put in a portfolio and it's liquid. you know, i think maybe we'll make a bigger deal out of it, that it was priced at 3.15. >> but waits controversial move when they were allowed to pay back the t.a.r.p., anyway. then when you see something like that, that adds fuel to that fire. >> if you have to rank it one way, negative or positive, for city group to be able to raise money in the public markets it is a good thing. >> and it's not miles away from where treasury got in. they had initially they were going to take six to 12 months to sell their stake. >> we're going to stop and wait until it goes up. wow, is it -- so you can tell me it's going up, then let's buy it. i mean, $3.15 is $31. if it's going to $34, $35, $36,

we should all be buying it fp. do they know it's going up? >> i think they hope it will. >> and then there's the issue of whether it's a secondary offering or not, so it's not a secondary. >> speaking of paying back the t.a.r.p., b of a find a successor to ken lewis brian moynahan. moynahan will move from boston to charlotte easing concerns that bank of america might relocate. >> there he is. >> and his primary goal is to carry out lewis' business plan. b of a shares on that news called lower this morning by a few cents. it's in the papers this morning. >> where the heck is it in the papers? it's on c1 and it's not in there anywhere.

>> it's through the treasury story on page 1. >> yeah, but it says look for the complete story on c1 and there is no story on c1. >> we've got the whole ken lewis, that he was forced and did they tell him, did you have the buy? and so it does make a -- you know, with other than now it's jobs, there's a new ceo at apple, then we take note, right? but this is still a big deal. but i want to know more about it, don't you? >> yes. >> turn ones, turn offs, favorite color. how many kids? how many kids? >> he went to brown. does that help. >> i thought you said he went to notre dame. >> yes. >> he went to notre dame. why are you point ath me? >> i don't know. >> he's the youngster. one day you're "time"'s person

of the year and the next the senate is voting on whether you still have your job. the senate meets at 9:00 a.m., just squeaked by brian roberts yesterday as person of the year. isn't that true sfp. >> i told you he doesn't like -- >> oh, never mind. >> i'm making that up. >> zucker had to be there, too. he orchestrated all this. anyway, the full senate has been expected to take up the vote on bernanke until next month. rick didn't mention him, either. >> you know who else was a contender? >> tell me. >> andrew ross sorkin. speaking of which, we're joined by "new york times" supporter andrew ross sorkin. >> author of the year. >> author of the decade is more like it. how are you doing this morning, andrew? >> good morning. i'm told metallica is brian

moynahan's favorite ban postponed. >> really? >> no. i'm just making that up. >> by the way, they're going into the hall of fame today. >> as they should. do you know how many number one hits they have? ♪ . >> dance queen. >> anyway, we have b of a, citi and bernanke's senate vote. which one do you want to tackle? >> i want to talk about brian moynahan. in terms of the kul material shift this provides, what it means for the first going forward. >> you say you have mixed views on him. i think there are mixed views about the board and the company behind him. he's 50 years old, so he's young. i think there was a view inside the board and the reason it took so long to get to brian

moynahan, where he was sitting in front of them the whole time, was that they preferred someone outside the firm. bob kelly was one, obviously. and really, in the end, this was almost a decision by default because they couldn't bring somebody else in. what does that say, really, about the firm going forward? >> and plus, you know, the law background, at least in roebt history, has not served ceos of banks well. i think the issue with brian money na hab was there. he was a lar for many, many years, didn't join the banking world until recently and has been in the business for handful of years as a banker and he's been moved around. so he's done investment banking, he's done retail. he has done well. that's the good news. the bad news is he doesn't have the lifelong experience that ken lewis did or does. >> we're looking at video of him testifying before the senate or the house. that is a nice hazing, right?

if you're going to get some steep learning curve experience, going to the hill to tv on behalf of you're bank is something, right snt. >> yes. in fact, greg can you recall who was if other person that ken lewis wanted as the ceo, that cloud is going to hang over this company with brian moynahan as the ceo because that investigate is going to continue and i think it's going to continue to raise questions as the company goes forward. and that is one of the reasons in many ways they were looking for an outsider so they didn't stro deal with this issue being in the papers over the next couple of months. >> maybe his legal experience will help in this. >> it could. >> how about the treasury? >> you know, i think it is an

issue. so many investors are flooding into that stock, they want to follow warren buffett into that, but on the other side, citi is getting kill and in their minds, they're getting killed again. they think they can't win. >> behind wells fargo? is that like they're mad at wells fargo all over again? >> there's a number of people inside the firm that rb exposing that firm quietly. >> if they said citigroup is going to steal $25 million from the general public -- i would have laughed. the whole idea of the dilution and what that will mean for the stock price, it's hard to see how that stock moves over the next 12 to 24 months. >> but you don't buy it if you think it's going back to zero or one or two. >> but that's -- >> to be able to sell it at all is something. sdwli agree with that, but

again, i suspect at what price? i think the price will be lower than what you think. i think there was a higher expectation in citigroup that they could get this off the ground quicker. >> what is the most surprising, that they can't get the institutional support that they that it thought they were going to? >> i think they thought they were going to get more institutional support. i think other things were bloeb into the system. >> the bunnings of the world aside, is this week going to be a net positive or a net negative for him? >> it will be a net positive, but in the way the whole time magazine cover has created a mini firestorm. lots of people have been out there now pointing the finger at him. it raises new questions. >> you don't actually point. you point at the sky with that

ping. >> and he's somebody who obviously has in many ways as good a record as you does from bringing us to the brink is that it was on his watch that we were brought to the brink. i suspect we'll hear more about this. >> did you see the cover yesterday, andrew? we brought it up, the men who saved the world. you should wait on that, right? >> do you think there's a curse here, a "time" magazine curse? >> sara was on and said, dick vole, i feel comfortable writing a book with his chapter. are you sure? wait until you know. >> it's a very dangerous game. >> it's very good to see you. >> andrew, are you sticking around or are you leaving? >> i don't know. you tell me. >> we're going to let you go.

the results of the latest nbc/wall street journal poll are out. for the first time since taking office, president obama's approval rating has dropped below 50%, so you're ending the year in a much different way that you started this year than it was back in january where there was a lot of hope and optimism. more than half disapprove on the president's handling of the economy. as you can see. >> how about hejt care? we're not only going to mention that. what were the numbers on health care? >> awful. it looks to be the status quo versus health care and at least people said they would rather to health care than status quo. status quo is winning now. >> because people are upset that the bill is not morrow bust. did you hear from howard dean? kill it. >> nobody is happy on it, on the

right and the left. >> you're losing some of the liberal base now. >> pass it with 51, we'll be golding. >> is that what you think? >> no. that is what dean said. >> you said it so earnestly, are you sure? >> i'm channeling dean's message. >> the question is timeline now. it's almost the end of the month, isn't it? >> yeah. the house isn't in session at the moment. they've got other stuff they're doing today. >> and they have a huge public option. do you remember when reid brought the public option back? was this a good move? because now it makes it so much more obvious that it's gone again. >> i think the line from a lot of hill people yesterday is now we know what's possible and what is not possible. >> well, they're backslapping and high-fiving when he puts it about a back in. now it makes it more painful,

like a tooth extraction, if he hadn't put it back in. >> ow. >> yeah. the house narrowly approving a $155 million mesh whiier. the house approved additional spending forl shovel ready projects. the bill provides money to avoid layoffs of teachers, employ es and other employees. 38 democrats voted against it. they got 217-212. >> big ten party. >> man, we are split. if sfleet is expected to consider the measure early next year. >> the latest reading on the u.s. labor market is set for 8:30 today. they were release weekly jobless

claims. we'll get the numbers and the latest reaction. the trade everies we've been talking to say this is the key number this week. >> in the meantime, the dollar rally conditions. greece had its credit rating cut a notch, as well. meantime, the markets in asia had red arrows, as well. chloe cho is in singapore with an update on that. >> plenty of red arrows, indeed. the name of the game seems to be about profit taking. it's uncertain as to how much we should read into these moves. a lot of people are packing up and leaving for the holidays. take a look at the australian market, though. they were the outperformers today. higher by 0.2%. it's a pick up in m&a activity with the national australia bank offering $2 billion to trump a joint offer by axaxa and amp over axa asia pacific.

on the other end, takes a look at the nikkei at seven-week highs, supporting a lot of the exporters there. the boj today kick started a two-day policy meeting. and it's interesting to know when they're offer tomorrow, they'll come up with a die vergent move. that is triggering a lot of talk that it's a matter of time for the japanese yen to regain its status of the funding currency over the u.s. dollar. another sell-off in greater china is three days in a row. we saw broad weakness in banks, properties, autos appliances and it seems that a lot of investors are trying to take and profit and they're concerned about assets bubbles that formed in the markets there. there you go, the shanghai composites getting lower by

2.3%. if that market falls below 3,111, that's moving away from the 60-day moving average. the hang seng down 1.2%. but there was one sector that actually bucked the overall trend in the greater china region and those were the utilities. and that is because there's a pretty strong winter chill sweeping across the mainland and a lot of investors piled into some of those natural gas companies, as well. and, of course, south korea off 1%, though been a pretty weak session out here in asia. let me send it back to you. >> chloe, thank you very much. good morning. we'll appreciate it. meantime, when we return, we'll have some economic numbers and earnings set to drive the markets this morning. we will set up the trading day ahead in a moment.

this is disturbing. let's have a look at this morning's upgrades and downgrades. goldman sachs talking about harley davidson, not nice.

downgrading it from a sell to a neutral. not only downgrading it to a sell from a neutral, but addling it to the convention sell list. they're convinced that you should sell harley davidson, the american icon. >> the bid is down, but more than 10%. the ask is still there. >> not going to be good. six-month target. now, it says that the firm sees retail bike sales declining. are they talking harleys? they're down 35% to 40% during october through november. and sees this as below street consensus. elsewhere, constellation brands, the target is reduced from 18 to 21 at ubs. the firm believes that agrupo modello will seek to take control another 50/50 venture crown imports, though ubs remains a positive on the shares. that was pretty good, wasn't it? groupo modello.

that was the accent. and finally, alberto kol better downgraded from equal weight to even weight at morgan stanley with a price target of 32. big name tech stocks are in the spotlight today with oracle, palm and rim all reporting after the bell. intel remains in the news. joining us now is david eller, principal at town hall research. we saw comments yesterday, i think, david, on -- i can't remember the only thing this person would buy. but out of those three that we were reporting, do you have a favorite? would it be palm, blackberry, rim or oracle? >> it would definitely be oracle out of the thigh. >> even though it's back to 23? >> back to 23, oracle is just a cash generating machine. 80% of their profit comes from maintenance and upgrade revenue. that's relatively -- it's very stable, even in this environment.

