captions by: caption colorado, llc (800) 775-7838 comments@captioncolorado.com from washington, "the mclaughlin group." the american original. for over two decades shall the sharnest minds, visit mississippi.org to see what we can do for you. ♪ [music] ♪ issue he's taking an important step forward today in curbing the influence of executive compensation on wall street while still allowing these companies to succeed and prosper, but more work needs to be done. >> that step the president was referring to was taken by kenneth feinberg, mr. obama's quote unquote special master for compensation. fine is ordering the seven

companies that received the most bailout money to slash the salaries of their top executives. a year ago, wall street came to washington on bended knee, begging the federal government to save america's flagship financial institutions, and the u.s. treasury ponied up $700 billion in cash per bank. now the obama administration wants payback, and fine did the deed. the president is demanding cuts, not in bank budgets but in executive pay. the seven companies and their bailouts, a.i.g., $180 billion in u.s. bailout funds, general motors, 50 billion, bank of america, 45, citigroup 45, chrysler 15, gmac loans 13, chrysler financial 1.5 billion. a total of $350 billion for the seven corporations.

now the pain. the obama administration is ordering these seven companies to cut the total compensation, salary and cash bonuses of the 175 highest paid executives by 50%. why target these seven companies? why stop there with the punishment, master kenneth fine? >> my power is limited by statute and to those seven companies. >> special master for compensation kenneth feinberg reports to the treasury department. the federal reserve board got into the feinberg act. the fed said that it is going to impose and enforce new guidelines on all banks not just feinberg's crackdown on the bailed out seven. you with that, pat? the question, pat, has feinberg really cut the total compensation of these top bank executives or is this political

hype? >> i think it's a bit of both, john, but he is going to cut the compensation of these banks. he is the pay czar, incidentally, one of 38 czars. the reason is for pop yu louse reasons obama couldn't stand the fact politically that these guys after taking our tax dollars, trading a bit, scooping their profits way up, they start reaping the rewards again out of tax dollars. so i think people will say they're getting what they deserve. they deserve to be cut even more. but there's this problem, john. we're going to create a two- tiered system here one of banks which the federal government goes after and cracks down on salaries and bonuses and dictates how they run things. another free banks which are out there. the real talent in places like bank of america is gonna say, there is no future here, and let's go over there where we can really make the bucks. so i think in the long run, they're gonna have damaged some of these banks and things they

proposed to save. >> the cap is at $500,000. is that the whole cap on all of the compensation? >> no. they're still walking away with huge pension packages. they still have plenty. don't worry about them, john. they're still making more money perhaps even than you can imagine in a lifetime. look, there was a populous rebellion brewing on main street. they see these firms bailed out by the federal government while much of america is out of work, and they're handing each other bonuses. so i think this is an appropriate reigning in of the seven comrs, car companies, banks, that really did rely on the federal government. there are strings attached, understandably so. the question is, can you extend this restraint further into corporate america? it's the honor system. that's no force of law. the federal reserve is charged with trying to see that banks

remain solvent and probably going to require more leveraging and that sort of thing. but this is not an onerous shutting down of free america so that you only have a handful of free institutions operating. this is a very modest step, considering the way that these companies drove us over the cliff. >> there is no special sympathy for banks that need federal bailouts and these huge infusions of taxpayer money. the problem here is that they're going after executive compensation as twofold. one for punishment for bad behavior and two to try to deter excessive risk taking in the future. wall street will always find a way around and through these kinds of pay restrictions. the problem here is about excessive risk taking and whether or not we're going to see more of that continue in the future. paul volcker suggested that they separate out the riskiest trading activity from the taxpayer protected institutions. the white house and treasury

said no, politically, it's too hard to do that. so instead, we're going to go after these executives and slash their pay hoping to deter their risk taking in the future. i don't think it's going to happen and i also think that in terms of the slippery slope, once you start going after institutions that took bailout money, now they're talking about regulating and going after executive compensation on financial institutions that were not bailed out by federal money. barney frank has talked about extending it even further into other industries. you start going down the slope where the government gets involved even more than they already are, and it's very difficult to reign in. >> this is like a virus. it'll go into the private sector, penetrate it and ruin it. >> you know, i can understand about the populous sentiment about the banks receiving all of this money. if you think it's smart to take $350 billion in federal funds and end up putting us in the lowest possible average of competency because all of the really talented people are not

stupid. they're gonna leave and go to those firms where there are no pay restrictions. >> and they've done that. >> the way to do it is doing it differently. you should have said here, you have a total salary, allocate it any way you want in order to keep your best people. this in my judgment will be the exact opposite that we as the public should want because these are the people who are able to manage the money, not mismanage. >> also, stock can be given out and put under the condition that you're getting this stock in addition to the $500,000, which would include, i believe, all of the bonuses and the salaries. >> the point is well taken. obviously in this 175, there are probably people who should have been fired. there are probably people in their mid-30s working their heads off. we're gonna bring this bank back. and they're gonna look at this and say we've got no future here. >> this economy thrives on a marketplace. this destroys the marketplace. there is no marketplace. the government tells you what

