tv [untitled] June 27, 2012 8:30pm-9:00pm EDT
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about, geez, moody's came in, downgraded five of the largest u.s. banking institutions, some within -- maybe not spitting distance, but throwing distance of junk types of ratings, and it's fascinating, because the debate that occurred was, they downgraded the banks now, but they are stronger than they were when the ratings were higher, to which my reaction is, yeah, but the ratings before were wrong. it's pretty darn clear that the rating agencies had this completely wrong. everybody -- not everybody, but a lot of people did, including the bank executives, the boards, the regulators, the markets. i mean, a lot of people had a lot wrong, but the rating agencies did as well. it's taken them this long to do what i'm sure is very thorough, very reasoned, very analytical work, to get these banks the right ratings. in fact if the banks had been
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rated correctly before, these would actually be upgrades that would be occurring, not downgrades, on an absolute basis, let's hope the banks are are rated correctly right now, on a relative basis, the debate about they were downgraded is the wrong debate, because the ratings prior were just wrong. >> moving to newark, new jersey now, james on the independent line. >> caller: how are you doing? i'm an insider at jpmorgan chase. i can tell you, their financial cushion that you talked about, you said it was $128 billion. wro wrong. their financial cushion is 3 trilli
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trillion. that's their financial cushion. when it did happen, i got involved, and i tried making things correct by one with of the deals that was made by correcting one of the deals that was made, and the topic -- i talked to, told me not to worry about it, because we had a cushion of $3 trillion, not $128 billion, but $3 trillion. >> let's hear from our guest who that caller calls himself an insider, says he has a much higher figure. what's your response? >> well, i think if that's the case, jpmorgan should reveal that to the markets. that is an extraordinarily high number, well beyond the capitalization that one would expect. so i think maybe an ak release, demonstrating in the market would be helpful.
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>> let's go back to a twitter question, asking about the role of the fed. please ask about the box that they say bernanke is in. must keep interest rate below 1% or blow the u.s. budget wide open and keep adding to the supply many the role of the fed currently? >> it's a very challenging situation that they are in, because they typically, you lower interest rates. and by doing that, you can spur demand. and these folks are clearly pushing on a string at this point. rates are about as low as they can go, it's hard to take them below zero, and yet we are in the midst of a tepid recovery. and this year, interestingly has the feel of every other year. for the past handful of years, it's felt like any other year, january, february, march. the demand is really coming
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back, and then you get into the summer doldrums, each driven by different things. in this case, nervousness about europe, we're just unable to get this recovery going. people have lots of reasons for it, people talk about -- get very heated about tax increases that are copping and uncertainty going-forward and health care reform coming in, i think it's hard to point to one single reason, but business executive after business executive that i speak to just feels nervous may be too strong a word, but cautious. very cautious. it's interesting, the business that i ran at bank of america, the one place we were missing the budget was actually in loans that we were doing. the client base that the business i had responsibility to serve was high net worth, ultrahigh net worth individuals who are in the business -- people that are out there starting businesses and growing
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businesses. people talk about, the banks aren't lending? the banks were very happy to lenned to companies and to those individuals, you couldn't get them to take a loan. so the fed continues with operation twist, with interest rates to look to reignite the economy, but it's in a very challenging set of circumstances. >> from the years you spent in the industry, speak if you can about public perception. don't know if you had a chance to see the daily news today. there's a cartoon here. they poke fun at all of this. they show a young guy, looks like a boy in high school being carried away. they have the cheating ring, mastermind genius says one with bubble. another kid asks, where are they taking him? another kid says, they're taking him to wall street. something of public perception there, but what would you say to us and our viewers about how to view the industry these days. >> it's funny you say that, i was reading the paper this morning, i thought, there's a
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lot of article about this kid. no one likes to cheap, but it's a lot of ink being paid attention to one kid. clearly to state the blindingly obvious, there is a lot of anger and angst toward the financial services industry today as there is also and perhaps to a lesser degree to the government today, and a feeling that these institutions that have let these individuals down. and a feeling too, that good times, when individuals feel like they have opportunity. feel like their kids have opportunity, feel like they see the country moving forward, they're very willing to look at those institutions and feel that if they're not being helpful, at least they're not standing in the way, but right now we have the feeling that those institutions, financial institutions are actively work against the individual and there are calls for that, that feeling