it's a call option on increase in spending and enterprise. so as enterprise comes back and starts reinvesting in modulation, oracle is going to be a direct beneficiary of that. conversely, we're seeing companies like rim and is palm coming under incremental pressure from the iphone and motorola and we downgraded both rim and palm over the last six months. >> looking at oracle's chart, it's very close if you looked at a long-term chart. we're pushing up against the multi year highs. if we keep going back, we'll be able to see that. do you think that could ever break back? it was almost a $50 stock at one point. at 23, it's trading at a multi year high. do you buy it here? >> it's a very different company. i think you wait until the acquisition closes. >> that is going to happen. are there still regulatory concerns in europe? >> i think they got a clearance. >> they made some small

concessions. >> okay. so you have a buy -- or you would buy oracle? >> we well, we don't have a buy on it. our concern is on wireless stocks, primarily. but chuck phillips at morgan stanley is the person who introduced me to this industry, so i have kept a pretty close eye on oracle over the years. >> the president, right? >> the president. >> so now go back to rimm and palm. would you buy either one of them? and google is going to have a phone eventually, too, right? >> no. you know, everybody is talking about that, but we don't think that is going to happen. >> really? >> yeah. we put out a note yesterday discussing how it's going to happen. google is in a software business. that is where the margin is. >> all the reports seem to indicate they wanted to follow a vertical integration model like apple's, right? >> well, they're partner with a company to do that, but there's low likelihood that they're going to -- >> get into hardware. >> yeah. they would be alienating all of

their partners. google wants their search platform to be in the hands of the masses, so they want a cheap smart phone to be out there for a company to use. a company like hgc is one of the best companies to work with. with the success we've seen from motorola and hsc both in motorola and europe, they're well on their way to doing that. >> david, i have a blackberry phone and it's on at&t's service and the service is getting worse and worse every year. i drop calls constantly. and i keep hearing people like erin the other day talking about how this is the iphone's fault because they're on the at&t's network. is that true? >> yau yeah. the crowding out effect. >> so this is at&t's fault for not caring about me any more inspect. >> it's not so much that. at&t has certain profit targets they're trying to hit and they're not investing their

network to the same extent verizon is. >> they need to eliminate all you can use data plans. >> this is at&t's fault. is it an iphone issue here that they're sucking up the resources? >> it's not an iphone issue. it's a corporate issue at at&t. they made a conscious effort to not invest in their network and to let the traffic push beyond the limits of it. >> dropping calls every ten minutes now. >> appreciate it. thanks. bank of america has a new ceo, but what will that park spark? will it spark new enthusiasm? also, john harwood is live in copenhagen as the difficult negotiations on climate change continue. stay here. yeah. would you like a pony ? yeah ! ( cluck, cluck, cluck ) oh, wowww ! that's fun ! you didn't say i could have a real one.

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good morning. welcome back to "squawk box" here on cnbc. i am joe kernen along with becky quick and carl quintanilla. the futures this morning were kind of like -- oh, now they have thawed off quite a bit. now down 61 or so after a day yesterday that didn't turn out positive. not a lot happening in the last six weeks. >> you've been in the 300 range. >> yeah. and small moves during the day. has the vix done anything at all? the last time i looked, it was around 20, 20 1/2. the treasury is going to hold on

to its stake in citigroup. i says it will delay of the sale for at least 90 days. it does expect to dispose of the shares in citi once the stock goes up. they are going to wait until it gets above the 3.45 price which is i guess what they paid. >> they don't want to lose money on it. >> although, what is 700 million is in the scope of things? but it's significant to say you made money on the deal or you lost money on the deal. you've got to hold on to it so you can make some money. it was close, but the house has narrowly approved ads 155 billion jobs bill. that money will get towards new shovel ready projects and keep teachers, police and other public employees from being laid off. the vote had no republicans voting for the measure. the senate won't consider the measure until the new year. >> who would have ever thought they the these two stories would

collide? the dubai debt crisis and tiger woods. it is going to complete its tiger woods golf project. dubai properties is a unit of dubai holding, which has about $179 billion in debt maturing in the first half of next year. it says it has no comment on tiger's personal problems. but he's got that going for him and athlete of the decade. you saw that yesterday in the ap poll? and a lot of those votes coming in after -- >> and i think erin talking to tim finchun. >> the pga chief. >> yeah. did you watch the saturday night live -- i saw it yet. you have to watch it. it's going to be fine, the pga tour is going to be fine. and as the sponsors are walking behind him pulling their signs off of the -- he finally ends up with the erie chamber of commerce sponsoring and the letter q sponsoring the tour and

seltzer. >> seltzer water? >> just seltzer. and it goes over some of the stars that the pga tour continues to have and they pick the most obscure -- it's not good. but darren, i think, is going to ask commissioner finchun about that. >> the masters is in, what, april? >> april. >> who knows what is going to be the case by then. >> a the this point, you know, him and his wife have something to deal with. he and his wife have something to deal with. beyond that, come back. you know, i think -- the sponsors probably -- >> sponsors, fine. but if elin -- now supposedly she's going to divorce him. come back, play golf, win attorney.mentes and do whatever you want. i hope he's not in some deep depression. >> how could he not be? >> i know. but there are people that say everything passes eventually. >> you know what? honestly, i hope he is in a deep

depression. you should feel bad about what you've done and gone through it and you hope you don't brush it off in a matter of a couple of weeks. >> as long as he's there for the masters, i agree with you. >> all right. let's talk more about what's been happening with some of the financials. bank of america tapping brian moynahan as its next chief executive. he will take over for ken lewis on december 31st. on the phone right now, we have jeffr jeffrey sandler o'neal. jeff, this decision has been a long and nuance decision going from an outsider to an insider. what do you think about the choice that bank of america has made? >> there is never a dull moment when you're looking at large cap banks. i don't think this should come as a surprise to the market. his name has been frequently thrown around and is one of the potential candidates. i think at the very least, the positives that come from this are it removes kind of the uncertainty or one of the

uncertainties that have been swirling around b of a and should help to remove a management distraction for the rest of the management team to focus on running the team. my personal opinion on brian moynahan, i think he's the right man for the job. he's intelligent, he's hard working, he's well known and received by investors. and he has a history of running businesses. the criticism of him tends to be that he lacks a lot of retail banking spirit. pretty much what he's had has been the last couple of months in what was his new roel in bank of america.

if you look at b of a, they're very good at retail banking. there's a strong management team underneath him to carry that along. the bottom line for b of a, though, at this point is execution, not so much strategy. if you're looking at citigroup, you need to have someone strategically pushing the company in the right direction. i actually -- i think brian moynahan is a good guy to do that. >> but the board clearly had some differences of opinion. why did they push so hard to try and find an outsider? >> well, i mean, there's always going to be differences of opinion, i think, especially the way b of a's board is set up now, with a number of kind of new people brought on versus people that have really known each other a long time. and i think from a fiduciary responsibility, they had to look at a lot of candidates. i think bob kelly from bank of

new york would have been a good candidate, as well. but end of the day, you know, they did their kind of vetting and searching and talked to a number of candidates and i think ended up with a good one. >> you know, you mentioned, jeff, that never a dull moment when you're looking at any of these major banks these days. we've heard the news about citi, too, but the government deciding it will hold on for at least 90 days to its shares. when you look at all the big banks, citigroup, bank of america, what are your favorite names? >> well, i mean, b of a, if you kind of look at my coverage universe, i think if you look at financials in general, the big banks, the money center banks are i think a good place to be looking. you get a little less of that interest margin exposure and you go ahead less relative commercial real estate exposure, which is kind of the next round i think of credit problems to come. and for the most part, a lot of the big guys have deleveraged their balance sheet, whereas a lot of other financials have work to be done there.

so i think b of a is one people should be looking at. and, you know, our other buy rating in the group is citigroup. >> you know, real quickly, doug cass points out that citigroup is at that offering price. if you look at that bid/ask, you'll see 3.14 to 3.15. 3.15 is the offering price. what happens if the breaks below that offering price? i thought this was spelled out, but i'm restricted on citigroup right now, so i can't say much about what's going on with citigroup at all. >> jeff, sorry about that. thank you. meantime, the president leaves for climate talk necessary copenhagen today. john harwood got there earlier to get ready for his arrival. john, it's good to see you this morning. things are not even over yet and already they're trading blame for failure to achieve a break through. how is that going to be avoided? >> well, we're going to see over the next 48 hours, carl. first of all, let me just start by saying i so wish that joe

kernen could be here. this right now, this city is the green organic vegan capital of the world with all of the efficiency and coherence of the united nations. it would just be perfect for joe kernen. >> i was in boulder -- >> let me get you caught up -- >> i was in boulder a couple of weeks ago. i'm sure it's not much different than where carl and i went to school, john. >> reporter: it's boulder cubed right now, joe. but let me get you caught up on the state of things. we've had some difficult days with the chinese saying that they were not going to -- not inclined to strike a deal here. hillary clinton, the u.s. secretary of state just made a move, with an announcement a few moments ago to try and break that dead lock, saying that the united states would commit to being part of $100 billion a year of wealth transferred developing country toes help them deal with the climate

problem by 2020, but she also offered a warning saying, no deal, no money. >> the important point for the next two days is not to talk about how we would fund money that we haven't yet agreed to fund, but to make the agreement that that is what we're going to do. because i want to underscore what i said. in the absence of an operational agreement that meets the requirements that i outlined, there will not be that kind of financial commitment, at least from the united states. >> reporter: now, of course, that is only part of what is needed to actually achieve the agreement here. you've also got to get action in the u.s. congress. the house has passed a climate change bill that would reduce carbon emissions. much more difficult in the senate. skeptics say there are only 20 or 25 votes for that agreement. but i talked yesterday to john kerry, democratic senator for mass pass, he said it's still possible. >> do we have the votes today? no.

but we have many more than -- many, many more and a majority of senators know we need to do something about global climate change. they know that, a majority. and very few senators in the united states senate still don't believe in the science. the principal naysayers are those who don't believe in the science. i don't think they have a lot of credibility. >> so a lot of work to be done here in copenhagen and later in washington on the senate floor. we'll see over the next 48 hours on whether the first step can be taken here with an agreement in copenhagen, guys. >> all right, john. just reading a wall street journal. check out the journal today. there's a piece on global warming there today. i know it's the journal, john, but i don't know, interesting. 20 sudden global warmings in the last 120,000 years. interesting. anyway, none of us -- >> are you one of the deniers, joe? >> deniers. i don't know. is that like a plat john?

