>> welcome to "wall street journal report." so where did the money go? the inside report of the wall street bail-out with the guardian of the gates. then he's the architect of a controversial plan to balance america's budget, cut debt and raise taxes. my conversation with alan simps simpson. and i'll go one-on-one with basketball legend kareem abdul-jabbar. the "wall street journal report" begins right now. >> here's a look at what's making news as we head to a new week on wall street. america's economy slowed to the weakest pace of growth in a year.

the gross domestic product just 1.5%, slightly better than expectations. about half of what it had been late last year. consumer spending was week, helping push the number down. the economy has grown for 12 straight quarters. ahead of the european central bank vowed to save the eurozone from collapse. the comments coming from mario drogy at a speech in london. >> within our mandate, the ecb is ready to do whatever it takes to preserve the euro. >> those words pushed the markets to the best gains of the month on thursday. closing up 200 points a second straight day of gains. in earnings news, european woes are impacting company's bottom lines. mcdonald's missed earnings estimates. ups was short as well. and apple also falling short of expectations. that sent the stock plunging. at&t, boeing and caterpillar

surpassed approximate estimates while facebook met expectations in its first earnings report since going public up. >> the troubled asset relief spent taxpayer money during the financial crisis. so where did all the money go and who was watching? joining me now, neil barofsky and the author of the new book bail-out. great to have you on the program. the book is terrific. thanks for joining us today to talk about this important conversation. so, first let me get your thoughts on tarp. you say, tarp, the popular perception that i had warned git mer about that it was little more than a massive transfer of wealth to undeserving wall street executives. do you think it was necessary and do you think it worked? >> i think it was necessary in that we were heading off into a terrible potential global apocalypse because of the importance of these giant super

mega banks. if they started to fall, they could bring the entire economy down with them. we needed some sort of response, it wasn't just tarp, of course. it's the trillions of dollars from the federal reserve and other programs. that did help to stop us going over that cliff. while it was successful in that aspect. it was a whole lot of other things tarp was supposed to do, get lending back in the economy, help struggling homeowners, the bill doesn't pass if it doesn't make those promises and it failed on every one of those promises, so it worked for the banks, but failed significantly for everyone else because of a series of choices that were made by our officials in washington. >> so what should we have done differently? >> for one thing, we shouldn't have given the money with no strings attached. no conditions. i had to fight hard to get fraud protections so taxpayers wouldn't get ripped off. we should have had a robust housing program that fulfilled the promise that was made to help four million people stay in their homes, instead what we got

were programs that were denchial to the banks and the housing program that foamed the runway for the banks as geithner explained to us in 2009. >> meanwhile, we have too big to fail out there, years ago, you said we should be breaking up the big banks. this week sandy wild, the former ceo of citigroup, the architect of the bigger is better in terms of banking when he put together travelers and his citi corp so many years ago. now he's changing his tune. let's listen to what he told cnbc this week. >> i think what we should probably do is go and split up investment banking from banking. have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail. >> were you surprised at this? and do you still believe this

should be happening? >> it's interesting, right, the guy who created the frankenstein monster that helped destroy the global economy, has now come around. although i wish he was there in 2010, when there was bipartisan support to break up the banks, it was beaten back by the banks and the treasury department and the obama administration, defeating that bill. it's very important that he's saying this. >> do you think it will happen? is it realistic? will we break up the banks? >> i think eventually we're going to have to, and hopefully before a larger, more significance crisis. there's also the problem of corrupting influence on washington. one of the things i saw over and over again, is how much that influence impacts policy decisions and individuals. i was told point blank by a senior treasury official that because my tone was too harsh towards wall street and the administration, that was doing myself real harm in my career, harm for my family. but if i softened my tone, was

upbeat and positive about wall street, then good things could happen to me. like a good pot of gold at the end of the rainbow. that corruption is also a major problem. >> let moo ask you about some of the policies. this is the second anniversary of the dodd-frank bill which reformed financial regulation. supposed to limb indication too big to fail and provide protection for consumers. is it doing what it's supposed to do? >> no. in many ways, it's unlikely it will ever do what it's supposed to do in its current form. it's a process that has so many rules and regulations, so many loopholes baked into it p ultimately when dodd-frank didn't break up the banks as it potentially could have, it cemented a status quo that continues the implicit government guarantee. look at the credit ratings agency of the big banks and they still benefit from that presum

