i. last week president obama nominated north carolina congressman mel watt as director of the federal housing finance agency this is the agency that oversees fannie mae and freddie mac. now his nomination garnered both bipartisan support and criticism tennessee senator

bob corker it said in a statement i cannot be more disappointed in this nomination this gives new meaning to the adage that the foxes guarding the hen house on the other hand white house support from several republicans including senator richard burr and representative spencer baucus this is the second time obama has announced a nominee from north carolina to head the f.h. f.a. and she thousand and ten the president nominated joseph smith the north carolina commissioner of banks for the position but his confirmation failed that the republicans questions miss independence from the white house since the agency's creation in two thousand and eight and has yet to have a senate confirmed director and the post was nomination and contacts and confirmed he will take the helm from edward demarco the interim director since two thousand and nine. thousand courage to many groups to demand his removal because he has resisted efforts to help lower mortgage principal payments for bar workers and response demarco has cited his responsibility to return as much money as possible

to the taxpayers for the bailout of fannie and freddie he eventually became so controversial that top white house officials made a promise during last year's presidential campaign to oust de marco and to make good on that promise obama has now announced. as his nominee so who is mel watt what was first elected. the house of representatives into one thousand nine hundred ninety two he has spent the past twenty years on the financial services committee mel watt was one of the central figures that constructed the dodd frank financial reform law what is his cozy relationship with tara let's bangs his top campaign contributors that raise concerns of his objectivity mel watt received a million dollars from political action committees in the finance and insurance industry during his time in congress he received donations from bank of america corp the federal pac which by the way is headquartered in this district washington

mutual pac countrywide financial gold and goldman sachs as well as market jacobson the co-founder problem and tory by his own words was a minute he didn't understand a focal point of the agency he's expected to head fannie and freddie issued two point six trillion dollars of mortgage backed securities as of two thousand and eleven which are derivatives and here is what he had to say about derivatives in two thousand and eleven. a lot of these arguments that i'm hearing today the same arguments that i heard about the rivets were allowed in north thing about derivatives i'm not sure i'm still not sure. do. not a trivial concern we hope you got a quick learner and addition we have this to say about bain capital can somebody explain to me we're soon to you're going to you know. i just. assume every bank.

i mean i just don't have enough knowledge in this area. but will he understand enough to oversee the banks that are ensure growth to the securitization process as nomination moves forward the question is whether he will be able to leave his financial conflicts of interest behind and provide effective stewardship of fannie and freddie and this is the profile of now what president obama's nominee for the federal housing finance agency. and it's time for our daily duel yes it is once again thanks for joining me thank you for having me shall we begin yes here we go now one of the largest nationwide

homebuilders which is told rather has just raised one hundred million dollars by issuing ten year notes and we've also seen a few recent i have heroes of housing based companies including century communities in colorado which also raised two hundred forty one million dollars now that housing sector really seems to be taking on this it's taking off but let's see what these guys have been doing before because one of the interesting things about the toll brothers is they were selling their own stock in two thousand and seven and two thousand and eight and this was one of the bellwethers that the housing bubble which bernanke he said could never be popped at least nationwide would actually end up popping so you know what these guys are doing they're putting their money where their where their mouth is they're taking on new debt they're expanding projects in several markets and i think there is evidence that there's considerable froth in the housing market right here but you would think that they would have learned their lesson the first time around well everybody wants to build up the pyramid and jump off at the last minute so. they can figure it out just like they did last time

but what about i mean maybe just a few bondholders will end up being unlucky but maybe the majority of the firms wall well. i know i mean they can refinance a lot of this or they can finance a lot of this very historical rate so maybe they're just taking advantage of that opportunity but i mean and that gets to the point of q.e. which is you know to encourage people to get into higher yielding securities anyway and that gets back to bernanke his theory of how does just the markets pushing on a string which is very good i mean the whole point of q.e. is really to encourage saver is out of their safe investments into accounts like stocks are real assets and. it we're starting to see this now but is this real growth or is it just a manipulated bubble well it gets back to what we were talking about yesterday with the dow hitting above fifteen thousand it was up a little bit to close just a little bit under yesterday it doesn't really matter because the whole point of this exercise that ben bernanke is is that is to make people is to build this

wealth effect and i think that's what we're feeling right now at least some people who are in the financial sector but not you and me but there's a lot of numbers out there that are saying you know we have you know a great economy and job numbers where you know along with the dow being i mean it doesn't like that. ok well if we can get into the merits of price inflation and i don't think we've seen the brunt of it yet because a lot of this money has to work through the system first before you feel it and long term interest rates are going to rise we know that there's also but we know that well because bernanke is telling us that they have to i mean we can't have zirp forever so of course interest rates are going to rise it's just a matter of when and then we have one point six trillion dollars of excess reserves sitting at the fred what's going to happen with that the fed has to keep that money out of the system somehow and one of the things that we're going to be talking about a lot on the show is exactly how the fed is going to be doing that but isn't the point of this to get the other banks to start lending more in the capital where they have been lending a lot more. and if you look at c.

