been effectively leaderless for quite a while. ken lewis has been focused on responding to these investigations. i think he's lost a tremendous amount of credibility. i think shareholders deserve to have the company led by a ceo who is unencumbered by all of these investigations. i think that would away big positive for the company going forward. >> dick, is it possible -- i mean, we're obviously talking about different constituencies here. shareholders of the company, america at large. is it possible that shareholders were, in fact, harmed by whatever he did or did not disclose but we're all better off because he made this deal? >> share molders are clearly not harmed. the price of bank of america at the time of the merrill lynch takeover was 14.5 a share. the price of the stock today is roughly $17. the shareholders are not harmed. the fact that everybody wants to concentrate on one quarter of earnings at merrill lynch, not

at bank of america, and assume that that is what all this merger is about, you know, misrepresents the fact that bank of america now has 14,000 people all over the world selling products. it has a dominant positions a an equity underwriter the. >> and nobody to run it. >> what do you mean nobody to run it? >> who is going to run it. >> there are 300,000 people in the company to run it. do you think somebody is waiting for someone in the ceo's office to tell them what to do? >> dick, you are one of the best banking analysts out there. with x amount of losses, merrill is worth one price. with x plus, i think the number is like 10 billion plus or whatever losses, the bank is worth another price. will you not acknowledge that? >> well, yeah, but the fact is

that merrill lynch -- >> so they overpaid if that was the case and they overpaid if they did not correctly do the due diligences that accounted for all the losses that were there. >> merrill lynch is profitable. merrill lynch is adding profits to bank of america. >> but not as profitable as they thought they would be. that's not true at all. the fact of the matter is, no one thought merrill lynch could be this profitable in 2009. no one expected the financial system to recover as quickly as it did. >> jonathan, who is your pick to run it next? >> you know, a couple of names i've seen out there, bill winters, cohead of investment at jpmorgan and perhaps the former cfo and who is currently over at gmac, both of those i think are strong candidates. >> dick, your thoughts on that? >> neither one of those make sense. the two people you should put in are brian moynahan or barbara

desour, who i think has been a crete career at this company which would be very much successful. >> we would very much like to see them go outside the company, increase transparency and focus on shaffer shareholder value. you guys don't agree on a lot. in fact, not anything at all. >> not the past, not the present, not the future, as a matter of fact. >> it's fascinating to me the cases for and against lewis. you could have a mock trial. >> spin a tale of a guy who saved the world, essentially the banking system, but yet tanked the bank or a guy who really, what, knuckled under to government pressure or any number of -- >> cried like a baby, yeah. >> what i thought was interesting is there is only one sin that john fingers him with, which is the last deal. and that's like, what, how many prize fighters, you always find one fight too much. >> you can argue countrywide was a precursors to merrill. a lot of people look at ken

lewis' career and says, we get to the maximum deposit level. now what does he do? and he starts buying credit card companies. he starts going outside the realm of his comfort, buys countrywide, buys merrill. maybe these are things that he didn't know as well as good only regional banks. >> and i think dick bove is right in the technical sense. the losses are accounted for before the merger and he take those losses and the bank ends up making money because you preloaded the lowses. but i'm not sure that's the way most investors look at it. i look go ahead at, by the way, the stock price changes of bank of america versus others. and i think john talks about it out of context. but then you look at the last six months, bank of america has been on an absolute tear. so he has been executing in this post deal world very, very well. up 152% and i think the next

best is citigroup, up 100%. worse than citi, worse than the average bkx right there and not as good nearly as wells. but then look at that. that is in the past six months. bac, 152%. you take those losses up front, it looks pretty darn good afterwards. >> i'm glad you guys are here. although did you sit here? this is joe, a male seat and this is becky, a female seat? >> assigned by the director. >> i sat here trying to catch some of joe's aura. trying to catch some of that political personal aura that he has. >> please, no. >> you'll notice you're to the right of steve. >> we have more today. >> i have to talk about something else. this morning's other top stories. cnbc's david faber saying there is no deal for comcast to buy ge's nbc universal. quite, while we do not normally comment on mr.&a rumors, the

report that comcast has a deal to purchase nbc universal is inaccurate. nbc universal did not comment. carl, why was it left to me to read that? >> i don't think there's worries. faber is going to be on at 8:00 eastern. >> he's the guy that we know knows about our company. penske walking away from gm to buy saturn group. penske's board rejected a plan to make cars for the new saturn. cisco buying tandberg, for about $3 billion in cash. and citi has completed the sale of its japanese brokerage. the deal is one more step to shed those noncore assets. >> there are reports this morning that unidentified companies are renault, correct? >> all right. >> are you reporting that or -- >> i read it in one of the

papers this morning. i read it some in the papers this morning. >> interesting. >> yeah. >> we've got a ton of data today. >> there was a lot of issue stuff by the way yesterday. two big stories on the economic front, fed chairman ben bernanke testifies before the house financial services today. he will tell them the panel's sweeps new oversight powers should be shared. according to the prepared testimony, he will argue for a new, broad council which has been proposed. it's a council to monitor systemic risks in the economy. that's a step away from the idea that the fed should be the systemic risk regulators. he says the fed is, quote, well suited to oversee financial institutions which could damage the economy. meantime, the treasury announcing an initial closing of the public private investment funds, part of the ppip, part of investco and tcw have completed initial closings with at least $500 million. the treasury has suggested all

of these ppips to be running by the end of october. it will result in $40 billion of purchases and that's rnbc and cnbc issued before october 2009. michelle. >> let's check on the markets so far this morning, steve. let's show you what's going on with the futures. at this point, they were indicating a lower open. the dow jones industrial average lower by about 35. the nasdaq would be lower by about 10. let's show you was going on with oil easing yesterday. crude oil lower by 81 cents, $69.80 per barrel. gasoline is lower by 1.73. and crude in london, $68.30 per barrel. the 10-year note, 3.30%. what does that mean? the dollar is stronger against the yen and the euro weaker against the pound. you get 89.96 euro for every dollar. the pound is going to cost you

1.60. and the price of the gold ends the rt yeaher above $ ,000 and there it stays, $1,006. quick break now, markets ready to tack trillion day ahead when we return. as we head to break, take a look at yesterday's winners and losers.

call or click today.

welcome back. the imf says the world economy is recovering. global activities are forecast to expand about 3% next year. the imf raising expectations for the u.s. economy, now saying it will grow 1.5% in 2010. joining us now, william teeny and bert white, chief investment officer at lpl financial. who should i start, mak? bert. give us an idea of your outlook here and how you think the market has priced in what the economic forecast is. >> yeah, you know, we think that gdp is going to surprise. we think earnings are going to be good, gdp is going to be good. i think economists are thinking

about 2.9% or so is the consensus for u.s. gdp in the third quarter. we think it's going to be higher than that. 4% is in the cards. maybe even higher. if we get that, that means top line operating growth. we think that will mean great corporate profits. >> saying 3% or 5% in the third quarter is old news. >> no doubt. >> i don't want to be looking too much in the rearview mirror here. >> no doubt. it is definitely somewhat old news, but i definitely think it's going to be better than what people think. the real question is, what is the but? i think the but is what about fourth quarter? our fear is what happens with a bunch of rimms? >> bill, why don't you pick up there on where the forecast goes, in your opinion. >> i hate to agree too much with

your other guest because it makes it look less interesting. weebl procedure going to see a three handle on it. i think basically the economy is going to be picking up from here. the fourth quarter is not going to be seriously down, if at all. maybe it will be in the high 2s rather than 3 point something. as we go into next year, we're going to be looking at 3%, 4%, 5%. >> so you grmay agree with our other guests, but -- >> i don't believe this double dip story. if you look back to the big recession that we had in the '82 perd, we had some 7%, 8%, 9% growth rates coming out of it. so i think the dampers which are out there being a drag the on the economy are going pull it back to maybe positive growth rates in the 3% and 4% range, but not down to zero and below. >> i think that the second quarter of this year was the rodney dangerfield quarter, which is not getting any respect. if you look at the change on the

change, the movement from 6.4 to minus what is now 0.7, it is one of the biggest rebounds we have had. i went back i think to 1980 and there's been only one quarter in 2000 since then. i think the market did not give the second quarter enough respect. >> i'm with you on this point. i think basically the -- sort of the baseline assumption for what would happen after such a deep recession is that you would get spectacular growth rates coming out of it. i don't think we're going to get spectacular, but relative to what the markets move commentators are talking about now, i think it's going to look pretty good. >> i think it will look good, but i don't think 2010 is going to look as good as most people think. you have stimulus coming out. that will have an impact. and we have to pass this baton from the two runners in this race right now, china and stimulus. that baton has to be passed. it has to go to business and then to the final consumer.

pce is personal consumption is up three months in a row. we hope that's going to be four. we think back to school is going to be pretty good, but we don't know. >> and is that runner permanently changed, right? is that still the ultimate question that we are all facing right here? has the u.s. consumer changed in a dramatic way and in a permanent way? >> exactly. and that's the real question. but you have a bit of a hidden net worth effect. home prices are up and debt is down. i think the consumer is in better shape that we think, but i think it's going to change. i think it's a bit of a new normal. >> any chance q4 from a stock perspective is as good as q3? >> yes. i absolutely think as we go through the fourth quarter, we're going to start to see the kind of news that will get people thinking next year will be better and better. >> like positive job growth? >> i think we'll see positive

job growth before the end of this year. the basic truth of this cycle is that businesses lay people off as fast as they could and they've got no fat left in the system. as soon as the top line turns up, they'll have to start hiring. >> why does the ten year keep hovering around 3.3? >> at the moment, i think there is huge worldwide demand for a safe asset. i think it's still the remains of the flight to quality syndrome. i think at some point, investors around the world are going to decide that, yes, we are off to the races and they're going to leave -- >> and great, interest rates will be much higher. >> unfortunately, that obviously means you start driving up bond rates. >> but rates come up as a symptom of an improving economy and they tend not to crimp off the expansion. i want to ask both of you guys this question. the issue of potential is the steady state of the u.s. economy. what is the right level of

growth in this country? i've been traumaticing too economists who have dramatically ratcheted down what they thought potential growth to be in this country. what they thought was 3% may be in the minds of some 2%. what does that mean for average folks? what means get ready and get used to a morm permanent span of lower growth in this country. are you on board with that? >> no, i'm not. i think the basic determinants of product growth and labor growth, i don't think they've deteriorated at all. there a lot of issues on the demand side of the economy. but that has nothing to do with this calculation or potential. and, you know, even if consumer demand is a little subpar for a year or two, that doesn't reflect on what this potential is really going to be. i think the potential is still there, probably around 3%. that informs my estimate of sort of speed limit for the state is going to try and impose. >> i think it's going to be a little below. and i think we have a little bit of a new normal.

