organized to consider them for tradeoffs. . .

>> how much in check their neighbors got from the stimulus or their competitors did. as bob points out a limited disclosure there. there's hardly anything there to evaluate the value of the spending and no indication how to boy for it now in the future. >> any questions from the audience. you got time for two more, real quick. >> was putting them to sleep. should we call on somebody. >> we can if you would like. >> [inaudible] >> what decisions will be made by december 31'st. >> if you had a crystal ball. what decisions would be made by

december 31st? >> i was asked this question by a hedge fund. [laughs] two months ago and i tell you what i told them. i said, um... whatever the outcome of the election, because this was before the election. whatever the outcome the republicans will gain lots of strength and they certainly have. this will give the obama administration a rational to compromise. they will compromise with respect to a one year extension of both the top and the below $250,000 dollar tax cuts. that's unacceptable for the republicans and they'll fight for at least a two-year, and i think the republicans will win. some time in the next five weeks we'll get a two-year. not longer than that. two-year extension of the tax cuts. that will be the last budget action of any significance until

2013. [laughs] nothing will happen until that. we'll have to do something on the debt bill and sure there will be appropriations passed and maybe federal civil servants will not only have a pay freeze and have to take a pay cut or something. there isn't dynamics to do anything real between now and then. it doesn't mitigate the praise i gave to these committees though because you have for lay the ground work for this and in 2013, we not only will have the greeks to thank to show us what can go wrong, but we'll also have irish and by them a few more countries too probably. >> i suspect at least bob and i hope one of the actions will be continued resolution. we'll be both employed still by

the federal government. >> well, thank you very much. i'd like to thank the panelist for the inside discussions today. plus pl >> up next the head of the fdic issue as report on the health of the banking industry. after that, president barack obama visit as chrysler autoplant in indiana and on this mornings "washington journal". update on tensions of north and south korea. >> here's some programs c-span is airing thursday at 10 am. academy winn jeff bridges talked about youth hunger. jane goodal and the talk of judge roberts and john paul

stephens. former president bill clinton. thanksgiving day on c-span. >> now and update on the banking industry's performance during the third quarter of the year. we'll from officials at the federal deposit insurance corporation. sheila bare is the chairman. f di zoo is responsible for insuring at most commercial banks. this is 20 minutes. >> the industry continues to recover from the final crisis. credit improves and we remain cautiously optimistic. lower pro visions from loan losses allow share revenues to

more able reach the bottom line. 14 point 5 billion is a substantial improvement but lastly, less than the last two years. last quarter almost 2/3 of all institutions reported year over year increasings in earnings. institutions are reporting positive incomes rising to the highest level in two years. lower level where is the key factor in driving earnings higher. assured institutions set aside in pro visions in the third quarter which is 28 billion less than they set aside a year earlier. the decline and loss of pro visions corresponds with improvement in asset quality in this chart both net charge offs and noncurrent loan losses decline for the second quarter in a row. the improving outlook for loan losses has encouraged some institutions to produce quarterly losses below the level

reductions in loan loss reserves. almost 60 percent of institutions increase reserves but the dollar bottom exceeded reserve builds. most large banks had substantial reductions and the magnitude over shadowed what occured mainly smaller banks. as a result, as you can see. the coverage ratio fell slightly eventhough noncurrent balances also declined. reserve deductions are not unusual when troubled loans are declining and we're seeing an improvement trend in credit quality but they're still near high levels. many institutions came in with inadequate reserve levels and need to exercise restraint in drawing them down now. at this point in a credit cycle it's too early for institutions to reduce reserves without

strong sustainable improving loan performance and reduced loss rates. when it comes to adequacy of reserves we should always air on the side of caution in recertain quarters. falling losses over combined to reduce earnings but the industry must improve loan. the declining trend in loan balances underway for more than two-year as appears to almost have run it's course. total loans and leases held by f dia insured businesses declined 0 point 1 percent in third quarter. if not for the change in accounting rules that brought security loans back on to balance sheets in the first quarter. this would have been the smallest decline in two years. many large banks have had sizeable reductions over the past couple of years but in the third quarter such reductions were notably absent.