and i loans over the last few years they've been up the maybe eleven twelve percent annualized and that's a pretty big number historically speaking so we have seen loans picking up but are they high quality loans and what's going to happen when interest rates rise and i think we're going to see defaults and once this money starts going out is that going to exacerbate inflation and what if we do start seeing inflation doesn't the fed have the tools to scale back so it's really you know a concern of well this. saying that he has that he can reverse policy in fifteen minutes he does have the tools to rein in all this extra money but the question is is he going to use him at the right time the federal reserve can still be there you know that's that's one of the other points he's probably going to be out next january and we're going to have somebody new coming in and maybe and he said he's not even to go to jackson hole this year so maybe that's a sign he's just going to you know leave the sinking ship before it sinks so. well you know i'm talking about the fed there's another issue going on there was the independent foreclosure and when they're at it they're out again they wrote.

yes i think this was after just a few weeks ago they had written checks that bounced and now they're very they're writing checks that are for the wrong amount and these checks are so small to begin with i mean let's back up here and take a look at the situation that exactly that for those who you know are familiar with this process and are going to part closure of you you know reviewed all of everyone that was foreclosed on possibly a lot were at a few banks there was a side around you were basically nine point three billion dollars in the federal reserve and the o.c.c. oversaw this process and a couple of very nice contracts were awarded to insiders like prom and tory financial group and a few billion dollars who are involved and spending contractors and consoled and exactly what happened to that report before it was even released it was quashed because it was releasing too much information about the big banks that there was a bank of america whistleblower who came to them and the report just got. wash at

the last minute so the bottom line is that people were only getting five thousand dollars one hundred twenty five thousand dollars for military when. they lost their home obviously not going to cover the cost of i know the checks are. being written for the wrong amount probably not a higher amount either but another point that we do have to look on is the federal agencies the fed and even took their eye off the ball they gave the money to the independent consultants and even a contractor to oversee this process and there's a g.a.o. report that came out about this as well and in the report it said that they had zero guidance from the government of what they were supposed to do when they hired so many different contractors that there was just no what streamlining the process so it really is a very complicated process as you now are saying all this money being lost and no one's really being rightfully you know that they're not and promissory financial group for people who don't know is as a private firm and it's staffed with people who were formerly really really big in the government gene ludwig is one of the major founders and he used to be contrary

to the currency alan blinder of used to work for the fed mark jacobson who came out earlier in the show as a contributor to me what i mean isn't the whole point of having you know the private sector step in to take over what the government doesn't have the capacity to do so who better to do or than someone who's been in the government well i guess you can make a lot of. another ok another in the tory financial they also advised m.f. global and i'd be remiss if i didn't point out that they advise them of global on their risk controls and they said they put their stamp of approval on them a year later john corazon blows up the entire for good job from a tory. because we didn't get to a scar the final question here do you have perfect pitch. i think. i have not been a very big. maybe. i hope. things that i mean that's the door to.

we took a trip a third time today on prime interest the big banks try to remind us of the harmonious days when they were safe and too big to care and we looked at a few new rules that fannie and freddie that might just pretend the next housing collapse the new york fed traveled back eighty years to channel irving fisher let's just make sure stocks remain cheap ok templi then we talk with jaron lanier who lie in dust of the future of social media monetization and we profiled mel watt who we predict will one day learn the definition of a derivative finally history repeating itself with the independent foreclosure review as a second round of bad checks and an already bad settlement made their way to insult

foreclosure victims thanks for watching and make sure you come back tomorrow make sure you follow us on facebook at facebook dot com slash prime interest from all of us here at prime and just have a great night. real damage and complexity of this oil spill is not something you just by looking at dirty birds we have between four to five million people in this directly affected area of the clothes and it's pretty clear why it's not being reported because b.p. can't afford to have a reported all along the gulf coast are clean they are safe and they're open for business if b.p.'s. the single largest oil contributor to the us war machine is

heavily. b.p. and their oil this is a huge step backwards for the. toxic is a look like. it was a it was not a picture that either the government or b.p. really wanted to have out there i don't want dispersants to be the age. old. technology innovation the least developed around. olympos.

clint. good speech. which. look. good. and i'm. fine i'm a little. serious

crosses the agenda as president bush and her british prime minister cameron well the two leaders are seeking to have all the common approach to getting peace through towards. iran all washington reaffirms its reluctance to back syria's a radicalized rebels if you for them to russia and the u.s. agree to set up an international conference to bring about an end to the escalating conflict. and a blogger said to democracy pakistan braces hold saturday's historic general election amid a wave of brutal attacks and kidnappings by the taliban.