hi everyrybody welcome to "the wall street journal report." i'm maria babartiro. where did the money go? the inside story of thehe wall street bailout. with the guardian of the gate, i'll t talk with the r rock sta the 700illion t.a.r.p. program. he is the architect of the controversial plan to balalance america's budget, cut debt, and raise taxes. my conversation with alan simpson. one on one with basketball legend kareem abdul-jabbar. the secret of his sky hook and a lot re. "the wall street journal report" begins right now. >>his is america's number one financial news progm. "the wall street journal report." now, maria bartiromo. >> here's a look at what's making news. america's economy slowed to the weakst pace of growth in about a year. the gdp for the second quarter coming in at an annualized rate

of 1.5%, slightly better than economists' expectations actually. but about half of what it had been late last year. consumer spending was weak, helpg push the numbedown. the economy has grown, however, for straight ququarters. the head of the ropean central bank vowed to save the eurozone from collapse and said it will do what is needed to support the currency. the e comments coming from mari droghy in a speech from london. >> we meet our mandate, ecb is ready to do whatatever it takeso preserve the euro. >> those words helped push the markets to the best gains of the month on thursday.y. the dow industrials closing up 200 points a send straighday of gains. the markets continued up on friday. in earnings news, european woes are starting to impact companies' bottom lines. mcdonald's missed earnings estimates for the first time in seven years. u.u.p.s. was short as well. in a rare miss, ple also falling s shortf expectations. that sent the stock plunging. at&t, boeing and caterpillar also passed estimates. while facebook met expectations. in its first earnings report

sisince going pupublic. the troubled asset relief program spent more than $7 billion of taxpayer money. during the financial price crisis. it was designed to bailout america's financial system. which was teetering on the edge of collapse. where did all the money go and who was watching? joining me now, the former special inspector general of t.a.r.p., neil barofsky an author of a new book. "bailout." thank you so much for joining us. >> great to be here. >> the book is terrific and thanks for joining us today to talk about this important conversation. so first let me geyour thoughts on t.a.r.p. in your book you say "t.a.r.p., the popular perception that i had warned geithner about, that t.a.r.p. was little more than a massive transfer of wealth from taxpayers to undeserving wall street executives." do you think the program was necessary and do you think it worked? >> i think it was necessary, in that we were heading off of, you know -- into a terrible potential global apocalypse. because of the importance of these giant super mega banks. that if they started to fall,

they could bring the entire economy down with them and we needed some sort of response. and it wasn't just t.a.r.p., it was the trillions and trillions of dollars from the federal reserve and other programs. working together that did help stop us from going over that cliff. and while it was successful in that aspect, there's a whole lot of other things t.a.r.p. was supposed to do. get lending back in the economy. help struggling homeowners. the bill doesn't pass if it doesn't make those promises and it failed on every one of those promises. so it really worked for the big banks but it really failed significantly for everyone else because of a series of choices that were wmade by our officia in washington. >> what should we have done differently, better? >> for one thing, we shouldn't have given the money with no strings attached, no conditions. you know, i had -- when i got down there, i had to fight very hard to try to get fraud protections so the taxpayers wouldn't get ripped off. and we should have had a robust housing program that fulfilled the promise that was made to help 4 million people stay in their homes. instead, what we got were presentlies that were very, very deferential to the banks and a

housing program that was much more about the runway for the banks as secretary geithner explained in a meek in 2009 than helping homeowners. >> meanwhile we still have too big to fail. you said we should be breaking up the big banks. sandy weil, formerly of citigroup, architect of bigger is better in terms of banking when he put together travellers and citi corps so many years' ago, now changing his tune. listen to what he said this week. >> i think what we should probably do is go and split up investment banking and banking, have banks be ddeposit-takers, have banks make commercial loans and real estate loans. have banks do something that's not going to risk e taxpayer dollars, that's nott going to b too big to fail. >> were you surprised at this, and do you still believe this should be happening?

