pending house bill that would legalize internet gambling. then our week long series on the financial regulations law with bloomberg reporter phil mattingly. washington journal is next. . . savvy

enough to handle bottom line questions very delicately. u always say you're a realist.

are we winning losing here? >> we're making progress and progress is winning if you will. but it takes the accumulation of a lot of progress ultimately needless to say to win overall and that's going

. .

>> after getting into operations and traveling into far reaches of the country. host: more now as he talks about that draw down.

>> how stife eling is the concept of this deadline and debate to what you are trying to do here? >> i don't find it that stiffling. the president has been very clear, this is a date when a process begins. it's conditions based. we transition tasks to our counterparts and security forces and various institutions enabling a, quote, responsibly draw down of our forces. next call is afghanistan winnable. thank you for waiting. good morning. i do not think this war is winnable.

caller: this war should come to an end as soon as possible. i think us fighting over this is no prize. there is no winner there. no winner in any of these wars. what is the prize. we should stop and try to live in peace. it's about peace, not about war. give thanks. good day. >> top u.s. and nato commander insisted, his job was not to lead a, quote, graceful exit. we'll be taking calls on this topic until about 7:45. where are you calling from? caller: st. louis. the war is unwinnable because the st. louis people had

nothing to do with 9/11. go to israel. they were the ones behind 9/11. host: perhaps more interviews coming in the days ahead. san francisco. what are your thoughts this

morning? caller: i'm thrilled you are having this discussion and thrilled to hear people say this war is unwinnable and should never have happened. the utes is in a quest for empire and oil. we are not there to bring freedom to anybody. it is just i sane how anybody would attack afghanistan. we need to get out now and take care of the people at home losing their jobs. thank you for taking my call and let's get the heck out. host: good morning on the democrat line.

caller: i agreed. the war in afghanistan is unwinnable. the taliban is deeply involved. they are smothering the people, especially the women. we are not going to change the mind of the people that's how they are. when we went there after 9/11, we worked with some of the farmers to get rid of some of the poppy they grow, but it has all gone back to poppies which

is turned into drugs. we are just spinning our wheels. host: one more short clip of the general on meet press yesterday about winning and possibly losing in afghanistan.

>> after what wok a bloody civil war in which different countries in the region would take sides. the prospect is pretty frightening. if we succeed on the other hand. we are succeeding in a region that has linching -- links. it could become the new sill being road, think about the implications to that. >> baltimore sun leads gates with training transitioning

some responsibilities as early as spring. likely those forces could assume those responsibilities suren in less violent periods of the country in the barlt son, is the afghanistan war winnable? caller: absolutely not winnable. in the cia report, they have reported that after $300 billion spent by the united states since 2001, we are quoting the "q" ia, worst off than in 2001.

others have failed. we need to cut our losses and get out. caller: i 100% agree. now they are fighting us. this is just a big money pit. how many billions are we going to be down. it was announced that china will be the number two economic country behind the united states. they are not spending their money on wars but kicking our buts and we are throwing our

money in a pit. it is totally unpredictable. how could you even ask a question are we winning? it's been nine years. this going on for nine years. we spent $2 trillion chasing a bunch of people that can't blowup a pair of shoes. little rock, is the war winning in afghanistan? caller: no. we should never have been there either. the war is no winnable. the republic cans don't care

about anybody but themselves and corporations. they voted against the 9/11 survivors. host: the afghan star war a winnable they say. one of their headlines -- >> we also found this piece in the wall street journal today by a professor of economics at

nyu

>> i un survey say 8-10 organizations are corrupt. caller: no war in the history of mankind have been able to continue without support. the average guy in afghanistan. this war has been going on for nine years. if only took 4.5 years to defeat germany here it is nine years later.

describe what exactly winning the war would be and how would he know when we have won it? i want to know when we'll see the flag draped coffins from coming into the united states.

the spokesman said this will come later today. thank you for waiting. hello, oregon. you are on the line. caller: i don't thit war is winnable. along with what 98% of the people calling here today. we were told the general would

address this on the sunday shows making the round. everybody is doing after snow after they showed us what exactly was going on in the war. how about veterans against the war. thank you so much. >> what do you say, brent? >> good morning. thank you for c-span and for taking my call. i'm readly getting fired of this defeatist attitude. i'll remind each caller that

harry reid declared defeat. the first aim a senator doe claired defeat. we have our heads in the sand and

caller: we done already had 1,000 wars over here on these soils and we need to get rid of the government. the government that's not listening to the people. we are talking about getting out of debt, this is the debt. asked whether he was certain the counter insurgence wasesquive in a coifpblet where are many regard this as

relevant. although he is not tackling afghanistan as he is iraq. he is seeking to duplicate some of the messages that serve well. meets with afghan president about once a day. far more often is the war winnable? caller: i don't believe so. i look back to general, then president eisenhower. i don't see we have ever let up sints in a date since world war

ii. it seems there is a lot of mem that make for opportunities off of it. we need to strengthen our borders and our constitutional rights.

any military personnel is going to give you that answer. this was necessary. these people were living in the 16th century. women over there were suffering. pakistan was unstable. nuclear threats. the government and pakistan. whether it is wonderful or not, i couldn't say. the idea was necessary to go over there it needed to be cleaned up. i hope it is winnable for the benefit of the people of afghanistan and for the world's security. >> we would not be in afghanistan if the gop and bush did not invade for shel oil.

host: arizona now republican. caller: good morning. i have a solution. i was thinking you take all the money we are spending send everybody over there with their sand rails, dirt bikes and quads. it's just big land out there. have dirt biking out there. host: going to the phone caller: when there was a school

in every village. the people of afghanistan, i lf them. the question is can they win? it's not a matter of winning at the expense of others. success is a better word. i put the fact that we are there for almost nine years. by the way, we were in vietnam for more than 10 years. this is not longer than veetplanch it's one thing about the money we are spending. i am rooting for afghanistan.

the people there are wonderful, except the key countries surrounding it. pakistan, iran. china. the former soviet union countries. this is a critical spot. people need to think about it as though the war just started when obama came in. the way the republicans were conducting it, it was self serving. it was the same as whether his father abandon obbed after

zpwan stan. host: wuven headline we found.

host: back to the phones. vancouver, washington. is the war winnable? caller: i spent some time in iraq. what i noticed that's why we are not winning and why we are still there. i'm still really amazed there

too because we are trying to hand the war off to those nationals. when i was over there, we were getting shot at left and this country is in political danger. we are playing a game scalled the war on tror. host: that was jim there from vancouver. new york city on the line now, republican. caller: of course it is winnable. we have to expand and go into pakistan and iran. host: lots of comments this morning about iraq as well.

here is the front page of the christian science monitor. what now, they right. host: wall street journal reports they are weighing a new solution. what they are saying is that senior politicians were weighing a creation of a new commission that would break the 6-month log jame was failed to

secure the formation needed. that's from the wall street journal. host: texas, democrats. caller: i think the taxpayers and military lost nine years ago. i think they are winning big. there's been an extra winner in iran from all of the devastation from iran and afghanistan. i think it is already over. host: utah, is the war winnable? caller: it has to be unless we want to all be converting to is

rahm there's no other option. christians keep radical christians in check. we have to take extreme measures. host: rhode island on the republican line. your thoughts caller: i think any war we engage in is winnable we need

to take the politics out of were. the rules of n gaugement for troops of two weeks if we win it more heavy handed, we could have achieved. the war would be this for years and years and years. china reports to be reloted

>> the soft power approach to world affairs. looking for more of that to come out. host: writing out of jerusalem that israel plans to buy 20, u.s. built, radar evading fighter jets built by lockheed martin.

attacking after the u.s. military pulls out at the end of 2011. jim in west virginia standing by. good morning. caller: if iraq or afghanistan attacked the united states, would you fight with everything you have to get rid of the outsiders. for all the people who are anti-war now, where were you

the last eight years, you hypocrites. host: thank you. caller: i do not think the afghan war is winnable. it's time to bring troops hope and protect our own borders. host: today, the preds will head to mississippi and ill. he will head west to l.a. tuesday, off to seattle, washington and talk more about the economy. on wednesday, ohio.

later on wednesday, he'll go to florida as well. thursday, the preds travels to martha's vineyard to start a vacation there. the lead item on the mosque story. flush here says the american people will render their verdict. host: new york city. jim. caller: i think we should pull our trips out a couple more

quick stories. the front page of the $862 billion stimulus mplet talking infa structure. they break it down by different programs. commerce, energy in what has been spent and not. it says the white house is under fire for unspent cash. you might want to check it out. "washington post," bp and the u.s. government may decide to move ahead with a process to permanently plug the source through a bottom kill thf well in the gulf. the post reports today, judicial campaign funding.

