onnell: we'll be taking that live and the q&a, but, first, a few other things to talk about, including another obamacare bombshell of sorts. as a matter of fact, at this hour they have experts giving what might be considered to be alarming testimony about the administration's failure to patch several critical flaws in healthcare.gov's site in terms of cybersecurity. for more on this let's bring in government technology expert and street cred software ceo nick selby. let me ask you about a couple of words that i just used in terms of describing what's going on in the hearing. number one, to say it's a bombshell, was it okay to say that? and number two, to describe what's going on there as alarming. was it okay to say that in your view? >> oh, i absolutely think that it's both a bombshell, and it's alarming, and the problem is that the bombshell was dropped in november by many of the same people. they weren't believed, and really there was a lot of

dissembling based entirely on political reasons. technology is binary, something's vulnerable or not. this was shown to be vulnerable back in november, it's now been further demonstrated, and we've got a lot more testimony, a lot more expert opinion on there showing that, in fact, there are some very serious vulnerabilities with healthcare.gov. connell: all right, tell us a little bit about them as you understand them. as this testimony continues today or throughout the day or after the hearing is over we'll have a summary of it and find out what they found out. however, you say it was vulnerable, and then as we went on it actually got more vulnerable. you'd think the opposite would be true. in other words, if we saw that a web site, this target story's been in the news and other stories related to it in the news, something's vulnerable, you fix it and it gets better. why has that not happened? >> um, i don't actually know why it's not happened. i can speculate that, you know, as we heard happens quite a bit in the recent book by secretary gates, we're finding that political considerations

outweigh other considerations. in this case, the political considerations to get the site going, to push things farther faster might have meant a de-emphasis on what were clearly vulnerabilities, and so moving forward i think what we had was a sort of rhetorical approach as opposed to a technical approach to address very, very fundamental flaws in the technology to secure the web site. as an example be, this is not complex stuff, right? you can actually surf to a specific address on healthcare.gov, and you can expose be names, e-mail addresses and other information. you can trick people's browsers into displaying other information or actually going to other places. it's very, very fundamental stuff. connell: and in the most practical and, to use your word, fundamental way, for someone watching, you know, who needs to make use or has already made use of this site, they should be worried about what, their identity being exposed quite simply? or are there other things they should be worried about? >> i think, you know, the

government has said many times there is no hipaa information available on health healthcare.. that's technically true. however, it doesn't mention that all the information a person would need to demonstrate that they are that person to get hipaa be information is retained by the site. that's what you have to do when you identify yourself to healthcare.gov. it's a very serious problem. so i think that people should be looking at their credit report, they should be looking he govert actually now says that there's no evidence that there was a security breach, i would go so far as to say, and i'm very confident in this, that the government does not have the capability to say that because they don't have the telemetry and the understand understandine actual inner workings of the back end. connell: thank you, nick, for coming on today with us. as i said, this hearing's going on, so next hour we'll get through the ben bernanke commentary, and we'll have a one-on-one with the cyber expert behind the revelations today, trusted sec ceo david kennedy will be on with dennis and

cheryl, that's next hour. he's testifying now up on capitol hill, and dennis and cheryl will talk about that next hour on "markets now." dagen: and it is quarterly earnings season. goldman sachs and citi reporting quarterly earnings before the bell this morning. goldman's profit topping estimates, citi says profit more than double from a year earlier, but it still came up short of analyst expectations. what to make of those numbers and the entire be financial industry, let's bring in capital advisers president anton schutz. finally in studio, my man. so far the reports you have gotten from the big banks, what's your assessment, your take? >> well, i think, actually, good enough. i think people were expecting a moderately weak -- dagen: because of mortgage? >> well, because of mortgage, because of legal reserve building, because credit spreads are still a little light in terms of the margin, and revenue growth isn't that high, so some of them had some long growth, margin expansion, that's good. reserve build continued, as far as legal reserves, goldman, you

know, put money aside, bank of america put money aside, and credit keeps getting better other than at citi. dagen: your biggest disappointment would be citi? >> yeah, it's disappointing. it's something we do own. it's cheapest in terms of tangible book value s so that matters eventually. they'll probably be able to return a lot of capital, that matters. they're using their tax benefit which will also allow them to accelerate their return of capital, dividends, buybacks. so i think citi continues to have some pretty good upside when they start getting the numbers right. dagen: most impressive so far? >> bank of america be, clearly. they really looked like they were getting costs in line, loan growth. that stock really performed -- dagen: right. i was going to say that it's, has the stock fully factored in all the good news that's out there? i mean, i was looking at it, it's up, it's outperformed your other major financials glrmt bigtime. i think near term perhaps. i think longer term brian

moynihan still has a lot more work that he's doing. i think they're going to continue to get costs in line, and the thing bank of america has had to focus on is kicking the can down the road, settling all the mortgage issues. i think they can focus on building business, and i think that's a big deal. i think they can start being offensive again. dagen: where's the most upside for growth at bac? >> i really think just getting back down to it, you know? merrill lynch, capital markets, obviously, are picking up. the economy's doing reasonably well, we don't have fiscal drag this year which i think really matters. we can have a chance to post some real gdp this year. dagen: let's hope. safe travels, usually in rochester. please come back here more often, anton schutz. >> thank you. connell: all right. any moment now we'll have the outgoing federal reserve chairman ben bernanke one last time expected to steal the spotlight before he leaves office, so we'll get you set for that. dagen: and so many investors hot on 3-d printers, but a related group of stocks is expected to

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dagen: and we are waiting with baited breath for ben bernanke and what will be his final public comments before he exits as the

federal reserve chief and janet yellen steps into his shoes. connell: he'll take some questions, from what we understand, at the brookings institute. dagen: i wonder if he cuts loose and starts telling jokes? connell: which one of them, ben? won the pulitzer prize, and dan henninger, you should win a pulitzer prize for something. >> i was part of one for the 9/11 coverage, "wall street journal." connell: editorial page editor of the journal. i felt confident in saying that even not knowing the answer. >> i'm glad i was able to give you that answer. don. connell: basically, the pregame show is going to start any minute, what might be interesting, do you think, coming out of it? and well, you know, central bank chairmen normally don't say things that are all that interesting, that kind of comes with the job. connell: even if they're on their way out? >> even if they're on their or way out. i don't think he's going to put janet yellen in a spot.

what's kind of interesting is he's down there at the brookings institution, and they're opening the hutchens center, and they're having a group of academics come in today, and they're going the deliver papers on bernanke's tenure which is to say what he did, quantitative easing, i think, has to be described as the greatest monetary policy experiment in the history of the world. and it it has now generated an entire area of academic research trying to figure out what he did, did it work, and what's going to happen in the future. there are so many unknowables around what the bernanke tenure did to the economy, and, i mean, you can see things like growth rates in unemployment, but did it work or didn't it work? should we have had stronger growth, or should 2% be all that we could have expected? those kinds of questions, i think, are what is going to pursue ben bernanke in the years ahead. dagen: we do, the fed had a period, though, in the late '40s into the early '50s

where it was buying treasury debt as well. do they go back and look at that period? because you see this as a complete experiment be, but it's not completely foreign to what the central bank used to do. >> well, volume was unprecedented, $85 billion in bond purchases per month. and, you know, the fed balance sheet is now just so huge -- dagen: right. >> it's never held this much, these many bonds. and i think that the question is -- ben bernanke, as everyone knows, is a student of the depression. connell: right. >> and you came out of this terrible experience in 2008, and he was determined not to let the u.s. economy slip into a serious deflation. and so they created all of this liquidity in the economy. that, i think, was the basic idea behind what he was doing. the question is, did it work? or should we have had greater growth than we have had? and we've had very weak, tepid growth for the last five years. i think that's one of the big questions that will surround the