>> you know, it's interesting, right. the guy who created the frank frankenstein monster that helped destroy the global economy has now come around. although i wish he was there in 2010 when therreally was bipartisan support to break up the banks that was beaten back by the banks and the treasury department and the obama administration, defeating that bill, i welcome him on team break them up now. it's very important he's saying this. >> do you think it will happen? is it realistic? do you think we are going to break up the banks? >> i think eventually we're going to have to. i hope before another significant isis. one of the things i saw over and over again that i talk about in the book is how much that influence impacts policy decisions and individuals. i was told point-blank by a senior treasury official, because my tone was too harsh toward wall street and the administration, ththat i was dog myself real harm in my career. harm for my family. but if i softened min tone, was

upbeat and positive about wall street, good things could happen to me, a good pot of gold at the end of the rainbow, even a judgeship. that corruption as major problem and a disincentive for regulators to do are in jobs. >> this week is the second anniversary of the dodd frank bill which reformed financial regulation. it is supposed to eliminate too big to fail and provide more protection for consumers. do you think it's doing what it's supposed to do? >> no. and, you k know, in many ways i is extremely unlikely it will ever do what it's supposed to do in its cururrent form. it is a process that is -- that has so many rules, so many regulations, so many loopholes that are baked into it. andltimately when dodd-frank didn't break up the banks as it potentially could have, it cemented a status quo that continues the implicit government guarantee. all you have to do is look at the credit rating agencies at big banks and see that they still benefit from that presumption the government will bail them out and that gives them advantages small

counterparts don't have. >> how significant is th scandal, tim geithner testifying bere congress, what he knew, when he knew it? this coming soon after the jpmorgan trading mess. you mentioned scandal after scandal. do you think more reform is needed and do you think this libor scandal gets bigger? >> this is the problem of too big to fail banks and captured regulators. this is a massive global conspiracy to fix the most importrtant interestst rate. when it was disclosed to the government, one of the plars in the conspiracy, barclays, came to the new york federal reserve and confessed its sins. the response was not going to the department of justice as you would imagine. this is a pharmaceutical companies or any other in a conspiracy to fix a price, they go run together department of justice and demand a criminal investigation, there would be a public announcement to the markets there's a problem here, there would be a real ringing of thelarm bell. here, we had a meeting, we had an e-mail, and ultimately the

federal reserve stood behind libor when it started enacting bailout programs, using it as an interest rate, sending the exact opposite message to the market. >> good to have you on the program, thank you so much. neil barofsky. ul up in on "the wall street journal report," a man whose name has become linked with our nation's deficit. foformer senator alan simpson wl join me on the looming fiscal cliff. a legend in basketball, the many carereers of cream kareem abdul-jabbar. f off vietnam in 1968.

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thexpiration of the bush-era tax cuts as well as $110 billion of expected spending cuts at the end of this year could be sending our economy toward a fiscal cliff.

what some are calling the most predictable economic crisis in history. my guest is former wyoming senator alan simpson, co-chairman of the president's commission on fiscal responsibility. and reform in 2010. senator, good to have you on the program, thanks so muchor joining us. >> always nice to do that. >> let's talk about this fiscal cliff. look ahead to january 1st, 2013, for us. what do you see happening? is our academic economy pushed over the edge as a result of this fiscal cliff when all these tax cuts and spending programs will expire? >> it's a difficult and totally predictable thing. because between election day, november 6th, and december 31st, this country will be awash in $5 trillion to $7 trillion of money that has to go somewhere, thing taz have to be advanced or not advanced. if they don't get it done, then the president, whether it's the present one or a new one, is going to have to come on in january and grapple with snakes.

