ms. too much of ernie said is questioning ben bernanke. charles: we will keep an eye on the markets as well. >> a reasonable fed, and many colleagues might not know of this, members, institutionals themselves, as we theaters are appointed by the financial institutions and three come from appointments by the fed. we have absurd situations where jamie dimon, ceo of the largest financial institution on america on the new york fed to regulate wall street, the fox guarding the hen house. i will reintroduce legislation to end and absurdity of six of

nine members of regional fed's coming from the financial institutions. last question, from the end of 2007 until april of 2013 financial institutions held to the fed, the one$.5 billion to $1.7 trillion in 2008, the fed provided interest to financial institutions to keep this money at the fed. and huge financial institutions with huge amounts of money at the fed getting a small amount of interest. i think it would be much more productive to the economy of the money without going to small-businesses and into the productive economy rather than sitting at the fed. legislation i am working on what

address this problem by prohibiting the fed from providing interest to banks on their excess reserves and require the fed to impose the 2% fee on the excess reserves of the largest banks in america, those with $150 billion in assets to get the money out rather than parking in the fed. >> the amount of excess reserves in the banking system is out of control of the banks. the third put those reserves in the system and the bank's past summer around to each other but the total is just given. they can't do anything about it. it is the hot potato. 1/4% interest we are paying them which we are doing for technical reasons is not preventing money from going out to small business or any other business. after all, loans are paying 4 percentage points, primary 3.5 so if they can find attractive loans they will make those loans

rather than hold excess reserves. in addition getting rid of the interest and excess reserve capacity would force us when we come time to tighten it would force us to sell assets very quickly in a destructive way instead of using that pull to tighten interest rates and avoid inflation. it would be counterproductive. we will discuss that length. >> breaking up large banks. >> that is a complex question. and small changes and a form of glass-steagall. as we saw in the crisis investment banks, commercial banks separately got into serious trouble. i would support we are doing a lot of things which i don't have time to go through through dodd-frank through basel iii and other authorities to move in the right direction for the dressing too big to fail and as i said if we don't feel after

some additional work that we have addressed the problem i would be supportive of additional steps. the best direction is probably requiring the largest firms to hold more capital proportionally and that would force them to be safer, to have more level playing field and if their economic returns didn't justify the higher capital costs to induce them to break themselves up. >> the structure of the fed? >> i am open to discussing those with you. i just want to assure you as strongly as i can that the primary role of board members is first to give us market insight, business inside, let us know what is going on in the economy and hold lot operation issues but there is a complete and utterly in permeable ball between the board members and any supervisory matter and i assure you there is no conflict.

that being said i can see why you might have different people represented on that board, more union members for example. i think that is a reasonable thing to talk about. >> all time is expired. representative paulson. >> i wonder if you can comment on the primary factors you are monitoring to gauge the economic risks of your current policies. given that the effectiveness of the federal reserve policy has been somewhat muted over the last few years by a strong the leveraging cycle how important do you consider the expansion of bank lending or the result of the senior loan officer opinion survey as a gauge of future inflation and what other factors other than pure inflation measures do we look at as precursors to an expansion of economic risks due to these policies. >> we have seen a number of things which are suggested that the effect of the financial crisis are being mitigated to

some extent. as you mentioned consumers arr delivering their debt burdens and interest burdens are going down and their balance sheets are healthier than they have been, smaller number of people are under water on their mortgages, banks are much healthier. in our regulatory role we have been doing these stress tests and we found largest banks have roughly doubled the amount of capital they had four years ago, and the survey, you mentioned, indicate their willingness to amend is improving in many areas, still issues in mortgage lending, credit availability is improving, and related to the financial crisis do seem to be moderating and that is hopeful for further progress in the real economy. inflation, we use economic

models and look at market data and commodity prices and commodity futures prices, we simply don't see at this point much sign of inflation. inflation is on the low side historically. if we look at market indicators the very fact the united states could borrow 30 years at 3% is indicative of the idea investors are not investigating in this country. we are not attentive to that, that is half of our mandate that the moment if inflation is on the low side. >> why do you think businesses aren't investing so much, interest rates -- dagen: back to ben bernanke's testimony. we want to get reaction, chief investment officer of fixed-income at pc w joining us from los angeles. great of you to be here. it seemed what knocked the wind out of stocks and sent yields

higher on the ten year was the suggestion by burning key that the fed could change course in the next several meetings. is more being made of this fan necessary? >> probably. the fed chairman didn't really tell us anything new. we heard from new york bank president yesterday that the next move with respect to the fed could be either to increase or decrease the pace of quantitative easing. that is effectively what the fed chairman said this morning but what it reveals is the markets of grown overly dependent on expectations that quantitative easing is going to be a fixture of monetary policy for years to come. what ben bernanke reminded us this morning was the policies may be fine and not subject to change in the near-term. what he is in forming about the equity market and reaction in the bond market the same message

was being heard, don't have the belief that quantitative easing will necessarily continue for years and years which i think is where capital markets ave been in terms of their own pricing structure for quite a long period of time. dagen: a more definitive statement from the federal reserve about the backing off of the bond buying program how ugly will it be for bonds do you think? >> the said casts a really long shadow over the bond market and this is well understood within the con fines of the fed. i don't think they ever thought when they launched quantitative easy in the dark days of late 2008 but almost five years later we would still be witnessing an ongoing purchase program that as you well know is equivalent to $85 billion per month. essentially where it all leaves us is a realization on the part