bernanke tenure. connell: you may have noticed on the screen, no, i was just noticing that bernanke is in the room, they've sat down, and i'm sure they'll get started officially in a minute or two, and once they do, we'll take it live. in all of these discussions, we never know what would have happened had he not done that, so isn't it almost -- i won't say impossible, but it's difficult to judge and grade people when you can't say, well, if you didn't do that, we would have fallen off a cliff. >> i think most economists can see at that point in 2008 when we were in the crisis that the fed needed to step in and provide some liquidity into the system. i mean, there is an argument that they shoulded not have intervened at all, but i think that was a risk most people feel it was just too great to take. the question is, should they have continued the quantitative easing and the liquidity as they have ever since 2008, keeping interest rates nearly at zero or at zero? that's what's so unique about this. to have an economy the size of

the united states operate with interest rates at zero for so long, has this created distortions, bubbles that we're going to have to reckon with in the years ahead? dagen: when is the days, weeks and months of reckoning? how long are we going to wait for in? how long will it take to really know any damage done by this policy? serious damage? >> dagen, i don't think we'll know until it happens really. i mean, that's the nature of bubbles. you had a stock market set record highs in the last year, and many people were very nervous about the heights that the stock market was getting to even as there was so little growth in the economy. how could you explain that? i mean, one explanation was that a lot of of people finally decided they had to be in the stock market rather than not be in it, and there was no other way to make money on your deposits. i mean, savers, retirees could not simply put money in certificates of deposits because there was no money to be made on it. what assets were available went into the stock market. connell: the two of them are sitting down to start this

discussion. once again, back in 2006 or just pick a year a lot of people said, oh, yeah, reality, prices keep going up, there's no problem in the real estate market. dagen: generally, they mic you before you come out. they do that off camera. connell: an inside television thing. they're going to start it off. dan, as always, thank you very much. again, ben bernanke. let's listen. >> one of your signature achievements. so let me start with that. you've said somewhere that the playbook that you relied on was essentially given by a british economist in the 1860s, walter badger, and his victim was in a financial crisis the central banks should lend unlimited amounts to solvent institutions against good collateral at a penalty rate. how useful in practice was that rule in guiding you? >> it was excellent advice.

this was the advice that's been used by central banks going back to the at least the 1700s. when you have a market or a financial system that is short of liquidity and there's a lack of confidence, a panic, then the central bank is the lender of last resort. it's the institution that can provide the cash liquidity to calm the panic and to make sure that depositors and other short-term lenders are able to get their money. um, in the context of the crisis of 2008, the main difference was that, um, the financial system that we have today, obviously, looked very different in its details if not in its conceptual structure from what walter badget saw in the 19th century. and so the challenge for us at the fedded was to -- at the fed

was to adapt his advice to the context of a modern financial system. so, for example, instead of having retail toes fors -- depress to haves standing in line out the doors as was the case in the 1907 panic, for example, in the united states, we had instead runs by wholesale short-term lenders like repo lenders or commercial paper lenders, and we had to, um, find ways to essentially provide liquidity to stop those runs. so it was a different institutional context but very much, um, a, an approach that was entirely consistent, i think, with badget's recommendations. >> now, you also rather than lending only to institutions, you intervened in markets. >> uh-huh. >> is there a sort of similarly-pithy dictum, i don't know, a bernanke rule that you

can come up with about when the fed should intervene in markets and when it shouldn't? >> well, the -- if we're talking about the crisis period, i would say that all the interventions we did fit under the badget heading. for example, the commercial paper facility that we set up was essentially designed to prevent, um, a run on this particular form of financing. um, so it was a different institutional structure, but it was, again, essentially the same badget rule being applied in a different institutional context. now, we have done, um, other interventions, if you will, with our asset purchase program, for example. but that i would call the monetary policy part of our response. so, again, while the analogies between, um, it's a wonderful life and people running on the thrift are not always immediately obvious, there was, in fact, a very close parallel

throughout the whole response. >> now, the crisis began in august of 2007 when there was actually a problem with a french money market fund run by a french bank. and if you trace through it, it actually continued until the spring of 2009. so that was a long time. and despite major interventions, you know, after lehman, despite t.a.r.p. you still had a run on citibank, you still had a run on bank of america. why did it take so long to get it under control? >> well, it was not a continuous crisis of equal intensity for that entire period that you described. in the fall of 2007, we were seeing, obviously, a lot of stress in markets. but at that point it was not obvious whether it this was goig to be the start of something bigger or whether it was

something more comparable, say, to some of the disruptions we see in the '90s, for example, around the russian debt crisis, for example. there was a critical point that occur inside march of -- occurred in march of 2008 with the bear stearns episode, and that was a period of very intense stress this the repo markets and some other parts of the financial markets. after bear stearns, financial conditions calmed fairly notably for a while. obviously, we remained very alert. we were beginning to, the federal reserve was beginning to supervise the investment banks together with the sec over the summer. so we were not complacent about the crisis being over, but conditions were certainly more stable after bear stearns for a number of months. and there at least was some hope given that, for example, that the bush administration was undertaking a fiscal expansionary policy, there was some hope that things might calm. but, again, we were very

attentive. i think the real, the real intense phase, i think everyone would agree, began with the takeover the putting into conservatorship of fannie and freddie in, i think, early september of 2008 that was followed through this very intense period of lehman and aig, the t.a.r.p., etc. so i think that very intense period from, say, september 1st until the latter part of the year, that was the period of greatest stress and gr risk. and the combination of our lending programs and the injection of government capital, the fiscal aspect of that, brought the crisis down considerably by the end of the year. of course, into the next year we were still working to stabilize the system with our stress testing, addressing some

concerns of specific institutions with our monetary policy the like. -- and the like. but i don't think it's fair to characterize the crisis as being something that was continuous, you know, for a year and a half. rather, there were periods of ebbs and flows. and the most intense period in september and october, i think we actually got that under control reasonably quickly with a combination of fed easley quiddity provision -- fed's liquidity provision, actions by the fdic and other agencies as well. >> now, hank paulsen describes having sleepless nights at that time, agonizing as he would go down in history as the herbert hoover of this episode. and i think tim geithner once described you as the buddha of central banks which -- [laughter] implies a certain level of enlightened detachment. [laughter] did you have, did you have sleepless nights? >> oh, sure, absolutely.