>> yeah. actually, john kerry combined the two. he said the opponents were practicing trogladitism and flat earthism. >> a 4 billion year old planet. it's hard to wind surf in copenhagen, isn't it? anyway, we've got to go. >> reporter: it is hard to wind surf. >> hey, john, abba is going if the rock and roll hall of fame. i'm going to leave you with that. that's right next door, isn't it, sweden? >> i just want to underscore what becky said, tiger needs to feel a little pain and you're a trogladite if you don't agree with that. >> you're very sensitive. we know where you're coming from. thank you. thank you, john. the fed meeting is in the books. the fed now turns to the labor market with the weekly jobless claims due at 8:30 eastern time. john brady is at the cme group in chicago this morning. john, we haven't talked to you in a while, i don't think, have

we? >> it's nice to be back, joe. i have missed you, as well. >> it's good to see you. what do you make of the current state of affairs just in credit land, john? give us your most recent thoughts. >> well, the process of healing when a credit space continues to move forward, joe, albeit at a slower pace than what we saw in quarters one and two of this year, i think if there are going to be challenges in credit space moving forward, they could come from overseas. we saw a brief introduction of quality yesterday as s&p downgraded the debt of greece. and that has seen sort of a flight to quality trade in the overnight when the dollar is trading substantially higher against most major currencies and treasuries are higher once again. so there is sort of a level of calm and credit space in the u.s. as we head into the next two weeks, liquidity may be lacking a little bit. we may have to keep an eye on overseas developments. >> and as far as what we've seen with bernanke recently, what do you think, john? he's man of the year or person of the year.

but he's having trouble with some senators. >> he is. you know, there's a real sort of populist wave moving through congress, joe. and with people such as ron paul, i think the whoelt situation regarding the dollar should be more interesting fed deliberations in 2010. joe, down here on the floor, that could sometimes act as a signal that perhaps volatility is going to increase in the coming year. and the follow years and seeing how those policies played out from dr. greenspan suggested that he may not have been the maestro. so there are traders down here who sort of see that signal of dr. bernanke being "time"

magazine's man of the year as perhaps someone to pay attention to. >> that is a good reason to pay attention to it. so -- >> well, and this whole challenge of the united states government underwriting risk, they're done it for the better part of 2009, they're going to continue to do it in 2010. but at some point, the fed is going to have a challenge when they begin to withdraw liquidity from the system. liquidity policy is going to have to change at some point. it could get tricky. but it's most likely a 2010 story. >> and you say better fanky really well. talk to some of your friends. two ns in bernanke, right? >> that is correct. >> thank you. if you have comments or questions about anything you see here on squawk, smael us. still ahead, news outside the world of business and then at the top of the hour, he's cracking the whip on executive pay for bailout recipients. we have ken feinberg and a first on cnbc interview.

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i want to get a check on the news outside the world of business this morning. alex is here with the headlines. >> sad news, everyone, to start with. roy e. disney, the nephew of walt disney died yesterday at stomach cancer, the last member of the family to work t conglomerate. he was the creative force behind "the lion king" and "the little

mermaid." the drug is dead. they were singled out by a u.s. government. and troops in iraq got into the holiday spirit by lighting a christmas tree and singing carols but the biggest thrill of all, a video conference with their families who were all gathered on ft. benning base in georgia. that was a little early christmas gift for them. happy times. >> yeah, much happier times. all right. great toe sue you. >> you, too. coming up, we'll be talking a lot more about the top stories of the day. also, at the top of the hour, the man at the center of the storm of executive epg compensation, pay czar kenneth feinberg will be joining us. ♪ (announcer) some people just know how to build things well.

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welcome back. japanese auto mrakers aworried about the u.s. market. they are afraid u.s. sales will not reach 11 million vehicles next year despite signs the industry is on the mend. the u.s. is obviously an important maker of japanese automakers. michael jackson is still a money maker. the 2010 royalty income will beat prior forecasts thanks in part to the surge in demand for jackson's music. jackson, who passed away earlier this year, isn't the only artist helping chrysalis. they also get royals from a

catalog of the beatles. that's a catalog worth something. >> yes, sir. >> huge revenue. >> yep. >> 200 soungs that would have been one-hit wonders for anybody else. when we come back, stories making headlines this morning and then the man cracking the whip on executive pay for companies. ken feinberg will join us on a first cnbc interview.

treasury, putting the brakes on a citi stock sale after a weak stom stock offering.

we discuss what's next for citi and its plans to get out from under the tae.a.r.p. cracking the whip on executive pay. the administration's pay czar ken feinberg joins us for a first on cnbc interview. governor david paterson stops by to talk getting new york budget issues under control, even if it means getting sued. ♪ new york ♪ ♪ hello new york hey, hi, treasury is putting the brakes on citi's stock offering. the government realizing they'd lose money if the sale went through. we discuss what's next for citi and that company's plans to get

out from under the t.a.r.p. is this like a -- no, we're not. good morning. i thought you were going to read something. i thought i was on some other show where each does a thing that we're going to -- >> hi. >> hey, good morning. weave got a task force coming up. i'm becky quick along with carl quintanilla and joe kernen. actually, i'm joe kernen. very funny. this morning's rundown includes restructure update from the coo of again ral growth properties, going through the bankruptcy properties. we'll get an outlook for commercial real estate and the chances of digging out from -- i think you're supposed to reading this. i was becky quick. new york governor david paterson will join us live in just a bit. and a new sheriff in town at bank of america. brian moynihan will take the

reins. david faber in a rare and exclusive appearance will be here to discuss what he brings to the table first on cnbc. right? >> first on cnbc. >> yes, david faber. >> so after he does us does he go -- >> i don't know. >> you have your headlines? >> doi have headlines. >> i thought i just did some. >> you did the lineup. now we'll get to the big headlines. ben bernanke will be going before the senate banking committee where his nomination for a second term will is expected to be approved. the senate will consider the nomination sometime in the new year. citibank's new stock offering is is below what the treasury paid for its stake. as a result, the treasury says it will hold onto its citi shares for at least 90 days rather than sell them. it does expect to dispose of

citi stake within the next 12 months. by the way, if you take a look at where that stock is bid/ask today, the by the way is at $3.17, ask is in the same place, two cents above what this offering is being issued for. bank of america has a new chief executive officer, retail banking chief brian monynihan will replace david faber. don powell will be here to discuss this. meantime, executive compensation, as you probably know, being billed as a major reason why b of a's search for a few ceo took as long as it did. the man in charge of cracking the whip on executive pay, ken feinberg joins our mary thompson on a first on cnbc interview. morning, mary. >> good morning to you, carl. as you said the special master for executive compensation on ken feinberg joining us this morning. thanks for joining us. the last time we spoke was on friday. since that time, you have one

less company about to be under your watch. citi is undergoing an he cantive offering. what's your opinion on that? >> i think it's wonderful. the primary objective of this t.a.r.p. compensation program has always been to get the taxpayers their money back. and if bank of america and citi, between them, roughly $90 billion, are prepared to repay the taxpayer, that is exactly the objective of the program. >> citi has been quite clear that one of the reasons they're doing this equity offering now is to get out from under your watch. do you think that this has been in way harmful? because some people would argue, they're doing it a little too soon. the demand hasn't been there. the demand for the stock wasn't strong enough to allow treasury to come in and share its sells concurrently. do you think your actions have been harmful or helpful here? >> if experts at the federal reserve and expert at treasury

believe it is appropriate for citi to exit the program, they exit the program. if as i read today the treasury has some reservations, those reservations will be considered. i'm dealing strictly with executive compensation and not with the question of whether or not citi exits the program or not. >> in a recent interview president obama said that wall street still just doesn't get it when it comes to executive compensation. you've worked more closely with some of these firms recently. do you think they're getting it? >> i think the limited number of companies that i'm -- that are part of my mandate, i think they are getting it. they're working constructively with me. they've been very kruktticonstr. whether or not the principles i've enunciated will have a more pervasive impact among wall street generally, that remains to be seen, although i did note the other day, as deputy secretary wolen pointed out that

bank of america is starting to get it and that's all to the good. >> reporter: you pointed out last week that the reason you like goldman's new structure, again, for only 30 of its top executives is they have to hold the stock for five years. would you like to see that implemented without wall street, a five-year holding period? >> every company is different. some we have five years, four years, a third, a third, a third, three years, two years. every company has to adapt the principles to their own unique circumstances. but i think the notion of limited cash, no guaranties, long-term stock, that's the way to go. >> reporter: i want to speak about another company under your watch, that being general motor. the company's chairman ed whitaker recently said that pay continues to be an issue in the company's search for a ceo. how are you working with general motors to allow them, you know, to pay the person who will help

them maintain and improve their competitive position in the world? >> i don't believe it will be an issue. general motors hasn't come to me yet pursuit to the law with the name and proposed compensation package. so there's nothing for me to act on until i receive a submission from general motors. but i've made it very clear, that general motors and the other top recipients must, under the law, remain competitive. if that means that compensation must reflect that competitive dynamic, all to the good. >> reporter: i believe i have a question -- or a carl from carl. go ahead. >> thanks for being with us. thanks, mary. ken, mary mentions goldman, which i think you might agree, is a model for some in terms of looking where the street's going to go long term on pay practices. when they have say on pay in an advisory role, are you willing to go out and say that that doesn't quite go far enough? should it be more binding to the board? >> really, when it comes to say

on pay and corporate governance generally, i defer to congress, treasury, others. my role is limited to the determination and calculation of actual compensation. so i'm not prepared to pass on the legitimacy, the value, the pros and cons of say on pay today. >> so your role is to get your job done. you're not there to provide guidance on how we should be doing things in the future once this whole mess is taken care of, is that fair? >> that is fair. but understand, my role is just one aspect, as you well know, of a whole list of reforms designed to deal with compensation and excessive risk, corporate governance, regulatory reform in the house and the senate, my role in determining compensation, foreign governments that are looking at various ways to reins in compensation. so you've got to look at the whole comprehensive list to see

how government is trying to deal with this problem overall. >> reporter: what are your thought on what's happened overseas with the tax they're putting on pay in proposing in the uk? do you mithink that's an appropriate step to take? >> what i'm reading in the newspapers, what i like about britain and france and maybe other countries, they're doing something. i'm not saying that the tax is the way to go or our approach is the way to go. the secretary of the treasury made it very clear at the g20, everybody in a global economy must be concerned about executive comp. how each country deals with the problem is less important to me than the fact that each government is, in fact, doing something. >> reporter: you're speaking on a panel today talking about reinventing the roles of capitalism. what are some of the rules you'll be speaking about that you'd like to see reinvented in the wake of this financial crisis? >> let's limit the amount of base cash salary. let's elimination the notion of

guaranteed compensation unrelated to performance. let's tie individual compensation to company -- long-term company success so that each official has a vested interest in the overall strength of the company and let's eliminate excessive risk. >> reporter: again, others would argue, chaets exactly what lehman did. a number of their employees had their pay tied to long-term stock, they held onto their stock. it didn't prevent that company from failing or taking risks. >> i'm not saying that executive compensation and the principles that i've developed are the only way to go here in terms of avoiding an economic meltdown. there are, as you know, better than most, there are many reasons that underlie the lehman failure quite apart from executive compensation. and i think that looking at my role in a vacuum is a mistake.

i'm just one part of an overall agenda to reform compensation and avoid excessive risk of these companies. >> reporter: one other thing we'll be watching that you have an impact on will be the 2009 bonuses at citi, which you still have oversight on. they're going to be pulled from a fixed pool that's going to be derived from something. what is it that it's going to be derived from? will it be revenue? will it be earnings? >> right now our report says it will be derived from bottom line earnings, but we have acknowledged with citi and with each company with this pool concept that the definition of what constitutes this pool of available compensation, bonus compensation, has to be worked out with each company in our office and we plan to do that. >> reporter: i believe joe has a question. joe? >> mr. feinberg, back to europe, just for a second to talk about your philosophical views on what we're trying to accomplish here now.