of the fed that to a certain degree they are in a policy box. the fed has accumulated trillions of dollars of assets in their balance sheet. it is not really clear or obvious how they're going to exit from it all. dagen: therein lies you get the typical warning to congress by the fed chief, not just ben bernanke but alan greenspan about needing to get your % financial house in order and not spend beyond your means live beyond your means but there's a much bigger meaning today given the fact that the federal reserve is giving these lawmakers a free pass with this. did you read into that that way? >> the fed chairman himself has written historically extensively on the idea that fiscal policy is the domain of the elected officials and the fed basically plots the trajectory of monetary policy assuming fiscal policy is given but what you are saying is quite correct, quantitative

easing and zero rates has reduced the cost of the borrower to the national government from something along the lines of 5% four five years ago to where it is currently which as we well know is typified by a ten year treasury of 2% and probably lead to an enlarged federal government on a level of spending we wouldn't have seen otherwise had it not been for the abnormally low rate environment that the fed has actually facilitated. dagen: one last thing. do you think individual investors fully understand the risks that way in owning u.s. treasury at this point or continuing to buy them? >> the risks are not as fully understood as they should be and to put that into context, we should first of all first take away ten year treasuries at 2% probably below the underlying

rate, and maturities in a condition of losing purchasing power. if that 2% was repriced to as little as 2-1/4% that negative price movement that would be implied on a ten year treasury would be effectively wipe out an entire year's worth of income associated with the security. bond market has become as we all well know very dependent on the continued expectation of fed accommodation. dagen: that is the reason we are taking these hearings today. thank you for being here, great to talk tooyou,. connell: talking about the bond market reaction in the stock market as ben bernanke continues to testify has been positive. we are up 90 points on the dow. the message has been stopped stimulus too soon you risk hurting the recovery. we will be back with more ben bernanke in washington and

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connell: back in the hearing with fed chairman ben bernanke which is the market story of the day. the chairman to resume testimony or will resume listening in. >> i know now mr. chairman, i have a question about the economy and i would like to get your idea on something in particular. the chairman was before us and i spoke to what i thought the time in the housing market, around the time they called it in a

particular set of markets, since having left, i completely missed what was going on. i want to go back to housing, housing is an incredible piece of the american's budget and american family budget and their sense of wealth creation because in many ways is the first set and traditionally what we have used to make small businesses or put kids through college, what is going on now. around the nation in a lot of markets in california, housing prices are going up, what i see is pouring money coming in, money being bought as investments, banks fluffing off large amounts of homes and putting them into hedge funds,

these funds holding on to these and shrinking the mouth, anticipating at some point five for ten years down the road to get appreciation out of those assets, rental markets tightening, rents going through the roof, and your average working family, at least where i live is not able to buy a home because of these, if you will, have to have the money and the cash to coming and by the home and in return not slip it as we saw in the last speculation housing market but actually hold it at a higher rate for rand to these families who now are becoming unless we change something permanent renters. housing market getting better, but not for the middle class or

the higher lower income class. and almost chaining them, i would say, into the inability to find their way to homeownership. do you see that going on? do your people see that going on in different markets? and secondly what can the congress do to ensure not the other way where we went wrong that too many people who shouldn't have been buying bought in, but what we would normally call the middle-class and people who should be attempting to buy a home not get caught in this cycle of i didn't get in and i didn't get a home? >> a few comments. prices having fallen 30% and very low mortgage interest rates, affordability right now is the highest it has been in decades so there are people who are able to buy now who could not have bought under other circumstances though mortgage

lending i agree is tight for the people in the lower part of the fight the distribution, i agree with that. on the run side many people who have lost homes or otherwise not become homeowners stopped being homeowners have gone to renting and rents of gone up as you said so it is probably a good market response the houses that were previously owned are -- it is adding supply to the rental market, it will take some pressure off of rents and reduce the rents people have to pay who are forced to rent. >> excuse me a minute. people who had mortgage rates and were paying mortgages, we know that a good amount of these people lost their jobs and that is why they were not able to continue their payment but in most cases what i see in my markets are lower mortgage payments that they were making

versus higher rental payments that now being caused again because the family is not getting credit or family can't get credit or evee those who qualify with credit cash offers in particular foreign markets are keeping them from being able to own them so what i see for a family unit is a higher cost of housing effectively than what they had before this problem. >> if you can get a mortgage, i and stand your question, payments are low and affordability is high, i agree with you. if this is your question i agree the mortgage lending is too tight. there are a number of reasons for that. texas of conservatism on the part of the bank's, uncertainty about regulation, there is still work to be done to clarify securitization rules, the need for g s e reform and other

things, fear of put backs that the banks still have. dagen: ben bernanke talking about housing and lending, being grilled by congresswomen sanchez. we will stay on top of the federal reserve chief's testimony but we are going to take a quick break on fox business and be right back. this is america.

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>> 20 minutes past the hour your fox news minute. bombshell in the irs can along capitol hill moments ago. the key person in the investigation into what was happening at the irs, los where just invoked the fifth amendment. she was in charge of that division that targeted conservative groups. here she is. >> i have been advised by my counsel to assert my constitutional right not to testify or answer questions related to the subject matter of this hearing. >> she took the fifth but she insisted she did nothing wrong. would not answer a single question on the matter.

