forget about culture within a firm, and culture is important not just at an u.s. attorney's office, not just in government, not just in congress, not just at any school or institution it's important. at a business organization and in particular at financial institutions it i'm shocked and amazed at how few people think about that. you have a conference named delivering alpha, but i wonder in my conversations with people, not sitting and reviewing indictments, that they're not spending enough time thinking about the kinds of people they're hiring, the culture they're creating in their firm -- the thing that happens to me a lot, and we talked about this, is in many police stations, not just in the business community but in too many institutions, but we're here to talk about the business community i think, of people wanting to come as close to the

line as possible. and they think my job, and the job my corporate council should be is to tell me how close to the line i can get to maximize my profit without going over the line. the problem with that is is it is a dangerous game to play. it's like a person trying to find a way to have has much to drink as possible in a bar, but not get a dui. if you're really clever, smart, good about figuring out what you've eaten and the alcohol in the drink, and you're smarter than all of the people in the room. i suppose you can do that for awhile, but how long will it be before you blow the limit and you kill someone on the highway. after making points like that, and i get a question that's often asked seriously and it

amazing me, they say you talk about how important it is not to cross that line and not cross the line, so how far from the line do you recommend we stay? and i say you know three and a half feet is the good distance. and it's obviously the wrong question. if you focus at every moment at where the line is, and getting as close as possible. maybe you will not be convicted of a crime, but that generates smoke, and when there's smoke, firefighters show up, prosecutors in my office and other regulators are conditioned and trained to make sure you don't do undue damage. firefighters sometimes will go into a building to make sure they're saving lives, putting out the fire, but there was just smoke welcome but damage occurs to the building. as i understand it and people in

my office are conditioned to understand it -- that the grenade analogy that some people say, you have to understand when you're assessing risk, you're talking about at what cost you're delivering your alpha, you have consider catastrophic risk of a mere investigation. people understand that the mere opening of an investigation or the discovery that we're investigating a hedge fund or financial institution can have a devastating collateral effect on the business before there is a proven charge. we need to be very sensitive to that and make sure we're not doing any undue, improper, and not overreaching, but at the same time we have a duty and obligation to enforce the law. if we see smoke, we have an

obligation to investigate. if you're a financial institution and you're sensitive to that kind of an investigation, and the mere opening of an investigation, or the mere execution of a search warrant is such that it will ruin your business or cause people not to invest with you or creditors not to want anything to do with you, then it's your obligation, if that's the business you're in, do be that much farther away from the line as possible. and not only should the ceo and the cfo think that, but everyone else in the company. i see over and over again. smart people and smart lawyer that's are ethical and they ask the wrong question. how long should we spend on compliance issues. as long as it's required. someone asked me once, what percentage of time should boards of directors be spending on ethical issues?

and i almost fell off my chair. as much time as is required. if you're a member of the board, at a corrupt company, and you believe it's corrupt, then a lot of time. if you think it's honest, and you asked a lot of question, and there's a plan in place and everyone understands is honesty is important, and whistle-blower wills be taken seriously, and things are investigated, then less time. no honest person would think it's a intelligent question to ask how long should rim think about the competition? you have to tailor at amount of time depending on what problem is and understanding what the catastrophic risk is. people understand catastrophic,

although not always given the example i just mentioned, seem to understand what catastrophic risk is as a business matter, but boards of directors, and cfo's need to think seriously about the kinds of questions that can happen to a company if they don't take seriously this issue of not just technical compliance, but really from within the company, a culture of integrity and doing the best that you can. if you're just joining us, you're watching the exclusive interview of jim cramer with the u.s. attorney for the southern district of new york who just said that insider trading appears to be rampant. coming up on "closing bell," we have steve leisman's interview with henry paulson and robert rubin. thanks for watching "street

signs," all of these big interviews and more, delivering alpha ahead, have a great day. hi, everybody. welcome to the special edition of "closing bell." i'm maria bartiromo coming to you from the delivering alpha conference, we will have a rare and special event today, to former secretary treasuries together. and on a day when we have good moves in stocks. >> we i'm bill griffeth, and that will be an interesting dynamic between paulson and rubin considering the economic and political climate. we'll be looking forward to that. in the meantime, as you mentioned, a good way under way at wall street. despite a decline of the you're row, the dow is up.

