"washington journal" is next. ♪ host: several stories in the paper do with how the administration will deal with health care. senator ted kennedy will not be part of the debate because of chemotherapy treatment. he hopes to be back in july for floor debate on the issue. also, california republican becomes the ranking member of the house armed services committee. for the next hour on our program we will take a look at economic principles of the obama administration, specifically applied to banks. the papers this morning talk about several banks that have received tarp funds given them back.

other stories related to executive pay. for our ohour we want to get a sense from you about how the administration is handling things. we want you to give a grade to the administration on it. e-mails or twitter us. re-the administration on its bank policy and its handling of banks. this morning a look at several banks that are returning tarp money lent to them. "the new york times" and others rightabout this and the net result of having lent to the banks. here are the results -- banks

the return taxpayers' money will remain dependent on other forms of government aid, among them are enhanced deposit insurance, incentive payments to modify home mortgages and federal guarantees on bonds that banks sell to raise capital. the treasury has collected about $1.8 billion in interest payments. it might reap up to $4.6 billion as the banks seek to expunge other investments known as warrants. we will focus on how to read the obama administration. joining us to help interpret that is john shaw. if you have to pick below points to consider on how to grade the administration on its bank policies, would you say? guest: it is too soon to tell

with the agenda for the financial-services industry, whether it is working. they inherited a very complex and chaotic situation. you start out by saying it is too soon to tell. broadly it will be measured by the degree of stability that enters the financial system and to which banks can lend to consumers. this whole notion we hear about systemic risk, but institutions became so in snared and complex, that brought the whole system into jeopardy. the long term will be the sense in which banks lend, to which consumers and businesses can borrow at a reasonable rate, the degree of stability in the system. host: with the money that has been given back -- is that a

pure way to sense if there is stability arriving in the market? guest: it is an indication. i was at a hearing yesterday with tim geithner who took the repayment as a positive sign. he was careful not to overstate it. he said there are tough times ahead, but it seems like these institutions have gotten their feet under themselves. they're doing better than there were six or nine months ago. but it is too early to tell if this will spread throughout the system. host: what you make of statements made by elizabeth warren yesterday about the stress tests used to gauge the health of banks backs and her concerns about whether the tests were actually flawed in nature? guest: she testified at the same time that geithner was in was presenting a monthly report. this board had commissioned a

couple of economists to look up the stress tests. it looked at 19 bank-holding companies that had over $19 billion in assets. she reflected what the economists said which says that the tests needed to be credible, but also ran adverse some areas which should not have billable of unemployment -- one that is less than what will be the case for this year. it may be 9.4% note bandit these tests of some 8.9%. -- it may have crept up to 9.4% on these tests. their concern that some of the stress tests be repeated over time instead of just one. and that the banks should self- monitor. it would not be fair to call her

report weather. she just question whether these stress tests were strong as they should be in she actually praised them. geithner was asked to respond to her comments and he had not yet heard them or the report, but heard reports of what she was saying. he said there was some credibility, but said he was very comfortable with the tests conducted earlier this year. he felt those tests have given confidence and stabilized and have allowed banks to get more capital flowing into the. -- into them. host: where does this minister and head next? guest: the financial-services reform over the next year. it is likely to gain initial momentum in the house. german barney frank is very focused on this.

-- chairman barney frank is focused and will have a bill which will pass this summer. chris dodd is involved in so many other things. today he will conduct hearings on the auto industry. he has been involved in credit cards. he is also keeping an eye on his reelection. senator dodd said yesterday his committee will probably not take up financial-services reform until september. we will see a lot of activity in the house. next week the president is expected to outline more ideas on how the regulatory system should be restructured for financial services. host: our guest will be with us periodically throughout the hour as we look to you to tell us how he would grade the administration on its policy for banks.

from bloomington, ill. on our republican line. caller: i would rate them unsatisfactory. those banks that are taking federal money are being allowed to go to consumers. they should be limited in the amount of interest they can charge to 10% over what they pay for those federal funds. some of those banks are charging all whole lot more than that. i would rate the program unsatisfactory and say that the federal government should limit what those banks are allowed to charge consumers for the money that they lend it to 10% above what they pay for it. host: rick on our independent

line, your next. caller: hello, i have not been on the program for quite a while. thank you very much for c-span. 10% sun, maybe it should be a little more than that, but we need some usury legislation brought to us by the congress. last night i heard a man on c- span and said he was thinking of introducing a bill to make usury anything above 36% -- that is outrageous and way too much. i would think maybe 20% four usury. it used to be illegal to charge over certain small amount and know anything goes.