more oklahoma efforts shifting to the recovery, monday's massive tornado killed 24 people including nine children. officials say they are confident everyone has been accounted for. the national weather service upgraded that twister to n e f 5, the highest ranking with winds of 200 miles per hour. los angeles has a new mayor, democrat city councilman eric are steady defeated when the girl. 42-year-old is a rhodes scholar and first jewish mayor of the nation and second-largest city. he takes office july 1st. now back to the fabulous dagen mcdowell and connell mcshane. dagen: we say this, i love the tweak you put out last night about a mutual friend of ours at a benefit. you look beautiful land to read that. love you much. >> we know who we're talking

about. dagen: and inspiration every single day. connell: we cover breaking news of the day. we mention the irs hearing in washington, the other one we are monitoring is ben bernanke's congressional testimony, the fed chairman being questioned by senator toomey of pennsylvania. let's rejoin that hearing. >> total amount of economic activity that occurs over the long run. >> to some extent that is correct. we have a situation where we have home building is well below what is sustained in the longer term so more quickly we get back to a more normal level the more quickly the economy will be close to full employment. >> it is important to consider accommodative monitoring policy, a net growth strategy with a bigger impact on timing of

economic activity than the total amount. >> we are trying to mitigate the effects of the recession that can't affect long-term growth very much. >> another point, quick follow-up, senator coats and senator lee alluded to as that bubbles in the past, everyone with residential housing bubble in the last decade, i just worry, accommodative and unprecedented policy can manifest itself in unpredictable ways and we see a recent surge in housing prices, low yields on junk bonds, huge rally in equities, high agricultural land prices, it is not easy deck out hard to know at any point what an asset ought to be worth but it worries me. that it will manifest itself in unpredictable ways. the last point i would want to

raise is you have discussed your general strategy for accepting when the day comes, but always with an implication that there will be an orderly transition, but it is important to underscore that it is hard to predict how markets will respond when the biggest holder of fixed-income securities in the history of the world decides it has to sell. you might decide you have to seldom. you may decide you can let them run off but that may not be enough and bears very significant risk we are taking by accumulating a portfolio of this scale. do you want to comment on that briefly? >> i don't disagree this is not easy and requires good communication. we have improved our communication. >> i would like to commend you for that. you have provided more transparency, more communication and guidance than ever prevented

in recent history. >> there is no risk free strategy, if inflation is 1%, unemployment is too high, we could have monetary policy and address some of the issues you have in mind and it will include a big market correction if we move very quickly and unexpectedly. >> which might suggest the market is where it is because of monetary policy. >> the market thinks monetary policy is creating more profits and growth. >> quick follow-up to comments he made in the past about the swaps put out provision in dodd-frank legislation to allow that much activity that is currently required be pushed to the curb back in the banks which i think is a better way for financial institutions to manage risk and a better way for end users to use these products. do you share the view that it is a good idea to repeal parts of

the put out? >> the federal reserve had concerns about this prior to the enactment of the law and we have concerns about it. >> last thing i want to mention is august 9th, '11 minutes of an fomc meeting that contained notes on a video conference in which there is a reference, i will quote from a portion of it, referring to, quote, plans the federal reserve and treasury developed regarding processing of federal payments, potential implications for bank supervision and regulatory policy and possible actions the federal reserve could take of disruptions to market function closed a threat to the federal reserve's economic objectives. this was in the context of the debt limit impasse. clearly there were plans regarding how to deal with processing fed payments and other things. could you give us a sense what those plans consist of and what you can tell us about those

plans. >> my memory won't be complete but we look at our systems and our ability to make payments to principal and interest holders. for the most part we found we were able to do that with a few possible exceptions, people holding savings bonds and a few things that are not as easily connected to the system. we also had some discussion of the kind of policy we have with banks, discount window lending, we accept the default treasury and all kinds of things that were contingency planning in case this were to happen. what we did not do was directly engage the private sector for contingency planning. we were mostly looking at our internal system and the ability to address whatever directions we at the agent of the treasury

o what they tell us to do and we are working through our capacity both as an agent managing the payment system and as a bank supervisor to deal with a possible default if the debt ceiling was not raisedd >> time is expired. >> senator bob casey. >> testimony on capitol hill, ben bernanke will be at it for some time and we will continue to cover it. we did not cover disappointing stock investors. dagen: still hanging on to gains in the dow. we go to nicole petallides with more on market reaction. nicole: obviously traders are keeping a close eye on every word ben bernanke is saying today. more importantly the market is moving in relation to what he is saying which basically is for the near term they continued to

print and signature tightening monetary policy could stall the recovery and with that we have seen the market's moving to record all time highs. i sound like a broken record as i say that day after day but that is what we are seeing, dow jones industrials moving above 15,500 and many names on the dow jones industrials are hitting new highs including bank of america, chevron, ge to name a few as we have levels of 15,542. another thing we should know is we were talking about these record highs, for people with 401(k)s, so much money sitting on the sidelines. people are nervous when the financial crisis, when they lost their money last time, people don't even know when to get in and are missing the rally. back to you. connell: back to the testimony of ben bernanke and senator bob

casey from pennsylvania who is questioning the fed chairman. >> goes through elements of the tax code. that is the good news and moving in the right direction. the challenge is getting consensus. question i have is can you give an opinion or assess the impact, i am assuming it would be positive but i would like to hear about this? passage of a substantial bipartisan reform the tax code. >> first i would like to make the observation that such a major action taking the bipartisan basis would itself be confidence inspiring. most everybody on both sides of the aisle agree that tax code is extremely complex and distorts economic decisions and a lot of ways so if it were done in a way

that simplified it, made it more economically efficient and rational it would be positive and i hope you and your colleagues make progress on that. >> is there any one part of the tax code of particular significance in terms of adverse impact on business activity or economic growth? i realize there may be more than one but if there is one that is particularly difficult to manage? >> the difficult problem is the following. most economists would argue the efficient tax code relatively broad base and lower marginal rates, but low-margin rates is easy but broad base means restricting or limiting

deductions in credits so that is the goal but the political challenge is to figure out how to do that and as you know, in the income tax biggest deductions are housing, the charitable, state, health care exemption which are obviously very popular and have their own purposes. finding a way to deal with that issue is the most challenging part but the biggest payoff if you confined ways to broaden the base and lower the tax rate. >> i hear about a lot and i know we all do, this sense that businesses have that there are various, a big measure or a substantial areas of uncertainty, one is the tax code, one is the economy, one of the areas of uncertainty is what the congress will or will not do

or hasn't done and it is my belief we get a bipartisan tax reform agreement it would remove at least one element of uncertainty. my time is almost expired. and i want to be on the right side of chairman brady. >> thank you. you are recognized for five minutes. >> thank you. to follow up on mr. casey's questioning, just briefly not only are we here to get bipartisan support for reform of our tax code hopefully -- connell: more coverage of ben bernanke on capitol hill as his testimony continues. the market likes it, that continues to be the case. nice gains on wall street. dagen: we will be right back, everybody. i want to make things more secure.