but it's my nature, i think, to kind of focus on the problem, you know? and i was so absorbed in what was happening in trying to find response to it that i wasn't really in that kind of reflective mode. i mean, later on, you know, i was kind of like, you know, if you're in a car wreck or something, you're mostly involved in trying to avoid going off the bridge, and later on you say, oh, my god, you know? [laughter] but during the crisis, as i said, there were some very intense periods during the september/october 2008 period. not only were we, you know, trying to address the crisis, we were trying to deal with our international colleagues around the world. this was a global crisis. and then, of course, we were constantly testifying or otherwise trying to keep the world informed about what was happening. so it was a very intense period. but, again, i was, you know,

just focused on the task. >> now, your partnership with secretary paulsen and then-secretary geithner was clearly central to solving the crisis. >> uh-huh. >> now, it's, to an outsider, it's remarkable what a united front you presented. but you did have different backgrounds, different personalities. you represented different arms of government. and to some degree, a natural tension the central bank does liquidity, treasury does solvency, but the distinction is often not always very clear. were there any big disagreements? >> so first of all, you're absolutely right that we had a very strong partnership, paulsen, geithner and me. we are different people, different backgrounds, and i think we were actually quite complementary in various ways. and we certainly all recognized

the seriousness of the situation and the need for cooperation among the treasure i, the fed and other -- treasury, the fed and other agencies, and that was the cover overwhelming imperative, to work together to try to solve the problem. there were, certainly, points where, you know, we were trying to address the financial condition at aig or some other politically very difficult problem, and there was a little bit of discussion about whether or not the fed or treasury should take the lead on that particular area. but in the end, paulsen in particular who during the heat of the 2008 crisis was the person who was most exposed to the political winds because as secretary of the treasury, he represented the administration, and he had to go to congress and so on. in the end, he always did what had to be done. and i think that was the reason that we worked together. the combination of our

complementary backgrounds and skills and the fact that we shared a common purpose. there were many people in the world, economists among them who thought that it's perfectly safe to let financial companies go down. we heard that even at jackson hole a few be days before the -- few days before the crisis intensified in september of 2008. the three of us never, we were all very much in agreement that that was not a wise thing to do, and we were committed to doing that. let me just also say, though, that while the, um, interventions with large failing firms are the part of the story that gets the most attention, the most controversial, much of the good work that was done was a little bit more under the radar and had to do with our actions to try to stabilize key financial markets like the money market funds, the commercial paper market, the asset-backed securities market, our work to

strengthen the commercial banking system and so on to work with our foreign partners to do currency swaps with 14 other central banks. there was a whole range of things that we did that didn't involve firm interventions. which were less visible but probably occupied a much greater portion of our time and which were at least as important if not more important in terms of stabilizing the system. >> now, i think in david wes l's book, there's a scene where he has you sort of pushing secretary paulsen to go to congress. so if the treasury had gone to congress to get money earlier, could we have avoided lehman? >> no, for the following reason which is that even with lehman, even with the stock market tumbling, as you know, it took two votes of the house of representatives to get, to get the t.a.r.p. approved.

i remember a senator telling me when we were trying to go around and explain to congressmen why we needed the t.a.r.p. and why it was critical to the stability of the american economy, and he said, well, i have to tell you, he said, my calls on this from my constituents are 50/50. it's 50% no and 50% hell no. [laughter] so it was a very unpopular, as you know, a very unpopular policy. as barney frank has put be it, it's one of the most successful government policies ever and, nevertheless, of course, it's almost one of the most unpopular. there was no chance. there was no chance that we could have gotten a t.a.r.p.-type program before it was becoming evident how bad situation was going to be. so that was the catch 22 we were in, basically. but it was also clear to mm at that point in mid september that the ad hoc interventions on which we had relied given that we didn't really have a framework for resolving these

firms had reached their limit. and we had no choice but to involve congress, and that was very clear. >> so let me talk a little bit about that political backlash. i mean, i get the impression that dodd-frank, for example, while giving the fed more power to prevent a crisis limits the ability to, of the fed to intervene in the way that it did in 2008. can you tell us more about that? are you worried about the, you know, what the consequences of that are? >> no. we were supportive of those changes, and we're totally comfortable. what the, what we're talking about here is the so-called 13-3 provisions which allow the fed to make emergency loans to individual, partnerships and corporations under certain conditions, unusual and exigent circumstances as it was called, and we used those tools for the first time, essentially, since the great depression to, you

know, to support the collective effort of the government to prevent the collapse of some critical firms as well as doing broad-based lending for, in a number of different key markets as i was describing before. the former, the interventions for firms, again, happened because there was no framework, there was nothing but the standard bankruptcy code, and the trouble with the bankruptcy code in this context is that what bankruptcy does is, first and foremost, is defend the interest of the creditors. which is a great thing, but there's no recognition in the bankruptcy code that you also have to worry about the stability of the financial system. so in any case, we didn't have anything like that in 2008. um, so the dodd-frank act, title ii, created an orderly liquidation authority which provided a much more structured and flexible approach to

addressing a failing critical firm in the middle of a crisis. so we're, you know, we don't need that authority anymore. we have tools now which we didn't have to address individual firms. didn't have to address individual firms. at the same time the 13-3 rules in dodd-frank do permit, and we rode the implementing regulation for this, they do permit the so-called broad based program so that our actions with regard to commercial paper asset backed securities and other markets that we provide liquidity to presumably would still be legitimate, still be legal as would be the primary dealer facility which was open to all primary dealers. so the key things that we did would still be possible also we have to get the secretary's

permission now and we are perfectly happy there are alternative ways to deal with a failing firm, that it has to intervene in the way we did in 2008. >> we heard from don turn this morning talking about the whole political environment. you worried about the political backlash against the fed, the consequences of monetary policy and future fed decisionmakers to respond in a crisis. >> it wasn't a surprise. this is another place where history helps you, when you think about the 1930s we had exactly the same kind of reaction. it was much more intense. >> those guys did the wrong thing and you did the right thing. >> it wasn't so much the fed, it

was the fed did keep it head down in the 30s unfortunately. but the government in general. marches on washington and strong populist movements, and revolution among some parts of the population and roosevelt what he argued is strong actions he was taking whereabout saving capitalism essentially and analogous we to the report we have on the crisis in congress this time, there was the -- all of that happened before and it is not surprising you would get this populist type of reaction. the only thing -- one comment is the alternative, doing what the fed was created to address financial panics and its

independence, disability to act quickly is the key feature is about. if we had not done that, the financial system, the economy had plunged into a deeper depression, the populist reaction would be pretty bad as well. we tried to do the right thing, there certainly has been pushed back, we hope as the economy improves and we tell our story and more information comes out about why we did what we did and so on, people will appreciate and understand what we did was necessary, in the interest of the broader public, it was the main street set of actions aimed at helping the average american and time passes, it becomes

clear, these political concerns will wayne. that being said the reason the fed was independent is so it can take emergency actions or any other policy actions independent of short run political pressures and the date that we allow short run political pressures to make us do something which is not the right thing for the economy our independence is effectively gone. >> pakistan, i could keep going about the financial crisis but let's move to monetary policy. many ways, you had a playbook for how to deal with the financial crisis, the monetary policy post financial crisis, providing the economy, we heard from john williams this morning, is essentially, of little bit of the erie, some of which you

helped to develop, but we were really operating blind. in devising all these unconventional monetary policies, were you confident that the theory would work, and going into it? >> the problem is it works in practice but not theory. and the other way about forward guidance. i think it is a bit of an exaggeration to say that this was all unprecedented, and we had a case in japan that it took these actions and we had these experiences, we learn some things from the 30s and so on. i think of q e as being basic

monetary principal, these are the ideas that friedman talked-about which is the way to stimulate the economy is swapping ms. collette -- liquid assets for less liquid assets, that is what an open market is. on the side of forward guidance etc. people like michael wouldford, paul krugman and others talked about those issues and how that would work. we were relying on research. parenthetically, i think monetary policy in general is an extraordinary example of how thinking within policy institution and in the academic world's can mutually benefit each other and we made use of the ideas we got from academia and ideas that came from our own experiments. the basic problem was interest