in your view, we'd like to align compensation so that it doesn't cause risks to the entire system or breed risky behavior so it's aligned with performance. how do you align that with what happened in europe? everybody across the board, 50% arbitrary windfall tax on bonuses. that almost appears punitive. how do you make sure this isn't done in a punitive way or a populist way to make sure no one makes any money? >> great question. first of all, i take no position on what england is doing or france. i'm more interested in what i have to do under a statute passed by congress. what i'm trying to so do is -- there's no vindictiveness whatsoever to this program here in the united states. none. zero. what i'm doing is trying to, as you say, align individual

corporate official interests with the long term, not the short term, the long-term interest of the country. let's give these officials more compensation in the form of stock, which cannot be sold for three, four, five years. and over that term, hope and believe that the officials' interest are aligned with the long-term strength of the company. >> do you think it's ironic that so many companies have accelerated efforts to exit the t.a.r.p. just to avoid the compensation caps? i mean, that's kind of a -- i mean, we're accomplishing what we wanted, but it's in kind of a per verse way. >> well, you say ironic and perverse. i would say that i -- i would say that the goal of the t.a.r.p. executive comp program always was, and the secretary of the treasury has pointed this out time and time again -- the

goal has always been, the top priority, get the taxpayers their money back. and that is exactly what we're doing with bank of america. i hope with citi. maybe some of these other t.a.r.p. recipients. and that is the primary objective. >> reporter: you know, you speak about how important it is to align long-term compensation with these employees' overall pay. how deep should that go in the management structure? you're overseeing the top 100 executives. should it go down to anyone in the company? >> each company is different. many companies have told me that although the statute talks in terms of 26 to 100, that their own parochial compensation program doesn't stop arbitrarily at 100. it may be the principles i'm enunciating go 26 to 1,000 or 26 to 5,000. that's up to each company. i can only construe the statute

that limits my authority. whether the companies then use those principles well beyond 100 is up to each company. >> reporter: you know, when i listen to this, the one thing that i'm thinking is, part of the problem we saw, these huge pay packages in the past couple of years was because of stock options. stock options weren't part of your plan. if you do see a rally in the stock market, where we come back to the same thing where people five years from now who received these stock grants pulling home huge pay packages once again and will the cycle start all over again with people complaining that it's a bad thing to go home with a multimillion dollar paycheck, even though your interests were aligned with the company and are reflective of the company's performance? >> first, stock options are prohibited by the statute. >> as i said, these are the stock grants given right now. >> second, if at the end of four years or five years a company

corporate official's stock is worth double, triple, quad ruru because the overall health of the company has quadrupled, or whatever, i think that's precisely what we are trying to promote here. and i'm less worried, frankly, that there will be a windfall five years from now than i am in reining in current excessive risky compensation practices and trying to put in place some principles that will not only be mandated as to these companies i have jurisdiction over, but hopefully wall street generally and we'll have to see how that unfold. >> reporter: i know becky quick has a question. >> yes, mr. feinberg, we're watching the t.a.r.p. money get paid back at a rapid pace, wells fargo, citigroup, and now a story in the financial times that aig is listing its ash shn

insurance group, is going to raise up to $20 billion, they're planning on paying back. how long do you expect to number this position? >> under the statute i serve at the pleasure of the secretary of the treasury. and the jurisdiction of my office. continues uninterrupted until all of the pertinent t.a.r.p. loans are paid back to the taxpayer. from what i gather, even though some have accelerated their payments, like bank of america and citi, other companies that are subject to my jurisdiction acknowledge that it's going to take a good deal longer, no matter what. so i think that the office of the special master will be around for some time to come. >>. >> reporter: if you were asked, would you do it again? >> you do not say no to the secretary of the treasury. and if secretary geithner asks you to do something, i suggest you do it.

and i serve at his pleasure. and i'm glad to do it. >> reporter: we want to thank you for coming in. we've been speaking with kenneth feinberg, the special master of compensation for the u.s. government. thank you. >> thank you. that was ken feinberg live at the yale summit leadership conference in new york. cnbc has exclusive coverage there all day long. if you have any comments or questions about anything you see here at "squawk," e-mail us at squawk@cnbc.com. up next, we're going to be speaking with mall operator general growth properties. joining us with an update on the plan for the company to restructure and how busy the malls are right now in the holiday season, that's next.

welcome back, everybody. mall operator general growth properties looking for a fresh start in the new year as it moves forward with its reorganization plan following the bankruptcy filing. joining us in a special "squawk" exclusive is tom nolan, president and chief operating officer of general growth properties. thanks for joining us today. >> thanks for having me. >> the bankruptcy judge signed off on the restructuring of about $10 billion in loans. what's the plan from here? >> well, that was a big step. you know, when we filed last april, i think we set out

probably three objectives. the first was an operational objective, and that was to make sure that bankruptcy and the operations of the mall were kept separate to keep it completely transparent from our tenants and our shoppers. and we're very pleased. that's an ongoing process. the second was two financial objectives. the first was to put in place a more sustainable capital structure. we had too much debt coming due at the wrong time. and what we did this week to get $10 billion restructured, to get the loans extended, the average duration of the loan now is -- loans now are -- now are over 6 1/2 years, 6'4 years and an average interest rate of 5.5%. we took that wall maf tourties we had facing us and extended it out. we don't are a loan now coming do you in the restructured forty polio until 2014. we checked that box in terms of meeting that objective. the last objective was to reduce

the overall leverage of the company. we simply had too much leverage. and this is really the foundation to allow us to move on to that step. we've got $7 billion of unsecured debt left in the company. that needs to be restructured. and we're going to proceed post days to move forward on that after the first of the year. >> meanwhile, there are a lot of interested parties circling the company. we had david simon a few weeks ago on the show. he's not only interested on the properties, maybe the entire company. brookfield asset management, others circling out there. what's the likelihood that some sort of a deal happens. >> first of all, i think we're flattered by all the interest. we do have terrific properties. we have terrific properties, terrific people. and i don't think we're surprised there's interest. but this company's been in business for over 50 years. it's known for its operational excellence. the second largest in its field in the amount of square footage

we own. we're confident that we have a path to proceed as a stand-alone entity. again, what we did this week really set the stage for that. so we're getting interests not only from strategic investors, as you suggested, but we believe there's going to be substantial interest in investing in this company on a more transitional equity approach just as the company is stand-alone. >> is is there a chance one of these deals could get made, that an offer would come in that would be a very rich offer you would consider and accept? >> we're in bankruptcy. you know, bankruptcy's an inherently transparent process which i think is terrific. the beginning of bankruptcy, they give you a prediction. at the end of bankruptcy it is capitalism at its best. and the important thing for this company and for this management and i think for this board is to have as many options as we can possibly have. again, what we were able to do yesterday really set the stage, in our view, to create options for the company. we could be independent and

we're certainly going to take any offers or expressions of interest will be taken very seriously and for the benefit of our stakeholders. >> there's a lot of hopes out there that the holiday shopping season's going to give some retailers some breathing room, right, to make good on their payments. is that going to come to fruition? >> i think so. first of all, the retailers have had all year to get ready for this holiday season. last holiday season, the events in october with the credit crisis hit them awfully quickly. they had an entire year to get ready for the holiday season, and we think they've done a excellent job. the management of inventory and management of stores, we're encouraged what we hear from them and they're encouraged from what they're telling us in terms of what they're seeing this holiday season. >> are there places around the country doing better or worse than the average? >> well, we're in 44 states so we have a good view in the world. it's not surprising there's a pretty direct correlation

between employment level and sales. we've got either significant housing or issues, value issues, or -- >> california, florida. >> california, florida. or significant unemployment issues, which is some of the markets. the middle of the country, some of the other areas in the country, i think, are doing very, very well. >> do you have a mall in detroit? >> we do have a mall in detroit. >> how many stores are in it at this point? >> the occupancy level in michigan portfolio are lower than average. >> any in 50? >> no, likeside mall, it's around 80. >> what's the average? >> 91. >> what's the lowest? do you have a 50 anywhere? >> we probably have one or two in the high 50s. we have over 200 properties. >> cincinnati on the side of town i lived in, the mall i grew up with, it became a ghosttown.

you leave a key tenant and the entire mall -- >> that's an excellent point. that's one of the reasons we feel good about our portfolio is because, first of all, we're over 90% occupied portfoliowide. you need to invest in these properties in order for them to ultimately be successful. you can't sit there and watch -- you can't be coupon clipping. you have to remerchandise them. we own the shopping mall in kenwood in cincinnati. >> that's a good one. >> we just opened nordstroms. the traffic is fantastic. >> do you own the one in western hills? >> i don't believe so. >> for you it's used for walkers for elderly people in the white sneakers, walking up and down. that's all that's there. >> tom, we appreciate your time today. we would love to have you back to get an update on how things are going. >> i'd love to come back. thank you for having me. any questions or comments, drop us an e-mail at squawk@cnbc.com.

when we come back, david paterson is going to join us on the set for an update on the state of new york and his economic outlook for 2010. also up next, david faber, a rare "squawk" appearance to talk about b of a, citi and a lot more. welcome to progressive.com. yes, i need some insurance for my sle-- uh, vehicle. great. we insure all sorts of, uh, "vehicles." you also get concierge claim service, 24/7 live support, and pet injury coverage.

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welcome back to "squawk box." we've been keeping an eye on the markets this morning. so far the futures have been under a little pressure this morning. if you want to check out and see where things stand, you're talking about the dow futures down by 35 points below fair value, off the worst lefz of the morning. remember, we get those weekly jobless claims coming up in one hour's time. let's take a look at shares of citi. after a weaker than expected offering late yesterday, that offering priced at $3.15, that prompted the treasury to delay planned sales of citi shares. now it's talking about 90 days. again, the stock pricing just above the offering price right now. also, bank of america has

named a new chief executive, retail banking chief brian moynihan will succeed ken lewis at the year's end, following a long search complicated by pay restrictions for t.a.r.p. companies made it difficult for them to recruit outsiders so that top insider, again, is the man who's walking with way with that title. let's take a look at shares of food maker general mills this morning. the company reporting quarterly earnings of $1.44, nine cents better than estimates. the house narrowly approving a $155 billion measure seeking to create jobs and blunt the impact of the recession, which is many say the worst since the '30s. the house approved additional spending for shovel-ready construction projects. the bill also provides money to avoid layoffs of teachers, police. not a single republican voted for the bill. 37 democrats voted against it. the senate is expected to consider the measure early next year. the latest reading on the u.s. labor market set for later

on this morning. the government will release weekless jobless claims numbers. economists expected a drop of 9,000 from last week's number to a total of 165,000. if we get something like that, it will be the 15th consecutive week where we've had the four-week average of continuing claims come down. so we will see. we'll see a little health and labor market, not quite enough, obviously. >> this is a number that is, you know, we always talk about how important it is. lately these numbers have been more important than ever. traders saying this is the key number of the week because everything hinges on jobs. >> in december they're volatile a lot of the people dawes of the seasonality and that sort of thing. we'll see what happens. meanwhile the latest results of the cnbc/wall street journal poll are out. for the first time since taking office, president obama's approval rating has dropped below 50%. the percentage of people who believe the u.s. is headed in the wrong direction, that is also at the highest level we've seen since his presidency began.

we're talking about 55% of the people. more than half of the people disapprove of the president's handling of the economy. as we saw, in our own wealth and america survey that steve liesman picked up the other day, they're not just unhappy with president obama and the administration. they're basically unhappy with everybody's handling of the economy across the board, as the jobs picture has gotten worse, as you saw unemployment rise above 10%. people are just unhappy with the -- >> the tea party is more popular than either major party as part of that poll. >> i didn't see that. >> when we say dropped below 50%, in our poll -- >> right. >> i've been reading about it for months. >> first time it's happened in this poll. when we come back, new york governor david paterson crossing the river to tell us how the empire state will handle the economy in 2010.