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diane: diane macedo with your fox business brief. rose in a put to the highest level since november of 2009. according to the national association of realtors sales

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♪ all on thinkorswim. from td ameritrade. ...amea... neil and buzz: for teaching us that you can't eate the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... inverything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. dagen: we keep a close eye on ben bernanke's testimony on capitol hill. the fed and chairman. we want to turn your attention to the irs hearing still going gone. iris exempt organization

director low as lerner led the fifth. invoked fifth amendment rights and was excused. there was a little careful there. connell: wasn't the only thing that happened in that hearing. what rich edson notice when this was going on some fancy footwork by deputy treasury secretary. tell us about it. rich: game of musical chairs. this is all about optics and that iconic shot of all these testimonies on capitol where folks raise their hand dancewear themselves in or are sworn in by the committee. the deputy treasury secretary stepped out of that shot when they were taking the shot. a number of press photographers standing in the well taking shots of that, then he steps back into the shot afterwards. he was sitting next to los learner who was excused because she refused to answer questions leaving an empty seat. he turns to an aide and says i am going to stay here. i want to stay here. then it turns out from the

podium the chairman of the committee says please move over. you can't get physical distance from the internal revenue service. is sitting next to the former commissioners dud shulman. little bit of footwork and optics going on at this hearing which continues to move into its second or third hour. connell: that is a classic. way to go. dagen: this is only one camera in a room. there are no photographers in the room. connell: got to get that one, very well done. pull over. dagen: great reporting. wonder if he is worried about an audit. connell: kevin brady handling ben bernanke. let's go back to that and see what he is asking about.

that is the end of it. ben bernanke approaching the bench, they just wrapped up the testimony for ben bernanke and there he goes out of the hearing room. if you had to say in one sentence what he touched on and why the stock market seems to like and there may be some competing views to the idea that if we stop the stimulus too soon will hurt the economic recovery. people interpret that as he will keep pumping up money. dagen: and other quote is if they continue to see improvement in the economy, have confidence that it is going to last, be sustained in the next few meetings they could take a step down in their pace of purchases. closer to bajas of the day so far. connell: we will be back with more on markets, busy day in washington with all these hearings and in new york with a rally in the stock market will stay on top of it, don't go away. [ engine revving ]

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connell: we are back and that does it for ben bernanke, this hearing in washington as the stock market rally continues in new york. dagen: peter barnes can button it up and tell you everything you need to know. >> said chairman making it clear he wants of the stimulus from the fed to continue, and not prepared to stop it. and better data particularly on the job situation, he went out of his way at wang fin his testimony and his prepared

remarks to say 7% unemployment is too high, the economy needs help to create jobs but at the end one of the big questions and i have asked this in his press conferences and other folks in the press corps have also asked about his plans for the future. would he serve a third term if asked by president obama and he said -- he declined to enter that question and said i am not prepared to answer that. is term ends in january. he is leaving that question hanging. dagen: peter barnes in d.c.. connell: he is not prepared as if it is an out of the blue question. let's go to nicole petallides on the floor of the stock exchange, the rally pretty good on wall street. nicole: obviously if the fed is a key proponent to this market moving to new highs and googe 15,000 and today dow 15,508 and at one point at 1 42. you are seeing significant gains

that comes from a loose monetary policy we have seen from the fed, money printing and money printing whether it goes for the third term we will see but you see we moved to record highs and many names on the dow jones highs some of which are all time highs like home depot and other names we follow like jpmorgan and united technologies but this is the environment we are in and we are seeing a strong dollar reacting so we're hearing from the fed and what we are watching as well oil and gold pulling back and the majority of dow components have up arrows, 28 of 30 names are higher with the exception of microsoft and cisco systemm. the editing was existing home sales and we saw that moving to the highest level in a few years so with that we have seen names like told reuters hitting annual new highs and other names in the group like j. b. holmes with the arrows. it came out with its own

quarterly report up 7.7%, scrapping some attention today. connell: a lot going on as we balance between new york where nicole is and where ben bernanke testified and the irs hearing where lois lerner took the fifth and the moment of the morning may have been the swearing in when the deputy treasury secretary, where is he? he is out of camera shot. that is him, right side of the screen, step to the left by an experienced washington hand and when the cameras zoomed in he is not in the shot and when they go to new testimony when lerner had left the building after taking the fifth he had tried to stay in his seat and leave an empty chair but chairman darrell issa was having none of it and said move over. dagen: he only moved over when asked by the chairman of the committee. connell: rich edson caught it and was reported earlier. this shot is what you always see on the internet or newspapers,

the swearing-in and it looks like when you see this, the jacket, steps to the left, the deputy treasury secretary did not want any part of that shot. dagen: it is not just the inspector general to the far right. you know he is thinking i don't want the irs, i didn't work there. connell: before that lerner who is seen as a key figure in this invoked her fifth amendment privilege and did not take any questions but the former irs commissioner is taking questions at the irs hearing going on still in washington d.c. so let's listen to what he has to say. >> that is a gift tax matter i am aware of. >> this is about political speech and it continues to go on.

then you hear from charles deuce send the letter of october 6th requesting information about the tax-exempt sector. how is it takes you so long, and mr. bowlen, you said you took immediate action. what happens with all of these letters? when you get a letter from a member of congress, who else is copied on that? who else do you give it to? you are not the only one -- >> the letters usually as far as i know the process goes to the congressional affairs office, they get farmed out to the appropriate staff to get the best answer. >> does mr. walling get copied on these? >> not i am aware of. >> does anyone at the treasury department get these outside the irs? >> i don't know. >> does anybody get these letters at the white house? >> at the white house? >> at the white house. >> not that i am aware of.