rates, short-term interest rate was effectively zero as of december of 2008, that any analysis would suggest there was not enough economic monetary support to achieve a sufficiently robust recovery. we need additional stimulus and these were the two methods with some experimentation we came to. and i do think they both have been helpful, we have learned a lot. but i would disagree that these are complete the novel ideas, a number of central banks tried forms of forward guidance and the federal reserve on considerable period and those kinds of things as well. we were trying to build on what others had already done. >> q e was more controversial than the lender of last resort,

the things that you did and you had to deal with a fair number of skeptics including within the fomc. how did you have so many people go along with it? >> not sure i would agree with you on which one was more controversial. they both had elements of controversy. we were looking for additional measures we could take to provide additional accommodation and to help stabilize financial markets. the biggest measures we took were in late 2008 and march of 2009 when we put in a very big program and that program at the beginning of it was very broadly supported in the fomc. it was felt the intervention would both provide very much needed monetary policy support

and in addition would add to liquidity of markets in general which are under great stress at that time so the beginning of it was broadly supported idea. subsequent to that, that gave us the opportunity to see the effect and to analysis and so on and the staff analysis, pretty large literature out there, john's bibliography has some of that, suggested that while there are differences in views about how effective q e is the great majority of studies found that there is some what affective and given that we are at the limits of conventional monetary policy we felt we needed to take additional steps and for the most part it has been supported. in number of folks who have been -- voted against it or been

critical of it have in some cases argued that perhaps it wasn't needed or something like that. i don't think a large number of people in the committee feel it is inherently not effective. >> we know what the benefits are, lower long-term rates, lower mortgage rates, what are the costs you most worried about? >> i think that some of the costs that people talk about are not really costs and i will mention a couple. one cost the jets talked about is is it going to be inflationary? while of course it is always possible for the fed to raise rates too late or too early, i think we have plenty of tools at this point, developed all the

tools we need to manage interest rates to tighten monetary policy even if the balance sheet stays where it is or gets bigger and because we can do that, that means we can run monetary policy the normal way and avoid any risks of undue inflation. i don't think that is a concern and those who have been saying for the last five years we are in the brink of hyperinflation i would point to this morning's cpi number and suggest that inflation is just not a significant risk of this policy. another concern that people have talked about is the idea that the fed might take capital losses which is of course not impossible but i would say that from a social point of view we have already not only helped the

economy but helped the fiscal situation quite significantly with hundreds of millions of dollars we remitted to the treasury and that doesn't even take into account the benefits for the public stronger economy and more tax revenue and the like. so that risk is again not a true social economic risk, it is if anything perhaps public relations risk for the fed but it is not a serious economic risk. the main risk my colleagues have pointed to is very is aspects of financial stability or potential for financial instability. there is always some concern for any kind of easy monetary policy that after a period of time there may be some reaching for yield or myth evaluation of assets and given what happened five years ago we are extraordinarily sensitive to that risk. that is for different kinds of

monetary policy. q e in addition works on term premiums to a significant extent and we simply have less knowledge, information how to d term and therefore a little bit of additional concern, volatility associated with management of q e so there is certainly some risks there. our strategy has been to not to disport monetary policy in order to address those risks directly. indeed, in sufficient monetary policy accommodation if it leads to a weaker economy and bad credit outcomes, also financial stability risks of our basic approach has been at least for the first, second, third lines of defense to rely on supervision, regulation, monitoring, and a whole set of tools the we have and are developing to try to of avoid

potential problems. we also look very carefully at the implications of any potential kind of financial imbalance. for example, is that asset class heavily leveraged, is it supported by live ridge which would in turn mean a sharp drop in that valuation would lead to other types of problems? those are the things we look at and increase our ability to monitor and analyze those situations so our goal is to address financial instability concerns primarily at least in the first instance through supervision, regulation and other tools but it is something i think of various cost ascribe to q e it is the only one i find personally credible, frankly and it is the one we spent the most time thinking about and trying to make sure we can address it. >> bottom line for the moment

you are not worried about financial markets. >> there is always bad luck to make any forecast about any particular market. the market's current we seem to be broadly within the metrics of market valuations seem to be broadly within historical ranges. the financial system is strong, chief financial institutions are well capitalized, we are watching this very vigilantly, we have developed tremendous additional capacity for doing that, but at this point we don't think -- i can speak for my colleagues, we don't think financial stability concerns should at this point detract from the need for monetary policy accommodation which we are continuing to provide. >> last question and we will turn it over to the audience.

as the crisis done a lot of damage to the economy? if so, what other panels you are worried about? >> i don't think we will know the answer for a while but i would note first is important to say there has been a benefit which is that obviously we have done a root and branch reformation of the financial regulatory system, financial markets, which will provide greater stability i hope and more effective credit, and very extensive game. there are ways in which the crisis, the supply side of the

economy. the effect of long-term unemployment, labour supply. obviously there have been declined in labor force participation, part of which is certainly due to ongoing trends. and they could affect the available labor supply going forward and direct effects who are unemployed and that is certainly a concern at a motivation for being aggressive with monetary policy to prevent those effects from taking hold. another kind of longer lasting effect has to do with productivity gains. we have seen very slow increase in productivity recently. we don't fully understand why.

some of it may be low demand for example but it could be the financial crisis has led to slower pace of innovation, slower pace of firm formation, less capital investment, which led in turn to less rapid pace of innovation. there is interesting where, economic historian alexander field has written that the 1930s was a period of great innovation but it didn't show up in the productivity statistics because with the economy in depression there weren't market sufficient to make those innovations commercial and some things similar may have happened to some extent here. all that being said, these are important effects, but none of them are permanent, truth be permanent eventually the economy will return to the growth path

that it was on prior to the crisis or something close to that so these are long lasting and serious potential defects but i don't think they are truly permanent. >> we turn to some questions. >> i want to ask any people on the panel this morning, you want to stand up and wait for the mic and tell us who you are. 140 word character. >> mr. chairman, as a student of history, talk about the role of the president during the great depression, we had franklin roosevelt's fireside chats, explaining chief, making sense and comfort out of the chaos. if we had that in 2008, my sense is the american people, mean streets, wall street, a great deal of confusion and we are paying the consequences of it

even today. >> it is a big challenge to explain what was going on. at the federal reserve we tried to do it. we didn't always succeed i am sure. president bush, and i give president bush a lot of credit, he gave a lot of leeway to me and secretary paulson to do what we thought was right, he supported us throughout the process. i remember him going on television and giving a speech about t.a.r.p. which must have been very difficult for him given his political predilections and the cost of that from the political side. it was difficult. it was difficult. communication was a challenge throughout this whole process but i wouldn't put it on the president or anyone else. all of us who were involved in

the policymaking had a role and a responsibility to explain as best we could and this was a time at which when i came to the fed i was interested in increasing transparency although my motivations were primarily making monetary policy more predictable and more accountable, as it turned out transparency was very helpful in other dimensions as well and in particular i fried where i could to bring the story not just to markets and other economists but a more mainstream type of audience on television or in town halls or things of that sort, but it was very challenging to do that. obviously we had other things to do as well. if you look around world, there are populist reactions in most countries where there were

serious financial crises and that is probably not avoidable completely. what we have to do is explain what we did, why we did it and tried to win back the confidence of the public and that is an important objective around the world. >> the gentleman in a blue shirt. >> thanks very much. i grade the mitchell report. i would like to ask a question that broadens from mr. lamont's question and that is you have been in a remarkable place during a remarkable time but you are a great student of history. what i am interested in knowing is weathered this experience has caused you to think in different terms about the strengths and