i don't worry so much about the consumer. i think business sperchbding will be less than the new normal. they're not going to hire as much, they're not going to get as fast before. so i think that the businesses are going to be more lean, more focused, and i think spending is going to be much more just in time. i think the business side of things will be a new normal. the consumer will eventually get back to where they were, spending what they make, maybe more. >> i would argue that increases the potential. >> when we come back, we'll get to the top stories. ken lewis, retiring. what is next for the financial giant? we will ask one of the top industry an lives. as washington continues the debate over health care reform, aarp has chosen a side-- yours. we're fighting to guarantee that you'll never be denied coverage

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are you picking this music? i mean -- >> i think the first song, gone, gone, gone, rock & roll -- >> one of the hidden advantages of anchoring squawk is that -- >> well, there is this woman in the back named ann who is pretty cool. she picked this one. >> good morning. welcome back to cnbc. i'm carl quintanilla. steve leisman and michelle cabrera are joining us this morning. >> our story, charlie gasparino broke the story yesterday that

ken lewis is stepping down by the end of the year. no replacement has been named, but analysts say six internal candidates are seen vying for that job. b of a stocks did rally on the news after hours. the merrill deal announced last september's stocks have shed some 50% since then. the stock is called higher this morning, as well. we'll see what happens later with b of a and as the guessing game begins, michelle, in earnest of who wants this job, who would take this job and who would the board would pick for this job. >> let's start that game right now. joining us on the phone is jeff hart. jeff, first of all, ken lewis stepping down, good or bad for the stock? >> i think that the stock's reaction, as we saw last night, will probably be above. there's just been so much negative sentiment toward him, both by in the press, from regulators, that it's become a distraction.

so the stock will probably react positively. but as i kind of sit back and think through that, ken lewis certainly has had his issues in the bank, a buyer of companies. but when it comes to actually operating a bank, the day-to-day tackling, i think he does a really good job. so my perspective in what is still a very difficult economic environment is kind of the operating discipline he brings to the table may be something b of a shareholders miss a few months from now. >> who do you think ends up taking over? it's been suggested bill winters or aldam molina. any of those names strike you? >> there's a number of names that will probably come up. everyone is talking about internal candidates, external candidates. my guess is -- and my guess is probably no better than anyone else's at this point. but i think brian moynahan is

probably the biggest internal candidate. tom montag's name will come up, as well. he's the head of the investment bank. but he's new enough coming from goldman/merrill that i tend to think, you know, moynahan is more likely than that. and actually, barbara desores is probably another name that would be considered, but i think brian moynahan is probably the biggest internal candidate. and from the outside, the name that rings for me is jim hantz, who was the ceo who lost out in the power struggle when ken lewis became ceo. those strike me as the two leading names. >> jeff, where do you come down on the debate about what ken lewis did and didn't do? did he fail to disclose the bonuses from merrill, in your opinion? >> on the did they overpay or not, i think it's pretty clear

that even by waiting a day or a week, they could have gotten a much better price for merrill lynch. so i'm not crazy about the price they wound up paying. the actual disclosures, tough to say. from what i'm able to hear from b of a, they really kind of let their legal advisers guide them as to what had to be disclosed, what didn't have to be disclosed. we'll see how that plays out. but certainly, in merrill lyn lynch's case, you could even say in countrywide, the acquisition before that case, a little more patience probably could have gotten a better price. >> jeff, are you going to miss ken lewis or is your mind-set more of good riddance? >> i will -- i think in a recessionary period where the bank is trying to get its stuff together, so to speak, he'll be missed. but once we get into a better operating environment, given the perception that he did overpay for a couple of acquisitions, it may, longer term, be in the better interest of the stock to

have somebody else at the top. though we knew he was going to retire in a couple of years, anyway. so my perspective from here is i would rather have seen him stay at the helm until we got through the economic crisis solidly and then retire. >> as he said to us on squawk i guess in the spring, the easiest thing would have been to have -- inside words, let someone else stick around. why did he agree to stay, even though he knew things would be difficult this year and suddenly now decide to lead. >> i wasn't hearing much of grumblings of this in advance. he has been in the cross hairs of regulators and media and as much negativity as you can take. he just got tired of having that on his shoulders every day and every day become ago distraction

itself, moving myself and getting me out of the focal point will let the banks focus more on its day-to-day operations. now, the hunt for a new ceo is almost by definition distracting. there's a new set of distractions coming up immediately, but i think that played into it, as well. >> cuomo says it doesn't change the status of his investigation. does it amounter the trajectory of the settlement with the s.e.c., judge raycoff's views? any of that, is it affected by this? >> well, you know, initially seeing the headlines as he was stepping aside, i think my second thought was, okay, are we going to hear individual charges right away, that's why he's stepping down because those charges are looming. it doesn't seem like those charges are looming. not that they may not come, but this is a reaction to come tomorrow or necessarily soon. but no, this really shouldn't change what the regulators are kind of doing. what it may do, though, is take

the heat and distraction away from management. >> all right. thanks, jeff. jeff harte, managing direct erp of this cnbc squawk line. >> we're going to continue this discussion. ken lewis has done a stellar job at boa and he's been treated poorly is jim. thanks for joining us. the answer i had to the question that carl just asked jeffrey is that, you know what? a ceo has to be able to sell the company, go out every day, sell the stock and tell people why to buy it and all the distractions mounted on ken lewis. the cuomo investigation, the question about did he overpay, the failure to really resolve that s.e.c. investigation that was going on, was he ultimately -- >> i think the bank is going to miss him a lot. he did a great job building that company. he and hugh mccall before him

took ads 16 billion north carolina bank 25 years ago and turned it into a $2 trillion plus powerhouse that dominates all of the growth markets in the united states. and i think -- and he's a great operator. they did acquisition after acquisition over those 25 years and he put them altogether and made them work. so i think they're going to miss him a lot. i wish he had stayed, but i understand why he left. and, you know, i know ken and i watched him at those congressional hearings and the look on his face, having to deal with all that political turmoil -- >> pain. >> it was painful. you could read it. it was palpable. >> i'm sure you can sympathyize with shareholders who do have a grudge. >> i think it's a legitimate debate. should he have purchased countrywide, should he have purchased merrill, if he had waited, could he have gotten them cheaper. what i would say is that this

guy sa strategic long-term thinker and we want our leaders to be that way. we get tired of people doing the quarter to quarter game and he was not quarter to quarter guy. he really had a vision for this company, he and hugh mccall going back 25 years. >> you keep bringing that up and i wonder if his failings didn't start when they got to the maximum deposit levels. they used to buy consumer banks. now he had to do something else. he knew that play book really well. but then he starts going into credit cards and mortgages and brokerages and maybe they needed a different ceo for different types of acquisitions at that point? could be. but i believe in a few years, people are going to look at b of a and say, what a powerhouse. i mean, right now is the best banking franchise in the world. it really is. i don't know -- i don't know any bank in the world that has the kind of market share that they have in such a major market as the united states. >> so you say treated poorly. treated poorly by whom?

>> the politicians, primarily. i don't have any gripe about shareholders. they're -- >> well, what about john fingers who is out there saying they misled us, because shareholders also are angry at ken lewis. >> and i think that's legitimate. i think shareholders are entitled to be angry if they want to be. and they have recourse. if they were misled on disclosures, there's legal recourse. i don't know why the politicians are in the disclosure issue right now. i really don't. >> let me spin the tail for you. back of america required in some form or another a -- what was it, $30 billion or $40 billion that bank of america ultimately got from the government? i'll check to that number. and then we find out that they paid merrill lynch billions of dollars in bonuses in the 11th hour of this deal. and i think that's where the anger comes from, not just the politicians, but also the american public. is that not legitimate?

>> well, it's my understanding that those bonuses were very much a part of the deal. the dealing with the bonuses, that was in the deal. the regulators approved the deal, knowing about those bonuses. so you can disagree with the bonuses and say they shouldn't be put in the deal, but they were in the deal and i think they were between a rock and a hard place. they had a deal and they had to -- lewis, remember, at the end of the year went to paulson, the secretary of the treasury and said, this the place is in woshs shape that we thought. weerp thinking about walking away. and paulson said, you do that, it will be a catastrophe for the country and the financial system and we will take very strong sanctions against you and your bank if you do. you walk away from this at your peril. so they went ahead and did the deal. but the regulator knew, the fed knew, the treasury knew that those bones were there. and i believe bank of america

had very good lawyers and their disclosures were proper. i don't know. but that's something that should be played out by the courts and not decided by politicians. >> thank you so much for coming in. trichet is on the wires saying that the 16 countries that make up the euro zone should withdraw their stimulus programs and start repaying all this public debt by 2011 at the latest. so you have op-eds and s from w and now you have trichet weighing in. >> there's a lot out there and basically what was said yesterday is what the fed said in the statement prevails. dewhat he called like a redir t redirect, when you have the one witness go one way and he said, wait a second, what's going on? the facts on the ground are the statement and that's really the main issue. that's what i think kohn said

and you saw the markets react to that. >> when we come back, we'll go to the futures pits in chicago and get a look at the trading day ahead. taking its rightful place in a long line of amazing performance machines. this is the new e-coupe. this is mercedes-benz.

welcome back. michael gurka is standing by at the cme. michael, good morning to you. >> thank you. >> so we had the best quarter in 11 years in the fourth quarter starting out on a steady note. but we have a lot of data coming out way. what do you make of how today is going to shape up? >> it's all been about jobs where we're looking for down 400 on some of these numbers. it's going to be about the initial claims today. ism is what could help us out here. we keep getting better numbers. i think the market is going to

probably look better from those situations. >> people were spooked by chicago's pmi number yesterday. is that a precursors wto what im might say? >> i don't think so. actually, i think it was a bit of a blip. >> okay. all right. we also have to work our way through auto sales which we know aren't going to be nearly as good as august, right? >> no, not at all, which slides into the ism. >> michael, i have a theory that the focus of the market has changed from the change of the level and that there's no longer any change in things being up 20% or 30%, that the change has to be on the level of things. we need to bring the level of things down into that low 400,000 range. we have to bring the level, not to minus 250 on jobs any more but to the plus side. is that the focus on jobs any more? >> absolutely. again, from 400 to 70, that is a step in the right direction. you know, we keep hitting singles here. i think as far as taking the market out and not seeing these

big blips, and for the same reason, that's why you're starting to see trichet and some of these comments about why you start paying back. those are signs that recovery is in place. i think the market is trying to hit singles right here and i think clearly that's the first step. let's look at these weekly numbers. they spill into the monthly. i think that's why you're starting to see more positive momentum here. >> michael, thanks. coming up, the forbes 400. did you make the cut? it goes easier this year. tdd#: 1-800-345-2550 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.