they make the point that while washington argues, a growing number of states are starting to grapple with their own challenge. spending has more than doubled. the surge for other kinds of political races during this same period. this is released by a number of non-partisan groups. >> i don't think either war, we'll be out of there any time

soon. it might not be as soon as 2011. even if you look around, you see it surrounds perfectly. we have good reason to be over. if you make it hard to off shore drill. >> you are the last call for this segment. caller: thank you very much. good comments. i don't think we should win in terms of winning a war. we should have an exit

host: in the mine time, i knews update from c-span radio. >> 7:45 a.m. eastern. an al qaeda operative has been killed in an air strike. a taliban subcommander was reportedly housing four toe pen shal sue i had bombers. u.s. military said his patrol had been killed.

adding that muslims have to build everywhere so follows can pray just like christians and jews co-founder of hamas. new york senator says the comments don't carry any weight he has not yet taken a stand on the building. south korean and u.s. troops launched with a mercyless counter blow. the drills dubbed and label the

>> campaign 2010, the debate, rallies, victory and concession all freon your computer any time. host: joining us now, the chief economist of the national association of realtors.

how would you describe the market conditions right now? the tax credit we have has really brought buyers into the market. we have bought home values. in that sense, the housing market has stabilized. we have seen the buyers pull significantly. we are seeing slow activity. that was expected. it needs to begin to push and pull. host: we will dig into all of that. remind us the connection between the housing market and whole u.s. economy. guest: simple. people need to have a job and education people save money,

make a down payment and buy a home within their budget. over time, they trade up. that was the old fashioned american way. the phone number is on the bottom of the screen. chore you'res is up. some of the details here. that 6% figure, what does it all mean? guest: wreff to go through past bad lending mistakes.

there was too much lending going on. we have to flush flew through the system. it appears to have peeked. it set a high level. it is not ricing in significant way. we need to bring that down. he may take an additional six months. due to the past lending mistakes, the key is whether buyers come into the markets. we have seen that right now. it remains to be seen what happens after this year. on the screen, updated housing figures. pending home sales down 2.6%. how about those figures?

>> pending contracts, usually takes 2-3 months before people can can close on a home. after a large plung in may. the decline in subsequent months was modest. host: immediate yoon sales prices rose. that's were second quarter figures. the actual price was 177,000. anything there? guest: a large variation of the local prices. in california, median it is

$35,000. there's a question about whether there's a possible that prices could fall further. before we get to calls, administration tomorrow. what should we expect there. we understand that.

mainly participating in the boom. we know that part led to mark purd evens for the taxpayers. >> tampa, florida. caller: i put down 20% on my first house. bill clinton signed the fair housing act to give financially challenged people the right to buy a house. that was a recipe for disaster.

this is crazy. 80% of black children are born out of wedlock. i will never be a democrat again. guest: spinning it around and talking it a triple a rating. with this money, they started lending it to many people. americans reign of homeownership, this is a positive thing for many years. you cannot have this over extension

host: let's hear from baltimore. go ahead and turn your sound down on your set. caller: yes. i am calling from baltimore. host: go right ahead. caller: i'm at the age where i would like to sell my existing home. there are many of us in this baby boomer phase. we find out we can no longer sell our home and mover to an's nted assisted living facility.

this is going to increase the market going into the years the cost is fairly high. guest: one thing we hear is that some of the homeowners are realistic in determines of their homes are. hard to do for the homeowners. in the current situation. many are siceable homeowners.

you say you sell a home but don't have money to pay back in the amount. we will forgive you in the defish yen si. it is a trade off. host: as we look at the action, what is most effective so far? caller: two things, tax credit without a doubt has done a job

on relying on the stimulus method. the federal reserve has really driven mort rates down to the lowest level where mortgage rates today are 4 maunt 5 perts. if ever it is a great opportunity for people financially qualified with jobs to look at the market. i don't know all the specifics. the housing and urban

development are trying to clarify all of the rules. the principal says in some states. people are losing jobs. some ways they can't make zero loans. good morning. . . .

guest: there is the fair housing act. they need to speak to the local officials. they are looking at the income, credit history, and trying to adjust the risk and the rates that matched the characteristics. if it is the case where minority groups are being additionally charged, then you can report to the local housing officials to investigate the situation. host: we have been reading about las vegas being one of the hardest-hit areas.

what is like out there? caller: the real estate market, we have been hard hit and things are bad. unemployment is high. i have the questions about -- during the bubble, what was your group doing about any red flags regarding how the underwriting standards were? they were inadequate, and it was obvious -- i attended task force meetings during the growth here questioning the growth rate and the measure to income. none of it made sense. host: let me stop you on the

underwriting question. she pointed to your group. guest: back in 2005, at the height of the bubble years, we sent a letter to the housing of urban development and the regulator of fannie and freddie indicating that the standards are lax and to take caution. we indicated that many people are not qualified entering the market. from the organization and also, people need to purchase homes with in their financial budgets. during those years, some realty members, somehow they thought buy, buy, buy is a good thing. people should only buy if they

stayed within their budget. hard-earned way to realize american home ownership. host: did you have another point? caller: beyond the poor underwriting standards, there was a lot of fraud that went on. i also -- that was another question for your group. there were fraudulent brokers and buyers working together, putting together fraudulent deals. what is your group -- what has your group the done to provide oversight regarding the fraud? guest: any fraud needs to be looked into. any fraud into the system is

unhealthy for the long term health of the housing market. it needs to be prosecuted. our association is not involving the legal matters. if there is a fraud, it needs to be exposed. host: charlotte, north carolina. dan, republican. good morning. caller: the oldest baby boomers will turn 65 next year. we will be older as a country than florida. what will be the effect -- will boomers be able to buy houses? what is the boomer effect on home sales tax guest: about 20 years ago, there was a paper that indicated that as baby boomers retire, the u.s. home that used maybe on the verge of a large decline. that was based on static

population. you have baby boomers retiring. in the u.s., we have a healthy respectable population growth. it will show that in 2010, there are roughly 30 million additional people than 10 years ago. so we have this population growth. there is support for housing demand. in japan, they are experiencing population decline. it is all about demographic. the housing start activity has been suppressed the last three years. our analysis indicates that if this continues, we may encounter a housing shortage situation two situation two years -- in about two years.

builders are not building. we may encounter the cross. of a housing shortage. host: this"usa today -- this from "usa today." lowest mortgage rates in decades. how long do you think low rates will be around? guest: i am surprised how low the rates have been. 4.5%. one of the reason is the fed has been aggressive in buying mortgage-backed securities. the second reason is the consumer price inflation has been very weak. there has been concerned about deflation. because of low consumer price inflation, lenders can lend

knowing the money would have the purchasing power as interest rates are low. i am surprised but i do anticipate it will be inching up as we move towards the end of the year. host: 1 viewer wants more detail about the 6% figure we have been putting out there. guest: last year we have roughly two million foreclosures in the u.s. unexpectedly high. this year could be higher. we're looking at possibly 2.2 million. the worst part of foreclosure is not yet over. we are finding that some of the three modified loans are quickly defaulting.

the past lending mistakes -- many of the bad lending aspects would have been through the system. we do anticipate foreclosure rates to climb steadily. as a distressed property comes onto the market, it is helping to stabilize the market. we have seen these trends all current. >> take it deeper. opinion piece inlly the paper. "obama promised the program would spend $75 billion, last month the administration reported it in roles 1.2 for homeowners." guest: homeowners need to take initiative. they have lost their jobs and

therefore they cannot make cheap mortgage payment. the government is there to supply some support. many of the foreclosures are occurring with second home owners. people bought a second home and were looking to flip. the rental income did not support the home values. people are throwing in the keys. we are seeing a rise in foreclosures with second home owners. is it a success or failure on the mortgage program? 60% default rate. 60% would the fall. that means it is a 40% successful program. is it the case that the program needs to be readjusted to make sure we get a more meaningful

success rate. host: democrat, ill.. caller: my father lived through the depression in chicago. he had a mortgage with a bank. there were 95% of the people were out of work. he went to the bank in chicago and he was going to turn the house over. they said, you might as well stay in there. when you cannot begin to pay us back, begin to pay as back -- when you can begin to pay us back, begin to pay us back. guest: if you will modify the loan, that is much better for the lending institution. perfectlyit preferab

reasonable to say yes. acceptwilling to exces less. we went through -- in our society, we go through some tough economic times. over the past 100 years, the u.s. economy has been more prosperous than any in the world. we're in a great recession. we are coming out of it. hopefully we're strengthening the job creation. host: a lot of negative news in a segment like this. there are some bright spots. what regions are doing poor and well right now? ,uest: the region's doing well prices accelerating, are places

like washington, d.c., houston market, boston. one commonality is that they have more jobs today than one year ago. that is a test for job creation. there is a high unemployment along the coast. that brought some strengthening in prices for people looking for bargain prices. in places like las vegas, there is still oversupply of the market. too much supply. one of the hardest hit market is that buyers are returning. they are seeing exceptional bargains. holmes selling for $250,000 a few years ago are now selling for $80,000. host: david on the independent

line. caller: in 2002, there was an order unsupported by congress our user reefd fees, user it lost -- our usury fees and usury laws, the most a bank could charge was a 5%. if you had $100 credit card charge, the late fee was $5. my father, when he bought his house in 1960, he was making 7 $5 a week. he had no credit at all. -- he was making $75 a week.