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is perfectly reasonable, perfectly understandable and certainly will persist until the economy begins to recould beer in a way that it feels like the whole country is moving in the same direction, not certain parts of the country are moving in one direction. >> there's this question in via twitter, why has no one been held accountable for the financial crisis. not a new question. is that true? and what's your broader perspective? >> well, i'm not a lawyer. these people, with these laws or that law, i'll leave that to the lawyers to debate and to discuss. but make no mistake, individuals have lost their jobs. a lot of individuals have lost their jobs. and some the ones i know -- i know this wasn't popular, and i'm sure this will get a lot of
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hate mail. they're individuals who i know in these institutions who made mistakes, lost their jobs. and feel terrible about it, okay, i get it, here comes the hate bail but the folks that are at the top these institutions today, have been determined to be people who have the experience and have the expertise to lead these institutions forward, who were not part of the significant mistakes that were made. i understand the desire for people to be brought away in handcuffs, i can't effect that. that's why the work i'm doing is to help the boards show them the places where they can make a difference. all i can do rather than look back here, all i can do is given my experience as a research analyst covering the industry, and some roles within the industry, is to try to say, okay, for looking forward, what are the levers that we have to
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help keep this from happening again. >> we have perkins, oklahoma on the line, randy a republican for sallie krawcheck, who is up in new york city. hello, randy? >> caller: yes, hello, john. you said if there's a run on the banks, that people with savings, and their money invested in the banks would be 100% covered because the government guarantees -- is that the chinese government that's going to be guaranteeing it? >> well, the u.s. government remains very strong today, and so that government guarantee continues for as long as we can see forward to certainly be worth something. you bring up a very good point about the health of the banks and bank runs. because confidence can be a fragile thing. and while we think about the historic bank run, and all have pictures of the great depression
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and people lined up around the corner i think a change here, a bank run can happen at 10:00 at night, sitting at your kitchen table with a few clicks of your mouse. it's much easier if there's a sense of danger out there for individuals and institutions to move their money away from weaker institutions, and quite honestly, it's a little bit of what we saw with wachovia, when it was having its issues, people were draining money from that institution, not by standing outside in line for it, that's another factor that needs to come in as we think about the next down turn of how much easier it is for there to be runs on banks today. and, therefore, the additional safeguards that regulators need to be taking. >> des moines, iowa, tim, good morning to you? >> hi, sally, i notice by the spelling of your name that you'd almost have to be in the
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financial business i would guess. i have a couple questions. certainly my sort of gut feeling on what happened back in the great recession and the bank meltdown was capital requirements and banks went way down, it was 40 and 50 do 1 and so forth. also, there was not adequate funding of the sec. now we have the consumer financial transaction organization which i think is very positive. i'd like your comments on that. the other thing i'd like to mention. and somebody else mentioned this, the transaction tax. they refer to it as the robinhood tax, it's getting at these high speed transactions that are based on nano second type stuff and doing more and more stuff. no value at all going to anybody, other than the traders themselves. the last thing i'd like to
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mention, how do we limit pay, so that people, traders don't make a billion dollars. somebody makes a billion dollars, somebody is losing a billion dollars. something has to be done, and if you can do something, i'm basing on a multiplier of a median income, maybe that would be a positive thing. that's all i have. >> you can take one or all of them. >> there are are a lot of them. >> i was trying to figure out what you meant by my last name, which i think years ago was full of c's, z's and y's before it was americanized. you bring up the issue of high speed trading, and that's run i thought about, and i haven't come to a conclusion yet. by the way, i always used to tell the folks who worked with and for me at the institutions that i worked at, that, you
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know, we need to be careful of opinions versus facts. i wanted their facts, i sometimes wanted their opinions, i always wanted their facts. with the high speed trading, the initial take is certainly one of what value does it bring. is it worth having? i haven't seen any research yet that shows that it hurts the individual investor. the moment i do, i will be sure to build a case or work on it, it's really a continuation of what you've seen historically, which is, things just happen faster. they just happen faster. even when i was a baby research analyst back in the day, to think about coming into the office, buying the newspaper, the wall street journal, the daily news, the post, the new york times and going to my desk and spending the first 30 minutes leafing through the papers, versus today whereby the time i read the news -- if i ever read the newspaper in the
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morning, i've already read it the night before, it's just a speeding up of information and content which you're seeing across all industries including the trading operations. there's no doubt that we need to make sure this technology works. what i have noted is that we had the bass ipo and facebook ipo, both of which went poorly. certainly because technology failures. you know, we have to be careful that we're not putting too much into those machines and leaving out sort of the human judgment that occurs with it. >> we have time for a couple more calls for our guests. mike on the independent line for sallie krawcheck. >> caller: hello. i have a couple points that i was hoping you would address.