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"forbes" magazine out with 2009 list of 400 richest americans. matt is here with the details. good to see you. >> it got easier to make the list. it went down. i don't know if that's good news or bad news. >> $950 million. you've got millionaires on the first time in three years. you had to be a millionaire 2006, 2007, 2008. but the rich are getting pummeled. $300 billion shaved off forbes, $1.57 trillion. >> violins across the nation.

>> every industry, not just finance, real estate, retail, tech, you name it. these guys got hammered. >> bill gates, warren buffett lost $10 billion compared and larry lost zero. >> $17 billion from the top three gone. >> warren buffel "the biggest loser." >> any up and comers as a result? >> andy beal, this guy out of dallas, beal bank, he tripled his net worth, wept from $1.3 to $1.5 bhig up distressed assets. he went out and bought them cheap. we did this great cover story where we talked about this guy. he said i don't understand why everyone was paying premiums during heady times. i was waiting on the sidelines. >> i'm just reminded of the simpsons where burns gets thrown out of the billionaire, because

net worth is $999 million. these poor guys now worth less than a billion dollars. >> when i look at the top ten i see a lot of inherited wealth, waltons, christy, jim and alice walton, 4, 5, 6, and 7. >> the thing about the waltons, they are holding up in march. when we did billionaires in march, they held up a lot. fell off a lot in the last couple months as basically walmart stock started to get more risk and people walked away. >> michael bloomberg. that's how he pays for those campaigns. >> richest man in new york city, mayor of north, worth $17.5 million. worth $20 million. that's reflective in the value of -- >> what about average age. >> in the 60s, about the same as last year. always typically late 50s, early 60s, white male.

>> youngest person on the list. >> facebook, mark zuckerberg. russian company came in and offered cash for facebook. >> highest placed minorities, women. >> oprah winfrey is the only african-american worth $2.3 billion, down $400 million from last year. a lot of investable assets, real estate, money in the market. so that fell. the brand is weakening a touch. >> where is this going? next year, what do you expect the surprise to be? >> we saw this a lot this summer, june and july. even as we go to press, talked to five, ten billionaires, got out of the market in march in the bottom, didn't get back in. they are sitting] there with cash, gold, bonds. for me that's problematic because these guys control the economy. they control how you eat and you what think about and how you listen to music. so if they are not putting investable assets, that's scary for me long-term pf your

collective rice dom of the most brilliant people in the country were on the wrong side of the market in march. >> a lot of them. not the ones that were in their publicly held stock. i'm not talking about getting out. talking about guys that flipped their company for $2 billion and had it in a diversified portfolio. they basically took themselves out and are holding and sitting on the sidelines. >> not so bad. >> on the wrong side of this thing. now the guys on the forbes 100 are, i feel better now. >> don't get me wrong. almost everybody was down between 25 and 45%. >> thank you guys. good to see you. >> when we come back, top stories, b of a board member on ken lewis stepping down.

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the banking industry's lightning rod for controversy is stepping down. ken lewis announces plans to retire at year's end amid mounting criticism over his deal with merrill, controversy surrounding countrywide division and probes by s.e.c. and other agencies. we look back at the ken lewis area with former chairm eer cha don powell. talking to "squawk box" about dealings with lewis and what lies ahead. >> health care reform, prescription profits and the company's goal in making its own universal health care system as

the second hour of "squawk box" begins right now. good morning. welcome back to "squawk box" on cnbc. i'm carl quintanilla along with michelle caruso-cabrera. our senior economics reporter steve lease meadowlands filling in for diswroe and becky, who are both off today. joe is back tomorrow. good to have you here. >> good to be here. so much to talk about from ken lewis to the feds, jobless claims, jobs report tomorrow. >> bernanke speaks. >> i'm making up my mind about lewis today. i'm making up my mind was he guilty of many sins, multiple sins or no sins. did he do a good job. i know we've been reporting. we're going to put it on the table and have a vote at 9:00.

that's why there's three of us. >> that's right. we have a great lineup, ceo of walgreen's about health care reform and a lot more. we do begin with the resignation of bank of america's ceo ken lewis who announced late yesterday he would step down by the end of the year. the news broke by our own reporter last year. we spoke to him about the possibility of resigning. >> the range seems to be 62. 65 is when we usually leave the company as ceo and then you've got this issue of getting out. somewhere in that range would be when i would like to go. the easy way out would be just walk out now and let somebody else have this problem. but i owe it to my teammates to see us through this. >> lewis says he was not asked to step down. the decision was not the result of regulatory action current or in the future. what was the reaction, though.

board members joining us exclusively, don powell. board member of bank of america, former fdic chair and our dpes host mike holland of holland & company, a b of a shareholder. good to see both of you. don, he was tired, we hear. >> i think ken lewis deeply loves bank of america. he felt the issues he had dealt with in the past, strategic issues, he accomplished many of those. he felt like it was time to move on. this was, as you mentioned, his decision. i think it's remarkable what ken lewis has been able to do and accomplish over the years. i used to, in texas -- i knew ken lewis in texas. i know he's a man that had a vision for bank of america and was able to fulfill many, many of those dreams that he had way

back. >> you heard, talking about what he was guilty of, not guilty of is it possible he was guilty of being in the wrong place at the wrong time. >> it's difficult to distinguish between wrong place at the wrong time and accidents. i think ken lewis is like any ceo, there are some things he wishes he would have done different. i think we need to remember all the accomplishments at bank of america. he's been able to accomplish some things i think, you know, you'd ask me ten years ago, i'd say no way. bank of america is a group of dedicated, committed people, men and women, who wake up every day embracing the values of bank of america to serve their customers in a very productive way,

keeping in mind the shareholders. it's very important. >> to hear bill isaacs, he tells the opposite story, right place at the right time. he argues a lot of the profits of bank of america actually are going to come this quarter and next in the next year from the countrywide acquisition and from merrill. >> from what he's being criticized for. no, you're absolutely right. he and jamie diamond were the two people mr. paulson went to to make things better. >> the only one when the bank left standing. >> left standing and he was there. with the benefit of hindsight, he got caught in the middle of a few things, bad pr. >> merrill lynch already contributed. so has countrywide contributed. they are contributing now. bank of america has made --

>> why stepping down without any clear succession plan. he goes on vacation, comes back and surprises all of you and says, you know, what i said i was going to stick around but i'm not. >> i think he had an opportunity to reflect on where he was in his life and career and came back and made that decision. look, there are many capable people, men and women at bank of america that i have lots of confidence in. i think this will be an orderly succession plan. he's going to be there until the end of the year. he'll be at his post today. so i'm convinced that under the leadership of our chairman walter, who is unflappable, it will be a good process. >> what are the qualities of the next person? >> i think there's some quality that ken lewis has that you would want to see in the next successor. >> grit, competitiveness. core values of bank of america are very, very soft. very soft. understand thanksgiving we're regulated environment, understanding and appreciate obviously the shareholders. but also bank of america has an

excessive 250,000 employees that you've got to lead. >> internal candidate or external candidate. >> i think it's going to be the best candidate. >> is it possible for some period of time before you decide if mr. moynahan or someone else, chad gifford or someone else as the board step in as interim ceo, is that a possibility? >> ken lewis is going to be there until the end of the year. that's a full quarter. it will be an orderly process. >> it would be a mistake if we let you go and didn't talk about the other big news, which is regulatory reform. the fed chairman is going to be on the hill. i read his testimony last night, which we broke last night, he seems to be stemg back from federal reserve being systemic risk regulator. favoring what sheila bair is talking about, a council doing this. what's your thought? >> it's a complex issue. i think it's important they have in place how to deal with the large institutions. a council is a little dicey for

me because the committee respect, who has authority, who is responsible. say you are, steve. >> i'm personally responsible. >> some individual. >> and what about what sheila bair is doing, this notion of borrowing from the banks or making banks prepay next year's assessment for the fdic deposit fund. >> there's no easy toons that. it -- no easy answer to that. i defer to people, bright people, who i'm sure have looked at all the alternatives. this is a consensus. >> what would you do? >> i would probably favor what they did. but i would lean toward going ahead and borrowing money from the treasury. >> mike says timing -- >> don and i spoke off camera. the timing, we're coming out of a deep recession, trying to rebuild the bank. aren't you supposed to build up reserves when times are good

instead of times are bad. >> that's an issue we need to deal with. >> isn't that right? >> i mean, people, banks would criticize building their reserves during good times, manipulating earnings. >> we have to deal with that, same thing as capital. if the fund had been very large, most bankers, including me, would say you ned to pay some of that back. >> exactly. >> we've got to find a way to preserve that fund during good days. >> for a while we're remember that, then we'll forget it. >> back to ken lewis. >> this is how this came down? >> told the board. >> did anyone try to talk him off the ledge, talk him off. >> i think the board respected his position. the board was grateful for his service. there was lots of conversations about praise for ken lewis on that call, about what he was able to do. i think they respect his position. >> for the record he was not pushed. this has nothing to do with

imminent charges or anything. >> this is ken lewis's decision. >> not related to anything in the works with regulators. how do you see that shaping up? >> obviously regulators -- i think, i don't know. part of that is litigation. i know that the men and women that work every day at bank of america are committed to serving their customers. >> do you think we're going to see a resolution that either makes the judge happy by the time ken lewis walks out the door or is that an issue for next year? >> i think that's an issue that is evolve in time. >> a ceo has to be able to go out and sell his company. there were simply too many distractions for ken lewis. when he would go out, there was too many questions whether merrill was the right deal, adequate disclosures. in fact you got to the point ceo becomes a distraction. can't do the job. >> i think that was the case, steve. but i think there was also very positive feedback with ken

lewis. he visits a lot with customers both domestically and internationally. he got great feedback about merrill lynch and countrywide. clients saying great job, i'm glad you bought merrill lynch. i think as we talk about it, merrill lynch is contributing to the bottom line now. >> the first quarter after he bought them, they were positive contributors. the first quarter. >> countrywide and merrill, half the profits? >> i'm not sure about the amounts. it's a large number. >> you keep saying it was his decision. but was it his decision after someone put it in his ear you've become too much of a distraction. >> ken lewis made this decision. >> no one on the board suggested it. >> no, sir. >> he came back with a beard from aspen, said that's it. >> the beard. >> with a beard. >> he's a decent guy that's has feelings also. he deeply loves bank of america. >> a lot of bad things said about him that i don't think he earned.