the recession was caused by bankers who tried to make a low- ipple. job in to giant reptil and giant fees and late charges being rolled into the loan has caused a lot of people not to be able to pay back the loans. guest: i sympathize with the caller's comments. we have to let the market determine if there is a certain amount were the banks cannot charge, it will be caught up in the credit. having said that, one of the reasons for the late charge a fee, higher than normal interest rate fees is that there is a

lack of competition. there is a huge bank consolidation. we have few banks. we need more competition in the marketplace. then there would be bankers eagerly looking for clients. it is through the competitive process. host: a couple of stories. house price roller-coaster ride continues. looking at a global perspective. how things doing in other parts of the world? guest: the british market is surprising. britain had a bigger bubble then the u.s. they have seen their prices rise in a double digit fashion. in china, the market is booming the government wants to restrict some of the availability to hold

back demand. the u.s., the bubble was not as high as in the british market. we're undergoing a longer downturn. it is difficult to creating jobs and that is holding back consumer confidence. we still have a long way to go in terms of regaining consumer confidence. all real estate is local. it cannot be picked up and sold abroad. it is the movable product. host: there is a call for careful overhaul of u.s. lending. the u.s. does not tend to completely wind down fannie and freddie, given the housing state of the housing market. guest: the housing market is

more important for the larger recovery. there could be a double dip recession. we have to get the housing market on firm footing. the mortgage rate is key to that process. in a normal time, it would be functioning fine. these are not normal times. interest rates are exceptionally high. seven %, 8%. much higher than 4%. there is support for fannie and freddie as we try to recover in the housing market. the fannie and freddie situation, that cannot continue. that is the reason for the conference. host: housing bills cloud

debate. flint, michigan, is now on the line. caller: the time all real estate is local wings so sure. a trend that started -- b rings to true. a husband and a wife together, the husband bought the first mortgage many years ago before the crash. and now what they are doing is, since the price of all the other homes has fallen, they are walking -- they go out and purchase a new were home that maybe worth $300,000 and they are still in force $150,000, and the turn around and walk away

from their original mortgage. the wife goes on the second home. the get the new home ownership tax credit, $9,000. you will never see the market come back until people received a 1099 where they have to pay the tax on the home that they basically dropped onto the community. the turn around and sell it for a short sale. we have seen them in flint. a girlfriend of mine bought a home for 60,000 $25 years ago. now the house sold for $10,000. host: how prevalent is that situation? caller: the husband had the house first in an area that is

not so great. they bought a beautiful home and they are happy. they have the $9,000 tax credit. if they could not maintain that other home, eventually this will all get caught up. host: does that happen a lot? guest: it is hard to grasp how prevalent that happens. the banks are realizing it is zero currying. we have seen a rise in foreclosure among second home owners just turning in their keys. if there are two homes, foreclosed on the second home. another aspect is the 1099. if the banks give you the gap between the price you sell for and the mortgage balance, in the past, that has been considered a

taxable income. the law has been changed to make sure it is not a taxable income. this will be in additional financial burden because of the economic circumstances. 1099 do go out to people who own second homes. people who are playing this game, they may be surprised to get a 1099. the second home is a possibility. it remains to be seen how this will pan out. they try to be very restrictive in trying to provide loans for second homes. host: oklahoma city, louis. caller: if they do away with the compound interest, go back to simple interest, they could sell a lot more homes. thank you.

guest: maybe there would be some banks out there who come out and say it is to complicated and we will come out with simple interest. it depends upon the market forces. right now there is too much consolidation in the financial industry. we need to help facilitate more competition. then you get more innovative ideas and different market products. host: what has changed for the typical home buyer. you said it has gone harder. guest: 2004 and 2005 were bubble years. people did not have to show a pay check to get a loan. it was and unsustainable system.

we're going back to the old fashion way of saying, okay shall meet your income if you want to borrow money to show you can repay the loan. i would say rather than being back to normal, it is somewhat overly stringent with underwriting standards. one of the reasons is bank consolidation, lack of competition in the lending arena which is restraining competition that could provide more credit into the market. a down payment for people who want to take out a fha mortgage, the down payment requirement is 3.5%. for fannie and freddie, it could be anywhere from 5% to 10%. for jumbo mortgages, it would

be higher down payment requirements. we do not have the situation where people can get a zero down. host: conn. caller: this is a question about private mortgage insurance. why these companies are still in business when the precipitation of the financial crisis was these loans were sold for under water and what role the relationship with the banks pmi have kept banks from restructuring loans. is it true that banks refuse to modify loans because of their contractual relationship with pmi insurers? they have taken huge

financial losses. they have to cover those losses. they have taken the huge financial cuts. the caller makes a good point. it is not a simple loan modification program. the lender should just modify the loan. they need to get an approval because many borrowers have taken out a second mortgage. they did not have the 20% down payment. and then there's the private mortgage insurance. they need a release from many players. the original mortgage holder said we are willing to read modified the loan. the other players are taking a

leave here process. host: what about sellers? guest: it varies by mortgage. it can be less than two months. in some markets, the jumbo mortgage market cannot take up to six months. the pace on the market has been falling and it is indicating the low rate and people are now getting jobs. host: how about for closures? how has that process changed in the past couple of years? guest: contact your local lender. contact a person from the department of housing and urban development. there are so many programs to help distressed home owners.

not everyone can be helped. but the first contact point should be the lender. then contact the local official from the department housing and urban development. they can provide some guidance of how to go through the system. caller: good morning. i have heard other economists say housing prices will eventually be so low that it will go back to an economy where people will be buying houses with cash. people taking get huge loans to pay for a house, a devaluate asset, d.c. that as an imbalance in our current system? as an you see that'

imbalance in our current system? guest: people who are not able to get a mortgage, investors who now seeking great value in places like las vegas. they are coming in with all cash and purchasing properties. it is about 20%, so it is much higher than the historic norm. it is rational for consumers to say homes are overvalued. even though they have the financial capacity to enter the market, it would be rational to hold back if the prices fall further. we are not at 2005 values. we're at 2002 levels. it could be even 15 or lower

levels. we are seeing buyers taking advantage of the bargain of prices. the bubble has been removed. the price to income ratio is are back in line. the mortgage payments in relation to income implies some under evaluation of home values. there is more likely to a chance at the prices modestly increase. that is not to say it will not decrease. i would think it would be a modest decline if any. all the bubble has been removed. right now is an over correction. host: we have been talking with lawrence yun, vice president of the national association of realtors. we will have a look at internet gambling, some moves of food in congress.

plenty more time for your phone calls. but first this campaign 2010 update. >> the president hits the campaign trail today. joining us this morning is nia- malika henderson from "the washington post." guest: the president is going to wisconsin. he will end the day in california. there are competitive governor's races. he will be focusing near los angeles and on the house democrats. nancy pelosi has been putting out messages saying, have a chance to meet barack obama. they are hoping he will be able to raise millions and millions of dollars for the party. host: this fundraiser is for

candidates across the country? guest: there was a little dustup between house democrat leader nancy pelosi and robert gibbs. they said the democrats might lose the house. policy will be on stage with barack obama saying -- pelosi will be on stage with barack obama. this was scheduled a long time ago. the dustup happened the two about weeks ago. -- happened about two weeks ago. there are 37 seats that are up. whoever controls these governors sees will control congressional districting and will be in a real power position. tuesday is primary day in

washington state. guest: the president is not popular there. his ratings are about 40%. you will not see any big time rallies there. the real intimate setting their and he will have speeches talking about the economy. he can defray the cost of these and make the taxpayers pay for them. host: how is she doing in this race? guest: she is doing ok money- wise. the big problem for her is that 18-year incumbent. governors will be able to distance themselves from the president. they may not have a voting

record that ties them to some of the more controversial aspects of the president's agenda so far. but look at the language. how he will frame the democratic agenda and his tenure so far and how does he framed the republicans and how we ties them to president bush. host: she is having him come out to her state. guest: that is because he is not that unpopular in washington. barack obama is still the candidate who tracks voters -- who attracts surrogate voters. they are pivotal -- they were pivotal in electing him in 2008. money is the motivator. mojo.will be gagt

he will try to give the candidates a boost. host: where will they be on wednesday? guest: he will be in florida. there is another competitive race for governor. you have some senate races, a primary there involving jeff green. one of the things that will be interesting with these races is how much he campaigns for kendrick meek. the real focus is alex sink. host: heat will go to columbus, ohio. guest: all of these governors races are hyper local races.