to do. isn't that the fundamental problem? >> the most important marketplace is for managerial talent. what they're doing is saying anybody who's got any real talent, they're gonna move out of here. that's what you want to do when you are putting in hundreds of billions. by the way, the feds have guaranteed a lot of the debt of these banks, and therefore you're probably talking about 750 to a trillion. [ all talking at once ] >> it's a pretty sad commentary on america if we only have a handful of really talented people who can work for millions of dollars instead of many, many millions of dollars. i think there are enough people around this country to be able to handle that. and i'll quote alan greenspan went on capitol hill, and he said, well he's steered this economy for a long time. >> we know that. >> he said he thought the markets would not do this. [ all talking at once ] >> you cannot have -- >> eleanor, let me ask -- >> excuse me!

you cannot have unfettered capitalism. you have to have regulation. [ all talking at once ] >> that's what we're talking about, regulation. >> eleanor -- >> not regulation. [ all talking at once ] >> hold it! [ all talking at once ] >> hold on. pat, go ahead. >> why would you not leave general motors when they are chopping the salaries of heads at ford? >> let monika in. >> i saw your point about the market and whether or not the free market exists in this situation anymore. if you are working at a nonbailed out firm and your salary is kept in tact and the government's not coming in to slash your salary but the bail out firms, those executives are making half or 90% of what they made, well, then those firms have a cost advantage because they're paying their executives less. >> right, right! >> so therefore, the salaries of the folks in the nonbailed out firms are going to be depressed as well. >> right. [ all talking at once ]

>> what is the natural, ultimate consequence of the destruction of the marketplace? >> this is -- look, management is the key element and pren neural ability is the key element of our economy. if you want to level it out and make us like russia or england, good luck. >> was this designed to satisfy the public that wants people to hang? >> yes, that's exactly -- >> it's a populous reaction. >> a noble instinct that is self-destructive even to the public. >> i agree with that. >> exit question, are the pay caps sound policy or populous appeasement? i ask you? >> it's 100% populous appeasement? >> eleanor? >> they are both. the government is searching for a way to restructure risk as monika pointed out so that these firms do not take us over the chives once again. >> don't you think that the president would have recognized what we're talking about here, what the ultimate evil payoff

is to this? >> i think he does understand it. the irony is, he was on wall street this week doing a fund- raiser, and the people that he was slapping in the face were giving him millions of dollars for democratic campaign purposes. i do think that this is populous retribution. i think the unintended and intended consequences of this will be severe. >> is this throwing out the baby with the bath water? >> yes, i think it is, by the way. the public's reaction is natural. they don't want to pay them well, but now what happens is all the good people, the talented people are going to bail out. >> they're not working for minimum wage. these are salaries that are excessive beyond the imagination. that is the issue. >> so you want government to correct them? >> and there are perks that are beyond imagination as well that are being reigned back and rightfully so. when we come back, hillary, don't stop. when planning for retirement these days, the forecast is full of ifs.

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♪don't stop thinking about tomorrow ♪ don't stop ♪ it'll soon be here ♪ [music] ♪ >> no, no, i'm looking forward to retirement at some point. >> hillary, forget retirement. don't stop thinking about tomorrow. the newest poll on you says that a con census of americans think of you favorably. 65%, that's five points more than obama. so says the cnn poll. the gallop poll on you from two weeks ago also says that a consensus of americans think of you favorably. 62%. that's six points more than obama. 15 months ago, hillary chnt conceded the race for the presidency after 15 months of campaigning against obama for the democratic nomination. she lost. now she's on the obama team tea

secretary of state. question. does hillary's growing popularity reflect ol''s declining popularity? >> no, john. the president is in the eye of the storm dealing with a lot of problems. hillary clinton has the luxury, probably for the first time in her public life, to be operating mostly under the radar and doing good work, and people don't have anything to dislike her about right now. so her poll ratings are high, as they should be, and she is doing a good job. that doesn't mean that she's going to challenge the president in 2012. to me, that is almost unthinkable. i think obama would have to totally crater. for a sitting secretary of state to challenge the president of its own party. i remember when ted kennedy challenged jimmy carter -- >> right. >> inflation was in double digits. hostages were taken in iran and kennedy, as popular as he was

and is among democrats, could not wrest the nomination from jimmy carter. >> she's not powerful. she is not foster dollars. she is not henry kissinger. >> yes. >> she's got rivals in the vice president. she's got rivals. she's got these czars over there. she's got mitchell on the account of the israeli account. she's got dennis ross for iran. her power's dissipated. i think she's done in small areas good things, but she's not the major or even a very, very prominent figure. the pentagon is taking power away from state. >> you could not be more wrong. you ought to reed the current issue of new york magazine. he'll set you straight. he will also indicate how smoothly and what shall i say, almost unseen that hillary has taken over the job. she's done her homework.