weaknesses of our political system and in particular how you think the system and i mean that read large, the executive branch, congress, the people themselves, whether it gave you a different perspective, a stronger perspective, a more questionable perspective on how well american governance is working at this point in the 20 detonation the 21th century. >> one has to do with the structure of the american government -- the ideologies that are on the hill, in particular. in terms of the former, without

making a judgment i am not qualified to make a judgment about overall political systems. one thing that struck me during the crisis was the governments that had more parliamentary type systems were better able to respond quickly to a financial crisis. it was envisioned in the constitution that the president might have to act quickly to respond to a military or some kind of foreign relations crisis, that is why the president has a lot of flexibility to take action in the event of a military attack for example. of course ultimately going to congress to get ratification. during the criiis, say the british for example very quickly put together a plan to address their banking problems because in this particular case they had

a government which controls the legislature and was able to respond quickly. i think that turned out to be a problem during the crisis. obviously some of the legislative actions that have been taken, dodd-frank and so on tried to set up frameworks' whereby the fed, treasury and other regulators would be able to take necessary actions like the liquidation authority. there has been an attempt to address those -- that structural problem with the financial crisis. the broader question of governance, i have felt some frustration, certainly it has been a concern that we have had these periods of flights over the debt limit and things of that sort. those things have caused problems for the economy.

they had -- they certainly have prevented more positive constructive action on the part of the government to address these concerns in terms of unemployment for example. but again, that is not a feature of the nature of our government, it is the current situation in terms of the disagreement and range of views that are currently on the will. >> mr. chairman, when we look beyond the legacy of the crisis itself in terms of the leveraging and the other effects, there are other factors

at play, agent of a population in the u.s. and most of the industrialized world, the increasingly freckle distribution of income gains and international factors such as the continuation of the global savings reserve accumulation by emerging market economies. when you look at the longer sweep ahead beyond where we may have finally achieved flimflam and again, do you expect we will be in an era of sustained low interest rates? >> wasn't expecting to end there. i am hopeful that we won't be in this situation. part of the implication of your question is is it going to be relevant a lot or not?

there are a couple ways of avoiding the lower bound, one would be to avoid deep recessions like this one that we are now emerging from. another would be to use a more balanced mixed monetary fiscal policy when responding to recessions so as not to overrely on low-interest rate monetary policies. given inflation, the determiner of long run interest rates will be rate of return to capital investment, productivity and so on and that is a huge debate as you know. i guess the jury is still out about longer-term technological trends and the productivity of capital. one of the other things you mention, as part of the concern, the global savings. during the period before the crisis the u.s. added 6% trade deficit, we still have a trade

deficit, which means that 6% of the domestic demand is being drained off essentially abroad. at the same time among the richest countries in the world, receiving large amounts of capital inflows on that in which both of those things are going to tend to push down interest rates. so one way to address low interest rate problems would be to get better balance in growth in terms of trade and capital flows. another way is to have a better balanced monetary fiscal policy including good investments and productivity enhancing projects like effective infrastructure for example. but in this end it will depend a lot on the return to innovation, return to new capital. i think that question is very

much open but i am not yet ready to conclude very low interest rates are up permanent condition. >> i think that today has been a fantastic start for the hudson's center. i think we have at least as many questions to pursue at noon as we did at 9:00 which means we have a great opportunity. i want to thank not only the participants who were both very helpful in helping frame the event but mainly kept to the schedule which is always a challenge and also i don't have the long list of names who people made this possible, to make any event like the successful but anonymously i want to ask you to join me in thanking not only them, but ben bernanke. [applause] cheryl: listening to what may be

one of the final interviews of ben bernanke at the brookings institute and inching -- talking interest rates to the financial crisis, monetary policy in a very relaxed and ben bernanke. dennis: sappiest ben bernanke we have seen a long time, that might be his last ever that he has to do that and he seems pleased about it. gerri: let's bring in peter barnes who has been standing by, he is actually at the event and you were at least able to shake hands with mr. ben bernanke but what i your thoughts on that today? >> he was pretty happy as he walked by. i said hi to him and he grabbed my hand with both of his and said good to see you, big smile on his face, you have a bounce in your step. in terms of policy and revealing his tenure at the fed this was a lot of the history of the financial crisis and the fed's role in it, his decisionmaking an the lot of the process in

trying to save the u.s. economy and the global economy but then he was asked about the implications of today and the impact of policy today and one of the key questions is what happens to the economy as the fed tries to withdraw from its quantitative easing and stimulus programs, interest rates, he knocked down a couple concerns thrown at him by critics such as that this could cause losses in the fed's balance sheet and things like that but he did say he thought one of the most credible issues is the potential for financial instability market disruptions but he said he thinks the fed has that wonder control as it tries to wind all this down. take a listen. >> it is always possible for the fed to raise rates too late or too where the and so on, i think

we have plenty of tools at this point. we developed all the tools we need to manage interest-rate surge, to tighten monetary policy even if the balance sheet stays where it is or gets bigger and because we cannot do that, that means we can run monetary policy the normal way. >> he also talked about the political attacks on the fed from critics in congress, rand paul, legislation now there that would require bigger audits of the fed, its monetary policy deliberations and he says the fed doesn't need to talk to the public and try to restore its reputation with the public and also to make sure that it programs are successful in helping the economy recover and get economic growth stronger and he hopes that will help reduce these political pressures on the fed. dennis: thanks, peter barnes.

let's go to nicole petallides at the floor of the stock exchange where stocks are barely reacting and stayed down. nicole: they are watching ben bernanke closely word for word. in the meantime we have seen a market with back-and-forth action throughout the new year. this week has been a pretty busy week on wall street, 100 point swings, the dow jones industrial average down 72 points, 16,410, the nasdaq pulling back fractionally and the s&p 500 down 1/4 of 1% at 1844 and change after it hit an all-time high, trends for the week on monday, we were down 1 a points, the last two days of trading we were up 1 a points each of those and pulling back 70 points so that seems to be a little bit of the action with ben bernanke in focus over this off balance. cheryl: for more on ben bernanke's legacy in the future of the fed let's bring in oliver

portia and fox business's charles payne. oliver, he really is on his way to the history books now. >> he is backing in the sun and in spite of criticism and political backlash when you look through the lens of history he made the right decisions. he helped the economy, helped overcome crises and from an investment perspective helped stock a great deal. gerri: do you agree with that? charles: there is definitely argument against that and ben bernanke himself brought up the participation rate, he didn't take, mentioned that was already in place but certainly exacerbated during the great recession and a lot of people -- out the economy, this recovery has been wishy-washy. it is not the kind of recovery you expect particularly how deep the recession itself was you would have thought we would have come back a lot stronger since then. there is a fair amount of criticism. i saw someone who is just beginning to try to rewrite or write the history books and will be a long process.