i hope your close to seeing general increases in loan balances. service indicate the demand is recovering slowly as banks ease access to credit. it is important to keep in mind while most industry is on the track some institutions continue to experience distress. 19 percent were unprofitable in the third quarter and almost 36 percent had lower quarterly earnings than a year ago. number of problem institutions continue to rise and number of failures remains high. 149 institutions had failed this years we anticipated the number of failures this year has exceeded 2009 total of 1040. the total assets we expect lower than- last year and we anticipate fewer failures next year. as a banking industry continues to recover we also see a positive trend in the deposit

insurance fund. it was negative 8 billion compared to negative 15 point 2 in the prior quarter. the balance remains in negative because of losses from failures that have occurd to date as well as a contingent loss we've set aside to cover the loss of if i lures. but after declines for 7 straight years the improvement reflects income and downward revisions in estimated losses from future bank failures. at the end of the third quarter our total cash pro vision was under 34 billion dollars. approximately the same as june. while we expect the same in june our current resources are more than enough to resolve anticipated failures and meet obligations for banks that have already failed. the industry has come long way. building capital and a just

together changes in financial market as and the economy. adjustments are not over and this is no time for complacency. giving continued uncertainties particularly surrounding the market. recently documentation problems at large mortgages have raced concerns about liability they may face if it's not prompted addressed it could delay the recovery of u.s. housing market. we welcome the federal reserve tough demands. bank as well should be conservative with regards to dividends. bonuses and other that is can impact capital. as we continue to improve. building capital should remain a priority for inj insured banks. with that i would be happy to

take your questions. >> does this mean it's easier to get al loan? >> i hope so. the fact we have not had the declines specifically among larger institutions i think we are turning the corner. yen. joe? >> can you say further on what you mean about contingent liabilities? what consequences do you see as possible? >> well, we've already seen a significant public commentary about investor unhappiness and put back risk so the securitized loans could be impacted by this situation. so we don't have all the facts

but it's something to be aware of and it's a serious issue we need to get to the bottom of. of. >> can you expand furtherp -p it seems the fates of small and large banks are diverging and the larger banks are doing much better. is that what - well, i think, i think the smaller banks are getting healthier to o. it's not as fast as larger institutions. they are with the commercial real estate continues to weigh on the balance. but the community banks are improving as well. as i said the loan balances have remained more constant than the larger institutions where we have seen. they're behind the bigger banks but they are improving too. yeah?

[inaudible] right. well i think it's important to distinguish between civil litigation that the f di zoo and the obvious part of the completely autonomous. as it should be. we have improved 200 recovering 2 billion in recovery. we probably won't get all of that. shear thub more. if the deposit vabs is a valuable thing to have and it requires high standards to prudence and care. we do understand that it's important to be able to attract good boards. we try to be balanced and even in target when we bring cases for external directors the criteria is gross negligence so

there need has to be clear violation of obligations by the management and directors when we proceed but we feel we're wise to proceed. the cause costs back beings money and taxpayers that back the deposit insurance fund. the separate track with criminal investigations that they coordinate with the fbi and i refer them to you in that and a lot of the "wall street journal" article relates to that. >> that we can turn it over. >> thanks very much.

>> considering the general 0 point 1 percent. decline in loan balances. the projectory seems to be going up. how confident are you that will turn positive next quarter? >> these cycles tend to run in fairly predictable waist. we have declining commercial loan in the last cycle 13 quarters and once the recovery came it was pretty sustained. we've seen institutions cleaning up balance and through the regulatory surveys that lenders have stopped tightening and i think loan demand has lagged behind. large companies have gone straight to the company. they're starting to come back to banks and credit loans as well. small business has lagged behind somewhat. they're seeing lack of demand and haven't wanted to retire and expand as they would in other

types of recoveries. it's been a slow turn around but once it does take place it'll be sustained. >> will it be 0 point 1 percent next quarter or will it be? >> we don't have a prediction for next quarter but i think history shows, the cycles of contraction run the course and then expansion are sustained and they runs a well. we're poised to see an expansion in the next couple of quarters. that's my expectations. >> i believe many institutions have a tremendous amount of liquidity. as demand picks up. institutions are ready to extend lending and i think that's certainly once we see the economy pick up and we should see activity on the long side. >> yet another indicator. unused loan commitments expanded three years.