shun the government will bail them out. >> how significant is this libor scandal? this of course coming very soon after the jpmorgan trading mess. so you mentioned scandal after scandal. do you think more reform is needed and do you think the libor scandal gets bigger? >> it should. there should be more outrage. this the problem of too big to fail banks and their regulators. when this was disclosed to the government, one of the players came to the new york federal reserve and confessed its sins. the response was not going to the department of justice, as you would imagine. this was a pharmaceutical company or any other that were in conspiracy to fix a price. they run to the department of jft and demand a criminal investigation. a public announcement to the markets that there's a problem here. a ringing of the alarm bell. >> here we had a meeting and

they stood behind libor when it started enacting bail-out program, sending the opposite message to the market. >> good to have you on the program. >> thank you for having me. >> up next on "wall street journal report," a man whose name is forever linked with our nation's deficit. the looming fiscal cliff and what it means to you. and later the business of basketball with kareem abdul-jabbar. take a look how the stock market ended on the week. back in a moment.

>> the expiration of the bush era tax cuts as well as $110 billion of expected spending cuts at the end of this year could be sending our economy toward a fiscal cliff. what are some calling the most predibltable economic crisis in history. alan simpson co-chair on fiscal responsibility. good to have you on the program. thanks so much for joining us. >> always nice to do that. >> let's talk about this fiscal cliff, look ahead to january 2013. what do you see happening? is our economy pushed over the edge as a result of all these tax cuts and spending programs expiring? >> it's a difficult and totally predictable thing because between the election day, november 6, and december 31,

this country will be awash in five to seven trillion bucks of money that has to go somewhere, things have to be advanced or not advanced. so if they don't get it done, then the president, whether it's the present one or a new one, is going to have to come on in january and grapple with snakes. what you have going on right now is a cross current of greed versus cowardice. and it's a very disgusting thing to watch. i go all over the country. people are sick of b.s. and mush. they're seeking the truth and we do math. we don't do other stuff. if you're going to extend the tax cuts, you're going to have 3.8 trillion added in ten years to the 16 trillion we already owe. you got to correct the sequester. who wants to say it. i went home and didn't have the guts to use a surgical knife. i just let them take an axe to defense and non-defense. you got to put the social

security payroll tax. i wonder where the aarp was when they took it down to 4.2 and took billions out of the system. i mean, have a drink. >> when you look at all of this stuff, why aren't we seeing the leadership actually say, okay, these are very important developments and we need to come to an agreement. is it okay to wait until after the election to deal with this, or should we be having an agreement now? >> you don't have to do a specific legislation. although we have prepared specific legislation. we've taken the 67-page report, turned it into an 800-page bill. we have democrats and republicans looking carefully at it, making changes, but you can't get away from this. they love to kick the can down the road for a hundred more years if they could.

they are all enamored by the curious curse of re-election. you won't hear anybody between now and november 6, talk about the solvency of social security, getting a handle on the entitlements which are on automatic pilot and will suck up every buck in the treasury if you don't get a handle on them, do something with medicaid and do something with defense. >> howard dean said let's go over the fiscal cliff. in the event that though deal or kick the can scenario was reached by year's end, is there a way this urgency feeling could create a bipartisan solution? >> i tell you what will create a bipartisan solution. it's about the markets. they'll call the shots. they're got going to sit here and watch a dysfunctional government. they're going to say we want more money for our money. and to do that, interest rates will go up. inflation will kick in, guess who gets hurt the worst? the little guy that everybody

babbles about day and night. right and left. ought to take care of the little guy, fine, do something. get off your can and get with it. >> you and your co-chairman of the simpson bowls commission, white house chief of staff you're skin bowles who you mentioned today. you launched a campaign called fix the debt earlier this month. are you being listened to, senator? about the simpson bowles plan get blown off? what happened? >> we said when we put that plan out, we would be savaged. guess what, we were. we dealt with everything. we dealt with the tax expenditures, the tax code, only 27% of the people in the american index, they never heard of it and everybody bit of it drains the treasury.

then coburn comes along and says six billion bucks out of subsidies for ethanol and nor quist who is wondering the earth said that's a tax increase. you don't have to do a tax increase, you go into the expenditures and start ripping them out. home interest mortgage deduction, a million bucks. what the hell is that for? 500 ought to do it. then give a non-refundable tax credit which helps the little guy. people know whots going on and they know that there's the greatest game of chicken and cowardice and greed that's ever come together in one great tryingular mess. >> senator it's so refreshing to hear your candor. thanks so much for joining us today. we appreciate it. >> you bet. >> we'll see you soon. >> bye-bye. >> up next on the "wall street journal report" it's not all business with kareem abdul-jabbar. how retirement helped him find