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i have a solid belief that -- not understanding what was going to happen or not researching is it enough, i would call that into a regulatory situation. that goes to my point. i was wondering with the bear stearns and lehman brothers and the larger are investment banks that were doing derivative and this new answer fumbling of debt and being able to make profits off the bundling debt, that is just a foreign, nonsensical, uncommon sense like situation for me to think that businesses would make money by bundling
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debt. it goes against all human nature, i just don't understand it. my point is, that the regulation, it was lax. you made a reference to incompetence in the industry earlier and i feel that is the main problem, is that you've got unqualified, incompetent people in positions of authority. and my 30-year home builder, where what did work entailed deciding how many people were needed to do a certain job. i find that what's happening more and more, is that the downgrading of regulatory systems, gets two people to watch over something where there's 20 people needed. that just boggles my mind again, i could not get away with that. it's unsafe. i feel the unsafeness of the financial industry is what brought us to this situation. >> let's get a response from our
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guest. >> yeah, it's interesting, you said one word that i wrote down, and the word that you said was the incompetence of individuals. i would add a word to that, and the word that i would use is group think. the individuals who were in these companies, very high i.q.s, high s.a.t. scores, a plus's in college, individuals who have records of achievement who got together and by the way, this is individuals who were in the institutions, these are the rating agencies, these are people who are the regulators and there was an entire industry that missed the sub prime bubble. let's go back, we must have brought in idiots, if you go back, you can see this happened in the internet bubble of the late 1990s, it happened if the asian crisis, the same sort of time period it happened in the
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1 1987 stock market crash. you have these cycles that occur, and there's a crash that occurs. in hindsight, it's so obvious, everyone should have seen it. that's predeterminism, things that happened in the past must have been so obvious because they happened. i remember being at meetings large investors and people saying we know there's a bubble occurring somewhere, and people thinking it was in china, when they had to identify it. i think a big factor here is group think. you have individuals who breathe the same air, who are are together all the time, who come together and form the same opinion. and, therefore, lack a diversity of perspectives. having idua within these organizations, the top of the organizations, who have a diversity background and
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perspective is exactly what's needed. and who are empowered to ask the question. there's a woman who's a friend of mine, on one of the boards of one these financial institutions, who wosay, exactly what is cdo squared? exactly what is the purpose of that? and because she was one of the the old, you know, gosh, you're not particularly smart, lady, be quiet. when, of course, that was exactly the right question to be asking. i do think as we look at these teams going-forward, we look at the boards, we need to make sure we're bringing in enough different perspectives. the boards need to make sure they're bringing in enough different perspectives. you have ten people around the table and one, they all come from the same background. >> please comment on the insider trading congress is accused of of. one of the editorials in the
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washington post today, taking stock of congress, they write, lawmakers should not have investment advantages over those they represent. they write at the end here, ideally, members of congress would not own and trade in individual stocks and they would t trusts. only six members of the senate have six members of the senate have done so. the house doesn't even keep a tally. that might be a place to start. and until congress tightens its rules including a more effective disclosure process, americans will have to live with an uncertain image of their legislators. are they public servants or are they self-servants as well. take us to congress. >> enough said. if there is any place where individuals, be it in corporate america, be it in government are using what could be viewed as inside information, you know, information that has come to them because of the privilege of the position they have been put into, again, whether it's in the private sector or it's the public sector, that they have
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had this trust placed in them by voters, by shareholders, they need to be operating fully in the interest of the individuals they being asked to serve, and get rid of those conflicts of interest. so i don't even think this frankly deserves a lot of discussion. i think the answer is pretty clear. >> we say good morning to lucy in pennsylvania who is on the republican line now for sallie krawcheck. hi, lucy. >> caller: hi. i'm calling about the federal reserve that insures our individual bank accounts. and i was told that the people that took the t.a.r.p. money, their insurance on the account is unlimited, whereas the regular banks that didn't take the t.a.r.p. money are limited to 200 or 250,000 on their accounts. and it seems to me that this
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administration always gives to the people that are doing wrong and punishes the people that did right. and had the government, if they needed to give those banks money, had they given all banks money instead of picking and choosing like they always do, which always takes away business from the people who do right, if they had given everybody the same rules and the same money and proportions in the accounts they had, i believe that the regular banks could have taken over a lot of these accounts that the other banks had. it would have made all the smaller banks stronger, and they would have been able -- we wouldn't be going through this no lending. >> thanks, lucy. we have about a minute left in the program, sallie krawcheck. give you a chance to respond one last time here. >> lucy, what i think you're referring to during the bailout period there were extraordinary measures taken by the government to, you know, secure the deposits of individuals to secure money fund dollars as well. and during that, the height of
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the crisis in 2007 -- excuse me, 2008/2009, those action were taken. make no mistake, i don't think we would have wanted to see what it would have been like if they hadn't been taken. and i very much understand the emotional around it, but you didn't want to see the other side of this. we're back to many, many ways a more level playing field where the fdic insures the banking deposits across the industry the same for individuals across the banking industry. and actually with some of the dodd/frank rules, there are actually more stringent rules and more stringent capital requirements for the large guys, who in some case are being held to a higher standard than for the small guys. so there may now be an opportunity for the small guys without those higher capital requirements actually to make some inroads and to win some business. >> the federal government has spent about $6 billion on weather satellite programs run by the national oceanic and atmospheric administration, or noaa. we'll get a report on that program next on c-span3.