cheryl: what do you need to be right in your opinion? charles: listen to what he said about the financial crisis, quote, i like to think we did the right thing, and like to, quote, people will appreciate and understand, we helped the average american. it seems like he was making a sales pitch may be to those who are not intelligent enough to understand how the fed really works and the fact is there has been a lot of pressure against the fed, and i fed sentiment. cheryl: one decision he made a key change for him and the fed was these press conferences, to bring more transparency to the fed, wanted to use television as a tool to talk to mainstream america to help understand what we do. >> he is doing something extremely complex, the transparency and clarity are two different things. i don't know they have been as clear as they can be so it is criticized on that. cheryl: our market participants -- >> professionals -- i don't

think so. we all appreciate professional money managers because it gives greater insight and one of the things they have done is really the forward guidance to me is incredibly important because knowing what they are thinking and what lies ahead allows you to kind of managing the portfolio and take steps that are going to reduce volatility and have a little more insight as opposed to a guessing game. cheryl: talked about the t.a.r.p. program. obviously a lot of criticism against t.a.r.p. against president bush for allowing the t.a.r.p. program to go forward and on capitol hill, and -- charles: he actually said bush gave him great comfort, someone was asking the president had given the kind of comfort fbi did during fireside chats he gave bush a lot of credit anded the pointing out the was a republican and gave the way and support for him and paulson to

do whatever was necessary to ride the shin. gerri: that will be fascinating as we closed the book on ben bernanke, it was 2008 financial crisis and hank paulson and ben bernanke and hank paulson has written a book, on the speaking circuit sama so many questions what then is going to do. >> that is the press conference, you have as many questions and noon as you did and 9:00 a.m. that will continue but again on a forward bases from investment perspective you have to look at the current environment and what i was most encouraged about was talking about the fed having all the necessary tools to control inflation and exit out of this extraordinary -- cheryl: do you agree with that? >> i don't know. he is a lot smarter than i am. charles: glad you brought that the history books.talking about can't be run until we see what happens with inflation. parrot we do things, whether the schools work are not and whether they use them. i thought alan greenspan was kept rates too low for too long

and when they came out they raised some too slowly. a lot of arrogance goes along with the idea that we have this under control but we are not sweating are panicking. that makes me nervous. i wish you would show a little more nervousness about loafing. >> those books will be written in ten years. charles: this will be a great way to get back at his critics. if we don't have a giant inflation drought we will see. cheryl: thank you very much for sticking around and watching all this with us. dennis: climbing testimony about the administration's failure to pass several critical flaws in the cybersecurity of the health-care.gov web site. take a listen. >> since november 19th, 2013,

testimony that has only been one half of vulnerability that we discovered that has been addressed or closely mitigated. what i say about one half is a little bit of work on it and it is still vulnerable today. dennis: joining us for a fox is exclusive the man you just saw in that clip david kennedy. the ceo of trust is easy, thanks for being with us so you say only half the flaws have been addressed and some of those are still -- three months ago you testified with three other guys and three of the four of you said right then they ought to shut the site down until that is secure. were you one of those 3 and do you think they should shutdown the site because it is not secure? >> i was one of the three and i hold to the same conclusion. it wasn't half of the vulnerability fixed, just one half of just one vulnerability of 17. they have literally done nothing to fix this web site and that is

apparent today. dennis: as they continue to proclaim millions more people are signing up to this in secure web site, how basic course sophisticated was the security of the web site? is there a lack of security, you didn't realize the superadvance and a jury is it so basic as to be an embarrassment? >> extremely basic and and embarrassment. we didn't do any hacking, just looking at it from the tertiary view, we look at the web site to see how it behaves and there are different things, really rudimentary hacker can do and i engage seven independent security researchers to look at my findings and they came to the same conclusion that this website sucks. dennis: money in basic security was included. nothing has been done to fix it. in the business world with an insecure website that was told too and secure with they have it fixed in three month? how long did the fixes take? >> once we identify and what other researchers like other

folks have done, they would do it quickly because it has the potential of leaking sensitive information about people to register on the web site and what we call the integrity or confidentiality of the web site so it would be remediator boo weekley, emergency change control or something to do very quickly and they would have it done fast. dennis: the government responds and says there have been no hack at tax on the obamacare website. it is a security of the site so lame that they wouldn't even know. >> that is right. they claim they only had 32 attacks on the web site. nice number when you can see what is happening. the rest of them are successful on the web site. they hadn't even started security operations. and to see these attacks happening, 32, probably accurate

because they don't know what is happening. dennis: would happen if they got ahold of my data? is this a tempest in a teapot? just using security for critics of obamacare to bash it further? >> that is something i give to the house and science committee, he was amazing that keeping things on track at least on the republican side to say listen, the things we need to focus on this when you have the information, not like you get your credit cards at target, your personal information is hard to replace so when you still social security numbers and e-mail addresses and phone numbers you are addressing to larger attack, fraud and identity theft, larger picture than credit cards, it is widespread, largest consortium of public information we have ever seen in history. dennis: the attacks the government doesn't even know about, we haven't seen them yet because you will see the results when they rollout elsewhere in the cybereconomy, looking forward to that. thanks for being with us, david

kennedy. cheryl: liz macdonald has an exclusive story on the financial and image problems facing see world. dennis: what is bugging me today, a new year but washington reverting to its old in effective ways to revive the economy. cheryl: american household and gravity on top with ten nominations for best picture. we will break all of it down and tell you who we think because you care what we think of who is going to take home the coveted statue. we will be right back. [ me announcer ] this is the story

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cheryl: big week for my name shall stocks, big gains on earnings coming, citigroup today, not a good report from citigroup, goldman sachs, it will be morgan stanley. all these names are in their red, charles schwab for the upside, the big bank not so

much. and always watching the markets. stocks every 15 minutes. the floor of the stock exchange, and aol hitting a new high. >> patch is one of its divisions, and an effort to grab online, local advertising didn't do well and they are selling off. aol is hand of a majority of its cast, the owner should to hail global joint venture, known for turnaround and what this was in 2007, kim armstrong was an investor and bought the whole thing and brought on board for $10 million but it was not profitable, tried to make it more interesting and they didn't say how much. cheryl: a lot of headlines crossing, thank you so much. dennis: what is bugging me is

washington's tired tactics of fixing the economy, a new year but congress is admiring the same thing, two pillars and the president's plan to revive the economy are age old patronage, extend jobless benefits, nevermind the recession supposedly ended four years ago and raising the minimum wage, but parrot effective and could make things worse. democrats demonizing republicans for resisting efforts to borrow more billions to extend long-term jobless benefits. a new study says these payments are a primary reason unemployment has stayed so high for so long so don't do it. our president back efforts to raise the minimum wage 30% get out of 125 million workers in the u.s. only 3.5 million get minimum-wage. half are under age 25. and cut the tax rate on overseas cash and let u.s. companies bring home $1 trillion, let businesses that expanding depressed urban areas the ten

years without paying taxes and do the same for their employees, provide training grants and instead of unemployment checks and tweet me at dennis kneale. what is the best way to reignite the economy? cheryl: some good news for the housing market and homeowners as well. homes lost foreclosure hitting a six year low last year, that is coming up and wall street winning the award for dropping the most f bombs in 180 minutes, taking home the gold and oscar statue. >> 3 shy of a million a week. >> making a name for ourselves. >> nobody matters if the stock is going to go up or down or sideways or in circles. >> it is something. when does your work en does it end after you've expanded your business?

after your company's gone public? and the capital's been invested? or wn your compan's bought another? is it over after you' given back? you never stop achieving. that's why, at barclays, open to innovation. open to ambition. open to ldids. that's why n york has a new plan -- dozens of tax free zones all across the state. move here, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and ows more businesses... we're open to it. start a tax-free business at startup-ny.com.

nation's military leaders and the 104 degree temperatures forcing the events officials to introduce extreme heat policy, halting play until temperatures are reduced. those are your headlines. back to dennis and cheryl. cheryl: he looks happy and wonderful and great. thank you. good news for the housing market, foreclosures are falling. according to realty track, the number of properties and foreclosure filings is down 26% year over year to its lowest level since 2007. grand total at 1.4 million properties with fla. topping the list of states with foreclosures at its peak in 2010.