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welcome back. take a look at futures this morning. i think we're a little below fair value.

had some red arrows in asia overnight. europe's been having issues as well after greece got some debt downgraded a notch once again. meantime, japanese automakers are worried about the u.s. market. the head of the country's auto lobbies he's afraid u.s. sales will not reach 11 million vehicles next year despite signs the industry is on the meant. the u.s. an important market for the japanese. michael jackson is still a moneymaker. british publisher chrysalis says there's a surge in demand for jackson's music. jackson passed away earlier this year isn't the only artist helping out the firm, they also get income from the remastered catalog from the beatles which has got to include, how many number one songs? >> a the lot of number one. how many songs you're in the elevator with the musack. don't you think? 500? >> 500. >> basically in five years

starting with stuff that seemed so simple and old to stuff that basically paved the way for all the new stuff. >> they started out, though, they would write a song at least a couple of songs a day. they would write a song, go to lunch and come back. >> i never realized a day in the life, john was working on one part, paul was working on one part, they put it together. charlie manson thought there was divine intervention. i almost, it almost -- >> the chances of them being that talented and being put together. meantime, wall street's giving a boost to new york. the state comptroller here prorting the street earned $50 billion in profits in the first nine months of this year. here to discuss that and a lot more is david paterson, joining us here on set a long with joe and becky. welcome back. good to see you. >> it's good to be back. >> people who don't live in new york may not know about issues we're dealing with. you've had to delay millions in local aid, lot going to school, nta is skut cutting back

services. does 2010 look worse? >> for new york state for the first time in its history has a negative cash balance at end of december. this is why i tried to bring the legislature back in a deficit reduction plan but they gave me back not 50% of what we actually needed. so what we've done is implement executive authority here. we will take the amount of money we owe and divide it by the amount of money we have. that's as if you owed 10 people $100 and you only have $90, so you pay them all $9. now they're suing me. i'm not going to let the state run out of money. the only other way to have done it would have been to keep paying the money until the money runs out and

but the reality is, that it's the bonuses, as i keep saying, that are the real lucative cash taxes for the state. when you cancel the bonuses, those -- and the corporations withhold them and list them as assets, they actually allocate them all around the country based on where their customers live and where the sales are made. the therefore, there is a preferential tax treatment. the investments are taxed as a preferential rate. so you don't look at the number for what wall street is doing to determine what new york state is going to get because we are getting massacred in this whole

situation. with all due respect to mr. feinberg, it certainly did have a tone, a political expeed y expeed yancy but we're cutting off our nose despite our face. when the bonuses -- if you -- when you don't pay the bonuses, i think the public thinks that that money goes back to the taxpayers. no, it goes back to the firms. the only way you get tax dollars out of these major firms is through the bonuses themselves. >> well, were you horrified when you read what goldman sachs is doing -- >> goldman sachs is actually converting their payments to stocks, which will give new york state, which is teeter on the verge of ininvolvency nothing in january. my point is new york state in 2007 paid $62.1 billion extra in taxes. the only state that came close was california at $46.3 billion. they have twice our population.

in 200 -- the next year, new york paid $86.9 billion more than we got in taxes. so new york state has been the financial bailout package for the whole country over the last decade. i'm not stating this to be choef n chauvinistic about my state. it's reality. we're getting little help at the time we need it. i'm happy the jobs bill passed. and the stimulus package was tremendous. but we're going three steps back when we go two steps forward if we continue this policy. >> how is feinberg or the president supposed to explain to people in arizona or wyoming why these bonuses are important to a state they don't live in? >> it even hurts to some degree their state because it impedes on new york state's ability to pay taxes. arizona gets more back in --

that get more back in attacks than it pays, south carolina, mississippi. these states benefit when new york state is able to provide that assistance. you're rearranging deck chairs on the titanic because the reality is that we have got to find ways to get more revenues into our governments, our state government. inevitably, our federal government. >> when you look at some of these proposals, though, you think nothing needs to be done? . >> i'm sorry, i made a mistake. arizona get about $13 billion -- arizona gets about $13 billion -- pays about $13 billion more than they get back. they're right on the edge. >> they're right on the edge. when you look at what's happened on wall street, it's hard to think there wasn't something that went wrong. how would you propose they do it if they don't do it through having these players have a long-term financial incentive and making sure the deals they're doing are worth while over the course of five years?

>> the criticism that i receive is that i didn't talk about bernie madoff and i didn't talk about the housing bubble. i did in the remarks i made last week, i said there were wall street executivetives that fittered away money in corruption schemes, should be investigated and the responsibility should lead to the dismissal of the people in charge and the criminality should be prosecuted. i think there aren't enough people like bernie madoff who are actually in jail now. where they belong. i'm not talking about the misdeeds and our need to investigate corporate crime. i'm talking about the structure of our financial system, like throwing a baby out with the bath water, which has actually been the engine. i don't think we put a face in new york on what happens if we don't have wall street capital financing new ideas and inventions. what you have is a larger homeless population. more people going without food

and shelter than in the last 20 years. and an entire regions of our state struggling for survival and the poor people is there think when they vindictively attack wall street that it's solving the problem. it's only exacerbating their rapidly depleting condition. >> but people have to live with a certain amount of inequality, right? that's tough sometimes. >> i don't think that people should be denied the opportunities on our educational system or work force development that they can't be competing for the opportunity to improve themselves and to upgrade their financial situation. but what i'm saying is, this whole issue of the bonuses is unrelated to that. >> right. i think we have fedex numbers, if you're looking at the wires. they told us the quarter was going pretty swimmingly a couple weeks ago, as they sometimes do, as the quarters come to a close. joe, do you see it? >> yeah. the next problem is the problem, from what i can tell at this

point. we'll see whether it causes an issue. i'm trying to see if there's something in it. $1.10 for second quarter was ahead of expectations however the next quarter the company, that would be the fiscal third, it says it sees 50 to 70 cents versus an 84 cent estimate. the year estimate is $4.16. and they just beat by -- by how much? by four cents or whatever. and now they're taking the year down, or at last they're forecasting $3.45 to bz$3.75. that's above, isn't it? i don't understand. they're going to have a great fourth quarter, i guess, at this poi point. that's fiscal ten. >> yeah, they're talking about comments from the company. they point out this is a continued modest recovery. they're encouraged so far by the performance as they're saying

what is the worst economic turndown in ed ex's history. our peak shipping own is about to come to a close. they do expect, though, that the strong operating leverage will provide improved year over year profitability in the second half of fiscal year. >> let's talk about how -- they're lowering third quarter but they're going to beat the year. so that means people have to -- >> i mean, they have two more quarters after that. this is only -- >> no, but the quarter that they're going to miss is the third quarter and they're going to miss it by a fair amount. so they'd have to make it up in the fourth quarter. >> fourth quarter. >> right. they're going to $3.45 to $3.75 and $3.46 is the estimate. the street is already at $3.46. usually traders will look at the third quarter -- >> which they have more visibility than the fourth quarter. >> you can see the stock right now. third quarter they're saying 50 to 70 cents versus 84 cents.

they beat by four cents in this quarter so they got that. but they're going to miss by at least 14 cents next quarter. so that's -- they got to at least make up ten, then, in the fourth quarter. that would have to be ten cents above the $1.05 -- >> they have some expected costs they're including into the company's earnings guidance. they had -- i don't know if you remember, they cut off merit salary increases for calendar year 2010 and got rid of their 50% matching for the company's 401(k) plan, which they are going to be resuming in calendar 2010. starting in january they'll go ahead and go back to merit salary increases -- >> these should be apples to apples. >> volumes are doing pretty well, up 4%. but the revenue per package is getting hurt by lower fuel surecharges. cap, forecast repains unchanged to $6 billion. >> a lot of times -- a lot of types they surprise you on the day and then it will look sharply lower. bit end of the day you don't

know where it's going to trade. they're also a company that when you say below -- that they're warning, they always come out and say, we're not warning anything. if the street's one place and we say something else, that's their business. they'll say, these are the first -- this is the first estimate that we've given so how can we warn if we're not even out there. we should make that clear. but they get very upset when you say it's below what their expectations are. >> governor, our apoll guys. we should mention, your poll layerty is back to 36%, your favorability rating, that puts you back to the levels of the summertime before the whole state senate problems came about. >> well, i think when you are governing in a crisis, you are going to have to make decisions people aren't going to like. sometimes things are so bad that whatever decision you make isn't going to appear to be favorable. but i think as a public really becomes more engaged about how severe the financial crisis is,

people are going to remember who stood up and faced the crisis and who stuck their heads in the sand and shishged their responsibility, like a lot of these special interests who are now suing, even though they are fully aware that the money isn't there for them to be paid. and they are further aware that the state is teetering on the verge of ininvolvency. >> that the sense you get when you talk to people out on the trail when you're out doing -- >> the same polls show that people didn't think we should cut school aid in the middle of the year. nobody wants to cut school aid in the middle of the year. that's a no-no. we had to do it because we ran out of money. now f the public get that, which the polls show the public hasn't fully appreciated, as they understand that a little more, i think they become a lot more sensitive to the decisions that we've had to make. by the way, i think the mistake in terms of this whole

compensation issue was that when the financial institutions were bailed out, and this was not in this administration, this was during the bush administration, there were no understandings made with these financial institutions that they had to lend certain amounts of money in order to be bailed out. now, that wouldn't be a democratic practice in the normal sense. but when you're bailing people out, you have a right to have some decision-making capacity. we are having more than anything else a credit crisis. the stimulus money would have l logrithmatic proportional differences if we were able to extend credit to companies that are trying to build and use stimulus money to create jobs. >> it's tough when you're told to raise capital, bolster your balance sheet and lend money out. >> but when you need the money, i think the government has the right to ask it at that point. not at another time. that would be sort of a tyranny.

but in a situation where there's a crisis, and the companies needed that bailout, no one in that process ever recognized that it was the credit problem that was going to inhibit the financial recovery more than anything else. >> that's true. good to see you again, governor. thanks for coming by. when we return, we have more coming up, include "stocks to watch." it is described as the cleanest fossil fuel, producing less carbon dioxide as coal and oil. some towns are seeing their water tainted. we'll get to the natural gas controversy up for debate in the next hour of "squawk."