better than expected home construction data out this morning helps. the nasdaq is doing even better up 27 points, and the s&p 500 is showing a gain of 7 points at 1370. >> we break down the closing belle exchange. we have bob pasings ani and rick santelli. >> and we have ben bernanke testifying today. it seemed to be a nonevent for this market, yes? >> not only for the market, but a actual nonevent. we could have wrote this testimony without listening to what he was going to say. things were soft, we'll watch it carefully and stimulate if we need to. the market is off the fact that he has not thrown cold water on

more stimulus, and numbers are not moving. >> what's the resistance today? >> it really is an important dynamic. many of us are saying that one of the reasons is all of these negative coupon yields spreading all over europe. there's now five countries that have at least their two-year notes in negative yield territory. switz switzerland out to a five year negative, and france and austria on the cusp of going negative. they're finding their way into the treasury curve. >> they continue lower there, bob pisani, the bright spot for us has been the housing market. >> yes, the housing starts, best

in many years, they're continuing to show improvement, we have been getting very strong order indications. the june preliminary numbers are very good too. that's one of the few economic bright spots. let me differ a little on the bernanke testimony. the stock market turned around yesterday and continued to move up the minute mr. bernanke got into the meat of his q and a. gdp numbers might be too high, they're own estimates, it became clear to them, the traders, there would be some interest in qe 3. >> thank you for joining us, that's the "closing bell" exchange. >> we have kate kelly here at the delivering alpha kahn for instance with breaking news right now. >> thanks, shortly after your best ideas panel, i spoke to the ceo of blue mountain capital,

but it was interesting today because of what he discussed on the panel and he gave me exclusive details on how his firm was involved in helping jpmorgan unwind the trade in london this year. they have said very little publicly about it. there were two things that were interesting. they were involved in two ways. about a year ago last summer and fall, blue mountain got into an intest arbitrage trade, it's a index that tracks the debt of about 121 issuers. they shorted that index and they went long in the names and took advantage of a gap in the spreads. this is something they do a lot so they were comfortable with it, but more importantly earlier this year after jp morgan announced the losing trade, where they had gone long

corporate risk along the cdxig 9, blue mountain helped them derisk by purchasing part of the position from them. he would not talk about the side of the trade, how much money they made or where they stand now, but he said there were a couple misconceptions. one that there was an adversarial relationship between the entities. he said it was friendly, and second hi wanted to let people no that they acted on principal. >> thank you, my next guest was with me today here at delivering alpha, he is telling investors to keep their money in the markets, listen to this. >> sitting in cash is a mistake. waiting for something to happen because when ever that does, you will miss it. >> so where do you put your money to work if you want to be into equities, he is joining me

now on this cnbc exclusive. your company reported earnings today. i will leave the specks to larry, but let me ask you about driving the quarter for larry. tell me about your assets and what happened in the last quarter. >> our business is very similar to the businesses we invest in. our quarter was driven by good performance, by a diversified portfolio, and by watching our expenses like everybody should do in this environment. >> in terms of driving the portfolio, where do you see money moving? you said sitting in cash is not an option, you need to find yield. how do you find yield in this market? >> we have three opportunities that we think are in front of investors right now to move out of cash. the first thing is clearly equity dividend funds. companies are flush with cash. they are raising their dividends, and they're buying back their stock. one of the points i tried to make to everybody is we

calculated about $340 billion in stock buy backs this year, and there's not enough ipos going back. while i was talking about stocks that are yielding 4% to 5%. it was interesting for me to be on a panel with those looking for more risk in their portfolios. we're more conservative and look in that 4 to 5% range. the second one that was interesting today is very high yield. it has not happened since 2008. where i went out and talked about high yield in a diversified portfolio, you saw andrew feldstein came out. companies are the beneficiary of low rates here. and the last thing, which i always talk about, is municipals. if you're a taxpayer, i city