2.9 million properties facing foreclosure at that time. dennis: the oscar nods out today and academy awards savant with his predictions straight ahead. >> the blockbuster gravity this morning nominated for best picture. ♪

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cheryl: nomination are in but who will walk away with the golden oscar trophies? we'll break it down for you. nor business travelers is expected to top nearly $300 billion. pr nightmare for seaworld. liz macdonald is digging behind the scenes with the image problems the company is facing. bottom of the hour, stocks every 15 minutes. let's head to the floor of the new york stock exchange with nicole pet pelt. watching particular movers with best buy on your radar. what is going on? >> unfortunately i don't like to deliver tough news for shareholders but that is exactly the case with best buy. it is down over 30% in trading today. right now a little better, down 27.5%. they had a tough holiday season. they did a lot of discounting and tried to run a lot of promotions to compete against names like walmart and the like. meantime coming out with numbers that are a disappointment.

as a result the stock is selling off dramatically. nu skin, another name we are following over this week, nu skin enterprises over in china is being investigated for illegal businesses. jcpenney closing 33 underperforming stores. tesla, what a week for tesla. got to throw it in there. up 17% this week. a lot of reasons why but sales for tesla, up 17% this week. cheryl: there is one of our showdown picks back in the day. nicole, we'll see you in a bit. dennis: much anticipated oscar nominations out this morning. ours car oracle is back with us to take us through his picks and his thoughts on it. we'll hit for you guys, getting into oscar pool. tarik, most likely he is right. best film, nine pictures nominated. 10 nominations for "gravity," "american hustle" and nine for "12 years a slave." are those only three that count in this category.

>> they really are, in two words dennis, the "american hustle." is overperformed. four nominations in all acting categories. that is unusual. christian bale got in knocking out tom hanks and robert redford. amy adams got in knocking out emma thompson. bradley cooper knocked out james gandolfini. 2 it could win the big prize. dennis: your pick for "american hustle", as. >> "12 years a slave" is important film. they have a hard time watching it. "american hustle" is more likeable. dennis: supposed to be entertaining. >> which they like the most and "american hustle" may be it over "12 years a slave." >> i thought one of the interesting stories, the women, what a strong category. four out of the five already have won oscars. >> that is correct. meryl streep nominated for 11th time, breaking her own record. dennis: 18th time? >> amy adams got in knocking out emma thompson. she has not won ever. i'm afraid to amy adams as great as she is in "american hustle",

cate blanchett in "blue jasmine." dennis: cate will win it. >> she will win it. dennis: won in '04 or aviator. >> best sporting actress. dennis: first best actress. >> that he was nominated for best actress for elizabeth but lost to gwyneth paltrow for "shakespeare in love." dennis: how do you do that without notes. supporting actress is a strong category. julia roberts and jennifer lawrence are two wthe pick. >> oprah winfrey we thought she would be in for lee daniels the butler. best supporting actress for 1985 for the "the color purple" leftt in the cold. jennifer lawrence i said she would lose and won of course. this year i have to concede she will win again. dennis: even though she won last year? i don't want to vote same person. >> a chance of upset would be for lupita, for "12 years a

slave." julia roberts looking strong. dennis: "12 years a slave", has a message about slavery bad -- best actor, was tom hanks robbed really? >> he was so strong in "captain phillips." one of his better performances. nominated for "big." great performance. "captain phillips", very dramatic. film up for best actor. his co-star, he gets nominated. tom hanks doesn't. dennis: best supporting actor? i would think he would win. pick on best actor? >> honestly matthew mcconaughey, "dallas buyers club." won golden globe. will probably win the sag award. transr transformative role. i think he wins. dennis: this is hollywood underdog. they love that out of nowhere. >> i predicted that by the way, best supporting actress, 1983. best supporting actor, jared let

toe in "dallas buyers club" he is seen as frontrunner. watch out for michael fasbender, "12 years a slave." he was i have a amazing. he could pull off an upset. dennis: wrapping me. best director. >> "gravity." he wins. dennis: really? >> no. some ang lee. dennis: even though the film doesn't win director does. >> same happened last year. dennis: thanks very much. tariq khan. cheryl: time for the west coast minute. a los angeles city councilman and city and pension fund and local agencies to cut ties with banking giant jpmorgan jpmorgan. the councilman introduced a motion to explore ways the city can legally sever ties with the bank. move coming due to what he calls discriminatory practices by jpm that led to foreclosures out in los angeles. washington governor is making commitment to keep boeing in the state no mat what.

they have given the them $9 billion in tax breaks. they have more than $4 billion in state transportation projects that would aid boeing's business in that state. seattle-based starbucks is honoring seahawks fans tomorrow. anybody who watches in a starbucks in washington state, wearing the colors, blue and green, gets a tall coffee and pay only 12 cents. the seahawks battle the 49ers in the nfc championship game. look at starbucks, one of the big picks we had from one of our analysts, stock's down today but he said buy it. that is the west coast minute. dennis: government taking the same old approach to fixing the labor market but what do you think is the best way to ignite the economy? your responses to what's bugging me ahead. cheryl: business travel, it is entraining to give hotels a -- on track to give hotels a big boost. we have the new numbers next.

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open to innovation. open to ambition. open to boldids. that's why n york has a new plan -- dozens of tax free zones all across the state. move re, expand here, or start a new business here and pay no taxes for ten years... we're new york. if there's something that creates more jobs, and ows more businesses... we're open to it. start a tax-free business at startup-ny.com. >> good afternoon, i'm sandra smith with your fox business brief. consumer prices taking their biggest leap in six months in september as gas prices jumped. cpi was up .3 of a percent from november. the core index which takes out food and energy was up .1 of a percent. both matched estimates. nba sacramento kings will accept bitcoin becoming the first pro franchise to take the

virtual currency by as payment. by march first they can use bitcoin to by tickets, merchandise and concessions both at the arena and their website. bernie ex-kel stone will step down from the f1 board while running the sport. he faces bribery charges. he denies any wrongdoing. that is the latest from the fox business network, giving you the power to prosper.

cheryl: well, if you're going to be hitting the road this year for work you're not the only one. the global business travel association project as 7% jump in the coming year for business spending. i'm joined by michael mccormick, director and chief operating officer for the global business travel association for this

week's on the road. looking at the numbers, huge amount of u.s. travelers, business travelers going overseas and a big jump percentage wise. what is fueling that in your opinion? >> well, overall let's just say i have good news to report in the outlook for 2014 for not just business travel but for business. cheryl: okay. >> business travel drives business growth. when companies are looking to grow their top line revenues they put their people on the road. and that means put being their people on the road wherever they can find business growth opportunities n a global economy they're going anywhere they can find the business. cheryl: let's give some numbers out to our viewers this is what we're talking about. we're talking a jump of 12% in 2014 for travel, international business travel by u.s. travelers. even in the u.s. more than 6%. these are big numbers for hotels and also for airlines who are going to be profiting from this. i mean do you think we'll see more capacity at the nation's airlines and hotels that are

going to be stepping it up to get these guys and gals, business guys and gals into the doors? >> absolutely. airlines, hotels, car return tall companies, ground transportation companies, the entire industry is looking for ways to try to meet the needs of those global business travelers. that means a change where we were before. international outbound business travel has been the biggest driver of the recovery since 2009. not just for the industry but overall for business and it makes sense. when companies look for growth, they will go wherever they can find the growth. cheryl: do you think this is realistic applies to you that the global economy is in full recovery mode? we've seen kind of some uneven numbers when it comes to business travel again over the last few years. it has been pretty much negative numbers. seems to me like this is the first year we're seeing in your research a big change for the positive? >> yes, it is. i mean to have boths transaction growth, real transaction growth along with the price-driven

growth we've seen over the last few years, that's a very encouraging sign. that means corporate confidence is up and that means companies are more confident about spending the money they need to, again to put their people on the yesterday because they're going to see a return on investment. that's good news. cheryl: what about, real quick i want do ask you because you're in the space, what about the consumer? what about leisure travel? this could be either this is airlines, hotels, this could be cruise ships? what do you think is happening in that particular section of the u.s. economy? because if you look at the job numbers we're getting the amount of wage that is people are taking in had this country is still really low. so is it still positive for the consumer? >> well it should have a rippling effect. if there are more money being spent on business travel, more jobs being created, more money being put into consumer's pockets it would lead to you believe that that will be good eventually for consumer travel as well. cheryl: michael, certainly nice to see some good news.