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dog sweaters? >> welcome back. the nba's all-time leading scorer, kareem abdul-jabbar went from 20 dominating seasons in professional basketball to thinking about how to encourage american kids to dominate in science and math. when we first brought you this interview a few months ago, i got pointers from the master of

the sky hook and discovered how he fou the words to write his second act. >> it took me a couple of years ago to deal with the burn-out of playing. i had a very intense career and it lasted for 20 years. once i got over the burn-out i figured on what i needed to be doing and i started writing. i always had the ambition to write. [ cheers and applause ] >> i probably would have been a history teacher or something like that if i had to have a real job. >> 15 years after his first history book, black profiles in courage became a "new york times" bestseller. he's promoting a project for children. what color is my world? the lost history of african american inventors. you write about two american kids, ella, and herby, who hear there's more to our history than jazz, slavery and civil rights. >> the message of this book has

to do with my experiences when i was in grade school. the only time black americans were mentioned were in conjunction with the issues of slavery and civil rights. and the black experience in america is so much broader than that. >> how are you doing? >> are you jaden? >> yes. >> jad-a-d-e-j-a-d-e-n. thank you. >> it's very important to me, especially for black kids do read this book. the only time they see black people being successful has to do in two areas, sports and entertainment. >> why did you choose inventors? >> these inventors are scientists and mathematicians and engineers. people that young kids in the inner city do not look to as being heroes and achieving extraordinary things. >> no kid raises their hand and says i really want to be an engineer.

they want to be a superstar basketball player. >> if you talk to young kids, they want to be lebron james or they want to be jay-z. >> born in new york, he rose to national prominence playing under ucla's legendary coach john wooten. >> you were a city kid in a catholic school in man hatton. what was your experience like? >> my experience was in learning about the general culture of america, not african american culture. my dad was a jazz musician, so in my household, duke ellington and louis armstrong were heroes, but i didn't learn how broad african american achievement was until i took part in a program in harlem that was designed to show the kids in harlem how to make it a better place. that's when i started to learn about the harlem renaissance. >> on the shoulders of giants, a documentary he released last year, tells the story of the

harlem rens, a black basketball team that won the first integrated professional tournament in 1939. >> black americans have never been given credit for the things they contributed to american life. it's always seen as something that happened in the shadows and in the corners. i wanted to shine a light on that. >> 7'2" is still the nba's all-time lead scorer with 38,387 points and his place in 345er7b sports history is ensured with his signature sky hook. >> okay. for those who don't know, what is a sky hook? >> sky hook is just a hook shot on the basketball court. put my own stamp on it. >> you want the ball to come down through the hoop. up and over and down. >> that's it. perfect. >> so what did you learn in

sports that helped you in life? >> oh, jeez, you learn so much team work, you learn perseverance. and preparation. one of coach wooden's favorite sayings was failing to prepare is preparing to fail. we used to just think these are corny sayings. >> that's another important influence. you got to be lucky as a kid, to have all these influences that are positive forces. >> i was really charmed. i've had a charmed life in that sense. >> perfect, perfect. >> my thanks to kareem abdul-jabbar. up next, we'll look at the news this week that will impact your money. the high cost of high achievement in the olympic games. why a trip to the winner's podium may be more expensive than ever.

>> look for us on facebook, look for @wsjr with maria. now a look at the stories in the week ahead that may move the markets and impact your money. earnings report from procter & gamble this week and pfizer. as well as these auto makers. on tuesday the s & p index will be out tracking housing prices in 20 cities across the country. auto makers will report in july and the feds open market committee wraps up a meeting on wednesday. on friday, the monthly employment report will be out. typically, a market mover. winning gold is not what it used to be and it's pricier than ever. the medals awarded will be the most expensive produced, thanks to higher commodities prices.

gold is up 45% since vancouver in 2010, silver up 77%. 2012's gold medals weigh in at 412 grams, 92% of which is silver bullion plated in gold, bringing individual cost to about $640 and proving that all that gliters isn't always necessarily gold. best of luck. that will do it for us today. my guests next week randy kroszner will be here. have a great week, everybody. see you again next weekend.