that's got to weigh heavily on him. for a guy whose reputation. >> i don't care what you say about ken lewis. i watched him with honor students at business school. they asked him very, very difficult questions. one of the questions they asked, how do you cope with this? >> i saw the human side of this. i saw him talk about his daughter, his mother, where he gets inner strength, about his vision for bank of america, where he's been, where he's going. this is a guy that came from humble backgrounds and has spend two-thirds of his life at bank of america. and you know, bank of america still today serves a lot of people, 50 some-odd million people in america. one out of every two people have a relationship with bank of america. the first six months of this year, steve, they made in excess of $400 billion in loans. that's a lot of money. that's a lot of credit being extended. that's a lot of jobs.

>> it is outpatient peers last month, 150% and next best competitor -- the last year over that period of time where the stock suffered more. >> obviously ken lewis has acknowledged some credit issues. there's some issues there. there's doing to be some bumps in the road going forward but it's a powerful franchise. >> would you say that as the lewis chapter ends that the period where the bank grew through acquisition is ending and this will be an era of organic growth. >> there's caps on deposits. i think now as ken lewis has acknowledged they have been executing. there will continue to be a commitment to execution. they are going to get better and better. >> at mergers or at growing organically. >> they are going to get better at all the key components, return to the shareholders serving their customers and providing solid, safe financial products. >> didn't say no acquisition.

>> look, a big story to have a director on the show. thank you. >> well done. >> during the break, michelle is going to continue to ask don whether ken lewis was asked out. >> i wanted a yes or no. >> additional answers don will give during the break. >> all right. there are other stories, actually. general motors is going to close saturn, going to wind it down, the whole dealership network to sell to penske automotive group collapsed. 350 saturn dealerships will close affecting thousands of jobs. no deal for comcast to buy general electric nbc universal despite reports. comcast issues this statement to cnbc, while we do not normally comment on m and a, the deal to purchase nbc universal is inaccurate. nbc universal did not comment. cnbc is, of course, a unit of nbc universal. cisco buying norway

equipmentmaker for $3 billion. bought in 2007 will round out video messaging and other collaboration tools. when we return congressman's reaction to ken lewis stepping down. health care, the consumer and chief executive of walgreen's. you're watching "squawk box" on cnbc and cnbc is first in business worldwide. >> time now for today's aflac trivia question. the screen plays for how many of the 71 best picture academy award winners in the 20th century were based on novels? the answer when cnbc "squawk box" continues. that accident. well...i couldn't have gotten by without aflac! is that different from health insurance? well yeah... ...aflac pays you cash to help with the bills that health insurance doesn't cover. really? well, if you're hurt and can't work, who's going to help pay for gas? ..the mortgage, all kinds of expenses? aflacc

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now the answer to today's aflac trivia question. the screen plays for how many of the 71 best picture academy award winners in the 20th century with based on novels? the answer, 30. welcome back. the resignation of ken lewis came the same day the oversight hearing eventually postponed. joining us ranking member of oversight reform committee,

representative daryl isa. >> good morning. >> what happens to your hearing now? >> it will go forward with the designated person likely to be taking ken's place. you know, it's clear congress has tend to look outward. we look at people there making decisions, the gladiators in the ring, if you will, and never looking at congress, his own actions and government action that led to the reason for these bailout purchases and the like. >> congressman, i watched i think the first hearing with ken lewis and i was a little confused as to what exactly the charge was against ken lewis that was coming from congress. i'm good for a conspiracy story any time there is one. i couldn't find it there. >> there's always a. >>'s trial lawyer behind every one of these. there's no charlottage of lawsuits and people who think no matter how much money merrill lynch makes bank of america or

how much countrywide may make, they can look at the part of the cup, the coffee that spills out of the full cup and they can make a case and they are doing that. congressman is angry. he didn't want the banks to close. he's angry and thinks people should be made whole. the money will come out of depositors or investors in bank or out of the government. and we have not looked inward to how freddie and fannie and other activities led to the meltdown. >> congressman, before you go there, would you answer this question, is ken lewis a patriot who stepped up to save the company with a key purchase of a troubled financial institution at a critical time for the nation or is he a scoundrel has made off with taxpayer money? >> he is a patriot. i'll give you the simplest reason. he's being charged with trying to consider backing out of something which would have left

his bank a little more comfortable in a very turbulent time. when paulson looked him dead in the eye and said we can't do that, he made a decision to go forward for the good of the nation in addition to the good of his company. and i think testimony in and around that, including from former secretary paulson, has born that out. you have some a pretty shrewd banger. when we want banks to take the safe road, he made a decision hoping it would be the right decision for the country and hoping it would be for his bank and it has been. >> congressman, you think these hearings should be canceled? >> i think these hearings are a waste of time compared to alternate hearings. government has to look at how we caused the problem and how we're going to keep from doing it again. we have to look at the corruption at countrywide much more than anything else we're not doing right now. they represented hundreds of bribes in the way of loans to

public officials. >> that's done, right? >> you know, the senate made the same decision with two senators they made with george when they said the gold rolex wasn't outside the gift limit of 50 bucks. but i'm not concerned about members of congress. i'm concerned about what countrywide got across the board for their pattern of bribery using discounted loans. >> congressman, do you think if it hadn't been for the hearing that lewis would not be retiring? did they drive him out of this job? >> i think they made it so unpleasant he decided he'd rather be fly flirk or something else between congressional hearings going on. at the same time, he's done a great deal. the bank is headed in the right way. things are looking overall very good for the next many quarters. it may be he thought he would wrap things up for the next quarter and wasn't another

mountain left after two-thirds of his life at bank of america. >> thank you very much. darrell issa. >> i'll never forget ken lewis gets asked a question by maxine waters and he looks at her -- >> part of my job is watching all those. i hate to say this and make the comparison because it is a little extreme but i was reminded of some mccarthy hearings. bringing a guy in front of the panel is accusatory and makes him seem guilty. >> when we return a check on the markets. 7:30 eastern time fresh data, job cuts with the monthly challenger report. we'll be right back.

welcome back to "squawk." we just finished the better quarter for markets in 11 years, best third quarter since 1939 and we're going to start the fourth quarter on a negative note a lot of data on the way. bernanke speaking at 9:00 a.m. a lot to walk through for the course of the day. crude down, hovering above $70 a

barrel. dollar relatively strong, back above the yen. gold down to 990 last week or so, back about 1,000 and 1005. >> first time you see a 9 handle on the end in a couple days. >> absolutely. when we come back this morning, a look at morning headlines, latest read on the job markets. challenger numbers are out in four minutes. investing ideas from mike collin, guest host and a lot more reaction to ken lewis stepping down as b of a ceo by the end of the year. you're watching "squawk" on cnbc, first in business worldwide. ♪

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welcome back to "squawk box." let's get a check on the markets. so far futures are indicating a slightly weak open. lower by 5, dow jones lower by 37 points. cisco systems buying norwegian equipment maker tanberg. the biggest acquisition. no deal to buy general electric. comcast was responding to reports it had struck a bill for

$45 billion. challenger jobs report coming out as we spoke, 66,404 job cuts were announced in september. that is the lowest level in 18 months. for more on the data joined by rick cob, executive vice president of challenger, gray. good to see approve good morning. >> what do job numbers tell us talking about decline of 54,000. >> it's the right trend. feel like we're moving towards the bottom. we might have found it. >> what industries are showing biggest declines? >> the biggest declines are automotive sector still in september. they are still struggling. then the government sector because of the balance of lower taxes against trying to maintain infrastructure. >> government jobs actually went down? i am shocked, with all this talk of stimulus -- >> if i'm not mistaken, state and local governments can't keep up. >> that's exactly it.

state and local governments struggling because their tax rolls are down. there's a significant increase to the number of people who don't have work, then the companies that pay their taxes. >> the city must feel a lot of money was federal money directed to the states. can we assume those will come back? >> you certainly hope so. there's certainly lots of shovel ready projects being worked on right now. but the state government and the county government that have to operate operate at a much lower level. so it takes longer for funds to trickle down. >> rick, we have a screen up before i hadn't seen in a long time. hiring plans, it was kind of positive. what do we know about the economy and different industries when it comes to hiring. there is any sign of, i don't know, some rekindling of optimism there? >> there's a chance of adding people, not much in fra struck to turn around.

entertainment has the opportunity to do that retail had a nice bounce. back to school sales were better than expected." heading into what we hope will be a trend towards buying in the holiday. those business vs a chance. the health care sector really never felt the same drop that everybody else did. they are stable and probably will begin to climb again. >> rational for job cuts, what are the reasons the companies -- predominant reason. >> declining demand is the dominant one. it's far and away above any reasons. >> thank you, rick. good to see you. >> it is a red letter day for walgreen, company officially celebrating the opening of its 7,000th store in brooklyn, new york. joining us to talk about that, health care reform, greg wasson. >> good morning, good to be back. >> 7,000 is a milestone, isn't it? >> sure is. we set that as a goal over the past decade.