think social security a great market, we love these transportation issues, new jersey transport for those people. we love that area. >> infrastructure, right? >> we love it, that's a good way to play it, if you can get 4% tax free, we think that's a good idea. we want to be income hogs and the second thing we want to do is we have to get people to take some of that cash, because cash is a cost. and it's very important that people start to look at that because you cannot sit there and earn zero for another year. there are good risk managed ways to get income. >> people are trying to protect their assets, but you're right you're losing money. i have two follow ups on what you said. i want to ask you about dividends. we're going to have meredith whitney come on the show in a little while. she was the leading voice, are you not worried about that. was that overhyped? >> she cost a lot of people

money with that recommendation, i'm sure she had reasons to make it, but in that period of time when people may have listened to that, they lost a lot of money on the table, income on the table, and where did they go with that? they probably went to cash. cash balances by individuals and banks is over $10 trillion. we have to get that cash. there's a cost of cash. so it's very important and i still think the municipal area is good, the states are seeing good receipts. >> real quick on this dividend play, you want equities with dividend ends, people worried about this fiscal cliff, there is a possibility it will go up to 43%, does that change that play? >> no, because companies don't necessarily look at the tax rate on dividends when they decide to increase dividends and they don't really have anywhere to go. and the tax increases we don't know when they will take effect, if they will take effect, if all

investors will be subject to that. if you look over time when equity dividend stocks have outperformed the s&p which is most of the time historically, the tax rates have not stopped that from happening. i think it's an issue to be concerned about, but not a reason to move out now. >> and companies don't stop paying dividends. >> no, they're flush with cash and they have to do something with it. some companies today can go out and buy their own stock back and finance it and make money on their stock buy back. it's very perverse. >> it sounds like a good strategy. >> the wind is behind were back and you're looking to be in the equity market at this time. >> thank you for joining us rob, we appreciate it. bill? >> less than 45 minutes left in trading, the dow hanging on to some gains right now.

>> u.s. airways is wrapping up the pressure on american airlines to america. doug parker explains why this deal could help profits take off. not one, but two former secretary treasuries explain how investigators should navigate the challenges on the economic and political horizon. [ male announcer ] before you take it on your road trip... we take it on ours. this summer put your family in an exceptionally engineered mercedes-benz now for an exceptional price during the summer event. but hurry, this offer ends july 31st. i'm making my money do more.

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welcome back, a big treat coming your way, not one but two former treasury secretaries. our steve leisman is set to moderate that panel. he joins us now with a preview. hank paulson and bob rubin. >> you're right to be excited, maria, because in the 45 minutes we have i will solve most if not all of the problems out there. probably the issues of china between these two brain that's we have and their experience, i really have little doubt that we cannot make substantial progress. >> do you think they agree on most things?

>> this is what interested me in putting this panel together. i think a lot of the political debate right now is driven from the extremes. we don't get to hear from the guys in the middle that may be very close. if you're that close how can we get you together to make substantial progress? there are major issues facing this country, and the question that i have is there a way we can find agreement in the middle across party lines and across the aisle. >> in terms of the fiscal cliff, you would think that we have a little more agreement in washington head washington ahead of the election. >> the question is can they provide a way out for the political process. i think the thing they -- there is things you can no finance, no politics, but can you marry the two? there are a lot of options out there. >> we'll be watching in just a few minutes, thank you so much.

we're in the final stretch of trading, right now 30 minutes until the closing bell sounds for the day, the market is up, bill, nasdaq is also strong today. >> yes, the ceo of u.s. airways has the urge to merge with american. he makes his pitch for a deal. >> and then how bad will the rate rating scandal affect the backs, what is meredith whitney have to say? stay with us. there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ.