>> when you get a letter from the chairman of the ways and means committee or chairman of this committee or chairman of any, you tell me you don't, have no idea where it goes or what happens? >> to the best of my knowledge it goes into our congressional affairs shop, someone in the organization -- sums -- if it is for my signature, the return, that would come up to me for review most of the time. let me also note of all the letters people are talking about there are a lot of individual constituent mail that come in to the irs. >> you get a lot of mail. >> much of which i don't see. >> the use the letters from members of congress? >> i do, the ones to me. >> you get 130 to members of congress. >> if it is something someone else is going to take care of by might not have seen it but the ones you are referring to, mr. busoni, mr. hatch. >> did you see that letter? >> yes. >> when he says this is a lie by

omission how do you respond to that? >> my belief is first of all the letter in question was not under my signature. >> you may unfairly -- >> i want to know what you think of this idea. >> i disagree with it. and that will have to conclude. >> we go to the gentlelady from california, mr. spier. >> mr. schulman, you have been head of the ira's for five years. you are in charge of the internal revenue service. correct? >> i was head of the irs for four years and eight months. >> you get 132 letters from members of congress concerned about targeting and you send them to affairs to deal with. did you feel any responsibility to go to the cincinnati office and find out for yourself what was going on?

did you ever make a visit to the cincinnati office? >> i don't accept the premise that i got 132 letters about targeting. i certainly wasn't aware of that number until now. i knew about two questions -- >> when congress contact you whether it is 12 senators or members of this committee, doesn't it alert you to the fact that if there's smoke maybe there's fire? did you ever visit the cincinnati office? >> i visited early in my tenure as the cincinnati office which has many different operations but i don't believe i went to cincinnati during this 2012 time. >> you take responsibility for what happened in the cincinnati office? >> do i take responsibility for the list? being done? i don't take personal responsibility for there being a list with criteria put on it. but i do accept the fact that

this did happen on my watch. >> you don't take responsibility but recognize the fact that it happened under your watch. >> i recognize it happened on my watch and i am very sorry that this happen while i was at the internal revenue service. >> one of the problems we have here, people are unwilling to take responsibility for actions that happened under their command. you have a duty as far as i am concerned to find out what was going on in the cincinnati office when members of congress, 132 of them or 50 of them or 10 of them informed you that they think there is some kind of targeting going on. and if that doesn't elevate your concern and interest then something is fundamentally wrong. dennis: i'm dennis kneale with cheryl casone, two be events, ben bernanke's testimony, the dow is up 110 points. the irs hearings, we have had

one irs official taking the fifth. another one has tried to dodge the cameras. cheryl: this is former irs tractor. he has three congressional hearings. dennis: the justice department it tells is under scrutiny for the aps record seizure. let's get this show started. i am dennis kneale. cheryl: hello, everyone. i am cheryl casone. we are all over these markets. dennis loves these kind of things. dennis: at an all-time intraday

trading high. one on one with they just resigned federal communications commission on what the fec will be doing next. cheryl: when asked about the irs targeting conservatives -- >> i have decided to follow my counsel's advice and not testify or answer any of the questions today. cheryl: can you say lawyered up? dennis: bernanke talks to congress, wall street listens. stocks pick up. you see stocks going even higher.

>> all of this qe needs to continue, at least for a while. the on employment rate is still too high. labor force participation still dropping. not acceptable. on the actual markets, he pointed out we are hitting new highs today on the dow. the fed chairman sounded like that did not concern him very much. take a listen. >> of course, nobody can ever say with certainty what an average price should be. they are not consistent with the

fundamentals. those mentioned earlier, price earnings ratios and the like are fairly normal in the stock. peter: at the very last question in the hearing, would he stay for a third term when his current term expires in january. he said he was not prepared to answer that. he is creating uncertainty. dennis: hasn't he been saying that before? >> he has not said that directly. dennis: thank you for being with us, peter barnes. cheryl: dennis is very excited

about the markets today. we have phil flynn in the training of this cme. we start with nicole petallides. nicole: we have a launching pad bernanke very closely. with that, we have seen record all-time highs. a majority of names on the dow. it shows you that it is not just once i there. 355 names out of the 500 also are showing gains today. we are watching the dollar break through to some new recent highs. that is the environment we are in here.

that is the latest on wall street. phil flynn, what is going on? >> bernanke, these traders love him right now. on one hand, he said, listen, we will not move stimulus. later on he said, hey, wait a second. that created a huge move. what is happening with the dollar, the dollar all over the place. a four and a half year high against the yen. it is not only the commodities that have been all over the

place. we have seen a lot of movement in the short end of yield curve. as far as oil right now, oil, of course, is under pressure because of that inventory measures today. back to you. we have jeffrey cleveland and chad morgan lander. we just heard phil flynn save bernanke says we may be pulling back some purchases. >> it is still stimulus.