that's kind of an indicator of availability hasn't been drawn down a bit. they're expanding in credit they're making available. >> chairman, you talked about - sorry. chairman talked about the need to look for her words exactly. this is no time for complacency. the adjustments are not over. as far as pro visioning, are you - giving any guidance to banks about banking off of the pro visions and what are you doing about? it if there's, if your worried about complacency? >> well, loan loss pro visioning is one of the major,

probably the major area of our on-site teams for all the regulators. this has been communicated directly to the institutions and where institutions stand right now is very important to understand that, that if they're seeing improvement this can be sustained understanding that there's certainly, something in the economic environment that the institutions are operating in, not to be too aggressive on pulling back. >> it's kind of a unique environment. we have a high volume of problem loans out there that you know, have already been reserved against - the economy is getting better but it's a slow expansion and hasn't reduced employment all that much to date in that environment i think bans try and find the right level of how much

to reserve going forward and we're asking them to take in to account that uncertainty so they are prepared for the problems still existing on the balance sheet. >> most banks are still increasing reserves at this stage. overall aggregate is driven by reduction of the small banks. >> have you given extra guidance with the record to the for closure mass and potential for put backs and things like that? have you given them additional guidance there and any instructions to make sure they're pro visioning for those? >> potentially? >> the agencies are in the process of doing some on-site evaluations of institutions with a largest mortgage banking corporations. once that information is gathered and covers all the items you just mentioned, that there will be guidance to

follo follow. >> was there a factor besides, the decline in loan balances that you attribute to the strong capital growth? >> um... no. there actually was tier one that we indicated one of the largest increases recently and that was - i don't have a particular list of who specific institutions were but we did see capital ratios improve for those across the board apart from the decline in the asset ass the denominator. i think we did see substantial improvement in the capital in the third quarter. not confined following a few.

>> because they are not - no. they were adding to capital. for the most part in the aggregate at least, it was through means other than retained earnings but we did see growth in the balances. substantially. so. >> this balance sheet repair has involved lending restraint and tighting lending standards. it's starting to involve dividend policies, retained earnings of that as well. so a combination build capital. recognizing loan losses and moving balance sheet into a stronger position going forward. that's sign of strength for the lending capacity of it may not have occurd to date but going forward they're in a better position from a balance perspective and in terms of capital to make loan as loan demand materializes.

the u.s. autofleet. will need replacement and businesses middle market for example starting to build inventors leading to this now and the industry has improved it's balance sheet position to meet the demand. >> any other questions? all right. everybody, thanks very much.

[captions copyright national cable satellite corp. 2010] >> president barack obama and vice president biden travel to indiana. site of a chrysler manufacturing plant part of the autorestructuring. during his remarks he calls on

congress to extend tax cuts and talks about the administrations economic stimulus packet. this is about 1/2 hour. >> president and vice president of the united states. [applause] >> hello? how are you? good to su agree all. good to be back in automobile plant making state. thank you very much. we're delighted to be here and i expect as delighted as you are

to be able to be here. look. when the president and i got elected new we had a heavy load to a carry. the country is in tough shape and with the help of all the congressman and senator here's we passed recovery act in taking office in the midst of the worst economic crisis since the great depression. we had three clear goals. one is help community at the hardest by this recession. save and create jobs today. but also lay a foundation for long-term prosperity in the future. more a year after implementing the act, i can say proudly not only have we helped many of people but we have created millions of jobs and spurred growth in new industry, but we've completely transformd with the great leadership with the

local and state leadership. communities like this one here in coca moomcocomo. look. i'm a son of an automobile man and he managed facilities for my entire life and this place and anybody in the business, he was and this is one of the great automobile areas in america. supplies parts and so many other parts and all the related jobs that go with that to bring this place back. new we had too change things and couldn't do things the way we did. we knew the auto industry had to be getting leaner and tougher and be more competitive and we insisted that they did and now you see the result. an old industry adapting to a whole new era. competing and leading again and most importantly, hiring again.