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later a house panel examines education issues involving veterans including deceptive marketing practices by schools. the u.s. supreme court will hand down a ruling on the constitutionality of the health care law. all or part of the law could be invalidated. we'll be live at the court as the decision comes down and to get reaction. our coverage begin at 10:00 a.m. eastern here c-span3. the full house will vote on contempt of congress charges against eric holder. watch live house coverage on c-span. i could have told you at the beginning of this year that here is how it would run there would be a vituperative republican primary, and the republicans would look enfeebled, that there
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would be a nominee, and that the republicans would then rally around the nominee and the true nature of the race would reveal itself, which is it was going to be close. and i would tell you the media would eat that up and say romney is surging, obama is flagging, this is a race. that is -- that is -- and i'll tell you what the next phase is going to be. the next phase is going to be the media is going to become more alert to the fact that governor romney has been completely evasive about his positions, has been all over the lot on many of them, and has tried to play a game of hide-and-seek with the american people. and i think the news media will be challenged to challenge him to be more forthcoming. and then the story is going to be that for a while. this is the nature of this business. >> look behind the presidential election process when you want online with c-span's road to the white house and the c-span video library.
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the national polar orbiting partnership is a new program designed to learn more about long-term climate change. next, two space and technology panels get an update on the weather satellite programs run by noaa. this hearing is about 1:35. >> this joint hearing of the subcommittee on investigations and oversight on this committee of science will come to order. and it's a joint committee meeting with the subcommittee on energy and environment. good afternoon. please forgive me and our colleagues and all our witnesses for running late. i appreciate your patience.
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welcome to today's hearing entitled continued oversight of the nation's weather satellite program, an update on jpss. in front of you are packets containing the testimonies and truth and disclosure for today's witnesses. before we get started, since this is a joint hearing involving two subcommittees, i want to explain how we'll operate procedurally so that all members will understand how the question and answer period will be handled. as always, we will alternate between the majority and minority. we'll allow all members before we allow a second round of questions. we will recognize those members that were present here at the gavel in order of seniority on the full committee and those coming in after the gavel will be recognized in their order of arrival. i now recognize myself for five minutes for an opening statement.
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this is the ninth hearing we have held a on the jpss program since 2003. that does not even include hearings related to geostationary observational environmental satellite and weather satellites in general. this level of oversight continued under republican and democrat administrations, as well as congresses is indicative of how important weather satellites are to our society and to members of congress. without both polar and geostationary satellites, our weather forecasting ability would be severely compromised. because of the importance of these programs, it is frustrating to watch them struggle. the original polar satellite program imposed was supposed to cost the taxpayer $6.5 billion. that was supposed to get the taxpayer six satellites
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operating in three separate orbits, carrying 13 instruments which were launched around 2010. instead, we now have a program that will only purchase three satellites and will operate in only one orbit and cost twice as much. to make matters worse, one of those satellites is a research satellite that was never intended to serve operationally. noaa is now dependent on european partner for data from the midmorning orbit. and it's anyone's guess what data the department of defense will supply from the early morning orbit. even more frustrating is the fact that this program still does not have a baseline cost or schedule. i understand that noaa is working towards developing this, but as they point out, the ground segment has already passed its critical design review. all of its contracts are signed. jpss 1 instruments are 60 to 95% complete.
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