when we had about 3,000 stores. we're excited to be celebrating that opening in brooklyn later this afternoon near coney island. quite an accomplishment. we're really excited. we've really been able to organically grow our chain. we think we have some of the best locations across the country as a result. >> although you're going to be slowing down store growth, you said this in 2010 and 2011. >> we did. by 2011, we're going to slow to 2.5 to 3.5. when you think on top of 7,000 stores, that's a lot of growth, a lot of stores. we want to focus on those 7,000 stores now to make sure we can become more and more relevant with today's consumer. >> speaking of consumer, we've had you on before. i think the mood at the time was they are spending more on staples, not as many impulse purchases or private label. any shift in that trend? >> still seeing the same thing. we saw a cautious consumer,

confidence index a few days ago. it still indicates that. they are looking for needs, buying more consumables as we said. they put a lot of emphasis making sure we've got those items. >> as health care reform progresses through congress, what's your assessment of the state of affairs right now. are you pleased the senate committee struck down the public option? >> i think the devil is in the detail to see what comes out of that. i think long-term, more focus on prevention and management of chronic disease and health and wellness is where we will be going and need to go. see what comes out. the finance committee. probably a little premature for me to comment on. i think we're well positioned like this season's flu shot. we're on the frontline of health care. we've got trusted, accessible health care professionals that are there to play a big role in

health and wellness and position with chronic disease. >> where are you with staffing? >> we're in good shape, actually adding jobs. we're still opening 4 to 450 stores, even when we slow to 2.5 to 3.5, that's still a lot of stores. we're still a growth company. >> mike collins here with the three of them. quick question for you with regard to your view of the near and intermediate future. speaking last night hedge fund successful person said you are the best at what you do, so people in the retail business should listen. you are planning for the next several quarters things to be tougher. we heard from challenger gray things are better. you're going back into the beer and wine business. you're redesigning the store growth a little bit. you're planning for things to be a little bit -- could you give us your view of how you see the next year or two with the consumer?

>> yeah. as i said, i think we're going to see a cautious consumer. we're certainly looking at preparing for that type of a consumer. i think the change we'll see will be lasting. i think people right now will be worried about keeping their homes, unemployment, paying down credit cards. we certainly see savings going up. we're focused on that type of consumer. i think we'll see one really focused on value and is looking for folks to step up and help them with that value. it's where we think we're extremely well positioned. we're in 7,000 communities across the country with the one open in brooklyn this afternoon. i think we're in communities and we can really become a big part of those solutions. >> you're going to be handing out h1n1 shots, right? >> well, we're still working out the details on that, carl. what we're doing right now is we're giving out the seasonal flu shot. >> you've given a million. >> we've actually doubled last year. we're at a little over 2.5 million, a little over a million last year. >> how much a pop? >> about $24.99 a pop.

i think the real thing there, carl, is the accessibility we've brought to this solution. we have 16,000 certified pharmacists, nurse practitioners, across the country that really stepped up and played a big role in this. that's why we do think we can be a big part of the h1n1 solution depending on how that's rolled out. we're working with all the states as we speak. >> in this model where you're actually providing the health care not just the prescription, do you plan to increase that? can you do more and more of that? >> i think we absolutely can. that's absolutely our focus. we're looking at the tasks and administrative work our pharmacists do every day in stores. we're taking that out in a more centralized manner. the reason i want to position our pharmacists to be more available to be able to work with patients at the point of care to help change behavior toward better health and wellness and better management of their chronic disease. >> greg, would you walk us

through the kind of roller coaster ride you've gone through over the past year. we were in a banking panic. my guess ois you guys at least put off a few decisions. where are you now? >> you look back over the past year, part of slowing the store growth was to reinvest back into our core 7,000 stores. we kicked off a major initiative, rewiring for growth, focused on cost reductions and improving productivity. we set a goal with a target of a billion dollars in cost reduction by 2011. we're on track for that. i think our store people have really done a great job in controlling expenses in this tough environment. >> did you slow down too much, greg? >> i don't think we did. i think we're absolutely focused on the right growth now, again at 2.5 to 3%. that still gives us the store growth you need to penetrate the areas you're not in yet.

really allows us to focus on an incredible asset, the fact we're in 7,000 communities across the country. we want to invest back into those. we're putting things into beer and wine we do think the female shoppers today will see us as a convenient place to shop. >> ears perked up when you mentioned liquor departments. we also noticed as you focused more on staples, you're cutting things like impulse items. are you no longer going to carry chia pets, is that true? >> tough question there, carl. >> it's a public service, my man. good to see you greg. congratulations on 7,000. >> where are you going to go at midnight for a chia pet. up next on "squawk box," we get some stock ideas from mike collin. find out where he's putting his money to work. take a look at widely held

stocks, "squawk box" cnbc back in a minute. (announcer) when you need it fast. get it fast. sarah! you're home! (announcer) on the nation's fastest 3g network. at&t. now get 50% g touchscreen phones after mail-in rebate. only from at&t. .

welcome back in studio, wall

street veteran, "squawk" veteran, mike holland, a few names you want to chat about, some of which we might do more listening than talking. ge comcast thing it's a talker no matter how you explain it. >> i'm interested because i actually despite some of the bricks that have been thrown for the last several years, i think barack obama are smart and successful ceos. i think this makes sense for shareholders of both companies if this thing is struck right. i sat here a few years ago and said i not nbc should have -- >> what are you talking a full deal, a partnership, what? >> i think the numbers that are coming out this morning, michelle, they are talking about one-half of nbc universal would go to comcast. whether it's all or half, just getting brian roberts and comcast in there i think makes more sense for ge. the comcast member got creamed on for trying the disney thing.

this makes more sense that disney. i think the disney thing was a reach. i think here, the numbers, came at them, told brian roberts -- >> the stock got creamed. >> because these people, large shareholders said this deal sucks. this could be structured in a way that would be good. i own both, both could be probably beneficial if done correctly. >> are there other places where distributors will be purchasing parts on all of the content providers. >> you know better than i. i think the answer is probably yes. i don't know. >> that old question, wrote a whot book about -- >> distributors are the ones that made money more than the content. >> how about ibm. >> it's interesting to see xerox and others try to emulate what

they have done. i think we will pass several quarters, good to be global, outside the u.s., for a whole variety of reasons in headline news. ibm has done is, made a successful transition to a service building around the world. the numbers continue to show that. >> hps, dell. >> all of them trying to do that. even this morning announcement, another norwegian coming. going back to global, not just u.s. but service business. also evaluation of the company. we do have large parts of the market that have done amazing switch. junk bombs, financial up a zillion percent because it went out of business almost. >> >> no one sells them. institutional investor, hedge fund i speak with periodically

will say i'm glad you mentioned that. i've forgotten those. not only inflation hedges but their deflation hedges. we as taxpayers are underwriting this. they are misnomered as inflation hedge. if you put money into ten-year tip auction, you buy $100 worth get deflation, taxpayers will get money back, even though we've had deflation. it's a bedrock with any investment you have to have it. >> the market, do you feel like this run is done and we need something else to get to another level and at least consolidate. >> i'm really worried about september because september is a really bad month. i'm sorry, okay is a really bad month. third quarter, fourth quarter. you talk about ibm, microsoft, these stocks and some of the tox outside the u.s. in the emerging

market have not tripled. i think we do have evaluations that are still okay. you're kind of a budding optimist here with economic evolution in the last several weeks. >> i'm a budding something, i'm just not sure what? >> reasonably optimistic. >> if that continues, i think that once again, even listening to art cashin, bears have been unfulfilled. they are in tough shape. we had a lot of lousy news. yesterday was a good example. it didn't take them down very much. part had to do with valuation and tsunami of liquidity in the past several months. with that liquidity you can have a 1970s economy where backdrop might not be as good but stocks go up. >> i like the bearish certainty about things unknown, sure there will be inflation when in fact the policies that will create

that inflation aren't in place yet. right now you've got this deflation to neutral. i think that's baked in for six months to a year. the inflation we're going to have is determined by policies yet to be affected by the federal reserve. i'm amazed by the certainty of the double dip. i don't think we can know that. we still have to get through one part before we're sure we've fallen. i have rejected the right of a person to call a decline who has failed to acknowledge the recovery. you've got to say we did something, right? we did minus 4 to minus .07. >> any that speaks with certainty after the past months is suspect. the only thing you can say for certain in addition to the unknowable, what we've had was so awful, things are getting better and continue to get better and may be sustainable for a while. interesting to listen to mr.

wasson, the guy from walgreen, he said this isn't a v. he's got a great feel. things are good. he's preparing for a new environment but doesn't mean things are bad. continue to grow earning. >> whether the worst op-ed, politic, durable housing numbers, plenty of chances for bears to grab the football in the last week or two but -- >> this is a rally that gets no respect. it's rallying but, but, but -- >> yeah, we've had a rally. >> we've climbed that wall of worry. the great thing the guy who normally sits in this chair says. >> wall of worry. >> deals with the fact as they come and makes the trade that day better or worst. >> totally agnostic. >> i don't know if that's true. but he's certainly willing to say i know there's stuff to worry about but in the meantime i'm going to make money if we can. >> which is also the strength of

rick santelli. >> mike is sticking with us for the rest of the program. >> the strength of cnbc right there. >> coming up at the top of the other, andrew ross sorkin, yale school of management, jeffrey sonnenfeld, hierarchy of bank of america in the future. senator bob corker, senate member, his thoughts on ken lewis resignation. you're watching "squawk box" on cnbc. we're first in business worldwide. up next, before you make a trade, you need your daily dose of stocks to watch. we break down today's movers and shakers right after the break. it's gmc truck month. shop the gmc yukon that offers 20 highway mpg, and over 108 cubic feet of maximum cargo space. step up to the best. it's gmc truck month. get 0% apr for 72 months on 2009 gmc yukon. or get $6,000 total cash back on