whether it is health care, double digit unemployment. the unemployment rate in ohio is something like 11.6%. the stimulus package is being debated there. whether or not strickland has been good. these are pivotal states on 2012 as you saw them in the previous campaign. that is why obama is devoting so much time in these next days. he will be in five states over the next three days. host: you have written about whether or not michelle obama will be hitting the campaign trail. a lot of candidates want her to come to her state. guest: she is the most popular democrat in the country. her numbers stand at about 66%.

there is some concern about her recent spain trip. things they can roll her out in close races. she can be a counter on to sarah palin, focusing -- we know that sarah palin is focusing on our mama grizzlies. her issues kind of dovetailed nicely with health care. she will talk about her pet issue which is childhood obesity. she can be comfortable talking about that and also campaigning for democratic candidates. in the way we have seen her so far. host: what is the downside of michelle obama getting out in campaign 2010? guest: the downside is that being out on the stump will

politicize the first lady. this 66% approval rating, her being seen could eat into that. in 2012, she may not have the same kind of popularity among independents and she may not be able to boost her husband's reelection campaign. they are also afraid she might say or do something that republicans or opponents will ceasseize on. host: how much in dollars could she bring in? guest: michelle obama could bring in 20 million dollars for the party. that is roughly half. the dnc wants those voters back out there. that is roughly half of what

michelle obama could do. she retains that of the 2012 campaign. she will be able to bring out the surge in voter, independence, and she will be able to connect with voters as well. host: thank you. for more information, go to our website, c-span.org. host: our guests now is michael waxman. he runs the safe and secure internet gambling initiative. as with look at internet gambling, explain what is going on right now. what are people gambling on? guest: thank you for having me on your show. our focus is really looking at federal policy and doing what

makes the most sense to protect consumers. " we have in place is a federal law -- what we have in place is a federal law. it is hypocritical. it has failed. there are millions of american'' gambling on line. they are doing it with offshore operators. they are not licensed or regulated. this underground marketplace is leaving american consumers vulnerable. " we believe it makes sense is to take some -- what we believe make sense is to regulate the industry. there is pending legislation introduced by barney frank which is looking to bring practical standards for making sure that consumers are protected and

protected against fraud and underage gambling. this is an approach that i think is common sense. the other benefit of online gambling regulation is the economic benefits. i hope it is something we get to talk about host:. we will put the phone numbers on the screen. if you are for internet .ambling, call this number if you're against internet gambling, call the second number. our guest suggested there might not be enough information for you one way or another. guest: there is a lot to important policy issues. the american public has a chance to understand the issue. internet gambling is not completely under the radar.

the media has picked up on it. for the people who understand the issue, they will have a clear sense. tens of millions of americans gamble online. these are people who have a perspective. others are not thinking about it. this is a chance to get a better -- to get better acquainted with the issue. host: give us a sense of what is out there. guest: there are thousands of sites located offshore. they are gambling on poker, sports, casino games. gambling is something that is part of our culture. you can go to las vegas and gamble. you can go to the corner store and buy a lottery ticket.

americans enjoy gambling as a leisure activity. they are going online and taking their money and using it how they choose. it is just something that is common. the government takes a look at this and the approach has been, we just need to stop this. when you look get online activity, it doesn't make sense to assume that you can try to stop it. chairman frank is coming at this and he is looking at government intervention and he believes that is inappropriate for the government to be involved. his approach is, let's regulate the industry. let's make sure there are licenses that will be granted

to operators. if an operator will receive a license, they have to put in place safeguards to combat underage gambling, a compulsive gambler, fraud. he is making sure this industry is transparent, that there are government watchdogs that are monitoring this industry, and this is a total flip from what we have now, operators that are completely unregulated. it does not mean that there aren't regulated that are not looking to protect consumers. right now there are no assurances. host: i want to throw in an opposing viewpoint. this comes from congressman bacchus. we will put the words on the screen.

guest: i think he is making a lot of the arguments for why we need regulation. right now consumers are completely unprotected, and that is the central argument and reason for regulation. we need to make sure there is some policies to protect

consumers. one of his concerns is really about gambling and he is looking at it from his moral perspective that's gambling is not something that should be allowed. if you look at our culture, gambling is not something that is new. it is an activity that is already legal in 48 states. the question is whether we will allow americans the right to engage in this act in the privacy of their own home. it is whether we are going to look to protect them or leave them high and dry and vulnerable. a lot of opponents will bring up stories about people who have lost money, their children who are finding ways to find

gambling online. that is the problem for why regulation is needed. we need operators that will take control of this industry, that will make sure we are doing everything we can to stop these problems from happening. host: to the phones now for michael waxman. richard, you are our first call. caller: i am for this. i think this will be something that can raise money. we hear democrats saying we should legalize drugs. why will this be different? guest: i appreciate your support of the issue. drugs is a bit different. when we talk about gambling, this is an activity that is already legal throughout most of this country. drugs is something that is very

different. the federal government will have to look at it for the health impact. but clearly, you look at online gambling, this is an activity that is already regulated around the country and successfully regulated. you can look at the u.k. and many of the other countries, and they have taken this approach. they have regulated the industry. it has provided the best mechanism for protecting consumers. host: what is the financial argument? guest: right now if you regulate the industry, there is a companion bill to chairman frank's bill. the companion bill has been introduced which deals with the

tax impacts and the tax that would be collected. there are estimates that have shown that online gambling regulation for the federal government could generate up to $42 billion. there is a significant amount of money, some estimates are a up to $30 billion that could be collected for state governments. this is important to note that this is new revenue. there is not a lot of sources of new revenue. when you put this new revenue on the table, the real opportunity is to figure out how that will be dedicated. so both at the federal and state level, we have deficits, tremendous budget problems, and i think it is valuable to put

this money that right now is being lost offshore to good use. host: we have lines for and against this. we are on with michael waxman. caller: i am against internet gambling. it has robbed people who do not have any control of their money. they just blow it away. i had a relative who was murdered because of this. it is a sad situation. he had five girls. it is just awful. that is just one instance. then we had some of these poor people. i think it is a wish to get rich quick. it is not going to work out. you know who makes the money -- that is why the gambling places are so gorgeous. host: what do you make of the

argument about blowing money quickly? guest: i am not here to take a stand for against gambling. my real interest is whether we will regulate the industry and protect consumers. i think there is some social toll to gambling, but it is for people who have a problem. there are a lot of very sad stories that we hear. i am sorry to hear about your personal circumstance and the loss you faced. gambling is an activity that should be done responsibly. we all need to take some responsibility for our actions. if anyone is gambling, they hopefully monitoring their activity and setting aside only

the amount of money they want to gamble and not go beyond that. people go too far. one issue that we should be talking about is the prevalence of problem gambling. when you look at problem gambling, there is only 1% of our population that the national council of problem gambling would say are problematic gamblers. other people who may have some issues they need to deal with. for that 1% and for everyone else looking to control their activity, we need to give them the resources and make sure they're being held as much as they can. some of that is by utilizing the structure of the internet to help them.

help them determine how long they want to gamble on line. there are systems in place. we need to make sure they are put in place. host: tom from miami. caller: the government doesn't care about people. it is just like cigarettes. gambling is bad for people. it is more regulation. a way to get into our pockets. it is all about how we can make more revenue. i am sick and tired of paying more taxes. it is crazy. guest: right now this is an activity that is not regulated. right now it is true if someone

is gambling. this is some new taxes that has been proposed. the taxes are license fees that would be paid by the operator. these would not be coming from individual gamblers. if you look at this industry, these operators want to have an opportunity to get into the marketplace any tax needs to be a responsible one. we're not determining the taxes by the individual gamblers. host: explain the reach of this

bill. how would it all connect together? guest: there are thousands of operators call opportunity is to set an opportunity where the government would grant these licenses. in order for an operator to be licensed, they would have to meet certain criteria. they would meet the technical criteria, the financial resources, the integrity in order to get these licenses. it is hard to know how many licenses would be granted. if this market was opened up, some of the first would probably be the landing casinos. they understand the industry and

they understand gambling. they already have the brand and in some cases the brand loyalty. they are in a great position to be able to expand this market. some of them are getting involved in this debate. this is a whole new source of revenue that we cannot become a part of. they are arguing that these casinos have been hit hard. if you look at nevada, it is a difficult situation. when they are looking at ways to rebound, having this new revenue, it is a benefit. host: we have ed from michigan. caller: good morning. first of all, i have been around

gambling for 50 years, connected with horse racing. if you go to the races and enjoy yourself, that is good. but some people become addicted. some people get addicted to alcohol. you go to these indian casinos and cd's little old ladies -- and you see these little old ladies pulling these one-armed bandits. some of the wealthiest people in the world are behind this. horse racing -- the ruler of dubai, saudi arabia, they have horse racing right in this country. but they do not gamble. you cannot win. it is rigged against you.