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welcome back, doug parker said today it is time to tie the not with american airlines, he has been saying this for awhile. he wants to do it while their still in bankruptcy. he made his latest comments today where he feels the marriage would up the antiagainst t-- ante against competition. >> with us right now, doug parker, good to have you on the program, doug, thank you for joining us, bottom line here, can you get this deal done? >> i believe we will, maria. there is so much support from this transaction. the employees of america, the creditors, the share holers the u.s. airways, the consumers with this should get done and i believe it will.

>> the latest presh readings seem to say that you and tom horton are speaking that maybe this is a possibility. has anyone at u.s. airways talked to anyone at american. >> we have had many conversations, they're lawyers contacted us last week. they have a process to get through, we want it to be a fair process that allows our proposal to be heard fairly and if that happens our proposal will prevail. >> what about labor, isn't that a big sticking point here? can you guarantee a smooth tran decision of the labor unions? they responded today and said they intend to look at the full range of alternatives. does that concern you? >> look, today we were happy to have with us the three labor leaders from american airlines. they signs agreements with us

that would be in place when the merger happens. the labor unions are fully supportive and it's one of the things that makes me so confident it will happen. >> would you support a merger even if you were not running the combined entity? >> the value creation here is by putting the networks together that can compete with united and delta that we can't do independently today. that's where the value is created, and there are great people both at u.s. airways and american airlines. my guess is when this is done we'll take the best of both, and whoever is running it, i know the value is not created by who does it, but what's important is the 100,000 people that work and make sure they're working for as secure of an airline as they possibly can. >> thank you for joining us. >> come back soon, doug. sorry for the delay there and the brevity. >> we're going to get to that

rubin-paulson conference next. >> earlier today, i was picking the braining of some of the world east most renowned investors to get their best ideas to make money. you will hear all five coming up in the program. >> paypal expected to give ebay's profit a boost. is it time to pay up for the stock in we'll look at ebay coming up. ing active can actualy ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. celebrex can be taken with or without food. and it's not a narcotic. you and your doctor should balance the benefits

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welcome back, we're moments away for the panel with paulson and rubin, and ebay is up today, let's talk numbers with ennis tanner. bottom line, do you like this stock sf. >> i like the story long term, i would not be a buyer of the stock here and i'll tell you why. if we look from the march 2009 low, it's been a very strong uptrend channel. and what's interesting is each time we hit the top of the uptrend channel, it's consolidated or sold off. i think it's a similar scenario.

if we go to a five year chart, you can see over the last five years the stock is actually come to five year highs. this is 2007 highs. it broke out from a $35 resistance level in 2011. this time, the break out is not as clean. we broke out and it sol back off, it's rallying again, i would be a buyer at $35. it's great support that was resistance. >> you would not bid on this auction at this point. >> exactly. thank you for joining us, we'll have the ebay numbers out after the close tonight. >> thank you, we're in the final stretch here, 25 minutes until the closing bell sounds for the day. the nasdaq is strong as well. >> where were you physically. were you on a plain back to new york? >> not at that time. >> so what bob greifeld being

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welcome back. nasdaq ceo bob grifeld took a lot of heat after the facebook ipo flop, i interviewed him, but was he being honest? >> the cia is watching maria. what happened here is we had phil houston, a 25 year veteran who spent all of that time developing deception techniques. houston looked a your interview for us just last week, and here is what he found. >> where were you physically?

were you on a plane back to new york? >> not at that time. at 11:30, we obviously did the opening, and then we were on an open kcall. and at 11:30, i was on a call. >> maria recognized he ducked the question, and went back to the question. and you see an anchor shift. it strongly suggest a spike in anxiety. his behavior clearly indicates he doesn't want to say where he was. >> when houston talks about an anchor point shift. the way you shift, your feet, hands, that is just one indicator of somebody who woulding information. his information is just one

