thanks to the accounting scandals at enron and worldcom, and the risky trades that brought down bear stearns and lehman brothers, a set of common practices for boards of directors has evolved. they include requiring directors to regularly attend board meetings and own stock in the company-- and some independent board members, meaning they haven't worked for the firm or done any business with it. still, jeffrey sonnenfeld from the yale school of management has found the makeup of a board is more important than any regulations or rules a board puts in place. >> we create these checklists which give people a false sense of comfort. much more important than this is look at the social process, the social dynamic. what's happening there? how do we confront one another constructively? how do we get the skill mixes in there? sonnenfeld suggests shareholders look at where board members have previously served. what happened at those companies during their tenure? he also says shareholders should ask the company what the firm requires of its directors, and you can learn a lot by how much a company is w

the bankers are still there except lehpeyton manning and bear stearns.nd the method -- except lehman and bear stearns. >> charlie: and the method. >> if you measure the recovery on the fees they've recovered. >> charlie: i'm measuring the basis on the parts of the banks you are talking about nermz of -- in terms of performance. >> if you measure the performance the answer is yes. there are 19 million people out there who don't believe that. who have gotten no signs that there has been improvement. >> charlie: and it is also argued that regional banks -- you know, are not -- are not -- lending money. and -- and corporate america is sitting on money. >> yes. there is plenty of liquidity out there. >> charlie: because they're unsure about the future. >> they don't -- if you're a small businessman, look what's happening. you're making more money than you did before. you have less vulnerability than you had going forward. the product demand for you is enough to satisfy what you have on board. why should you change? they're in pretty good shape? but i'll tell

european banks were hit by this quite hard by the fallout from the original failure of the bear stearns and other aspects of the sub-prime mortgage fallout. and there were big failures. uh, you had northern rock in the u.k. that had to be essentially nationalized. you had hypo real estate in germany, which was first nationalized and then liquidated, and on and on. now, compare that to asia. now, clearly the japanese banks, who had been smarting from their past mistakes, were on the sidelines. they were not caught up in this. the chinese institutions were not entirely uh, spared, but they didn't-- it was a glancing blow. what hit those countries-- and as you know, japan had a bigger recession in their manufacturing than we did-- is the impact on trade. and that happened because of this enormous reassessment by international business about their need for uh, fixed investment, and their ability to raise capital if they wanted to go ahead with fixed. we had a fixed investment crash, which lead to a trade crash that was partly financially driven, but largely, it had other origins that were g

already had this friday markets freezing up and they went through this whole process of billing out bear stearns he and geithner were saying really we don't see that these things are going to extend much further sure the economy's nor it going well so trying to manage confidence i would argue that that's their job too well that's what they say their job is to me is confidence but it's one thing to manage confidence another thing to just straight up be wrong and you know if they knew it was if they knew that the economy was not going to be growing if they knew that the subprime crisis is going to be spilling over anything within a couple weeks if they actually knew that and they just tried to boost confidence anyway well i don't know that we want. or people that are academically disinterested in truth we need people that need to manage the need to manage confidence for sure but they also need to be know exactly what they're talking about and they clearly have shown that they haven't been able to predict much at all so what is the solution if all of these guys have predicted what was going wrong h

of course, in the spring, with the purchase of bear stearns by j.p. morgan. but really towards the d of the summer and into the fall, the pace picked up. freddie mac and fannie mae were placed in conservator share. lehman brothers fifth at aig wa rescued and at the end of the day, or towards a the beginning of october credit markets essentially began to freeze. we saw stress in other parts of financial markets. the stock market of course is been one of the best examples in terms of the losses that we experienced there. i'm going to focus on credit maets today. primarily because the importance of these markets, and rich has already given us a preview and a nice discussion of what's going on in commercial lending and consumer loans, as well as mortgages. but those markers are really important to recovery in the real economy. the ppose of the financial sector is to provide the greece, if you will, of course helps the real economy option. into the extent people cannot bar and they cannot find new activity, that's the source of stress do so we're going to focus on