let's look at some stocks to watch. i want to start with a call coming from meredith whitney and her firm. meredith whit advisory group. lower estimate for gold man sanction and morgan stanley to $6 from $6.38. consensus 50 cents below where she is now, though. consensus is $5.59 so she's coming from down from 6.38 to 6 bucks. for fiscal '09 for the full year she goes down to 19.57 b the consensus is $19.29 anyway. and then she goes from -- the fiscal year cuts are scary. she goes from $21.73 on goldman

to $16.75. and the consensus is in the middle, at $18.70. she goes out to fiscal year '11, shaving almost -- over $3 off. she goes to $20.60 from $24.40. and then on morgan stanley she's going on fiscal '10 to $2.63, only cutting three cent off there and well below the consensus of $3.32. bigger cut coming in fiscal '11, down to $2.75 from $2.28. she has a neutral rating on both stocks. fedex, guidance for next quarter, the guidance is -- that's the quarter that includes december, january and february. >> right. >> so if they miss -- if they're missing consensus estimates, that's why the stock is down. >> a couple -- i was going to say, they are resuming a 50% match on 401(k) -- >> do we know if that's what's hutting the operating -- >> it does say the guidance includes new earnings.

maybe if the street wasn't expecting them to resume those payments thinking they'd still be getting some extra grease out of that. maybe that's what it's doing. >> it's a pr problem. the stock should go down either way because they need to make that clear. right? to miss it by that much. >> the markets will focus on jobs in half an hour, jobless clapz on the way. a cnbc exclusive, b of a board member don powell. fidelity, traders learn from the pros. say you want to backtest an entire portfolio of stocks. market experts show you how through fidelity's extensive trading knowledge center. and fidelity gives you free research from 15 independent firms, with accuracy scores... to help you decide which analysts to trust. find out why more and more active traders are turning to fidelity for a smarter way to trade online. trade like a pro. trade with fidelity.

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the search is over. bank of america naming brian moynihan successor to ken lewis. we have a "squawk" exclusive. bank of america board member and former fdic chairman don powell tells us about the big decision. throwmy a fricking bone here. i'm the boss. need the info. from "time's" person of the year to senators questioning whether you should keep your job. >> now, before we bring out ben bernanke, chairman of the fed -- all right. see, if you had your own show, you could do stuff like that. >> the banking committee votes on bernanke today.

senator judd gregg will tell us why the chairman will keep his job. breaking news on the way. the most up-to-date report on the labor market. weekly jobless claims at 8:30 a.m. "squawk box" begins right now. welcome back to "squawk" for thursday here on cnbc, first in business worldwide. i'm carl quintanilla along with joe kernen and becky quick. big lineup ahead, including an exclusive with former fdic chairman don powell in a few minutes. also at 8:30, jobless claims coming out. economists expect a drop of 9,000 to a total of 465,000. calm headlines. ken feinberg tells cnbc that he's glad banks are paying back t.a.r.p. money since that is the program's ultimate goal. >> i think it's wonderful.

the primary objective of this t.a.r.p. compensation program has always been to get the taxpayers their money back. and if bank of america and citi, between them, roughly $90 billion, are prepared to repay the taxpayer, that is exactly the objective of the program. >> in a first on cnbc interview, feinberg told us he favors the shift away from cash bonuses twald nonguarantied payouts. feinberg is in new york for a yale ceo leadership summit. we have exclusive coverage. shares of citi called lower after the bank's secondary offering priced below expect takings at $3.15 a share. treasury is planning to hold on to citi shares for at least 90 days rather than sell them. and then today the senate banking committee's going to consider the nomination of ben bernanke as a second term. he's expected to be approved,

despite some opposition. some people saying they'll be no votes. senator gregg going to talk to us about that at 8:40 eastern time. the search for a new ceo of bank of america is over. the board announced wednesday night it named consumer banking chief brian moynihan to replace ken lewis. joining us to talk to us is don powell, a board member of b of a and a former fdic chair. good morning. good to see you. >> good morning, joe. >> tell us about mr. moynihan. >> mr. moynihan is very capable man. he understands the business model at bank of america. he's, in fact, headed all three of our major business lines. he's got experience. he has great relationships with our investors and with regulators. he's a man that has earned the trust and respect of his fellow employees and we're excited about it. >> the -- i guess, it's going to be hard for us to get you to go

into what proceeded the final choice. but, initially you looked outside the bank and you at least say that's a fact? >> you know, this process, as we've talked about, the integrity of the process was very important. it was thorough, complete, rigorous and we looked at a lot of folks and interviewed a lot of people. >> tell us about -- i mean, obviously, we heard that mr. kelly was the first choice and that it was -- when it came right down to it, i guess he said he wanted to stay where he was. but the scuttlebutt was you couldn't pay him enough to induce him to come over. >> i don't think it's proper for us to talk about the deliberations of the board or the committee. at the end of the day, we were very excited about brian being our next leader. >> all right. but, you know, we've had ken feinberg on today, it's on everyone's lips, don. i mean, do you think some of these attempts are misguided and

counterproductive in terms of trying to run a financial institution in this day and age? >> i think compensation is obviously a factor and part of the consideration. it's where we understand the environment -- >> were your hands tied, don? were your hands tied? >> i think it's important that we recognize that pay for performance is part of the environment we're in. and that's what bank of america's always been about. >> did you feel like it hurt your recruitment effort. >> we had an array of candidates that were ready to talk to us and i think it was a factor consideration. at the end of the day, we feel like the best candidate was chosen and will be a great leader for bank of america. >> don, you know, he's got big shoes to fill. whether or not your opinion of lewis's job over the last 12, 18 months, lewis, most people agree, was a banking visionary,

strategically, even operationally. he saw what bank of america could become. over the course of years and in his case, you know, three decades of banking. it moynihan that kind of leader or are you looking for someone who can handle the ins and outs of this new modern age? >> i think brian is uniquely qualified because i think he's a force of responsibility newty and a force for change. he has a lot of strategic initiatives he's talked about, he has vision and energy to execute under that strategy and vision. i think he'll do just fine. i think, obviously, bank of america, i believe, is the best ch franchise in the banking business. with the exception of merrill lynch. it's very powerful. i'm excited about the future. >> what's your next step? you're out from under the t.a.r.p. you have a new ceo who will be taking over the reins in

january. what's the path of bank of america from here? >> i think the path is again the same business model,executing, understanding the environment has changed, and we have a team of great, great people that can execute. there are some solid, solid professionals at bank of america. >> you know, you've got at this point still some overhang from what happened with merrill lynch, with that being brought on with the bonuses. we spoke with a banking analyst this morning, jeff harte who said that could come up and rear its ugly head. where does that stand as far as you know and as far as you're concerned? >> we're sensitive to those issues. that's a potential legal issue, which i'm not going to comment. we're looking forward. and we're going to do everything we can to increase shareholder value. brian's going to be a good leader. >> and he's got -- not that a

banker needs a law degree, don, but he does have a law degree at this point, which i think in this day and age, given culpability and everything else, that's a good idea. although it didn't work out for chuck prince, as we pointed out. >> this is a man with lots of experience, trust and respect, understands the investor community, understands the regulatory community. he's going to be fine. >> we had an analyst on that said this was actually his first pick, but as you point out, you need to look all around, you know, beat the bushes trying to find the best candidate. in a nutshell, how would you say he differs in management style from ken lewis? >> well, ken lewis, you know, has done -- has been remarkable in leading bank of america over the past years. and i think brian is his own person. he's his own man. we're all different. but the most important thing, he

understands the business model at bank of america. he understands how important, how important the associates are. he really relates to them. >> we have you in on tuesday, you're going to guest host. we look forward to seeing you. will you come in to tell us who it is that should set the compensation? we've been talking off camera about. this. should it be the board of directors, the shareholders or should it be some government body, some czar, we want to come up with it so tuesday we can tell the country how to do it from here on out. >> i be happy to give you my views. i look forward to it. >> thank you. >> thanks. let's have more on bank of america's decision to pick an internal candidate, brian moynihan to succeed ken lewis as ceo. ed, what do you think about this choice? >> well, i think, you know, given that the outside search, which lasted several months, did

not yield an a-list candidate, this is the best internal choice. so given that the company did sort of have to default to an internal candidate, moynihan or greg kerl, moynihan was the best choice since he's lead a number of the business lines. >> but you think an external candidate would have been better. why is that? >> i think it would have been good to bring in an external candidate, assuming they would have gotten one of their top picks. that didn't work out. i think an external person could have brought new blood and new vision to b of a. it might have been a more proven leader at this point than brian moynihan is, but no less, brian is probably, as i said, the best internal choice. >> i mean, they got new stuff. they got merrill lynch, countrywide. it seems like the guy that knows the ins and outs of the banking business -- or ins and outs of the company itself might be the way to go. why always think that it's better to go outside?

i mean, gm, i understand. it's insular, it's been years, look at the problems. but what about bank of america because of the corporate culture that's already there? >> bank of america is a giant financial institution. while brian has done a good job in his various roles there, he has spent most of his tenure at b of a running the wealth management business. only in the last two years has run the major -- two of the major business lines in terms of consumer banking business and the global corporate investment bank. so that's a fairly short tenure as a leader of one of the largest business lines. you know, obviously, the board conducting a search this long leads me to believe that the board even thought that potentially getting a very experienced outside candidate was probably the best way to go. but as we know, that didn't work out. especially after bob kelly, you know, didn't reach agreement.