hiring again! [applause] mr. president, i know you know this. but the last year the last outfit we succeeded they lost 144,000 automobile related jobs and we've created almost 75,000 more and a lot more to come and folks, look. the government didn't do this. the government did what it was supposed to do but the leadership of a president and from the president, we investment from the private sector brought on board because the government was able to get back in the game and say we're part of it. the auto industry has roared back in america. i was telling the boss over here, that the thing i like most about everything again, being the sown of an automobile man s that my dad would be happy for the first time in 24 years. jd powers and american light year product exceeded foreign products in terms of policy.

that's big deal! that's big deal! look around here. look around here for. everyone guy on the work assembly line, there's five more doing what you are doing. it's not only the assembly plant but there's five people working in plants like this for every single job in the automobile assembly line. it's a big, big process. people working in places like here and defy. suppliers and when you guys have jobs. guess what happens. the coffee shop stays open and the restaurants stay open. people open new businesses downtown. people sell jackets and shoes and what's. people in fact, have jobs. this effects all the way through the economy and that's what's happening here. you know, the lunch counter need as few more waitresses and servers to feed them. the remodel plant can

reinvigorate an entire community. the people who don't work here. we can't stop creating new jobs in old industries. we need whole new industries as well. that's what the president did. a great example is in tip on the. the a bound solar. whole new industry. there's no reason why you can't build the best automobiles in the industry and be a leader with the new greens in the industry will be.

>> and in a sense, there's a whole new automobile industry building a different kind of automobile. my dad used to have a saying when he was running automobile dealerships of almost four decades. he said joe, all they got to do is give me product. give me product i can sell it. i said your giving them the best product in the world again. we believe we can have a strong economy without strong community. the president makes sure we help hit hard towns like community. there's 13 fire fighters still on a job because of the recovery

act and the safer act. teachers. law enforcement officers on the job. when i tell you. international recession in a worldwide recession. gets what a town like this one and others of 50,000 across america can't do it on their own. you have to help them stand up bit. that's why we help with infrastructure. to bring back main street back to life. nowhere is it written that this place can't be the hub of innovation in the 21'st century like it was in the 20th century. nowhere is that written. look. nobody knows better than this man that our work certainly isn't done yet. we're just starting. but it's important we recognize success stories like kokomo. this town and it's people ra model for others looking to do

the same thing over and over again in this country. you guys here have been the embody meant of the limitless potential when we put government and the private sector together. working toward the same end. a community built. this community is built on grit and determination. willingness for you to fight hard and pick yourself back up off the matt and march what you believe now. i hope you do is a better day. brighter future. a new start. we know it's along road back but we know we're on the road. one most important thing is to communicate to the entire nation that we can't stop now or turn around. we're heading in the right direction.

>> [applause] >> president ofuaw. bob king is in the house.

we have some of the best workers in the united states of america right here at this plant. and i had a chance to meet some of you. as we were going around seeing. these amazing transmissions that your building. and i was very happy. to hear that after a couple of tough years. this plant is now running at full capacity. that's why i'm here today. that's why i'm here today. now, we all know that one plant, by itself, doesn't mean that there aren't people in this town that are not still hurting. i had lunch with the may yr and some fire fighters and there's stale long way to go.

the mayor has great plans and there's businesses looking to start expanding, but the fact is, there are millions of people around the country. who are still looking for work in the wake of the worst recession in our lifetimes. i don't have to tell you that. many of you still have friends or neighbors, husband or wife, who is still struggling. and i know that before this plant started rehiring, that a lot of you were in the same position so. you remember. that it is a tough, tough thing. when you're out of work. especially, when you have taken a lifetime of pride in working and supporting a family and making great products. but even as we continue to face serious challengers. what's happening here at this plant, the changes we're seeing throughout kokomo are signs of

hope and confidence of the future in our future together. your showing us way forward. your living up to the spirit of optimism and determination. that grit that's always been at the heart of who are as a people. at the heart of america. i remember coming to this city a couple of yearsing a. some of you might have been here. what was happening here reflected what was happening all over this country and region for. a decade or more. families had felt a growing sense of economic insecurity. a lot of manufacturing had left the area. and then, a recession started taking hold. folk where is seeing job losses and facing new hardships. that was before anybody knew how devastating the recession was going to be. so by the time i took office.