man's position. he has a new book called "spy the lie." it's for corporations looking to see if folks they're dealing with are who woulding key information. >> can you really say that he is who woulding information. maybe he was just nervous. there was a lot of heat around him that week. it was the story of the moment, everybody was talking numbers, can you really say he was with holding information. >> he said he looks for clusters of deceptive indicators, that would be the anchor point shift and verbal and nonverbal clues. if you spot that cluster all in response to a question, then you can start to make conclusions from that, and what cia would do from that and they would hone in

on that area and pull out more information. they know that's something causing anxiety in that person, above and beyond the anxiety of being on a national tv interview. >> okay, i'm going to sit here firmly and will not wobble at all that i tell you the down is up 104 points. >> i don't know, that's why i threw that out there, just making that claim. are regulators as much to blame in tom of the interest rate righting scandals, how much could it end up costing the industry in meredith whitney will weigh in today at 4:20 p.m. eastern time. >> stay tuned.

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welcome back, yesterday senator schumer told ben bernanke in testimony to get to work on more economic stimulus, but today mr. bernanke herd a

different tune during his testimony. hampton pierce was there and has details. >> he wrapped up two days of congressional testimony fending of criticism to help aid the economic recovery and telling lawmakers the fed can only do so much. >> i don't think it's the case there has been no progress. we had in the last quarter of '08 and first quarter of '09, we had a collapse in the economy, the employment rate went about 10%. it's true that the recovery has been slower than we would have liked, but clearly we have made progress on unemployment and job creation. bernanke spent the last few days telling what congress plans to do to avoid going over the fiscal cliff. how that is adding to the slow down in the economy since the beginning of the year, and he

says there is no breakthrough on the horizon as far as the european debt crisis is concerned. >> i don't think they're close to having a long term solution that will solve the problem. until they find those long-term solutions, we will continue to see periods of financial market value valuety -- volatility i think. >> after the bell, i be speak to spencer bachus and he will say why the fed cannot ride to the rescue. >> we'll take a short break. >> and don't go away, american express and ibm set to report earnings after the bell and we will have them. if you are one of the millions of men

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discussion between bob rubin and hank paulson. we have anthony chan from wealth management. welcome all of you. mark, we have a two day rally here amidst nothing. >> there is no other place to go in globl markets than u.s. equities. it's not falling out of bed balance sheets are fortressed. >> tom, this is the argument you have been making all along. >> he makes a lot of great points, 64% of all of the s&p 500 have beat. people are recognizing it's maybe not so bad out there and they're going into the marketplace, and it looks much better going forward, yeah.

>> in terms of your seat at wealth management, are you seeing investors today having less risk adversity, are they starting to put money to work. dividend payers for accumlace, where are you seeing the money move right now? >> we're seeing retail investors getting interested in the market. i think the environment is getting better. certainly bernanke is helpful. he certainly made it very clear in the last two days that if things were to deteriorate, there are adults in charge welcome and it makes people and investors feel comfortable that it is safe to get back in the water. >> there's a lot of uncertainties out there. what is going to be the catalyst, do you think, to keep the money moving? will it be a flat market, or

what's your performance expectation for the rest of the year? >> anthony? >> that question is for me? >> yeah. >> the kat list will be for economic growth. if we start to see employment growth pick up, first of all the housing industry. >> gentleman, thank you all. we have to move along here. >> yeah, we do, two treasury secretaries about to weigh in, two treasury secretaries about who weigh in, let's listen to hank paulson and bob rubin right now at delivers alpha as they stake the stage to talk about the economic issues of the day. >> i am really delighted to be here and extremely grateful that these two gentleman have agreed to come on and talk about this. these really serious issues and my great hope right now is that we can draw on their experience

to make some progress on what are some very serious issues. you guys have been talking about all day long, and these are two gentleman from two different sides of the aisle. they are both serious fly fisherman which makes them a little crazy and a little patient. let me begin quickly here with the substantive issues out there. bob rubin, what do you assess to be the probably right now that the u.s. goes over the fiscal cliff? >> that's a complicated question, steve. i think that starting in the fall, there is probably -- my guess would be there's a relatively high likelyhood that you have increased uncertainty. i think the lame duck will be a period of engagement, but not a period of legislation. i think it will be deferred by