she hasn't tried to assume sense of state. she hasn't tried to eclipse obama in any way. in fact, okay, hillary full of grace. in zurich two weeks ago, turkey and armenia signed an historic agreement aimed at ending a century of hostility that dates back to the 1915 armenian genocide which killed 1.5 million armenians. a last-minute snag threatened to void the deal. clinton was on site in zurich. on a limo cell phone, she spoke three and four times with them keeping the deal on track. she then raced through zurich streets to bring the turks and armenians face-to-face. hours in the negotiation. in the end, the accord was signed and saved. then she flew to london, belfast to fortify the peace agreement then onto moscow to lean on the russians to restimulate iran's pos schur on

the threshold of the vienna nuclear talks. question. if obama continues to hemorrhage support, does hillary have the political know how to resign her post and run against him in 2012? monika? >> i predicted several weeks ago in my column in the "washington times" that she would do exactly that. she's not going to be a sitting secretary of state. we will resign her post over some critical national security issue whether it's iran getting directly to israel. she will resign her post if she sees the economy does not improve for obama to ride a crest of economic growth and if obama's poll numbers continue to tank. i would say they would have to be below 45 for her to entertain this. but hillary clinton's ambitions to be president have not dissipated. when she was asked this week whether or not she would run again, she laughed and bought

herself a couple of answers. i think both clintons are positioning themselves for another run in 2012. she he can put together a coalition even without african- americans and wrestle that nomination away from him because -- [ all talking at once ] >> this is absurd. >> i'm going to address this to you because i want to make sure we understand where obama is right now. what i have here is that he yea other president in the history of gallop's tracking of presidential approval ratings. gallop has its third quarter average of 53% versus above 60% in the first and second quarter. obama has dropped 9% of his job approval, the most for any president at a comparable time since 1953. doesn't that explain why hillary might be running for president? >> no, first of all -- [ all talking at once ] >> he started at an artificially high level, so he had farther to fall.

secondly, he's likely going to get a health care bill, sign a financial services regulatory bill that may be well liked. he will get a modified public option and opt in or opt out phase. the main thing is people worried about troops in afghanistan and worried about unemployment. and if unemployment is coming down, doesn't have to be 7%. >> do you agree with eleanor that this is -- [ all talking at once ] >> john this is the most absurd scenario i've ever heard in my life that the secretary of state could stand down, challenge the president in the primaries, defeat him. you would split the democratic party in half. [ all talking at once ] >> you will elect a republican in a second. hillary clinton is not brain dead. she is smart. [ all talking at once ] >> by the way, you're quoted in the same magazine. >> yes, i am. let me just say this.

hillary clinton is not stupid politically, and by the way, neither is her husband. there is no way, i agree with pat, no way they would have a chance to run again. but the real issue in terms of where the politic's going to be next year and three years is what's gonna happen to the economy and particularly employment. on that ground, obama's in real trouble. it doesn't mean hillary's going to run it. >> your timetables have to be turned upside down. the celebration in today's society is invading all areas, chudding politics. why don't you get accustomed to that and reflect it in the daily news and other massive billionaire publications. >> if you had read them all, you would realize we're ahead of the curve. [ all talking at once ] >> you will not get a single african-american vote if she did that. [ all talking at once ] >> who knows? >> for doing that to obama? >> i talked to african- americans who are displeased

with this president. [ all talking at once ] >> let her in. >> on the point of african- americans, that is true. if you look at what is happening to the african- american governor of new york state, david paterson, blacks are fleeing from him and want andrew cuomo, who is white. we'll be right back. the sharpest minds, best sources, hardest talk. the mclaughlin group is brought to you by mississippi development authority. visit when planning for retirement these days,

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kaiser permanente. thrive. what is it to lead? at pnc, it's doing what most benefits our customers. whether that's building more certified green buildings than anyone on earth. creating online banking tools for the next generation. or making a 10 year, $100 million investment in kids. it's how we've always done business. and will for a very long time to come. pnc. leading the way. the quality of our lives depends on our connections. access to high-speed internet, at home and on the go, is no longer a luxury. it's how our children access education. it's how we find jobs, discover information, and connect with family and friends. it's the spark that drives innovation, creates investment, and builds a stronger economy. to shape a better tomorrow,

at&t is investing in america's future - working to create an internet that's smart, mobile and safe. last year at&t invested more than any other company in the u.s. and we're continuing to invest this year, to expand and enhance our wireless and wired networks. we support a national plan that ensures high speed internet access and enables adoption by all americans, over the next five years. adoption by all americans, over the next five years. the future is our business. at&t. your world delivered. predictions, pat? >> john, there's a big battle in the 23rd district of new york maybe more important than any other race this fall. the conservative candidate may win it. his name is hoffman. >> fascinating. eleanor? >> republicans will continue to push the scenario that hillary will challenge obama because it raises lots of money and makes

obama look weak. i say keep your eye on sarah palin. she's gonna run in 2012. boy i'd like that. >> it could be a woman's year in 2012. the chinese posted a nearly 9% growth rate for the third quarter. the chinese government's going to start focusing on potential inflation. >> mort? >> the federal reserve is gonna maintain the lowest level of the interest rates all through next year because the unemployment rate's gonna go up and everybody is very concerned the . >> currently, there are 27 members in the european union, i predict pwxwín ó