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let's get a look at stocks watch. joe is out. he's back tomorrow. in the meantime up to us. reuters looking for 41 here, nice from stz, reaffirming full year guidance of $1.60 to $1.70. reuters around $1.62. we'll see what happens with constellation later today. they bid higher. alcoa upgraded to buy. wonder if some of these trades will come back into groove. they will kick off earnings

season next week. hard to believe it's coming around. >> earnings meet up with expectations. >> earnings central. microsoft taken off the conviction list at goldman. they keep a buy rating and a $30 target right around 25. >> no longer convicted. >> not on the conviction list. sachs downgraded to neutral from overweight at jpmorgan. we all wondered how christmas will go and what inventories will be like. their target is seven. >> no way saks can have as much inventory this year as last year. >> disney in light of comcast, comcast's long battle to build confidence, here is disney. the target rates at morgan stanley. they think eps can grow. given the investment in parks, cruise lines and securing some additional sports rights to help

espn. >> espn is doing great, stock is doing great. >> target raised to 35, they were at 30. they are overweight. finally -- >> tigers have done a great job. >> apple, the target increased. shares rated outperformed. going from 185 to 210 on apple. we're all worried about the consumer. >> they have a great product. >> when you have a great product they will buy it. cut out other stuff. >> we'll see apple 210. >> oppe. >> oppenheimer. >> when we come back, breaking economic news, jobless claims. girs, big reaction to ken lewis legacy, we'll talk to sonnenfeld, andrew ross sorkin of the "new york times," senator corker and house oversight chairman ed towns all ready to react to the development at b of

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a key player in the financial crisis is leaving the game. embattled b of a chief ken lewis stepping down at the end of the year. what kind of legacy will lewis leave and hole be next. >> the easy answer would be to step out now and let somebody else have the problem, but i owe it to my teammates to see us through this. >> banks running for cover, like it or not. >> bills are good. >> banking community member bob corker on how to prevent the next financial fiasco. >> we're completely bankrupt. don't tell anybody. >> all that plus breaking economic news. weekly jobless claims and personal income and spending. "squawk box" begins right now.

good thursday morning. welcome to "squawk" on cnbc first in business worldwide. i'm carl quintanilla along with michelle caruso-cabrera. becky and joe is off. joe is back tomorrow. guest host collin & company. check out some markets, personal income, half an hour away. just finished the quarter yesterday, best quarter for the markets since 1998. we'll see how we kick off q4. in the meantime a lot going on. bernanke speaks at 9:00 a.m. corporate headlines as well. >> big news, bank of america ken lewis is stepping down at the end of the year. it's the story our charlie gasparino first broke on cnbc. the 62-year-old executive tells employees he's retiring voluntarily. lewis has been under fire for a series of government

investigations after acquisition of merrill lynch. six internal candidates are vying for the job. bank of america shares this morning are trading higher on the news as after hours trading. we'll talk more about lewis on bank of america with andrew ross sorkin and jeff sonnenfeld of the yale school of management. fed chair ben bernanke testifying today. he plans to tell the panel sweeping oversight powers for the central bank should be shared with other regulators. bernanke will argue for a new broad council of regulators to monitor systemic risk in the economy. they say the fed is well suited to oversee financial institutions but failure could damage the economy. take the testimony live when it begins an hour from now. >> thanks, michelle. the other big story involves two media giants. david faber reports no deal for comcast to buy general electric

despite reports to that affect last night. here on the set with details. what do we have? >> it's funny. a strange world we live in when an internet entertainment gossip site can get the entire world going during an evening reporting that. comcast in a deal to buy. that is not the case. however, as i have reported previously a couple of weeks ago, ge expects that viv endi will exercise the put it has on 20%. again, first reported a few weeks ago ge is preparing for that possibility by getting ready for a potential public offering. when something like that happens, as i also reported previously, there will be other interested parties. chief amongst them certainly might be comcast. no doubt about that comcast has had an interest, long-term interest in gaining a lot more

content, to wit the hostile bid for disney that went down in flames. some saying disney still trying to bulk up to make sure comcast won't make a play. comcast relative evaluation has gone up. but shareholders would absolutely storm the gates if they were to actually buy all of nbc universal. is it conceivable there have been meetings? absolutely. in fact, given some of the comments i received, some people close to the situation or lack of comment on certain things, i believe there has been at least one, if not more meetings, during which is likely to imagine comcast said you know what if the vivendi comes up, we might be interested. would you allow us to be your partner? ge has the right of refusal -- if vivendi were to sell, there are riot, they have a right we don't want that as a partner. the partnership itself doesn't give any control whatsoever.

constructed to whomever would own the 20% if it wasn't taken public. if you are comcast and trying to think of ways, a path to control and/or do something or talk about something that would give more control. this is speculation. this lends itself to the kind of thing we'll start to hear and see in the weeks ahead. by the way we still don't know if vivendi is going to exercise the 20%. ge expects it. vivendi will let ge know prior to the november 15th beginning of the window which they are supposed to. i have not yet heard that's the case. >> it's your sense, if there are discussions, it's in the context of 20%, nothing more. >> might be in the context of that 20%. we want to buy it. what else could we do to give us more control if we did buy it. could we conceivably buy more. let's remember, comcast shareholders are not looking for that company to spend an enormous amount of money. i notice another report saying we might be looking at a 50% stake. that would be 15, 16, $17

billion depending on valuation of universal. a company that made a point of delevering. that being said, a strong interest in content. i have no doubt they are looking at this opportunity as even if we were to buy the 20% and it has no control rights, is there a path here at some point in the future? turn it around on its head, i don't believe ge universal, ge interested in selling all. i have not heard that from anybody in a position to know. would they want to get in a deal with comcast where you'd have to take stock, where you'd then own 49 of combined comcast, universal, these are all kinds of things speculation going on. >> you've got the same large shareholders you spoke with from comcast if the deal were done at a price where you'd get 50%, half, a good partnership and not pay disney kind of prices they are paying.

that probably makes some sense. if you were brian roberts. >> well, you know, 50-50 partnership and how that works and what that looks like is awfully difficult for me to imagine. i'd want the lawyers in there for an awfully long time. would ge want a large infusion of cash? is that a possibility? >> no. >> of course. so it's not inconceivable. again, as i reported a few weeks ago, the fact that the stake is likely coming up will -- november 15th we'll find out. a process will begin. does at least create an atmosphere during which those interested in acquiring more content will look. it doesn't mean that anything is ultimately going to happen. >> i just love talking about the home office. >> really. >> awkward. >> you know what we'll see, of course we'll have more as we go along, we may, don't see in the realm of speculation.

>> thanks, david. we're going to segue from one story he's covering to a story he'll be recovering later today. announcement of embattled ceo ken lewis dominating the headlines. we spoke to former fdic chairman and b of a board member don powell earlier about the lewis legacy. >> ken lewis deeply, deeply loves bank of america. and i think he felt like the issues that he had dealt with in the past and the strategic issues he had accomplished many, many of those. he felt like it was time to move on. i think it's remarkable what ken lewis has been able to accomplish over the years. >> okay. here with more perspective, "new york times" business reporter andrew ross sorkin, his book, too big to fail due out later. professor jeff sonnenberg from the yale school of management. jeff, we've been going back and forth this morning. patriot or scoundrel for ken lewis. what's your take? >> thanks, i appreciate you

keeping an open mind on this. i would take a third choice, sort of the mr. magoo at attributes. not shareholders of bank of america to bail out our system. >> with all due respect congress wasn't there at the time to coin and pick up the pieces. congress was incapable or just could not act with the kind of speed that would seem to have been necessary during the panic. >> this is not an obligation we have the right to assign to the private shareholders of one private enterprise to bail out the system, anymore you can make the claim about any existing party or existing bank that didn't buy out lehman brothers. are youare

villains, non-patriots. was it a damming of praise. >> how does the author of "too big to fail" treat ken lewis? >> i think he's treated as somebody who thought he was doing the right thing. at every step in the end, not that he did the wrong thin, he ended up in this very difficult place. and so when he's stepping out or leaving, i don't think this should be, by the way, considered a surprise. we're all sort of sitting here as if this is a big headline. he had to go at some point. the investigation with andrew cuomo is hanging over this company. so -- >> andrew exactly right. i think the surprise here, andrew, is that the times, maybe the way it was edited, got the store usually 100% is wrong today by suggesting somehow this is a voluntary exit and quoting a former inside director with some supporting comments. a former bank of america chairman for support is --

you're right. this is no surprise. >> we pushed him so hard, don powell, whether or not they pushed him out. no, no, no, absolutely not. my follow-up question should have been, why not? >> michelle, also, where is the chairman of the board speaking out? why do we have several directors running separate -- where is the succession plan. look at the suspicious timing right after -- meanwhile of course you said on your air last spring he's not going to retire until he's 65 or more. now on top of that he has defection right now. leon magee would have been the odds-on favorite. he left because he couldn't become ceo of the bank. this is the man who is the genius of the operations. >> jeff on the voluntary issue, it's not voluntary in the sense there's a lot hanging over his head. i think at some point he said to himself, you know what, i've just got to get out of this.

do i believe the board pushed him out? no. >> stop believing steve jobs didn't this winter because of political disagreements, no health issues. too many are believing the spin the institutions wants to put out. obviously this is the first ceo in american history who was ousted by a shareholder vote as chairman. there's no s&p 500 company that's suffered the fate that he did. he's humiliated every month on the job and the board -- >> except for the fact that all of those pressures you just talked about i do believe are the reason he left. i do not believe that the board said to him, you need to leave right this moment. you don't believe that? >> no. where is walter massey's support? where is the succession plan. >> who takes over. andrew, who takes over. >> let's talk about who takes over, because that's to me at this point the more interesting question, which is to say you're right. if they had a plan, you'd like to have been seen a successor

announced immediately. talking about surprise, there is an element of surprise. >> who? >> brian moynahan inside the company is the front-runner. frankly, if he was the guy, he probably would already have the job. i actually think you'll hear more about bob, ceo of wachovia, former deputy secretary treasury. >> wasn't he the -- >> i'm not sure. i think in the end uch got a pretty thoughtful guy, you can stay with him when the company went under. >> andrew, be careful. it didn't go under, right, he sold that company before it went under. think what would have happened. he got a few dollars for his shareholders. >> that's the good news. what happened, as you recall, he did -- this is interesting, right in he sold the company for a dollar originally to citigroup in part because of the fdic effectively was going to take over. but then, as luck would have it,

obviously wells fargo came back and the bo the company for more. >> jeffrey, mike collins, did chad gifford have any future in this chairmanship ceo thing on an interim basis. >> i don't think so. i think he was fairly but generously rewarded. he had been the ceo of predecessor bank. very confident. did a fabulous job. he did with the creation of fleet. other than as a custodial role, i don't think he's the likely successor. i do believe no ceo is ever fired if you believe the spin out of the company. >> thank you, jeff sonnenfeld, i was beginning to think i was crazy and alone. no comments from the peanut gallery. that's my mental state. >> jeff, a question. what kind of ceo do you actually want to run the company? very broad and big company with lots of different businesses now. there's not a lot of people who have experience doing all of it? >> no, there's not.