you cannot win. people are selling this idea and advertising whiskey on television. guest: i think he brings up an important point. gambling is something that should be done responsibly. as far as the odds, he is right. we had this tremendous movement on chairman frank's legislation. they overwhelmingly voted in support of chairman frank's bill. what was the start was the fact that there was bipartisan support in such a partisan environment. it was good to see both sides of the aisle coming together in support of this consumer

protection approach. one of the amendment that was billd in chairman frank's required that odds be posted for games online select consumers could make an informed decision. this really is the personal responsibility -- we all need to take responsibility for ourselves and we need to take responsibility for the actions of our children and we need to do everything we can to make sure they cannot gamble online. host: separate games of skill and other games. guest: this has been a big part of the debate up on capitol hill. this would regulate online gambling for all gambling activity except for sports.

he has a specific exemption in there for sports gambling. there have been other pieces of legislation that have been introduced. there is a pending bill in the senate introduce that would regulate just games of skill. we believe that if you are going to open up this market, but it should be on all games, including sports. . .

of skill, that's fine. i just don't think that that's where we should be ending up. i think that just leaves too many people vulnerable. host: back to the calls. providence, north carolina. suzy, thanks for waiting. hi. caller: hi. i live in providence. i understand my own governor has signed a bill that's going through possibly stop the gaming. and i'd just like to say that i do enjoy them. i do take precautions. they take your i.d.

and -- host: mr. waxman. guest: i appreciate where she's coming from. gambling is a form of entertainment for many people. and if they do it responsibly i don't believe it's the rule of government to step in and to stop them. host: argument on the other side from twitter. one viewer tweets in this morning. worst thing that ever happened to mississippi was when they started the casino taking advantage of the poor. how about that argument about the poor might suffer most from this? guest: i think if you are going to have any expansion of gambling, including online, you need to put in place a system to educate consumers. you need to make sure that you're reaching them, you're explaining that gambling is only should be done responsibly , and as i've talked about, when we looking at regulating the industry online, the only way that makes sense if we do

everything we can to protect the consumers and dealing with problem gambling, we need to give them the information. we need to make sure there are ways that people can protect themselves from going too far. host: more than 10 minutes left in this segment. san diego, you're on with michael waxman. good morning. caller: yes. this issue sort of makes a trio of libry tarian issues -- libertarian issues. and it just seems as if this is -- we got gambling, we got the legalization of gambling, legalization of drugs, legalization of homosexuality. and this is falling -- libertarian and these issues mass can raid at left-wing issues but they are right-wing issues. what i'm concerned about with

gambling is a casualty of gambling is sports. i think he just mentioned sports. over in europe there have been numerous scandals that involved gambling in which games are being fixed. england is probably one country we're seeing enormous amounts of gambling especially in international sports there's often a huge pool of patriotic betting for england to win in england. and so, of course, if you have a huge pool of money on one side for england to win the best thing for the gambling companies to do is make them lose. that way they can keep the money. so that -- in fact, we all saw in the world cup a few weeks ago a goal that we scored against england which should have never been a goal and the goal keeper let it in. and this happens all the time. host: your reaction to that point. guest: well, i think it's going

a little bit far to say that these gambling operators are involved in match fixing. what i would share is that when you look at countries where this industry is regulated, there are actually examples of how they've been able to track gambling activity as a way to root out corruption and conclusion in sports. there's -- collusion in sports. there's examples of tennis matches where somebody who was playing was down. the odds were against them. there was a surge in gambling activity. because the gambling activity was online you were able to track the activity. the operator that was accepting the bet ended up not paying out because they believed that statistically this just didn't -- this was an anomaly, this didn't make sense and said there was cheating and there was further investigations. but really what this goes to show is that when you have this

activity online you're able to do what these land-based casinos can do which is really track the activity, track the betting patterns and look to make sure that the integrity of these games are in place. host: back to sports. has the u.s. professional sports league weighed in on this issue? guest: they have. the sports leagues historically has been opposed to any expansion of gambling. they first got involved in internet gambling issues in 2006, so the law that we have on the books right now that has prohibited online gambling is the internet gambling enforcement act which was passed in 2006. and included in that law is they said the banks, the credit card companies would need to become the online gambling police and they would be responsible for blocking unlawful gambling transactions which they came back and said

this is an impossible task for us to do. it's going to be incredibly burdensome and not likely to stop people from gambling online. when that law was passed there was actually an exemption in there for fantasy sports and for online horseracing. so this is incredibly hypocritical. we're going to determine that online sports racing is -- fantasy sports is acceptable but any types of online gambling activity is not acceptable. then when chairman frank pushed this issue forward, the sports leagues were very much out front and center and said we need to protect the integrity of sports and not allow expansion gambling. i don't think it's a strong argument if people can go to nevada to gamble on sports. if they don't go to nevada they're playing online or they're gambling with a bookie which is certainly not protecting consumers. with the latest movement on

legislation and in chairman frank's committee when they did the markup, they actually passed an amendment which clarified that sports gambling would not be a part of this. so there was actual low a statement by them saying they would no longer be involved in this issue. i hope that would be the case but let's see. host: let's go to mark from leavenworth, kansas. good morning. caller: and good morning. host: what would you like to say or ask? caller: i'd say that internet gambling, would it be better for this country right now would be a federal lottery with an oversight committee with certain team owners like -- taking an example. nba and football owners where they can oversee it and they can balance the budget, use that money to balance the budget. that money would directly go to the federal -- the feds and, of

course, that oversight committee would help. and what we do is that money would -- that lottery money would go directly to balance the budget only. host: another economic argument. trying to balance the budget. guest: i think that he should take his story to congress and make the argument. host: on this house bill, is there a companion in the senate right now? guest: i mentioned senator menendez's bill. certainly, though, most of the movement on this has happened in the house. it's been led by chairman frank. he's not alone in supporting this legislation. there are many other key supporters. we've got george mitchell. we've got -- sorry -- george miller, john conyers. on the republican side we have peter king, john campbell, ron paul. so there really is this growing bipartisan support that the legislation, chairman frank's bill is up to 70 co-sponsors.

in the senate there has been some movement beyond menendez's bill. senator ron wyden has actually introduced that says let's regulate the industry, let's tax it and use the revenue to help provide more health coverage to the uninsured. he also introduced another bill with senator gregg which is dealing with tax reform and simplifying the tax codes. and in that legislation is also the provisions to regulate online gambling. clearly for this to be done it needs to go through the house and senate. i think as the house continues to move forward it's going to put pressure on the smat to bring up this issue. host: and remind us, what has the white house said on this issue? guest: well, the white house has not been involved. they have not publicly commented on it. host: let's hear from south carolina now. it's been. good morning, ben. caller: oh, yes.

how you doing? host: fine. caller: earlier a caller came and talked about gambling and drugs and said it's totally different. it's not totally different. it's a very thin line between drugs and gambling. drugs is addictive and alcohol is addictive. and what we are doing -- one other caller said we're knocking over moral pillars and our ethics clean out of america. and if we keep this up we're going to destroy this country. this man sits there like he's so authoritative and honest. but people like him are killing this country. host: let's get a reaction from michael waxman. guest: well, and certainly if you look at the issues, they're similar in that if you come from the be libertarian ideology you do believe that government should be involved

only to a certain point or not at all in determining what you're allowed to do at home and so i certainly see how people draw the pair less. but i think -- parallels. but i think in comparing gambling to drugs, i would make the distinction because right now gambling is an an tift that is legal and -- activity that is legal. we're talking about americans allowing to engage in this activity and allowing to be protective. host: our last call is roger. hello, roger. caller: hello. thank you for taking the call. host: sure. caller: i am for gambling online, and i don't see a problem with a guy who wants to bet $5 online on his favorite sports team whether it be basketball or football to not be allowed to do that.