about two months to give the parties and those involved more time to work on this. my guess would be is there are three possibilities. one is the although possibility, how you get there is another question. another is that it gets kicked down the road and we remain in a extremely dangerous fiscal position. another possibility is that we will come to the end of whatever this period may be, taxes will go up, the adverse economic impact will hit. i don't think that can last very long, steve. i think it's far too dangerous of a position to be in. and then the third possibility, and the conditions are likely for it. with all of the pressures that exist in a post election period, that the parties will come together to seek common ground to address the fiscal outlook

that is unsustainable, dangerous, and has a substantial effect by undermining kf. >> it's a great thought, but the idea that the parties come together to address the long-term problems of the country -- >> when. i know they will come together and address them. they either do it before the crisis or after the crisis. if they don't, there will be a crisis. one thing i learned is that a crisis focuses minds, and there is some evidence to indicate that it takes a crisis to get big difficult things done. there is reasons for optimism right now, and i think the reasons fb optimism, very quickly, are there has been a great debate over the last year or two.

i think both sides of people understand the problem. and you have a good bipartisan basis. bob said you have forcing events coming up with this fiscal cliff, a big tax increase, and so on. i think it is, you know, at least i can't make that prediction. i am hopeful they will get there, but this is not just -- it's going to take, and the leadership needs to come. >> i want to be clear with what you're saying. >> frank, we were afraid that's going to happen, we have a line of major thunderstorms coming through this portion of the new york city area. we're having a problem with the satellite feed there. we will get back to that panel discussion. it's scheduled to last for quite a while there. we'll hear more from the former treasury secretaries and get their view of the current economic crisis around the world

right now. as we head toward the close, we're up 91 points. anthony chan's point earlier, that bernanke said it still exists. markets love more liquidity, but does that solve the under llyin problem? >> i don't think they deserve to rally. the reality is there is no more ammunition left in the gun. we get a little bit of liquidity driven impetus, but look what happens. >> what would change your view of this market, tom, as you have been right, you have been moving into this market, you feel like you're optimistic it will go

higher from here despite the dismal outlook on the economy and the fiscal cliff problems and all of that, what would change your mind? >> up unto this point, i think people under estimate the strength of the economy. corporations are strong and they have done well. all of the doomsayers out there that the world is coming to an end, the end of the euro, the u.s. economy will go back into collapse have been wrong. all of the short interest in the market has been going the opposite direction. people are getting more confident going into the marketplace. >> we're seeing a waterfall of events going into the end of the year. we have europe to resolve and a lot of things hanging out there that would cause some degree of concern. maybe we start to go into recession. >> very good point, it's going to come down to the elections many november. a lot of people are sitting on the sidelines waiting to see what happens come november.

if we have a new administration in the white house, a lot of the activity has been sitting on the sidelines could flow in and take this market higher from these current levels. >> but congressional gridlock doesn't go away, does it? >> right, that would be my concern, europe isn't going away. when you're running at spanish levels that depression terms. i have concern there is a issue out there, but it's like the best house in the worst neighborhood. >> the do you is up 09 points, peter costas is here. what's your version of why this market is doing what's is doing. can we continue this rally? >> u think it's headline driving and there is short covering going on at this level, and you know, every time you get new

news copping out of washington or europe, you will see them reverse as quickly as possible. everything has been basically news driven and the earnings haven't been too bad. once you get past the earnings season, direction out of europe, and then we realize that we're not going to have a double dip recession. we'll go back to the slow growth mode and we'll correct itself and get back on the upside. >> how important are the earnings reports. could that help set the tone for tomorrow? >> it definitely will -- you know what, there's not that much coming out tonight other than that. you know, it will help a little bit. i think the earnings should be okay, we'll see how well it goes tomorrow. >> all right, very good, we're heading toward the close, near the highs of the