i was one of the outspoken critics who i think does better and better every day on the job even with a very narrow base of expertise, although impressive behind him. he is growing enormously. if possible you can get someone. jamie diamond, for example, went to first chicago bank, people were skeptical, what do you know about retail branch banking system, much more on the investment banking side. he did a spectacular job, someone that has grown enormously in office, ken lewis is the anti-jamie diamond. he's shaking things up to create a succession plan. as opposed to hear ken lewis held hostage like other financial institutions. when somebody's name like ken lewis becomes the embattled ken lewis, there's something wrong. has to be somebody with a clean reputation. >> jeffrey, got to leave it right there. i could listen to you guys for a

long time. jeff sonnenfeld, the person talking for the author of "too big to fail." >> much needed help from t.a.r.p., some got help they didn't want. coming up next banking member bob corker on what changed and what still needs to be fixed to prevent another if i as come. his thoughts hon ken lewis stepping down. "squawk box" coming right back.

just one day before the one-year anniversary of t.a.r.p., b of a ceo announced he's resigning by the end of the year. senator bob corker, member of the banking committee joins us from the hill. >> good morning. good to be back with you. >> good to have you back. we talked about this. what's your take? is this good or bad for banking in general? >> i think three things. i'm not much of a legal break-dancer, if you will. this is a case of the alexander complex grabbing another person. i think all of us that have been in business know sometimes our ego let's us carry things too far, make mistakes. probably one or two acquisitions too many. this is what has occurred.

i'd say, on the other hand, from where i sit here in washington, i hope it sends a signal to the business world to please stay away from us here in washington. i can't imagine an intelligent business guy coming before a hearing up here with people interrogating that don't know the difference between asset and liability, the difference between an income statement and balance sheet. i'm sure that's pretty dehumanizing to do. on the other hand, the other side of the coin is probably, and i hope we'll have very quickly, we ought to have a resolution mechanism when somebody seeks $45 million, whatever the number might be from the federal government, ceo is gone, board is gone, stockholders are gone, i think as we move into regulation, that's where we need to be. so i think there's a lot to be learned from this. hope fully again the signal is to the business community around the world but certainly in our

country, look, stay away from us. >> you mean that figuratively and literally? >> i really do. i have recently talked to a very respected financial institutions board. their board meeting was here in washington. i told them the very evidence, the fact they were having a board meeting here in washington to me because scary. please don't come again. stay away. tend to your business. we need to have some things in place in washington that certainly calls it at a situation where we have a too big to fail mentality. again, we lack the resolution abilities during the last case. we really need to move away from that. i think there's a lot to be learned from what happened with mr. lewis. i'm sure he'll write about it and i look forward to reading about it. >> senator corker, let's talk about things to come as you see them. fed chairman ben bernanke's testimony is going to put his

weight behind this idea of a council to oversee systemic risk rather than the fed. what's your take on that? >> i think it's in flux right now. bernanke coming before an ad hoc group to talk about some of this. i think his notion of what a systemic regulator is and the way they are perceiving it are two different things. certainly involving a strong council in all of this is important. i think the one thing we haven't done here, which is kind of important, and that is defining what systemic risk is, because there's all kinds of things. again, washington is looking at getting involved in all kinds of entities that oppose, quote, systemic risk. i think we need to define what that means. i think that could lead us into a lot of areas probably we shouldn't be involved in. >> and phil pull said throw the

whole idea out because we cannot define what kind of company is systemic risk. therefore you create a nexus for government regulator to get involved in any darn company it feels like. >> senator corker, if we could just shift you slightly here. twice now the public option has gone down with the senate committee. >> right. >> when it finally does, is it going to come back? rear its ugly head? >> i think it's gone. i think what we need to be leery of is a co-op that has government-like attributes, much like a freddie or fannie has had. if you look at $6 million into a co-op and putting government guarantees behind it, all of a sudden you could end up with something almost worse than a public option where there's this implicit liability that we may have with an entity like that. i don't know. i think the big issue for the president and the other side of the aisle is how are they going

to sort of come together. i think the president's speech in a couple of weeks was not about advancing -- a couple of weeks ago was not about advancing policy but trying to consolidate their base. i think they are scrambling around trying to figure up a way to pa pass a bill. i think this is going to be a bipartisan exercise. i hate that. i think for the country. >> appreciate your time. jobless claims, personal income and spending. a lot more when "squawk" continues. it's at&t's a-list, don, and it's not the same. we get unlimited calls to any 10 people on any network, but unlike everyone else the minutes we save, we keep. so? so why save minutes with your calling circle if they just expire at the end of the month? you're using that one. (announcer) introducing a-list with rollover. unlimited calling to any 10 numbers on any network and keep the minutes you save. only from at&t.

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we have several pieces of economic data about to hit, jobless claims, personal income and spending. we've gotten challenger layoffs so far this morning. we'll keep an eye on futures and see how it reacts to all the data. not to mention bernanke speaking at 9:00, a.m., eastern time. a lot more to come in just a minute.

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all right. several pieces of economic data about jobless claims, person income and spending. we have kevin with the numbers at the cme in chicago. >> 551 on claims, steve, in the range of expectations but on the high side of the range. the deflators coming in down .5. spending up 1.3. looking for one one probably was the consensus on the floor.

>> any sign of continuing claims there, the four-week average? >> continuing was 6090. that's a little bit less than expected. we don't have the four-week average yet. maybe steve has got it. >> okay. kevin, don't move. let's bring in jim, mike as we go through the numbers here. your initial thoughts, jim, on how the markets will trade. >> trade badly. need to know trade badly on a bad number. come in today being worried about tomorrow's number and hoping today will make us less worried. it didn't. if anything, it makes us more worried. over the last six trading days the market has tradeed with an ominous cloud every since that key reversal day. every time we try to rally we make a lower high than we did before. i think the point is this, six months with two ingredients to push the stock market up. one, clearly undervalued, two, with all this government hope that was put on the picture. now we've gotten to a point of six months we need more than that if we can't get it

tomorrow, a substantial pullback. >> u.s. treasury prices extending gains after higher than expected trading. >> yeah, if the stock market doesn't trade down big today, i'm not sure what takes it down. this is a lousy number. i think as jim was just saying, we've got a series of bad news incidents over the last several days. it's been unable -- these have been unable to take the market down strong as art cashin points out. if this doesn't do it -- this probably -- >> kevin, you agree. >> why such a bad number, mike. i'm a little confused. >> personal expenditures. the jobs number is bad. >> jobs is the key. jobs is the key. the other numbers are interesting but jobs is the key. the other numbers are fine. once again, mixed. >> it's a lousy number? >> lousy number for two reasons. one, it's obviously worse than expected. we're in a situation right now

we're hoping for these substantially better than expected numbers coming in. we want to declare everything is over. it wasn't that. >> steve was just saying before the number came out, he hopes for a better number. >> not it. >> that wasn't it. >> directionally, steve, are we going in the right direction here. the four-week average. claims going down. >> the great debate, change versus level. >> right, agreed. >> the market has gotten beyond the change story. >> putting up the juice here when it comes to mixing metaphors, when it comes to actually i don't know where that phrase came from. got to get into 400s on jobless claims. i like the move we have on the prior week. it stalled again. we can't seem to get on track. good challenger numbers. nobody is going out. i think mike has proven my point. you don't buy stock at minus

250. assuming the number is going to reflect where jobs are going. real quick on jobs tomorrow, what's your expectation? >> i think the market is looking for something around 200s, whatever the consensus is. i think the whisper down here is something around 200. if it's lower than that they would like it. i would just say this. everything is true economically, everyone down here one church, the church of the devaluing dollar. right now the dollar is a little bit better so there's a minor adjustment. when that trade breaks down there's going to be a change in the market. until then, no change coming. >> that's why we can't stay out of stocks completely. if you're out of stocks completely, you worry -- they go with the war on the dollar, the government keeps beating it down. you want to be exposed to stocks. you can't be in cash, have that losing buying power. >> i need somebody to explain to me, somebody, for the love of god, explain to me why you buy stocks when the dollar is down. >> thank you, guys. >> you've got to buy something.