they will not be continuing to expand their balance sheet. market participants right now know that the federal reserve is behind them. cheryl: as long as we need it, frankly. the one thing he did admit to hear and acknowledge, 7.5% unemployment, there is only so much that monetary policy can do.

it will depend on the prices of inflation. the question that came up that i thought was interesting is could you before labor day? the markets could really react to this. dennis: chad, what is the consensus expectation for when the fed begins tapering versus your forecast for that.

dennis: i thought we were going way into 2014. >> the consensus is that they will taper. our expectations are that they will continue to expand by june or july of next year. cheryl: certainly, there is a difference of opinion here. jeff, at this time, you know if you look at what it has done for the stock market, we have not seen the full effect of the housing market. >> absolutely, cheryl. the question is the stock market rally all due to fed easing? i do not think that is the case.

you see about six-6.5 billion more people employed today. one thing i do not worry about is if they do taper, if they do come back, the world is not going to end. dennis: chaffe, what do you think is the plan by the fed here? we are nowhere near 3.5%. >> dennis, you are completely correct about that. essentially, that means that the

economy is in full gallop. we are far from that. gdp growth of 2% is just not doing it. housing right now is gradually improving. the federal reserve will continue to do what they are doing. >> no. cheryl: even better. l.a. will have a new mayor.

details coming up in the west coast minute. dennis: regulation nation. i go one on one with former sec commissioner. he just quit last week. cheryl: take a look at oil. ♪ tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

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tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-751-3261. cheryl: the dow just coming off triple digit highs. there is no sign of tapering off from stimulus at this point. the economy needs to gain more traction. the irs officials who ran the division that targeted tea party

groups -- rich edson noticed some fancy that work. rich: very good optics. loislerner saying she is not to blame. by the way, i did nothing wrong. taking the fifth amendment and leaving the hearing. this is that iconic shot. it does a really fantastic job of stepping out. it has been going on for a few hours right now. plenty of anger from both sides. they are basically charging a

number of folks that they were not coming clean when they should have. they waited quite a long time to address it. the third in the series of hearings on this issue. dennis: that what kind of extra punishment. thanks a lot, rich. cheryl: quarter after the hour. stocks now. it is a great day on the new york stock exchange. nicole petallides. existing home sales coming out this morning. nicole: we watch them jump. that is the highest level we have been seeing here since no member 2009. it has two reasons why it is

jumping. it had its quarterly report. the stock is moving to 52 week highs. many of these names are up over 50% this year. in some cases, there are double digits. the group really has outperformed the major market averages. dennis: thank you, nicole. ♪ dennis: time to make a low money with charles payne. he is following up with toll brothers. i love their cookies. charles: do you really should mark it is interesting. i know a lot of people are looking at these homebuilders now. i did this with you guys last month in the stock was around $23. it was at a height then.

i have to tell you something. if i put together the perfect order, it will look like the quarter just reported by this company. absolutely amazing. i saw one very tiny yellow flag. only the north was down 7%. contracts, the value of them were up 57%. the value of the backlog of 70%. the average house they sold -- this thing -- cheryl: let me say something. charles: i like to pick the best stocks. i gave you solar city. it was up 58% for the week. only one stock was better than

it. i am looking for the best name. i do not even know who competes with these guys. most of these homebuilders so homes for 200-250,000. if they're ready for start to spend this kind of money -- by the way, it accelerated significantly during the quarter i get is worth chasing. dennis: is this stock back to where it was before then? charles: the high was $55. dennis: it still has room to run. charles: the homebuilder is interesting. they are not. i remember for years, they were outperforming like this. they would not communicate properly out wall street. right now, i think that they have went. >> will e see that new home

buyer finally entered the market. charles: probably the lower names. there is a real tiny standard pacific in california. a real tiny names that i like a lot or a percentage play. they are buying up these homes. working families cannot afford them. cheryl: charles, solar, homebuilding. charles: see you later. dennis: all right.

that devastating tornado in oklahoma, the damage of it could top $2 billion. we will be live and moore, oklahoma ahead. cheryl: how is the dollar doing after bernanke spoke today. ♪ thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the pt. anwith that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best e. to the finest comforts above. we're not simply saluting history...

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cheryl: 26 minutes past the hour . i'm here with your fox business minute. after five take off -- five day the emigration overall has passed the senate. the bill will create a path the citizenship for some of 11 million undocumented immigrants and strengthen borde security. and there is live after. former democratic congressman announcing he is officially running for mayor of new york. you remember the scandal when h resigned from congress has afte testing and tweeting provocativ photos of himself. now he admits he makes mistakes and hopes that people will make -- give him a second chance. in italy had judge ordered the captain of a cruise ship to

stand trial for manslaughter. at the helm of the shipwreck that killed 32 people. these claims in the scent and faces up to 20 years in prison. those are your headlines perry tatarstan that dennis is waitin by. dennis: officials and more. officials and more, oklahoma saying tornado damage could top $20 million. we are in moore with the latest. >> reporter: and that is encouraging news because the police chief here says he is 98 percent sure that everyone has been accounted for and that most of the search and rescue i complete and the search and recovery complete as well. as now the death toll still stands at 24, number that we have not seen changed in of 24 hours time. of course, 24 lives lost.