now, i do have concerns when we come to the word regulation, because i worry about being regulated as well as george bush regulated the banks in the last eight years. and so when it comes to government regulation that kind of scares me off quite a bit. but i would like to say that that guy would make his bet with a best friend, there's no reason that the government can't use some of that money for the deficit. and i see that in the positive. gambling is a dangerous thing to be doing with a person's money and most people realize that, i think. host: final thought from michael waxman. guest: well, i think that the regulation -- i'm sorry if that's a word that scares you, and maybe that's a word that you have a negative connotation

to. let me make sure that it's clear. when we talk about regulation here, all we're talking about is creating some realistic, commonsense framework to make sure that operators are licensed, that there is transparency in their operation, that they are required to do all they can to protect consumers and to fight off some of the challenges that we've seen, which is problem gamblers taking advantage of the system, underage gamblers being able to get online, fraud, identity theft. we need to make sure that consumers are protected from those things because what we have in place right now just doesn't work. prohibition is not going to stop people from gambling online. it's legal around the country. people are finding ways around the legislation, around this prohibition, and regulation really is a commonsense policy,

and i think that's why we've had so much growing support and growing momentum for the legislative vehicles that are in place now. and my expectation is that as members of congress come to focus on this issue we'll see that momentum continue because not only are they interested in staying current with the times, putting in place realistic policies that are protecting consumers, but i also do think that new revenue that will be generated while may not be the primary focus is motivating them is going to make a difference and is really capturing much-needed revenue that could be going to offset critical unfunded or underfunded programs or just to reduce the deficit which will be fine with me. host: our guest has been michael waxman. executive director of the safe and secure internet gambling

commission. coming up in a couple of minutes, our final segment, we'll look at the new financial regulation bill that's just become law. we'll take a look at specifically what's changing here in washington, d.c., as part of that law with the federal government. in the meantime, another update from c-span radio. >> it's 9:15 a.m. eastern time. the former commanding general of the war in afghanistan, stanley mcchrystal, has accepted a new position in connecticut. an announcement later today is expected to say that yale university will welcome the former general as a lecturer, teaching graduate students, of course, on leadership. iran has announced that it lance to begin construction of 10 uranium enrichment centers across the country by next year and that work on one of the centers will be started by march of 20 is 1. over the weekend, iran and russia confirmed that russians will start loading a nuclear reactor with fuel next week. and this from the justice department, former house majority leader tom delay learned last week that the government has ended a six-year

investigation of his ties to former lobbyist jack abramoff. it lasted through two presidents and four attorneys general. and those are some of the latest headlines on c-span radio. >> i think it's important that every floridian know that i am a person that's stood up for the principles of the people of the state of florida. >> i'm not going to be part of this culture of corruption and special interest. i'm going to fight only for the people of florida. >> it's campaign 2010 and the c-span video library makes it easy to follow the election i cycle, rallies and de-- election cycle, rallies and debates all free on your computer any time. >> i think what we're trying to do is really frankly take away profit. profit is what drives crime. >> tonight, intellectual property theft on the internet and homeland security's role of stopping it with assistant deputy director erik barnett. "the community indicators" on c-span2.

>> "washington journal" continues. host: well, our summer "washington journal" series continues this week as we take a look at the financial regulations bill that is just becoming law. quick look at the week ahead. tomorrow is a conversation about this law and its impact on banks. wednesday, the focus will be on consumers. thursday, changes for investors. friday we wrap up this series with a look at which provisions will be aimed to prevent a financial crisis. of course, today, financial regulation and the control of the government. joining us is phil mattingly from bloomberg news. why don't you explain of how will the federal government grow as a result of this bill? guest: it's going to expand a lot. for the last decade, two decades, there's really been kind of an era of deregulation in the financial markets and financial regulation. there's been an effort to roll back some of the strictest great depression era regulations. i think on the heels of the financial crisis of 2008.

what you're seeing now is a certain boost. federal agencies throughout the area are getting significantly more power. the treasury department, the federal reserve, the fdic, those folks are really getting a significant amount of area now to kind of oversee our financial market to try and prevent what happened in 2008. host: so there's control, there's power. we'll get to that as far as new agencies or new entities that's part of the bowl bill, what's coming? guest: there's one that's been the hot point of the debate. certainly through the time in congress and now as we look into the establishment of the consumer financial protection bureau, it will be housed within the federal reserve. it really doesn't have much to do with the fed. it will be its own independent agency. a $500 billion budget. large budget. it's oin independent director. i think the point there, the goal there is to try to look

after the folks that got hit hard during the financial cry significance. and the officer of thrift supervision, the primary regulator for a.i.g., obviously the insurer that kind of went down in flames in 2008, that will be eliminated. and then you'lly -- and then you'll see a bunch of minor agencies to try to address some of the things that people thought we fell at in 2007, 2008. host: there's a lot going for a bill that might take up to two years to implement this financial regulation bill. our guest is phil mattingly who's a reporter for bloomberg news. he's following things for us. here's the phone numbers on the bottom of the clean. republicans is 202-737-0001. and democrats are 202-737-0001. and independents is 202-628-0205. some of the new -- republicans are 202-737-0001. democrats are 202-737-0002. and independents is

202-628-0205. explain financial reform and that concept and how it might work? guest: the ability to wind down , really to resolve firms, nonbank institutions, firms like a.i.g., like lehman brothers, people that did not -- we did not have the tools to resolve them when they started to fail. what this bill, what this law now will do it gives the treasury department to apoint to the fdic to aid any type of depository institution. it kind of gets rid of their assets in a very organized manner. the fdic will now have the power to do the same thing for nonbank institutions like a lehman brothers, like an a.i.g. the hope being that now the government has a way of dealing with these folks as opposed to ad hoc bailouts, the things you saw during the financial crisis. host: it would establish a 10-member oversight council. and we'll put these main

provisions on the screen. we saw the first one. here's the second one. the council, what will it do? guest: the hope, the goal of this council is all of your bases will be covered. there's a lot of what people thought things that slipped through the cracks. a lot of issues, especially in terms of the derivatives markets, in terms of who was regulating who, when were they being regulated, supervisory powers. some folks thought someone was doing it when they won't. this council is really a grouping of all the most powerful regulators, all of the regulators really responsible for our financial markets and their job is going to be try and make sure there are no gaps, that firms that causes some risk, that could possibly bring down the financial system with their failure will always be overseen. and they'll know what they're doing at all times. host: and have a one-time audit. what's that about? guest: this is an explosive

issue for many. the fed came in 2008 and exercised something they hadn't exercised. they went through institution-by-institution basis. there wasn't a lot of regulation, oversight into how they acted. so what this is going to do is basically anything that happened in the summer of 2007, any emergency lending facility, any emergency loans, there will be a one-time audit where the government accountability office, the g.a.o., will have an opportunity to look into these loans. there a lot of theories, some conspiratorial of what happened, what they did. the hope is to squash that a lilt and really to shine a light. host: and this new bill would give the comptroller of the currency duties handled previously handled by the thrift supervision. why did this have to happen? guest: it was a way to respond

to the bank regulators. there's a term that's called regulatory arbitrage. they are trying to establish an entity or a subsidiary to get the weaker regulators to be the primary regulators. that's what a.i.g. did. the office of thrift soup vigse to become the primary regular the -- supervision to become the primary regulator. and, you know, a lot of folks think they messed up royally. and for that they've been relaced that the m.t.s.'s responsibility has been dispersed. the fdic and a little bit to the fed. host: elaine, independent, good morning. caller: good morning. back in 1913 these are the same promises that was made by the federal reserve proponents.

they have never kept their promises then. they have never thue the years -- through the years kept inflation out of our lives or to stabilize the money. in fact, we only have debt notes. and they were responsible for the other crashes through our system back in the early 1900's, back in the 1920's, in the 1930's. it just goes all -- on and on. this bureaucracy is totally illegal. guest: you touched on one of the earlier points. when it comes to the federal reserve, there are a lot of people don't know what the central bank has done. it's kind of generally operates in kind of -- a shroud of secrecy, they try and keep a lot of their stuff private. it's been much more transparent in the last couple of years. there's la of skepticism what

have the central bank has done. it can really affect where the economy in a way no one else can. when you look back at the early 2008 and middle 2008 and since then, the fed ace ability to really do whatever it wanted wherever it wanted, and there are plenty of people argued it was necessary. the economy would not be around if it hadn't done what it did. it still scares the heck out of people who are fearful that any one entity within america can have that kind of power. host: susan, republican, good morning to you. caller: would you please discuss -- you know, there are so many other insane parts to this bill but one part that was reported in "the wall street journal" was the $1.6 billion that immediately was withdrawn from the market and the securities and exchange commission hasn't come out and say, whoa, whoa, whoa, we are not going to look at that part

of the law, we are not going to enact that part of the law for more than six months. guest: this goes back to changes to the credit rating agencies. obviously these are companies really dominated by three primary companies that a lot of folks are put at the center of the cly cis. their ability -- cry -- crisis. investor-grade ratings on some of the worst securities. the most expensive, one of the most difficult parts of the entire crisis. when it came to regulating them, the goal i think from both parties is to try and eliminate the reliance on these two or three agencies to basically stamp these products as good to go. we try to have investors do their own research, especially the mortgage-backed securities to really understand it.