i mean, what you have going on right now is a crosscurrent of greed versus cowardice. and it's a very disgusting thing to watch. erske and i go all over the country. people are dic of bs and mush, they're seeking the truth, and we do math. we don't do other stuff. if you're going to extend the tax cuts you're going to have $3.8 trillion added in 10 years to the $16 trillion we already owe. you've got to correct the sequester. who wants to say, i went home, i didn't have the guts to use a surgical knife. i just let them take an ax to defense and nondefense. you've got to put the social security payroll tax back. i wonder where the aarp was when they took the payroll tax from 6.2 down to 4.2 and took billions out of the system. got to fix the amt. i mean, have a drink. >> well, i mean, when you look at all of this stuff, why aren't we seeing the leadership

actually say, okay, these are very importantdevelopments, and we need to come to an agreement? i mean, is it okay to wait until after the election to deal with this? or should we be having an agreement now? >> you don't have to do specific legislation, although we have prepared specific legiioslation. we've taken the 67-pag report, turned it into an 800-page bill. we have democrats and republicans in the senate, democrats and republicans in the house, looking carefully at it. king changes, making suggestions. but you can't get away from this. they'd love to ki the can down the road for 100 more years if they could. they are all enamored by the curious curse of re-election. and you won't hear anybody, anybody, between now and november 6, talk about the solvency of social security, getting a handle on the entitlements which are on automatic pilot andill suck up every buck in the treasury if you don't get a handle on them,

do something with medicaid, do something with defense. >> howard dean, the former head of the dnc, said, let's go over the fiscal cliff, let's do it, in the event that no deal or kick the can scenario is reached by year's end. is there a way that this urgency feeling could actually create a bipartisan solution? >> i tell you what will create a bipartisan solution. it's about the markets. they'll call the shots. they aren't going to sit here and watch a dysfutional government. they're going to say, we want more money for our money. to do that, the interest rates will go up, inflation will kick in, and guess who gets hurt the worst, the little guy that everybody babbles about day and night, right and left. got to take care of the little guy. well, fine, then do something. get off your can and quit kicking the can and get with it. >> you and your co-chairman of the simpson bowles commission, former white house chief of c ,

caf,ecaf caf,ecaf staf staff, erskine, are you being listened to, senator? did the simpson-bowles plan get kicked off? what happened? >> we said when we put that plan out, we'd get savaged. get what, we were. we dealt with everything. we dealt with the tax expenditures. $1$100 trillion. $100 billion of stuff in the tax code, which is used by only 20% of the american public. only 27% of the american people indexed. they never heard of this other stuff. and every bit of it drai the trtreasury. then you have colburn, a great guy, comes along, ss get 6 billion stuff of subsidies for eth noel, and did it. and grover says, that's a tax increase. you don't have to do a tax increase. you go into the tax expenditures and start ripping them out.

home goert began interest deduction. $1 million? what the hell's that for? give a 12.5% nonrefundable tax credit which helps the little guy. people know what's going on and they know that there's the great game of chicken and cowardice and greed that has ever come together in one great triangular mess. >> senator, it's so refreshing to hear your cacandor. thank you so much for joining us today, we appreciate it. >> you bet. >> we'll see you soon. senator alan simpson joining us. >>up next on "the walstreet journal report," it's not all business. i'm courtside with nba great kareem ababdul-jajabbar. how retirement helped this hihistory major find his inner edator. >> you want the ball to come >> you want the ball to come down through the and so too is the summer event. now geget an incredible offer on the powerful, efficient c250 sport sedan with an agility control sport-tuned suspension.

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the nba's all-time leading scorer, kareem abdul-jabbar, went from 20 dominating seasons in professional basketball to thinking about how to encourage american kids to dominate in science and math. when we first brought you this interview a few months ago i got courtside pointers from the master of the sky hook and discovered how jabbar found the words to write his second act. >> kareem abdul-jabbar! >> it took me a couple of years though to deal with the burnout from playing. i had a very intense career and it lasted for so long, 20 years. once i got over the burnout, i figured on what i needed to be

doing. and i started writing. i always had the ambition to write. >> i probably would have been a history teacher or something like that if i had to have a real job. >> taken years after his first book "black profiles in courage" became a "new york times" best-seller, abdul-jabbar is promoting a project for children. "what colors my world?" >> you write about two american kids, ella and herbie, who hear there's momore to our history tn slavery, jazz, sports and civil rights. tell me about the message of this book. >> the message of this book has to do with my experiens when i was in grade school. the only times black americans were mentioned were in conjunction with the issues of slavery and civil rights. the black experience in america is so much broader than that. >> hel. >> how you doing? >> good. >> are youjaden?