just a few months later the financial crisis had hit and we were losing millions of jobs and that left joe and i with some tough choices. one, was to help the auto industry restructure. and that wasn't an easy call. i understood that there was some reservations of those that said the industry should pay a price for some poor decisions by the part of management. we also knew that millions of jobs, hung in the balance. we also knew that the very survival of places like this were on the ne. and we knew that the collapse of the american auto industry, would lead to an even deeper disaster for our economy. and you know what? we also believed that - america which popularized the

automobile, was middle class made on the basis of manufacturing. that we couldn't just give up. we couldn't throw in the towel. that was not an option. there were those that were prepared to give up on kokomo and the auto industry. there were those that said we through good money after bad. you remember the voices arguing for us to do nothing. they were pretty loud. su fwegs let's step back and watch an entire sector of ehr o economy fall apart. but this country wasn't built by doing the easy thing and doing nothing. it was built doing somethingness even when it's difficult. we made the decision to stand mind the auto industry. if automakers, if ceo's like

sergio are willing to do what it takes to make sthem selves competitive in the 21'st century. we made the decision to stand with you because we had confidence in the american worker. more than anything. and today, we know that was the right decision. we know that was the right decision. [applause] today, each of the big-3 automakers has increased their market share. each of them. for the first time in over a decade, americans are buying larger shares of chryslers. fords and gm's and a smaller share of their foreign counter-parts. for the first time in decades. we're coming back.

we're on the move. all three american companies are profitable and they are growing. some of you read last week, gm stock offering exceeded expectations as investors expressed they're confidence in a future that seemed so dim just 18 months ago. and as a result the treasury was able to sell half of it's gm stock. so here's the lesson. don't bet against america. don't bet against the american auto industry. don't bet against american ingenuity. don't bet against the american worker. don't bet against it! [applause] don't bet against it! don't bet against us. this plant is a shining example of why you shouldn't.

two years ago, production here was plummeting. a loft folks had lost their jobs, today this plant is coming back. the company has invested more than 300 million dollars this factory to retool. but it gets better. sergio just told me today. chrysler is announcing an additional investment of more than 800 million dollars in this facility. 800 million dollars. [applause] that's good. [applause] that's good news. that's real money.

800 million dollars. america's got a big grin on his face. i'm pretty happy about that. over the next few days folks here expect to manufacture more transmissions than ever before and as a result, hundreds of workers are back on the job. jeremy said we're going to be hiring more. this includes - this includes - i'm going to name a couple of people just to embarrass them a little bit. where's sharon dern. right here. sharon, lost her job of 20 years at a paper mill. she was only able to find work that paid her far less than her old job, until she was hired by chrysler and now she's doing a great job right here. at chrysler.

we're proud of you. jim is here. where's jim. he's right next to her. jim? jim worked for chris ler for a decade, right? and he lost his job when the plant, you worked at in newcastle shut down. over the next few years, he could only find intermittent work on and off. wasn't until after the restructuring he was able to have a job he could count on. he's back at work for more than a year doing a great job making outstanding product here's at chrysler. [applause] and a plant down the road, workers are manufacturing parts for hybrid vehicles and that's already led to dozens of jobs land lead to nearly 200 over the

next few years. few miles outside of this city, a clean energy company called the bound will be able to hire 900 workers taking over a plant that had to shut down a few years ago. so a factory that was empty and dark will come back to life and when people have a paycheck as skwloe said. they can go to the store and they're able to spend and make the economy grow. on main street we're able to see a revival with new businesses opening downtown for. anybody that says our countries best days are behind us. anybody that doubts our prospects for the future. anybody that doesn't believe in the midwest or believe in manufacturing. have them come to kokomo. come here! need these workers and visit these plant and come back to the city that's fighting block by block. business by business.