this was a big jump in the numbers. we're glad to see this kind of stuff. michael mccormick, global business travel association. thank you, michael. >> thank you. cheryl: nat-gas futures in the green but off session highs after weekly inventories coming out. let's head to the trading pits of the contract me and phil flynn. what do you make of the numbers, phil. >> cheryl, we had a record draw down in week over week supply, 287. it wasn't a record. they were looking for a record, over 300 bcf decline. exciting stuff. we were at the highs today best report came out. it really diddies appoint. they missed quite a bit what they thought we were going to get, by over 24 billion cubic feet, yet the market is still hanging in there they're hanging in there and it is not getting much warmer. supplies are 15% below five-year average. we're 20% below last week. cheryl: phil flynn, thank you, sir.

dennis: washington's tired tactics for fixing the economy is what is bugging me. here is what some of you guys had to say. frank says, reduce burdensome regulation. stu says, stop foreign lobbyists from sending business overseas. keep companies and jobs here. james says, fair tax, abolish obamacare, eliminate irs. needed epa and department of education. balance budget amendment. pretty copy just list there finally mike says, government guaranteed mortgages, which is a little bit of the problem that got us into trouble in the first place, cheryl. cheryl: man. seaworld investors, you might want to listen up to the store coming up on fox business. the theme park is in trouble and liz macdonald has chilling details on the problems there. dennis: first let's take a look at the winners and losers today on the nasdaq. (vo) you are a business pro.

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dennis: news alert for you. the federal government is trying to shut down the iconic theme parks whale shows and private equity firm blackstone reduced its stake in the company shares, seaworld entertainment, soaring after a documentary exposing animal mistreatment at its parks. cheryl: how does this impact seaworld's investors? all this news crossings on the company. let's bring in liz macdonald with details. start with the pr nightmare seaworld is dealing with on heels of this documentary. >> called "black fish" and what is essentially going on the fight is at the appeals court level. osha wants to shut down the lucrative whale trainer performances. this resulted in the death of a trainer at seaworld. seaworld is on the record with me saying that the whales

involved, and including tilikum, that is the name of the whale, never displayed aggressive behavior. there isn't a pattern of aggressive behavior with tilikum. an internal company document here on set does state back in july 2009, the company did note that tilikum basically had aggressive behavior. sometimes during times of frustration, during social stress in the environment, he has exhibited aggressive behavior. watch this, including lunging at controlled behaviors. four other whales also exhibited aggressive behavior as well. so the thing is, this is a classic case of doing spin on when you're company's brand is taking a severe hit. so this is a textbook case how to do it right and how to do it wrong. cheryl: talking about the blackstone angle in all of this. the company publicly-traded. this is private equity deal. they spun off the ipo last year. what does blackstone have to say? >> that is the important

question. here's what is going on. the company is in damage control. it is doing things like blame the trainer mentality at the company. it is trainer's fault, the woman who died, saying that her ponytail was a novel object in the whale's environment. when she wore a ponytail around that whale for six years. trainers testifying at the osha level, excuse me the appeals court level that the ponytail was not an issue. so again, the top spin on damage control. what happened was, blackstone, classic private equity lbo model, meaning leveraged buyout, took the company public but loaded it down with $1.9 billion in liabilities, including 1.6 billion in debt, much comes due by 2020. they need the min the door. they need to bring in ticket sales. seaworld out yesterday on other media saying hey, we are going to preannounce 1.46 billion in record revenues, not preannouncing profits. not preannouncing rising costs. so they're putting again a

really heavy-duty top spin on this story. dennis: this is a higher revenue means all this controversy over the whales and in that documentary film which came out a year ago hasn't hurt the gate? >> here is what is going on. we need to look at the profit figure. we need to look at the cost figure for the first nine months of last year. basically the ticket sales were not doing so great. they were going down. revenues were going down. cash flow was going down. costs were going up. so what we're seeing is essentially that, you know, they need to bring in the ticket sales. at the same time they have these major musical acts canceling their performance at seaworld including pat benatar. see here, willie nelson, trace atkins, martina mcbride, bear naked ladies. they need that money in the door because the boatload of debt. dennis: canceling the gigs because of whale controversy or not getting paid? >> the whale controversy, oh. >> watch for this. excuse me, seaworld has kicked

up inflated cash flow number it is touting to show the world it can service its debt. it is not the cash flow number that companies historically use. it is called adjust the cash flow number. when you strip out all the add-ins seaworld put in, the cash number is going down. it needs to think about the top spin it is putting on the negative brand image. cheryl: these are internal company documents obtained exclusively for fox business of the has seaworld specifically responded to that? have they given you a statement -- >> they said repeatedly, saying to me on the record that the whales, basically, any, they're not considered aggressive, not a pattern of aggressive behavior. when the document i have right here in my hand says, yes the company noted back in july 2009 that five whales had aggressive behavior including lunging at trainers, lunging at people. this one whale in the documentary is responsible, has been blamed, has been blamed for the deaths of two people.

cheryl: people can go to foxbusiness.com to get more. >> we have a two-part series on this. cheryl: liz, thank you. >> anytime. dennis: great work, liz macdonald. speaking of fish, a school of fish in a norwegian bay froze solid after chilling wind swept across the region. temperatures surprisingly only 18 degrees fahrenheit, that is nothing in the northeast when the incident took place. the expert said they were probably fishing away -- swimming away from predator and likely grouped closely. temperatures are heading our way next week. get ready. cheryl: expensive setback for marisa mayer. she canned one of her first hires at yahoo! is this telling for bigger struggles for the economy? dennis: unlikely pair, bitcoin, and basketball? the sacramento kings are warming up to the digital currency. details coming up next hour on fox biz.

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lori: i am lori roth said. ashley: i am ashley webster. lori: could this be a breakout? lori: investors succeeding from the 51st street? creditors meet ust one hour from now here in new york city. just back from the island. he joins us from the odds of a default. lori: crushed on weak holiday sales. show rooming turned out to be the grinch that stole its

christmas. lori: a plan to widen the panama canal still only 70% complete. the standoff that could lead to construction at complete standstill. lori: ashley: let's head down to the new york stock exchange. nicole petallides standing by, as always. nicole: maybe that is exactly it. you had two days of trading. this is the kind of environment we have been in for 2014. everybody watched that bernanke this afternoon, or this morning, very closely. the nasdaq trying to squeeze out a game. i will get to banks in a