they just let people charge whatever they want to. host: talk a little about your impressions of how the administration has handled policy toward banks? caller: i feel quite certain they needed to go in and bail out the banks, that we would have had a serious crash if they had not. i do not care whether the opposition party might have to say. it was really something that needed to be done and i'm happy they did it. it would have been highly irresponsible if they had not, however, i heard another man on c-span, a nobel-prize winning economist said that barack obama administration is overly concerned about being perceived as too much concerned about looking like they are socialists

or nationalizing the banks. his point was -- host: how would you assign a letter grade? caller: c as in charles, they needed to do it, but should have gotten a better deal for americans. host: two calls it back-to-back for talking about the interest rate. guest: it is something you're a lot about. yesterday governor at the hearing was asked about it, though interestingly, in regards to credit cards. he was careful. he wanted to express sympathy with the brought situation, but said he did not think it was the best approach. the administration owould be reluctant to put limits on interest rates. in would certainly get the financial system road up and i

do not know that it would really work. host: from knoxville, tenn. on our democrat line. caller: yes, i think he deserves and a for everything he has done. host: but why specifically towards banks? caller: well, he is making a start and rome was not built in a day. at least he is trying. the republicans are undermining him every step of the way. it is the businesses and big money that one to be damning him. host: on our republican line from baltimore. caller: good morning, and thank you for c-span. while it is a very complex issue and i think they're doing the best they can, and i did vote for obama -- i would give them at this pint a c + -- i think

that they build up the tarp banks because they had to. but at this point, those banks are paying back the money now so that they can keep their profits and it to continue to pay their executives and exorbitant salaries while at the same time they are still going to be receiving support from the federal government. there are many programs that will be available for them even though they decided to pay back the money. i think we should be getting more from them for the money that they will be paying back. host: when you say more from them, specifically what do have in mind? caller: i guess i really do not

know what i have in mind except that there should be some way the government can still have some control over executive pay and profits. because once the payback this money it will be business as usual and it will not have to account for any of those exorbitant costs. host: is there some truth to that john? guest: the executive compensation issue is huge and will be hearing with the financial services committee during which barney frank will try to connect executive compensation to the entire financial crisis that exploded in 2007. executive compensation is a very large and emotional issue. there is a sense of fairness and equity, but also an issue that the committee will try to explore which is whether compensation practices created certain incentives to take risks that are not healthy. when you go to a hearing or

listen to debate on a financially-related matter before the house or senate, executive compensation looms large. host: this headline saying that the administration is expected to announce their plans as far as bank compensation is concerned. in addition to standing by restrictions passed by congress, the push for broad changes in compensation practices across the industry. it will also. a pay czar to monitor firms receiving the most aid. treasury secretary timothy geithner is expected to push all firms to lowmore closely tie employment performance to stock rather than cash. good morning, this is joe on our in the pimm line. caller: good morning.

i would have to switch the question around -- how are the banks and the insurance companies handling the administration? the politicians had no choice. they were put into this position, otherwise financially we would have disintegrated. i believe when i went to college the rate was like 23%-26%, and with the way the fees are now you can get a better deal borrowing money off barney the loan shark on the corner. they have to do something about this. it is not just the banks. it is also the health insurance thing. the question yesterday was the health insurance and some guy was happy about paying $800 per month for health insurance. they are making a lot of money. there are people getting rich off this. i would have to give for grade -- i would give obama a c, and bush before him a c, pretty much

because there were put into a no-win situation. if they did nothing we would be in a big mess right now. there must be some regulation. charging people 30%, these fees? host: on our democrats' line from caller: louisiana i wish we had more programs like this. how much gold do we have in fort knox and the deficit? will they take this money and pay it back on the deficit or is this more money they can spend it? you have an excellent guest to answer that question. but for some reason no one wants to talk about how much gold they have. the could find out how much there actually is there as far as that goes? host: how do then relate this to

bang policy? caller: because everything is based on credit in the new this money for credit. with chrysler in these companies they can turn around and shut down the store. the smart move would have been for them -- and turn to be fiscally responsible to our deficit. we have to tackle that. i am for everything obama has done so far, but we have to watch the deficit. host: kentucky on our democrat'' line. good morning, mary. caller: i would give him and

"a" considering everything he has inherited. i think he is doing a good job. i do not think that we keep any gold at fort knox anymore. host: we will go next to tennessee on the our democrats' line. caller: hello, i am a first-time caller. i would commend the people calling and talking about the problems of usury, and i would probably give thea b- on this, but he failed by not nationalizing banks and picking them up. we ought to look at this as a trust issue. there's a lack of competition, overpayment of executives, and one of greed and which the banks and large companies are calling the shots, not the taxpayer, not even our representatives.