>> it's not the corporate culture at b of a. you could have found a more experienced corporate banker? >> exactly. you have to look at the size and breadth of b of a. >> if you were leading the seven for the board and if compensation weren't an issue, who would have been on your with wish list? >> well, you know, i think -- actually, what's interesting is, you know, the legacy of ken lewis is not just that he dilute the shareholder and shares have more than doubled over the last several years because of those deals, but also left the company with not really, you know, a very -- a very significantly experienced internal candidate. so, you know, some of the best choices that could have been remaining at b of a would have been someone like molina, who

knows that company inside and out, ran gibc, was a treasurer for many years. but, obviously, left, you know, under the dictorial style of ken lewis. same with william mcgee. ran the whole consumer business for many years, but left. these dan candidates were not there when it came time to hand over the rein. that's one of the things unfortunate. >> we have to go. quickly, was it purely the compensation issue that caused them from getting someone you would have liked? i mean, this is a clear example of how that whole idea has backfired? >> you know, i think compensation could have been one of the issues. but i would point out three potential issues. one could have been compensation. but the other two were, remember, it was just last week that this company repaid the t.a.r.p. so prior to that, during the search, you could have had a situation where potential candidates were looking at coming into a situation where working with the government would have been very heavy-handed and it wasn't clear when that was going to end.

and then third, remember, back in the spring, they separated the ceo and the chairman role, and i think that some of the external candidates would have wanted to come in as both chairman and ceo and the position was just to become ceo. >> molina, didn't he resign from gmac's board? >> i believe so, yes. >> okay. anyway, thank you very much. we appreciate your time and we'll talk to you soon. >> thank you very much. >> can't all bat 1,000, i guess. the focus will turn back to employment today, 8:30 a.m., 15 minutes' time we'll get jobless claims, the latest up-to-date rooet read on the labor market. we'll get details on the treasury's decision to hold on to its stake of citi a bit longer. u.s. and foreign stocks online, in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes,

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welcome back to "squawk box." take a look at futures. you'll see the dow futures down by 48 points below fair value. we are waiting on the jobless claims. we'll get those in a few minute. also, if you want to take a look at shares of goldman sachs and morgan stanley, they're under pressure as meredith whitney lowered estimates for both companies. she was talking about not only the new england next year but a

couple years out. she made substantial lower reads. morgan stanley and goldman sachs are below closing prices yesterday. treasury will hold on to its stake in citigroup for now, after a stock offering got a pretty luke warm reception. steve liesman report on all things treasury, joins us with more on the backstory, i guess. >> do you think luke warm is the right word? i know you didn't pick it. is it icy? >> it's not icy. >> it's diluted. >> is it worse than you would have thought given -- >> that's part of the spin. that's a good question, joe. there is a lot of finger-pointing over why the citi deal came in at such a low price and whether treasury or citi is to blame. at the end of the day, citi got out of t.a.r.p. by executing a huge equity offering. citi paid back the treasury $20 billion and the government got out from under a $250 billion

insurance obligation surrounding citi toxic assets. the question is what you would have expected, still, lots of citi shoulda, woulda, couldas. should treasury have held on to its shares? should treasury have sold earlier? did citi gauge the market correctly? and the other question we can't answer because there's no transparency on this, folks, was citi ready to leave the t.a.r.p. and what was the criteria surrounding it? a treasury official telling us citi wanted us to sell more shares, we wanted to sell less. we heard as much as 10 billion and citi thought it would show more confidence, according to this treasury official, where citi says, we asked treasury for a longer lockup of shares. all this finger-pointing back and forth, unclear who to believe. we talked to josh rosner, he says it was a sloppy execution by treasury that should have understand that a 34% overhang

would do nothing but pressure the initial 20% that was being sold. they should are sold it before or held onto it for an indefinite period. >> he's saying they should hold it until we're ready? >> i love josh but i think he's making a political misjudgment. if citi had gone with $3.55 price, it's worse for the taxpayers. why is all this money out there, 50 cents, why isn't the treasury executing it? >> definitely frontrun. >> frontrun? >> why front-running -- what does the fed -- the fed exists doing whatever it wants, before, after -- >> it's the treasury, by the way. >> i know, but why -- >> why should the fed -- >> i know it's treasury but think about how the fed operate. >> at $5 a share so that would have been a good sign -- >> no, no, why is it front-running when you know sooner or later it has to raise money? would you set the term of it, though? >> no, they set it awhile ago -- >> it takes out money at the expense of the current citi

shareholder base? that's another argument, joe. let me give you -- >> it might still be $5, then. >> if they had been gone and come to market -- >> look, i'm just reporting here. one more report which is mike mayo, a well-regarded analyst, he's got a $3 share price target on citi. not quite -- >> $3.18 now. >> they're low on the street. he took off the buy at $48. he says this is one more mishap for citi in a decade of underperformance. he says there is blame to be shared by management and regulators. >> you forgot the other finger-pointer, citi blaming treasury and also blaming wells fath fargo. >> i asked citi about it. they go, hey, wasn't two days too much? is two days too much? remember, we were here monday morning, which seems like a week ago. i don't know about you, but it was monday morning citi annou e announced this deal with treasury.

citi by the way point the finger back at treasury on that and says, they could have approved our deal a week earlier. so that's also part of the finger-pointing going on. >> well, it's $3.18 to $3.19. i think we theed to cut them a break. hopefully it stays above the $3.15. i mean be raise the money -- i mean, i think it gives confidence to the financial markets if a bank like citigroup, which a year ago was called dead, right? >> right. >> if they can raise $20 billion, even at $3.15, at least they're raising public money. >> the treasury shouldn't be under an obligation to say when or if they'll unload the shares, right? >> that's a point. they're saying they're going to do this in 90 days and execute it over a period of a year. to your point, carl, at the end of the day treasury will have 7 billion instead of 6 billion shares. is that as big a deal as -- the other thing is, you know, unfortunately for treasury, the meatloaf criteria doesn't apply. 2 out of 3 in this case is bad,

right? they did wells and they did bank of america. and then they tried to do citi and citi was not good. but i think they executed pretty well on the other two, right? so 2 out of 3, i don't know, you make the call. >> what's meatloaf -- ♪ 2 out of 3 ain't bad >> oh, the singer. i thought, what's meatloaf. >> that comment caused the producer in my ear on say, we have to go. >> oh, that song is in my head. >> when you do the first it's like, we can do that but we'll never be able to do citi and citi coming this quick was a surprise to a lot of people. maybe they did do it too fast to show -- to get away from the stigma of being the weakest player. >> you could blame the treasure roadway that, too? they were blaming the -- oh, no, oh, no. it's my bad. ♪ there ain't no way i'm ever going to ♪ >> jobless claims coming up. >> stop that music sclmg! >> jobless claims at 8:30

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take a look at -- stop that music. . take a look at dow futures, down by 56 points. we are just a few moments away from the most up-to-date report

on the jobs market right now. the weekly jobless claims and the instant reaction are next on "squawk box."

weekly jobless claims on the way. we're looking for 465. rick santelli is at the cme, along with steve you're yoe. . >> the survey says 484,800 on jobless claims. this particular metric is up 7,000. if you look at continuing claims, very slightly revised last time after a big drop, at least on a seasonally adjusted basis, it was pegged at 5.18. this time around it's 5.186. so we see small increases. now, unfortunately, what i can't dough from the current availability of information is give you the viewer, you know, unadjusted initial or unadjusted continuing to balance it out. or the emergency claims benefits. but i will comb through that. i'm sure steve will help. he's by a computer. we'll try to paint the full picture. on these two components there's

a mild movement, as i said, a little high other initial and just a smidge high other continuing. but the big story, i think, is the euro currency, the dollar, the dollar is flying this morning. and it's taking its toll equities. a lot different response post-november meeting. interest rates moved lower. dollar higher after the last fed meeting. we saw the dollar under pressure. more importantly, trying to digest exactly what that citi story means in the context of all the bailout programs. >> let's get reaction from steve liesman and steve yurio. >> i hadon't have the unadjuste. it's not something that moves on the wires right away. 4830,000, it's been a tick up. it's kind of been going the

wrong way after adjusting down. and the claims numbers looks to have stalled. i think on balance this is something that economists would say is consistent with flat job growth for the month of, what would it be, the month of december. this would be a week in or near the survey week so it would be important. 480,000. i know they wanted to see more 450,000, more in the 400,000 range to see job growth. >> it's putting a little pressure on the market again, some stock market losses are a little even below where we saw before we got these numbers out. jim, rick pointed out that the dollar is taking off. that may be the real issue, the dog that's wagging the tail here. is that what you think? >> no question. remember that just because the weak dollar for the last seven months buoyed the stock market, i don't think that means adverse relation sip going to be the same way. the stock market is more on its own to find it's on you new

triggers of which way to go, and the dollar thing is kind of a separate story when the inversion happens. yesterday's data that came out, the statement release was dollar unfriendly. to see this dramatic dollar move the opposite way has to mean a few things. one of them is that the problems that are feared in europe are -- we take way more seriously than we did a few weeks ago. the thing -- >> you're talking about the greece issues, about -- >> mostly greece and dubai. when you talk about greece you talk about iron laneland, and i see why, like australian dollar and canadian dollar are being thrown out as well. it seems it's a knee-jerk reaction. >> well, rick, you pointed out this is something maybe that has to do with the citi issue. >> yeah. i think -- jim is right. i don't agree necessarily on everything. i think the dollar issue is how it plays out in stocks, it's going to be the conductor of the

band. whether it's reversing because there are sovereign credit debt problems, is it reversing because of things like, you know, the politics of the day. i can't tell you. what i can say is when things get a bit dicey, of course the dollar is still the reserve currency. and the positions in the last couple of months are coming off. i think the carry trade looks like it's unraveling. i think that's a very, very good thing. >> so, rick s the bigger deal right now on the dollar move the risk aversion trade because of the end of the year or because of the problems in europe? or is it a combination of both? which is the bigger thing, do you think? >> i think the dollar trade is going countertrend but i would say it could be much bigger than what's going on end of year. >> to pile onto that, just yesterday $155 billion job creation bill was talked about. $79 billion of those dollars are leftover t.a.r.p. funds.

i don't remember having a vote on where those funds should go. >> i don't know, i'm going to give you a strange vision of -- i think that's a dollar-friend lid because the way it was passed in the middle of the night, i think that there's no way this is going to get legs. i think a lot of things going on in washington that are coming to a standstill, that could be a dollar-friendly as well. >> i like the way you describe it better than me, but i worry when they start throwing these things off like a side note. yeah, we're going to dump $155 billion towards this. it's scary. >> this new poll that shows the tea party's more popular than republicans, democrats, i think that at the heart of that is -- you can pass anything you want in the middle of the night, doesn't mean it's going to ever be reconciled by both houses or signed by anybody. i think that's a bit dollar-friendly as well. >> well, you being optimistic, that's amazing to me. way to go. >> thank you very much. you can catch jim on "options action" have night at 8:30 eastern time on friday night.

you have data on this vote coming up for bernanke. yesterday's man of the year, today he has to go before the nature. >> our crack team of cnbc called every member of the senate banking committee to find out how they were going to vote today. we get ten for, or ten in favor. >> saying they will -- >> five against. and eight wouldn't tell us, or wouldn't say. >> so it's a large margin of error. >> large margin of area. look at the breakdown. dems we got six for sure. four republicans. there's your undecided. eye got to go back and check how many democrats are undecided or how many democrats won't say or somehow we con get an answer. it's interesting that many. one away, he's one away from passing -- or two away from passing committee right there. got to get half, right, 50% to get out of committee. and the question is, is that a reflection of what would happen

at the larger senate? and ask yourself, what does that look like if that was -- wafs it, it would be -- what would that be on -- >> i thought they were supposed to -- i mean, i thought they were supposed to be -- this was supposed to be an easy pass. they're going to give him hard times? >> for sure, when you look at that -- i'm not so sure when you look at that number if all the republicans would come out against and a couple democrats would feel good voting. remember, we have bunning and a democratic senator yesterday, america merkley who said he was going to oppose. it's almost definite he would get out but how he gets out is something to follow. >> thanks, steve. speaking of the chairman, he was "time's" person of the year yesterday. now he waits to find out if he is going to keep his job. we'll talk to senator judd gregg.