what happened was the securities market and the credit agencies, which are extremely relying upon the bond market, so with this bill we would be liable for anything we rate. and they weren't willing to sign off. when it came to companies looking to -- for bond issuance, they basically said, look, if we don't have your signoff, we won't and we can't legally as the things are written, issue new asset-backed securities. when it came down to -- forbes pulled out. this is what the republicans immediately pointed to. it was a problem. as the caller mention, the s.e.c. put a six-month stay on it. this is almost exactly what they wanted. they wanted companies no longer to have to rely on threes two, three, four credit rating agencies that dominated the margaret. -- market. when it does this much to an

entire market shes an entire system, there are a lot of things you don't see coming. this is a week or two weeks right after the bill was passed into law you saw folks kind of sit back and say, wow, this has ramifications all over the place. host: our guest educated at ohio university, a fellowship at the wharton school of business and has worked for "congressional reportly" and now a reporter for bloomberg. phil, a democrat, good morning to you. caller: hello. hi, this is chris. yeah, the question i have about this issue is they pour billions of dollars into the system. why couldn't they assume the resolution that started at the time and let the lawsuits come later? save all the money. i think what they were doing is

looking out for their ownselves. why couldn't they taken the authority and say, well, we'll trim up the legal entities later? thanks. guest: i think it's an interesting point. it's one that at the time really in september and october of 2008 you have folks looking to every possible solution. it was unprecedented. nobody had done this before. i think in this case people were looking to contractors and they simply won't grateful. lehman brothers, which ended up failing, the federal reserve pointed to the fact they didn't have the power. congress wasn't willing -- or asked to pass a new resolution authority to actually staff up, to implement a new resolution authority would have taken far more time i think than anybody thought they had during the crisis of september. so their choice, their

decision, and it was made, obviously, you can debate its merits, it was made at the time that they wanted to really just kind of dump crash in the system and hope to flourish at the moment. and the hope during the crisis was once the system was stabilized we knew there was going to be a large regulatory overhaul even before -- even before the insurance fell, the treasury department, as you mentioned, was considering a large overhaul, trying to streamline the system. this has been in the works for a couple of years. it simply was not ready at the time of the crisis. host: this bill runs over 2,000 pages, might take two years to implement overall. but we mind of the votes in the house and senate, how close were the votes? guest: it was a partisan vote. kind of like what is going on in the 111th congress. i think two or three republicans were off with that. same with the senate, three, four republicans. this was an issue that i think

when debate started, if you looked back in early 2009 and thought there would be one issue where everybody would agree upon it would be overhauling the financial regulatory system. if there was one thing that everybody -- everybody saw the effects of that everybody got hit hard and from the lawmakers' perspective, everyone had constituents that had issues for it would be reregulating wall street. it simply didn't happen. there's a lot of ideology when it comes to regulating, overregulating, if you will and certainly the politics at the time. this is the third major legislative issue pursued by the administration. and folks were just so soured at this point. you really had a number of good-faith efforts, especially in the senate, to try to find some bipartisan compromise. the democrats, the obama administration had the votes. host: and in terms of negotiations and actual policy when it came to the reach of the government under this bill, what exactly did it take at the

end of the line to get this passed? guest: you know, there were certainly concessions. i think when you look at the consumer protection financial bureau, this was an issue that republicans had a major problem with from the very beginning. certainly turned it into a government overreach. one agency with a tremendous amount of power. and the concern being this agency, while the focus on consumers, the safety and soundness of the banking system, of an individual institution would be kind of cast aside. the ability of a bank to kind of pursue new products, to profit, to be able to -- and in the long run extend more credit would be pushed aside to move towards a more plain vanilla system. this was initially proposed by the administration, the federal reserve had nothing to do it. it wasn't housed anywhere. the banking system had a problem with it. one of the things the ballparks was able to do is -- the ballparks was able to do is -- the obama administration was able to do is give it a few

more checks and balances and reach out to a few more moderate republicans, especially in the house and senate, there was an issue where they said it wouldn't be touching the smallest banks or any businesses that weren't large banks. a lot of language added to kind of appease some of the more moderate republican members. host: lots more calls coming in. bruce, independent line. caller: the lady that called in earlier concerning the legality of the federal reserve bank pretty much hit the nail on the head and shows the mainstream reporters and media as yourself as being someone who won't touch that third wheel. you don't want to go there. you don't want to investigate that. you will not look into the illegality of that because in reality the owners of the federal reserve bank, which is not federal, is there's a

privately owned institution now own our government. as a matter of fact, they own most of the governments in the world. and consequently we were -- if we followed this thread back we could go to the rothchilds and the bank of london because they pretty much owned the a.p., reuters and everybody else. so you can't report on them. you won't report on them. and what we need to do is get -- what the constitution says is the country to print its own money. host: give us your perspective. guest: it hits on a really kind of a hot button issue. the federal reserve has become -- it's essentially become an institution that is so polarizing. when it comes to the american economy and what's occurred since its creation, you know,

few economies in the world can compare to the success and actually to be honest, the stability of the american economy. however, the federal reserve has a tremendous amount of power. the government tried to address it during financial reform. it is run by -- it's staffed up by the banking system itself. it is a bank. it's a central bank. when it comes to any institution, any entity with the ability to more or less dump cash on the system, to loan to whoever, to do a number of different issues that i think folks have never seen before, there's been a lot of skepticism about the fed. certainly the last 10 to 15 years it's come to be an issue where people wonder, what exactly is this institution doing? it's very secret tif. it's not an -- secretive. it's not one that's open. we have something like bernanke was able to kind of use the

authority never been seen before. it fires up folks that believe there should be more information out there, that believe that the federal reserve, for anything that it's done, has done much more in the telling tif category of things. i think -- negative category of things. that was touched upon during this debate. host: you may remember senators dodd and shelby, we heard quite a bit of them. here is senator chris dodd from this bill. >> also, we provided can consumer protection bureau, what a radical idea. people that buy mortgages, have a student loan, a credit card, a car loan, they might have some place in this city that watches out for them with their jobs, their homes, their

retirement accounts. and so while this bureau is in place in this bill, the idea was that people when they have the problems they've been through or going through someone is watching out for them. we have a consoumer product safety commission. when you buy a faulty product, what happens when someone abuses or takes advantage, that's happened in so many cases in financial areas that people have a chance to have a redress of their grievance or at least in the outset have an opportunity to address that before it becomes a broader problem? host: it's a good idea, phil mattingly, that senator dodd said this agency but he's come out against elizabeth warren, who has been said by the democratic folks as the right person that's run this agency. what's happened there? guest: elizabeth warren, this was her idea. she was the first person to

introduce this idea, a journal piece she wrote back in 2007. she's an interesting figure. she kind of leads the oversight panel for the tarp program, a $700 billion bailout program, has been a regular thorn in the side of the current administration. she has a number of folks who really don't like her at all and i don't think she would have any problem with that. i think she works as somebody who is fighting completely for the consumer. she's a bankruptcy expert. she's been working on issues like this for years. and when it came to the financial protection bureau, she was one of the hardest fighters. when senator dodd said he would not pursue an independent agency, she was the one who really rallied the troops, kind of led the troops to fight for this agency. she is considered the -- she is not confirmable. they need 60 votes in the senate should the administration push it forward, she needs 60 votes. she has a lot of allies in the

both the house and senate. republicans have a serious problem with her views on banks. and there are moderate democrats who are concerned of perhaps an overreach of this new agency, concern that she will push things. as i said earlier, kind of restrict innovation. there are plenty of people on both sides who say that either side's argument is completely ridiculous. she's extraordinarily intelligent woman. right now there are issues. she's one of the three finalists that the administration is hoping for the job. certainly chris dodd has been one to vocalize it. no one is sure if they can get her confirmed. host: as far as this overall bill goes, are there any other positions that have to be confirmed by the senate? guest: there's one or two more. the interesting thing that will happen in the next couple of months, much like the supreme court, the obama administration is putting themselves in position to really kind of shape this bill after it's gone

through congress. they -- one of the biggest concerns since the bill was signed into law, once it got into the rulemaking process and the regulators it would be done in dark, smokey rools where lobbyists have -- rooms where lobbyists can shape the bill. there is 250 rules. this is the first battle. the war is certainly on. the obama administration now has an opportunity to really appoint, if it hasn't already, all the leading financial regulators as this bill goes forward. sheila bared. there will be that replacement. the office. comptroller of the currency left. this do that appointment. obviously the consumer bureau. they've appointed the f.t.c. heads. they have three appointees to that as well as the reappointment of chairman

bernanky. they have an ability to -- bernanky. they have an ablity to shape this bill. caller: looks to me like it's an overt criminal problem and a cover-up problem. fortunately c-span aired the financial crisis hearing. it was a complete blackout across the entire nation. not even one news media that calls themselves as fiscally conservatives like fox news, there was bomb shells dropped. when they were interviewing the fannie and freddie regulators had been cooking the books, unquote. not lenged but we're bound to but no -- alleged but we're bound by regulations. the two regulators made it clear that both parties for five years from 2003 to 2008 knew that there was systemic

risk. they covered it up. they've locked at legislation. then look at tim geithner, head of the new york fed, as the meltdown occurred, he was legally charged with examining their books. host: let me jump in. any question for our guest this morning. caller: pardon me? host: is there a question? caller: there is a question. so tim geithner was charged with examining their books to keep tens of billions of dollars off the books. another crime that, of course, timmy geithner didn't want to call to the attention of the public. warren buffett was testifying in front of a crisis inquiring commission on june 2. said to the former cftc director that banks like jpmorgan are, quote, a ticking

time bomb, because cutting derivative contracts is opaque when determining underlying value. and my last point is august 3 of this year, senate budget committee. former chief economist of the i.m.f., simon johnson, was testifying before the budget committee and pointed out to judd gregg, ranking republican, and senator conrad that they were violating their own c.b.o. scoring rules because there's still a $6 trillion liability represented to the taxpayer by undercapitalized too big to fail banks. they didn't deny the amount. they didn't deny the $6 trillion. they weren't denying their own scoring rules. so my question to your guest will be, why are you pretending like this isn't a criminal enterprise, why aren't you calling for criminal investigations? thank you. guest: a number of different points on that one. moving back to the fannie and freddie issue.