>> that's a good reason, i suppose. a heck of a way to do investments. >> guys, good to see you. and a reminder, can you catch jim every friday night options action 8:30 p.m. eastern time right here on cnbc. a year ago, bank of america announced that deal to buy merrill lynch. a year later the deal is still under scrutiny. oversight chairman ed towns next with his reaction to ken lewis stepping down at the end of the year. you're watching "squawk box" on cnbc, first in business worldwide.

all right. here is the reaction to the futures newsweekly jobless claims climbed by 17,000 more than economists expected, 551,000 versus expectations of 535,000. consumer spending says cash for clunkers, largest amount in eight years, given personal income continues to lag. >> eight years. >> yes. >> cash for clunkers. >> an amazing number. meantime retirement announcement of embattled -- there's that word again embattled bank of america ceo ken lewis. news first broken by our own charlie gasparino yesterday afternoon. we spoke to congressman and oversight member about how he's going to be remembered. >> he is a patriot. i'll give you the reason. he's being charged with trying

to consider backing out of something that would have left his bank a little more comfortable in a turbulent time when he really wanted to take the safe road, which is what we want banks to do. he made a decision without public disclosure to do the right thing for the country hoping it would be the right thing for his company and it has been. >> joining us with some reaction to the retirement and perhaps that statement as well, congressman ed towns, chairman of oversight and government reform committee joins us from the hill. congressman, good morning. >> good morning to you. >> trying to make sense of what the retirement means, how it changes the trajectory of your investigation. does it? >> no, because the investigation was not about one man. it was not about ken lewis. it was about the fact the private deal the government put $20 billion in. of course we are looking at the fact that -- as to what happened with the $20 billion, why $20

billion. initially when you looked at it, indicated the fact there was $9 billion shortfall. then when we looked at it further, $12 billion shortfall. all of a sudden when the deal was closed the government put $20 billion into it. that's the real question, the real issue we're looking into. as we looked to reform our financial system, we need to know exactly what happened here, so we can look forward and know what we're doing from this point on. >> do you believe -- i'm not asking to get inside his head. do you believe part of his retirement, part of the equation is scrutiny he's come under in part by your committee? >> i don't know exactly what happened here, but i know one thing. we're going to continue to look to see what really happened regardless of the retirement that has no bearing on continuing to look to see what happens. >> congressman, i'm trying to understand if you believe there was wrongdoing. was there lying? was there fraud?

what is the allegation with regard to bank of america and ken lewis? >> we really don't know yet. that's why we're continuing to investigate. the fact is that if it was $12 billion or 9 -- >> i'm sorry, congressman to cut you off here. we don't know a lot of things. we don't hold investigations relative to those things we don't know. there's obviously some sense that something is wrong here. what specifically do you feel is the charge here? >> the point is we just want to know what happened so we can look forward to where we go from this point on. you see, what happens, people don't realize the meltdown is something that we are now looking to see what happened here in order to do that and make recommendations to the committee that has jurisdiction over it. >> i understand that. but we've had testimony from ken lewis now i believe. was it hank paulson and before your committee as well. >> ben bernanke as well. i don't know if tim geithner was

also there. what facts are we missing in terms of sequence of events. >> we've talked with anybody that has information. we're letting this investigation wherever it leads us, that's where we're going to go. >> when secretary paulson said it was me, it was me, and by the way, it was me. i told them to do it. it was me. that's not enough. >> some people are saying that's not the way it happened. we need to continue to look. if we're going to reform our system, don't we need to have all the information? i would think so. >> i think there's obviously information gathering, congressman, right? you'll issue a statement like this one. our investigation has uncovered troubling facts. we hope we can resolve unanswered questions about the merger. you clearly have some suspicions, right? >> of course. no doubt about it. that's the reason why we keep looking. we know there's something rotten in the cotton. we keep going to see what was happening. that's the reason the investigation is still ongoing. >> it's not grandstanding. >> absolutely not. >> what's rotten, congressman?

>> and what's the cotton. >> we're not sure what's rotten in this cotton. >> why not go after stan o'neal, a lot of other folks, chuck prince, who walked away with huge, huge bonuses and a lot of people think were actually ig abouter parts of the problem. >> we're looking at all of this, the bonus system. we feel there's definitely something wrong. we want to continue to look. no one is saying anything. >> congressman, don't get me wrong here. i'm the one who covers this stuff. i watched all of that hearing we talked about earlier. if there's some charge there, i'm happy to come on and report it. not happy but that's my job here. i just want to know, is the idea ken lewis stepped up and bought a company and that helped the country and something he wanted to do as well. then he found out later the losses were bigger and went to move away from that deal. and the feeling on the part of

regulator regulators. that's my understanding of the story and i don't know anything to contradict that at this point. >> i think the story is the fact they got the $12 billion in the shortfall from merrill lynch. the point is how do you get from $12 billion to $20 billion. so there's $8 billion situation that i don't quite understand. that's what we're looking at all of these issues. these are unanswered questions. we think we owe the american people an answer. >> congressman, the bank is obviously looking for a successor of mr. lewis. we'll play the game about how it might be. whoever it is, are they not walking into a hornet's nest? are they going to have to deal with you guys on day one. >> i think the only thing they have to do is open the books and let us know what happened. if there's nothing wrong, then fine. the point is, i just really feel we can't stop because of changing of leadership.

>> so the bottom line is the committee, they won't follow mr. lewis on this path, they are going to stick on the company? >> right. we're not looking at investigating one man, we're looking at a deal. >> congressman, appreciate your time. interesting stuff. thanks for being here. >> next week on "squawk" when "squawk" goes to capitol hill and broadcasts live from the hill on the house side. we did the senate a few weeks ago and we'll do the house. >> obviously regulators haven't explained well enough whole idea of additional capital requirements new in the wake of failure, right? >> you seem sort of perplexed by that. >> i really want to get this. >> carl actually asked him about his quote and he said there were troubling facts. >> rotten in the cotton. >> he never came up with -- he said the loss was greater. >> it's that $8 billion gap, additional capital. >> as i understand it, you had a

month of deteriorating securities and that -- >> that's what happened. >> the other thing i kind of get and i don't want to excuse the company and i feel bad for the shareholders that lost all this money perhaps because of this. but the idea being that you went in and you quickly did due diligence over a company because all this stuff was shotgun, the whole deal was shotgun. >> it's known. that's what happened. >> if somebody wants to write in and give us information on what happened to the $8 billion, do it. if there's some fraud here, let's report it. i think they have had a lot of hearings. >> i think the comment was right on the money. coming up, you're not done with this conversation. getting to the bottom of the financial crisis a year later because another guy who is going to try to do the same thing, former california state treasurer is the charp of the new financial crisis inquiry commission.

he's going to tell us where the investigation is headed next. "squawk box" is coming right back. you're watching "squawk box" on cnbc, first in business worldwide. 100 years of engineering excellence is right on time. it's gmc truck month. shop sierra 1500 slt with the 403 horsepower 6.2 liter v8. it's the most powerful half ton v8 in its class. step up to the best. it's gmc truck month. get 0% apr for 60 months on 2009 gmc sierra or get $6,000 total cash back on select 09 sierra 1500 extended and crew cabs in stock. see your gmc dealer today.

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super rich not so rich anymore. the collective group lost $300 billion in net worth. the top ten almost remain the same. bill gates in the top spot, warren buffett the second spot even though he was the billion as berkshire shares dropped. number three, larry ellison of oracle, the only member of the top ten who didn't suffer significant losses, stayed flat, $27 billion. the investigation to what led to the financial market melt down is under way. it's being conducted by the financial crisis inquiry commission, the new commission set up by democratic leaders on the hill earlier this year. the guy in charge is phil, chairman, he was california's state treasury from 1999 until

200 2007. familiar to our cnbc viewers. he's been a frequent guest. what can you do any different from the members of congress? >> the first thing i want to say is we were set up by the congress as a whole and a law signed by the president. i think it's important to have a non-political bipartisan look at what brought our financial system to its knees. so we have a bipartisan commission. bill thomas, former head of the ways and means committee, is the vice chair. we are to look at, in a nonpartisan way, at the facts about what brought down our financial system. just like the 9/11 commission has done, just like the hearings did in the 1930s, it's time to step back, do a full diagnosis, tell the history of this meltdown for the american people so that we are less likely to repeat the mistakes we've seen over the last several years. >> what is the makeup of the commission in terms of democrats versus republicans? >> there are six members appointed by democrats, four appointed by republicans.

the vice chair is a republican. we must agree on all the staff. we've been hiring the investigative staff together, subpoenas must be issued on a bipartisan basis. >> what's the nature of you guys that make that any different than everything that congress with do? >> we're not run for office. we're not in the heat of political battle. we are citizen leaders from across the country. i've been a real estate investment person, been in the public sector. we have a former chairman of the major corporation. we have brooksley borne, for example, head of the commodities trade commission. senator bob graham. we have american citizens from all walks of life who want to take a hard investigative look at what were the practices, what were the actions, what were the decisions that brought us from the peak to the valley. >> can i ask if you have a comment on our last guest, congressman. holding an investigation on bank of america. what is your thought on that particular inquiry by congress? >> well, look, there's a role for vigorous congressional

oversight. and that's really for him to undertake. we won't be looking at the issue of the day. we're going to start our clock probably or start our cameras in the mitt 1990s. take a look at all the policy decisions, low interest rates, elimination of glassed eagle, the separations in commercial banks and investment banks. we're going to look at the fire that started, the match was lit in the mortgage market. we're going to look at the things that accelerated that fire, credit default swaps, out-sized compensation. we're going to look at as the fire burned, where were the firefighters, where were the regulators, where were the credit rating agencies, the risk managers? we're going to try to do a definitive history, fact-based, not opinion based, of what were the major steps along this road. and that historical accounting is very important. the 9/11 commission is in some ways our model. they did a hard target, factual assessment of what happened, how our nation was left vulnerable to terrorist attack.

in the 1930s, ferdinand, when he did his hearings, lifted the vail for the american people on the practices on wall street that brought about the stock market crash of 1929 and a lingering depression. out of that came substantial reforms. we hope to do the same. >> all right. thank you, mr. an geliti, wish you the best of luck. chairman of the financial crisis inquiry commission. how long before friedman came out on his piece about what caused the depression from. >> you just cued my line for my speeches. when i get up and say there are lots of numbers, the only number that matters the most is 30 and that is the number of years. 1963, when schwartz and friedman explained what happened during the great depression and how the fed fell. so it took that long. maybe the curve is a little less steeper, a little shorter this time around. >> i doubt it. >> it took a very long time to figure it out. >> woods was, what, 40? >> 44. >> did you know that the guy we just had on was in "the

simpsons"? >> in "the simpsons"? >> he knew the creator and he was -- seven years ago. >> there's no higher honor. >> fake i.d. >> i'm getting screamed at. coming up, a final investment idea from our guest host, mike holland. first, share of gold prices this morning, where are they? there they are. down $2. but still over 1,000 where they closed the quarter. "squawk box" coming right back.

nike is denying its that new contract with michael vick. darren rovell reports nike is supplying athletic gear for vick to wear but does not have a new endorsement contract with him. yesterday the agency who represents vick said he had recently resigned with nike to we log his return to football vick was out of football for several years while serving time for charges related to illegal dogfighting. so we has gotten some time on the field but apparently no deal yet, if at all. >> nike says they have no dog in that fight. >> oh! >> hide your