thank you for the opportunity. host: j.p. morgan chase tops the list of banks that have agreed to repay tarp funds, followed by goldman sachs, morgan stanley, u.s. bancorp, capital one, american express, bb &t, and so on. connecticut it on at our independent line, go ahead. caller: thank you for taking my call. it is difficult to rate the president on this issue because because i believe the banks are the ones taking control on this complete control, and they are setting the rules themselves until the people started to scream back.

taking back some control and putting more rules and going into more detail about repayment terms and with the money will be used for. no more of these fans to trips or what have you. -- fancy trips. people are feeling sorry for the banks and how much the interest rates are or could be -- as far as being too high, and by god, look at the fees that the banks are charging. they are certainly not giving anything to their customers. for example, the banks that i have currently, they charge and

overdraft protection feet and i do not even have that type of account. i think it was overdrawn by 10¢ or something and that was because a local check was being held for 10 days, and i did not even realize there were holding local checks that long. host: "the new york times" relates a story heard yesterday which says that none of the bank's executives crowed publicly, but some of their employees celebrated tuesday night at an outdoor cafe in lower manhattan. goldman sachs employees toasted their freedom. "this one is on may seek one called out from the table -- "this one is on me."

is that unusual that the banks did not amount to make statements? guest: no, this program from the start has been hatched in the midst of a terrible financial crisis. no one likes the program or says that it has been administered well. this panel that elizabeth warren chaired has looked at the operations of the program. tarp is not popular. but the point that tim geithner and others have made is that it does seem to have some role in having save the financial system last fall. you never know what would have happened if tarp had not been put into place. many of economists say the downturn would have been worse. but this is not a popular program and banks' people are not popular in washington or

across the country. but i would not expect public statements of them saying that. host: do you think that if things get into trouble again they can go back for tarp funds? guest: i believe they are. i do not think anyone wants to, though. one of the things about the stress tests is to encourage banks to build up reserves so that they are more solid and can weather another economic downturn. as banks leave the tarp program executives have a strong desire not to re-enter it. host: john shaw joined us this hour. . caller? caller: thank you for c-span. i would give obama and a, he

jumped right in as soon as he took office. the tarp as i understand was passed before his administration came into effect. but i wanted to address the issue of the bank interest. it seems to me that they're charging outrageous abuse three fees to all of america -- usury fees to all americans and by that way the incomes of americans is being diminished. it is largely because of these interest rates. for years there were limits passed by states that said 9% or 10% was the maximum amount that you could charge. then all of a sudden i think there was a case in minnesota where a national bank was allowed to charge a higher rate and in the whole thing went crazy.

that is a major problem. it also affects industry. if you have a choice of where you put your money you do not put back into industry. industry does not make 30%, 35%. i think that the whole thing is out of whack. host: on the opt-ed pages of "the wall street journal" this economist writes about how higher taxes will ruin the economy. he talks about tax interest, and revenue from taxes -- you rights this this morning in his piece. he says with an increase trust in the overall banking system the panic demand for money has begun and should continue to recede. but says the dramatic drop in output and employment will also reduce the demand. it says that combined with rapid growth in money and higher

interest rates will also reduce the demand for money it thereby it exacerbating inflation, thereby it catch-22. our republican line from arkansas. we are asking folks to grade the administration's progress on bank policy. caller: thank you for taking my call. i appreciate your program and generally listen to it each morning before i go to work. i am amazed by the calls, both republican and democrat. unfortunately, the republicans seem to be too quickly sold out to socialism. excuse me, i am nervous. i know that our president has inherited a great deal of this, however, more and more of the situation we have economically

today i believe belongs to him individually. i would have to give this administration an "f" and not much for the economic condition, but for the way he has handled it in that he seems to be mostly concerned with gaining control and our nation, economically, not just economically -- but i see him as an individual who loves control. he wants to gain it over every area and faction of our lives. for instance, the state of south carolina, i understand it is being forced to take money. why should they be forced to take money if they do not want, do not need it, other than the fact it would give the government control? host: frisco, texas, on our independent line. caller: thank you for c-span.

i give the president a d on this, but i don't really think it is the president, but mr. geithner who is responsible. and that the chairman of the fed. the problem you have is that they gave the banks too good a deal. bailey got back $60 billion after $700 billion or so. that is less than 10%. there was some interest, but we should have gotten a reduction in credit card fees. we should have gotten some permanent reduction on usury fees on credit cards, and a limit on interest rates on those for at least a few years. i am not -- they did not take into account also all the bad assets still on the books, but assets still on the books, but at least that they are sho