it's extremely sad. however, the fact that it has not gone up by even one in 24 hours is a good thing considering that when you drive through these neighborhoods, when you move through these spots and you see a 17--mile path of this f5 tornado cut and no more people were killed, it is miraculous. and ef5 tornado is as high as they get raided, when is at or around 200 miles-per-hour. behind me is what is left of th hospital, the moore medical center. only about 12th, 13 th in-patients were here at the time, including 175 employees and about 30 additional patients. everyone inside made at okay because nurses moved patients into a safe spot because they knew that these areas are under

threat. as you were continuing to pick up the pieces and try and move forward here, we are still hearing the stories of survival have. listen to how this one woman describes writing about this monster twister. >> we got into a hallway. everyone holds. i was over lewd girl. it was started. i grabbed something imported over the old rule and then laid on top of her. i looked outside. it was right on top of us. then it was gone. that is it. >> reporter: in joplin, missouri, covering that devastation, and that have been two other scenes of discretion and -- distraction and have to mention that these people know what they're doing because ther really starting to move in the heavy equipment fast and starting to get polls cleared up . people not wasting any time trying to get this community

rebuild. they did in 1999 with a devastating storm that killed more than 40, and they can certainly do it again, dennis. dennis: thank you very much, casey. and regulation nation. robert mcdowell left the agency only last week. i go 1-on-1 with him. cheryl: los angeles new mayor wins after a campaign in ways h calls the opponents a pond of california labor -- pawn of california labor 57 versatility some of the s&p winners in the few losers. ♪ it's a brand new start.

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♪ cheryl: the irs director of exempt organizations sworn in b a congressional committee but takes the fifth. we will discuss a refusal to answer questions about the ira starting conservatives. former sec commissioner next on why the commission's regulatory push will not work. and at the next mayor of los angeles wednesday after a campaign in which he calls his rival upon a powerful labor. first, stocks now with nicole petallides. you're looking at targets, but we are pulling back. down another 20 points in the last 50 minutes or so. >> reporter: going back and forth. obviously new records in every time removable loaded because w take money off of the table. incentive -- incentives. want to take you to target.

an interesting story when we tell them to read about target. down nearly 4%. they came out with quarterly numbers. they cut their 4-year forecast. disappointing sales. if obviously a chilly spring. people did not have the wherewithal to want to buy clothes and gardening, of this type things that people normall bite during spring time. but researchers said, that was clear negative. so the full year outlook is being revised suggesting that under priced lower pressur on consumer spending remains. this is an economic story.@ the weakest quarter since the recession of 2009 according to finance retail. obviously it is not good news big picture. cheryl: may be general be a better month for the retailers, especially targets. thank you very much.

dennis: special on media. the federal communications commission seems hell bent on its oversight of high-growth businesses and the future. never mind that court rulings say the sec has no authority to interfere in that. let's learn more about the intense from an insider, joined by robert mcdowell who was signed on friday as a member of the fcc to join the hudson institute for economics and the internet. first, no scandal we are failin to report. you designed and -- resigned more than a year earlier. why? >> it was the time to go right after presidential election. they compare my replacement. also, seven years in government. i am in limited government, private sector kind of guy. i think this was the time. dennis: of limited government guy for an agency that seems to love to reach out for more area to regulate. let stockinette neutrality.

comcast, you're not allowed to say that traffic from netflix has to pay more or move and the slower speed. you're not allowed to run their own business the way you want. court ruled against the fcc, bu they continue. >> we are waiting to here from the federal appeals court later this year or early next year. it to strike down with the sec did again, there is another proceeding at the fcc to classify internet access as a monopoly phone service the way the montell service was which would be disastrous. dennis: basically it is not because the internet is a law like a monopoly but because tha would be the figleaf that the fcc uses to try to get new regulatory encouragement rights? >> regulate the economics of th internet and contents and reall the whole ecosystem, not just the networks, but applications and constant. dennis: is the sec well intende

here? will it protect consumers? i thought while the price is going down, al consumers be harmed? >> they have not been, and that is part of the controversy. also, they did know bonafide market's steady to evaluate whether or not there is a need for this to begin with or any laws with six alleged or theoretical problems. dennis: so there would be other laws that could apply but they could lose customers. >> and wireless broadband is th fastest-growing segment of the market. the average american has a choice of five different wireless providers which is being disrupted in a positive way. this is the best and the big consumer. dennis: and yet the sec, the staff has ruled two years running now that we have looked at the wireless business and cannot be sure that it is competitive. are they paving the way to regulate wireless morass

noncompetitive? >> that is a big concern of min and i think exactly what the staff reports are intending, tr to create the notion that it is not competitive and we need to regulate it. the wireless industry is one of the crown jewels of the america economy for last 20 years precisely because it is not regulated. dennis: poor people have self o prices because the prices come down so far. why is the agency in pursuit of problems that have not happened yet? >> a lot of it is from a small religious dogma. as the books we have in washington. dennis: is the people in forcin a prosecuting that really count. the luck in your new non sec iteration. >> i hope the fbi does not want to talk to me now live we have met. cheryl: they just want to talk to dennis. the irs director of exempt organizations sworn in by a

congressional committee, but when asked. >> i have been advised by my counsel to assert my constitutional right not to testify or else -- answer questions related to the subjec matter of this hearing. ready for battle. >> first take a look at the 10- year treasuries at the highest point had been in since mid march. ♪

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gasoline of $0.7 to $3.66. gas prices continued to move more. that is the latest from the fox business network giving you the power to prosper. ♪ i'm so glad you called. thank you. we're not in lonn, are we? no. why? apparently my debit card is. what? i know. don't worry, we have cancelled your old card. great. thank you. in addition to us monitoring your account for unusual activity, you could also set up free account alerts. okay. [ female announcer ] at wells fargo we're working around the clock to help protect your money nd financial information. here's your temporary card. welcomback. how was london? [ female announcer ] when people talk, great things happen. ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions...