certainly one of the things we haven't even touched on today really wasn't touched on much in the federal overhaul bill is the next really focus for the administration coming forward on regulation. even tomorrow the administration will have its first meeting on kind of overhauling fannie and freddie, the mortgage giants that kind of collapsed in 2008, are still kind of sucking down taxpayer money on a quarterly basis. in terms of crooking the books, this wasn't -- as i understand it, the fannie mae and freddie mac got hammered for their accounting fraud in 2004. it wasn't a secret they had been cooking the books. obviously the two agencies -- the two entities were run was kind of a clinic in how you inappropriately run a business. i don't think anybody would argue that. certainly as we see in the coming months and the coming year how that is addressed. in terms of citigroup's

s.i.v.'s, there is accounting rules to try and push some of these off balance sheet entities back on to balance sheets so there is a better reason -- this is one of the issues that's in the shadow banking area where regulators that banks-like citi had all these assets that were off book. they couldn't see it on a regular basis and that was a concern. but i think the biggest thing as you're looking at -- this was such a difficult debate. simon johnson, the m.i.t. professor, the administration really had two choices here. you could really go for a complete overhaul, change the banking system, shrink banks, end too big to fail, really take a part the goldman's, the jpmorgan's, the citi, introduce a glass-steagall law or you could try and get regulators

more tools. you can try and get the federal government more ability to kind of see inside these institutions to try to head off a crisis. the administration chose that avenue. they chose the avenue of giving more tools, not the breaking up of the banks. this has upset a number of different people on both sides of the spectrum that goldman is as is. i think both politically, in terms of getting the votes, in terms of an overhaul, this is the best way forward. and i think in terms of international competition, they looked at this as an idea of how would we be placing our financial system and ranking in the world if we were moving our banks to do banks in perhaps england or asia can do? host: more of your calls in a moment. more from senator richard shelby, the senator from alabama, major part of this process with some of his thoughts on the bill. >> nearly two years ago the

financial crisis exposed massive deficiencies in the structure and the culture of our financial regulatory system. years of technological advances, product development and the advent of global capital markets rendered the system ill-suited to achieve its mission in the mad earn market. madam president, this distracted regulators from focusing on that mission. instead of acting to preserve safe and sound markets, the regulators primarily became focused on the expanding the scope of their bureaucratic reach. and after the crisis which cost trillions of dollars and millions of jobs, it was clear that significant reform was necessary. but despite broad agreement on the need for reform, the majority decided it would rather move forward with a partisan bill.

the result is a 2300-page monster, i believe, that expands the scope and power of ineffective bureaucracies. it creates vast new bureaucracies with little accountability and seriously, i believe, undermines the competitiveness of the american economy. host: there's that monster comment regarding the bill. we've heard that quite a bit in the last year or so. regulators were distracted, though, he said. that's his take. what do you think? guest: i think accurate. at least if not distracted then certainly unaware. there are not very many people, if anyone, that was serving during 2008 and was working in 2008 that does not bear some responsibility within the regulators, within the administration, within journalism, really, that really

escapes the financial crisis scott free. when it came to the regulators it was one of those issues where everything was going well. the economy was doing great. we were on a good run. and not necessarily got lazy but folks at least got a little bit sloppy and all of a sudden some of the issues that should have been concerning every regulator leverage, some type of capital requirements that folks were subscribing to, some those issues were not focused on any more. i think in hindsight you look back and say, how in the world could this have happened? how could folks be this willing to overlook things? but at the time it was just something that people were not considering. host: ohio, earn ernest on the line for democrats. you have been patient. caller: thank you. the w.t.o., as long as are in

charge of the world government and we people will not be able to go up against corporations, and the last thing i want to say is that this guy said there's room enough for [inaudible] for the financial crisis that we're in. the fact of the matter is it would be a cold day in hell before poor people in this country calls rich people to lose one penny because of the the decision that poor people make. guest: i think that's accurate. i think a difficult issue. i think everybody's been dealing with right now is obviously the blame issue. but certainly the fact that the

largest institutions, the folks that are largely to blame for taking this system to the brink have been the institutions, the people that have gotten the bailouts, that have gotten the money, that have gotten the government support while a lot of homeowners, some of which -- many of which did not have bad intentions, were not speculating, were not doing any of these things, are finding themselves both out of work and out of a home. the difficult issue, and i think the administration's grappling with this on a daley basis, is how do you -- on a daily basis, is how do you deal with what's been going on? in 2007 and 2008 these issues were so core to our economy it is necessary for the economy to survive that we need to bail them out or else there will be no economy any. -- any more with the hope that these institutions would be lending or at least have the power to lend to the people

that have been hit the hardest, the main street folks. you have not seen that happen. the largest banks are more concerned of self-preservation. and more concerned with their shareholders than they are the average american who might be getting foreclosured upon. and i think it's an issue from the banks perspective and it is an issue from the main street perspective that makes no sense. host: next call, long beach, california. independent line for phil mattingly. hi, cl. caller: hi. good morning, gentlemen. actually, my question had been answered by one of year viewers was that i remember reading a long time ago that the federal reserve was not -- it was privately owned. and that i think the lady said it was 1913. i can't remember.

because i read so much. congress was in recess and a few congressmen passed that bill and it was like a coup, you know. i don't know what's going on with this government. i don't think we're going to recover. i don't think there will be a recovery. people are optimistic. some are. some aren't. i'm not one of them. i see things happening that are just disgraceful. host: let's get an opinion. you're from houston, texas. on the republican line, go ahead, sir. caller: yeah. i have a two-tier question. what is the mission statement of the fed? and with the fed not instituting technicals, do you think you can control resignations of the manufacturers easier to step

outside this country than to take our economic effect of their moving out of the united states? host: thanks. can you help us with that? guest: the fed issue statement is maximum monetary policy. the goal is to obviously stabilize. the money flow in the united states as well as to try and maintain the highest employment level they possibly can. the difficult kind of mandate, if you will, i think people struggled with it since its inception. i think to the other part on the tax code. you know, it's an interesting thing. there are any number of views on how the tax code has benefited and hurt the united states. you move in -- if you move steps one way, all the of a sudden the other way, you're getting hammered. and corporations are regularly looking for any way to save money, to help their bottom line. and there are certainly cases

where corporations to move work outside the united states. i think that's going to be addressed in a couple of years. there will be an overhaul of the tax code. i think that will be one of the issues, one of the primary issues, some of the most politicized issues going forward. host: one of your recent headlines to your piece, phil mattingly, financial overhaul law. now comes to battle. we have a process up to two years as the rules are being written move this whole thing forward. you hear the growth and the power of the government. what do you see happening, the push and pull of writing the rules here? guest: it's -- i think i said it earlier. what happened in congress was the first battle. and it might have been considered even the smallest of them going forward. you have every major agency now tasked with writing a number of rules. between 240 to 260 different rules from this 2,300-page

legislation. over the next couple years, you said, it will be a rule-writing process that people have never seen before where each agency will write a rule on every part of the financial system. the ability to resolve large, nonbank institutions. creating from scratch. and a derivatives market controlling the derivatives market. and you will see a very structured process. they have a way of writing rules that it's really a step-by-step process. you've seen almost every agency, with the exception of the s.e.c., this will be a very open process. you -- they will be releasing for comment everything they're doing. kind of an effort of ensuring this won't be a backroom type issues. this will be a long deal, very

detailed issue for awful these agencies. it will be interesting going forward. everybody is looking for a loophole. everybody is looking for an area to exploit, to kind of find the next big profit center. and how these agencies will deal with that, how are they going to be able to write rules that don't really lead or allow for the next financial crisis. host: democrat line goornings. caller: good morning, sir. how are you? host: good. caller: i want to tell but two documentries that are very good and they deal with the federal reserve. excuse me i stutter. the first one is called "america: freedom to fascism." that was made by the late aaron russo. and the other one is called -- is called "the owners of

america," and that was made by a couple of college students here in nashville. and i would like to ask your guest if he has ever written a book -- read a book called "the creature from jekyll island." guest: i have not read the book. host: tell us about the book. caller: it is the history of the federal reserve. and it's a very interesting book. on ron paul's website, he has a book list of books that he wants folks to read. and that book, you know, called it's called "the creature from jekyll island," that's the second book on his list. i also have a book. my name is arnlede joseph white. and -- aaron old joseph white and i've co-authored a book called divine intervention 9/11" and you can get it at