job by job! [applause] this is a reminder of what we do as americans. what we can do as americans when we coming to. we're not divided. we're not spending all of our time bickering, but instead focusing on getting job done. we don't give up. we don't turn back. we fight for our future. no. we're not out of the woods yet. it took a lot of years to get us into this mess. it'll take longer than anybody would like to get us out. but, i want everybody to be absolutely clear. we are moving in the right direction. we learned that the economy, we learned today that the economy is growing at a faster pace than

we previously thought. that's welcome news but we're going to keep making it grow fast and create more jobs. we need know do everything we can to make that happen. that's why in the coming days it's so important. the coming months it's so important. democrats and republicans work together to speed up our recovery. we got to put aside our differences. the election is over. we have to find places where we can agree. we have to remember the most important contest we face, is not between republicans and democrats. it's between america and our economic competitors. other nations are already investing. other nations are making investments in education, energy, infrastructure. technology. because they know that's how to attract new jobs of the future. throughout our history,

democrats and republicans have agreed on making these investments. we don't want to feed our economic leadership to nations like china. we have to do the same today. we have to make sure our workers have skills and the training to compete with any workers in the world. we should give our businesses more incentive to invest and research in invasion to lead to new jobs and industries like the ones we're seeing here in kok o kokomo. we should make it easier for middle class families to get ahead. i'll give you an example. on taxes. next year they're set to go from middle class families unless congress acts if we don't act by the hands of the year a middle class family will wake up to january first for a tax increase of $3,000.00 per year. the next few weeks i'm asking congress to take up this issue. the last thing we can afford to do is raise taxes on middle class families.

if we - [applause] if we a these taxes to go up, the result will be that a lot of people, most likely, will spend less, and that means that the economy would grow less. so we ought to resolve this issue in the next couple of weeks. you have the assurance. that your taxes won't go up when the clock strikes midnight. this is an area where democrats and republicans agree. the only place we disagree is whether we can afford to also borrow 700 billion dollars to pay for an extra tax cut for the wealthiest taxpayers for millionaires and billion theirs. i don't think we can afford it right now. that will require sacrifice for

all-americans including those who can most afford it. i'm willing to sit down and hammer this out but we need to hammer it out. you know, long before transmission where is coming off the line at this plant, and by the way, you look at the transmissions today and somebody 20 years or 10-yearsing a might not have recognized them. they're amazing. before henry ford built the model-tpt. a man, by the name of elwood hanes. decided to do an e appear meant hereexperiment here. he set up a boat in his kitchen. bolted it to the ground. the idea was he might be able to rig the motor to a courage. so he started it up and the engine works great. in pact it worked so well that it came loose from the bolt and

destroyed kitchen floor and after a brief, and what i imagine an difficult conversation with his wife, [laughs] elwood decided to continue his test in his machine shop and he toild for months. but when he was finished he completed one of the earlier working transmissions in america. named it the pioneer. so this place is in our history. this is a city where people came to invent things and build things and make things here in america to work hard in the hopes of producing something of value and something the people could be proud of. that's the legacy of all of you. you are all heirs to that tradition. right here at this plant. that's the legacy that has made this country the envy of the world. and i'm absolutely convinced

this legacy has been one you'll uphold for years to come. congratulations chrysler and congratulations kokomo. i'm proud of you! [applause] ♪ [captions copyright national cable satellite corp. 2010] ♪

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more than 100 million homes, created by cable and provided as a public service. >> "washington journal" is next. we will take your calls. tonight from emory university a conversation on civil discourse with commentators. that is at 8:00 eastern. coming up this hour, we will get an update on the conflict between north and south korea. a former senior director for asian affairs at the national security council, michael greene, joins us. after that, leslie gelb on the council of foreign relations discusses a recent article on u.s. foreign policy priorities in the new global economy. later, a look of the increasing number of diseases that are becoming resistant to antibiotic drugs. dr. anthony fauci of the national institute of allergy and infectious diseases is our guest. this is "washington journal." this is "washington journal."