>> yeah. >> all right. >> it's very important for me, especially for black kids, to read this book. the only time that they see black people being successful has to do in two areas. sports and entertainment. >> why did you choose inventors? >> these inventors are scientists and mathematicians and engineers. people that young kids in the inner city did not look to as being heroes and achieving extraordinary things. >> no kid raises their hand and says, i really want to be an engineer. >> right. >> they want to be a superstar basketball player. >> if you talk to young kids, they want to be lebron james, they want to be jay-z. >> born lewis elsindor in new york, he rose to prominence playing under coach john wooden. >> you were a new york city in

catholic school in manhattan. what was your experience like? >> my experience was in learning about the general culture of america. not african-american culture. my dad was a jazz musician. so in my household, duke ellington and louis armstrong were heroes, but i didn't learn how broad african-american achievement wast until i took part in a program in harlem that was desned to show the kids at home how to make it a better place. and that's when i learnedd about the harlem renaissance. ♪ >> on the shoulders of giants, documentary abdul-jabbar released last year, tells the story of the harlem renens, a black basketball team that won the first integrated professional touournament in 19. long before championships came with product endorsement deals. >> black americans have never been given credit for the things that they've contributed to american life.

it's always seen as something that happened in the shadows and in the corners. i wanted to shine a light on that. >> 7'2" kareem abdul-jabbar is the league's all-time scorer. and his place in american sports history is ensured with his signature sky hook. >> for those that don't know, what is the sky hook? >> sky hook is just a hook shot on the basketball court. i put my own little stamp on it. you want thehe ball to come dow through the hoop. up and over and down. that's it. perfect. >> so what did you learn in sports that helped you in life? >> oh, geez. you learn so much. teamwork. you learn perseverance. and preparatio one of coach wooden's favorite sayings was, failing to prepare is preparing to fail. so much of what he said we used

to think was corny sayings. >> that's another important difference. you've got to be lucky as a kid. you've got to have these influences that are positive forces. >> i was really charmed, you know. i've had a chaharmedlife in tha sense. >> perfect, perfect. >> my thanks to kareem abdul-jabbar. up next on the "the wall street journal report," we'll take a a looat the news this week that will impact your money. high achievement in t ompic games. why a trip to the winner's podium may be more expensive than ever. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it. this is new york. hey little guy, wake up! aw, come off it mate! geico. saving people money on more than just car insurance. ♪ ♪ i want to go

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hope you'll look for us onn facebook@wsjrwithmaria. follow me on twitter and google pl @mariabartiromo. look at the stories in the week ahead. we'll get earnings reports from procter & gamble and pfizer, as well as automakers gm, fiat, honda and toyota. tuesday, the latest s&p case shiller index will be out trking housing prices in 20 cities across the country. wednesday is august 1st. automakers will report july motor vehicle sales. and the fed's open market committewill wrap a two-day meeting also on wednesday. on friday, the monthly performance report will be out. we'll find out how many jobs the economy lost or gained in the last month, typically a market mover. winning gold is not what it used to be and it is pricier than ever. the medals awarded at this summer's olympic games will be the most expensive produced thanks to higher commodities prices. gold is up 45% since vancouver, silver up 77%.

2012's gold medals weigh in at 412 grams, 92 pr% is silver bouillon plated in gold, bringing costs to $640 and proving all that glitters isn't always necessarily gold. best of luck to the competitors at the london olympipics. that will do it for today. thank you for being with me. next week, randy crossner will be here. weep it here where wall stre meets main street. have a great week, everybody. see you next weekend.