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our future adding to their losses this morning after jobless claims just came in. a little worse than people expected. 480,000 for the week. showing that the repair of the labor market in this country's still a difficult and tenuous process. citi's new stock offering price is at $3.15. that is less than many had expected. below what treasury paid for it's stake. as a result, treasury says it will hold onto its shares for 90

days rather than sell. it does to expect to dispose of their citi stake in the next 12 months. dubai will finish a tiger woods golf course. dubai properties is a part dubai holdings. has no comment on tiger's personal problems. do you know what that course looks like? is it supposed to be nice? >> i don't know about that one specifically. there is a nice course over there. >> you can play year-round. >> do they play year-round, too. >> it's warm in the winter, right? >> yeah. and then you can ski afterwards. >> indoors. >> indoors. indoors, which makes a lot of sense, which explains a lot of the reason there's a little bit of a problem. >> that's true. the senate banking committee is set to vote on the chairman bernanke's nomination for a second term as federal reserve chairman. senator judd gregg, ranking member of the budget committee, was with us earlier this week with ron paul.

we're still trying to get over that interview. gad glad to have you back. >> thank you. i appreciate being invited back. i'm sure you've seen the quote from jim bunning about the "time" magazine decision to put him as person of the year. he says if "time" magazine's in the business of rewarding failure, ben bernanke is their man. is this committee vote going to be close? is it going to be a nail-biter? >> no, i don't think it will be a nail-biter but a fair amount of people on the committee unhappy with the fed, unhappy with the way the financial system has been dealt with over the last year and they'll probably vote no. >> what, if anything, does the "time" magazine do to the political calculus? does it change it at all? >> i don't think it has any effect at all. this is a major position. the position of "time" magazine is irrelevant to whether he should be fed chairman. i think he's done a very good job. the way i describe it, it's like driving over a bridge you didn't know was about to fall down

because someone came over and fixed the bridge before it fell down. the american people, as a result of what i think probably would have been a depression. the recession has been extraordinarily difficult for a lot of people, for all of us, really, but what we would have gone through relative to if we would have had the financial collapse, which would have occurred had he not taken the actions he took, along with secretary geithner and secretary pauls paulsen, would have been catastrophic. >> although, senator, i agree with you on that from what i've heard from a lot of people, but we also have people who write in and say, hey, he was part of the problem. he was at the fed when all of these problems built up over a number of years. why didn't he do something to stop it when he could have stopped it beforehand instead of fixing it as things were about to collapse? >> i think that's a legitimate criticism. at some level. i don't think you can lay the blame at the fed for all of what happened. my view is the fed keeping interest rates very low throughout the early part of this decade was a mistake. they kept the interest rates too

low for too long which made money too readily available which led to a lot of lending which was poorly done. i think the primary cause, however, this was really terrible underwriting. the fact that money was being lent to people who didn't have the capacity to pay it back or the assets didn't have the value to sustain the lending. that, of course, was secureized and we have a multiplying effect. when you look at this event, the primary driver was very bad underwriting right at the stage of making the loan. >> although, i'm sure you would have gree that test isn't over for him. he might be person of the year at this exact moment in time but he's never been part of a fed that's been aggressive on the upside of rates, that's moved aggressively to tackle a bubble and we need to see if he has that in him, don't we? >> yes, yes. we have some difficult times ahead here because of the amount of money that's been put into the system. how do you get that out? how do you get that out without

creating another economic downturn. that's a very naughty problem. the fed has new tools, fkt, the fact they can pay interest on deposits is a very big tool. so they do have the capacity to get money out of the system. in a way they haven't in the past. but a very practical matter, getting money out of the system has never been done very well. and it often leads to some very serious situations. we saw that, of course, in the 1980 when chairman volcker almost set the system down. >> senator, i was going to say, steve liesman called all of your colleagues on the committee to try to figure out which way they were going to vote today. came up with surprising numbers. he had ten who said they would vote for, five who said they would vote against and eight undecided. that might be a closer call than some people were expecting at this point. i know you've said, and a lot of people have said, there's to way he's not going to be approved and sent back on through the system. if something were to happen at

the committee level or on the floor of the senate, what would be the next step? i mean, we've seen other votes we were sure would pass, like the stimulus vote, that didn't. >> this is a little different. this is a little different than that. he'll get reported out of committee, and it may be closer than the numbers that are traditional. i think most numbers against the fed chairman on the senate floor were 16, that was chairman volcker's second term. as a practical matter it will be difficult to get him across the floor of the senate because two or three senators said they're going to filibuster him. that means majority leader reid will have to file cloture. our side of the aisle, yes, serious reservations about the fed and what the fed did, and i have reservations also, but as a practical matter i think chairman bernanke is a very strong candidate and who's better? are we going to get a better choice from this administration?

i would rather go with chairman bernanke because i think he's done a pretty good job and i think he'll do a pretty good job? the future -- >> you're available at the end of -- at the end of this term. let's not talk about that. >> i think my options have been played out of that one. >> senator, let's talk health care. can you tell us when we're going to -- when we're going to know something? you're supposed to have voted by now. when are they going to get 60? >> well, first we'd like to see a bill. they're writing -- >> oh, no, there's not going to be a bill. but you have to vote on this thing. when is there actually going to be a vote? >> i'm still of old school. i would like to see a bill and then maybe have a vote. >> do you think that -- >> that was five minute ago. >> you saw our poll today. for the first time there are more americans that want the status quo than want this health care. do you think -- >> common sense is kicking in. >> do you ever think that any of the people in washington are actually going to read that and start -- you know, when do they fold? when do they get scared and say i don't have the political will because i'm up for election next

november. when do they fold and decide they're not ready to walk the plank? >> never. >> well, you know, what's happening here is i think unfortunate. what's happening is that this -- the momentum for this bill, which is -- doesn't exist, but outlines of which we've been given, the momentum is basically driven by the desire to win a political event. it's not driven by the policies that's behind the event. in other words, anybody that looks that the bill knows -- the concepts of this bill have some very serious, serious problems. increasing the size of government by $2.5 trillion is a serious issue. cutting medicare by half a trillion and using it to fund a new entitlement instead of making medicare insolvent is a serious issue. causing small employers to have premiums increase on insurance so people have to leave insurance small employer has because he can't afford it. that's a serious issue. so the policy, i think people

have pretty much rejected the policy. americans say it's bad policy -- >> but that sounds like howard dean. howard dean is willing to lose the political event to go back and start over with new policy. are you cheering him on? >> i like howard. we were governors together and we don't agree on very much but we agree on this for entirely different reasons, which is sort of entertaining, actually. >> and he is engaged. i mean, i think some have made the point that had he come out in favor of it, he might have actually play indica lly placat >> he might have gotten what he wanted. >> he's a cnbc contributor. you watch what you say. >> senator, always good to talk to you. have a gooth good day. next, we'll have art cashin checking in with this morning's "trader's edge."

you could play that? >> all right. pay czar ken feinberg tells cnbc that he is glad the banks are baig paying back t.a.r.p. money, because that is, as he sees it,

the t.a.r.p.'s ultimate goal. >> i think it's wonderful. the primary target of this t.a.r.p. program has always been to get the taxpayers their money back. and if bank of america and citi, between them, roughly $90 billion are prepared to repay the taxpayer, that is exactly the objective of the pram. >> feinberg tells us that he favors the shift away from cash bonuses towards nonfarm payouts. and feinberg is in new york for a yale/ceo leadership summit today and cnbc has exclusive coverage. we'll be checking in at the summit all day long and bringing you updates along the way. >> carl can play that piano music. >> i would need the sheet music. >> well, we have a piano in the -- write in if you want to see carl play sometime. >> yeah. you can write in if you want. it's not going to happen.

>> why not? >> i will accompany you, how is that? >> sure. >> pour some sugar on me. >> if we put a bar out there, we'll get cashin, too. time for the trader's edge. joining us is ash cashin. art, it's the holidays. is there a bad time, really? >> no. i'm drink to that. i hear you guys are trying to turn yourself into the nordstrom of the financial markets. >> that's a good idea. we'll put some ladies' shoes out there, which that is sort of my thing. no. art, there is an old expression, never short it. this is so dull. we've done nothing in about six weeks. is that a good sign or a bad sign for the bulls? >> it's an inconclusive sign. when we break out of this one way or the other, it's probably going to be very dramatic. the fact that we've had this compressed consolidation with neither side with a big amplitude in range, this is

telling us that something is building up here. it's like a coil spring. so we'll find out which way it's going to go. >> springs don't go down. they -- they go up, right? but you mean it could go either way. >> no. this kind of spring is brought by wile e. coyote from the acme manufacturing. you don't know how it's going to work. >> typically, i does not turn out well for him. that's the one thing i have determined. but how does this work, art? what goes on on the floor that keeps the amplitude so narrow for the last couple of weeks? people aren't there? is no one around? >> no. well, they're here. it's maybe that the customers are starting an early vacation. we've seen a slowdown in almost all sectors, retail, buying, retail interest and even institutions. we've had some of the derivatives, the program trading, people they're keeping the tape moving, but they're not really -- you know, they're kind

of scalping pennies either side and not making a big deal out of things. that is what is keeping a narrow range. indecision i think is the big factor. >> well, you think about what you would like to hear me sing for carl to play, art, because i'm thinking of something that would make sense. >> carousel. >> you know what i might do? i might do the animal orchestra while you play. >> i used to do i feel pretty. >> and i'll look forward to that. >> thank you, arthur. up next, meredith whitney's call on two wall street giants. first, though, before we go to break, rick was telling us about how the dollar, it's hurting all kinds of commodities. gold is down by about $20. $1,115.50 an ounce.

>> you've never even played for us, not just our viewers. let's check on the shares of goldman sachs and morgan stanley after meredith whitney lowered estimates on both companies. she has a neutral rating on both. and i'd like to thank you, becky and carl, for being here today. >> thank you, joe, for joining us. it's great to have you.

>> when are you coming back? >> i'll be back tomorrow. you? >> make sure you join us tomorrow. squawk on the streets is coming up next. >> thanks. live from the financial capital of the world, this is squawk on the street. it is a thursday morning on wall street. it is cold, but we will warm your morning. i'm erin burnett. it's good to be with you. >> good morning to you. a lot happening right now. >> here is what is front and center for us. unexpected rise in jobless claims, up to 480,000. futures are trading lower, just off the lows of the session. people taking the jobless claims in stride, but i know, simon, you've been focusing on -- >> it's a really important test over the next hour of how this market in america feels about the fed's exit strategy. yesterday, it was all same, same, same. glass half full, still in there with the low interest rates. but overnight, what has happened is asia and europe have said,

actually, they are reaffirming that they're pulling out liquidity on the other measures at the beginning of the year and that meant that the dollar is starting to move. and the rest of the stock markets have come down around the world. now back to america, it comes back. the ball is in america's court. how bullish do you feel about where the fed is at the moment? it will be interesting to see if they can resist that on the that opening -- >> and some are calling for the dollar strength, at least a little bit right for now. >> you don't usually get the sort of move that we've had on the dollar on a regular day like we're seeing at the moment. >> bank of america name brian moynihan as its next ceo to replace ken lewis as the nation's biggest bank. ahead of market capitalization, i think it will be citigroup on the equity offering last night. b of ashares is not moving sharply. b of a is down after that stock