in everything from the best experiences below... to the finest comforts above. we're not simply salutg history... we're making it. cheryl: the ira scandal continues. >> i have not done anything wrong. i have not broken any laws. and have decided to follow my council's advice and not testif or answer any of the questions sedate. >> would you please see counsel for further guidance on this matter while we wait. >> there will answer any questions or testify what the subject matter of this committee's meeting which for this reason i have no choice bu to excuse the witness subject t recall after receipt specific counsel on the questions of

whether or not the constitutional right of the fifth amendment has been properly waived . cheryl: can use a lawyer up? the ira's tax-exempt division that has been under fire for singling out conservative groups . joining me now, gregg jarrett. >> there are only two reasons why you invoke the fifth amendment, if you know you have committed a crime or you know that other people are going to accuse you of committing a crime . i don't know which one it this year, but she needs to lawyer up . cheryl: you make a great point in the same mess, she has been going to congress for the past two years and saying that nothing was going on. she was asked and always denied it. does that count as criminal behavior? >> it would be either lying to congress, false statements, which is a crime, or perjury. and that is not just making a material misstatement of fact, but it is concealing a material

fact. so when congress asks you, did you target conservative groups and she says, oh, no, not all end schulman says now the ball and miller says not at all. no documents emerged that say yes, it's arguable. cheryl: we saw him make this crazy move. he did not want to be with the other three and the panel. >> guilt by association. cheryl: do you think a lawyer? >> absolutely. you never want co-defendants in a trial us. this is a public trial, if you will, without the judge and jury . so get as far away from them as you possibly can. cheryl: and if you think, like, i don't want these. all right. let me ask you this. the rest of this is going to fall the comes down to a criminal investigation, how hard is this to prove?

all wallet of affirmation. >> but once you appoint either special prosecutor or what exists right now, the departmen of justice has launched a criminal probe, you can subpoen documents, it warrants, your hands on all kinds of things. all you need to do is charged one are two people and then the start striking deals. then you go higher and higher and higher, and i think that is how those things will eventuall go. cheryl: the people who work in the cincinnati office, all of that. he seems to be the. >> this is his defense. i know nothing, i see nothing. that ain't going to sell. cheryl: that is good. dennis: stocks, let's go down t

the floor of the new york stock exchange with jonathan core tea of meridian equity partners. tweeting today that the fed chairman was speaking out of both sides of his mouth. any idea what they mean? >> i think so. year after a member that these comments are coming out of washington, so like all the politicians that we have done that talk and a both sides of their mouth. clearly what bernanke has been doing and what is being referre to is hedging his wording, hedging this strategy moving forward. this is not something new. what he is trying to do is manage expectations. we talked about where they will go, and at some point we know that the funding of our economy will have to stop. when is the big question or wha bernanke was doing today was tr to manage expectations of putting in a sock time line on when that could actually start,

the process, and the effect of when the process will start. dennis: i believe the dow was u at 1.150 points in our is only 85, so they're kind of backing off. what a worrying about? >> the answers in the biggest early we one information and transparency. what we do is to dissect every single word that comes out of washington. you will start to see some volatility. we are getting some information that is showing us at some poin funding will stop, but when wil that be? overall it seems like this market is looking for opportunities to take short-ter profits of the table. cheryl: thank you very much. i mean, we are up. dennis: about half of where we work. cheryl: los angeles will have a new mayor. a democrat who challenged his opponents. details coming gap in your westcoast minute. dennis: and to collect some of

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half billion dollar gambling operation in the bahamas. the resort is currently under construction and is being built by a chinese developer with financing from a chinese bank him. all of the former executives have extensive experience in developing operations which may have one of their appointments on this new project. take a look. a stock that for years has the solid performer and is today up $0.40. los angeles has a new mayor. city councilman defeated comptroller getting 54 percent of the votes. a democrat, promising to increase jobs and pass up streets, also making history, b the way, becoming the city's first elected jewish mayor. he will take office on july 1 st. history being made. he. dennis: and she would have been the first female mayor. cheryl: a very big story. dennis: l.a. coming in there. one of your smart disinvestment is not in your retirement, but

your pocket. that $200 smart phone could be worth up to $12,000 if you measure it in timesaving stuff. in a survey today's most popula applications, each of them save us an average of 88 minutes per day or just over 535 hours ever year. multiplied that by the average u.s. hourly income, $22 an hour and that pocket pc just turned you $12,000 off. one thing a big they did not include is all of the extra tim you end up spending working at home on work, so that counts. cheryl: one of the things, former sec commissioner, you were talking about the fact tha wireless and the economy, wireless in the hands of that lower and consumer is just in the first world. think about the wireless industry being sold to the thir world. it is really fascinating. well, a lot happening today, an ben bernanke is the reason for it.

we will call this the bernanke bounced off. saying an exit well that will b easy. coming up. dennis: i get that feeling that tapering will be the board of the month. more blessings. ed. lou dobbs on the scandal unfolding on capitol hill. ♪

♪ cheryl: so the fed will keep printing, the stock market is jumping, and irs officials are not telling. that sums it up. ben bernanke dissing billing to -- signalling that now is not the time for that accommodative policy. melissa: the dow jumping to another record high, although a you can see, we are off of the highs of the session. lori: more questions than

answers. invoking the fifth amendment. insisting she has done nothing wrong. melissa: less talk more about these markets. these are exciting times. that said to the floor of the new york stock exchange with nicole petallides. stocks holding on to big gains. >> reporter: off of earlier highs of the day, but seeing bi gains. the dow jones industrial averag sitting at 14,000 -- i'm sorry, 15,488. our highest point was 15,542. still seeing gains of more than half & on both the dow and s&p 500. it sector to sector during very well. money printing so continues. some good numbers. this is the types of things tha are moving along. also take millicurie dow component pfizer on that day wh