this week, we had a discussion over making $7 billion over the investments at citi bank. that doesn't detract from the larger problem that we had financial institutions, insurance companies and banks all working irresponsiblely and brought down the entire u.s. economy. we do have to address the issue of financial regulatory reform if we want to put the budget in order but also pu the u.s. economic growth on the growth path in the long run. we node to budget. i'm a little less worried about aig's affect on the budget. i'm more concerned about congress being able to pass a delay. >> we are talking with andrew biggs and christian weller. a senior fellow. you can read more about both of them on their respective websites. back to the phones. from virginia for republicans. good morning. caller: good morning. thanks for coming in. one of you said well, we have time to work on this and turn it around. i've never believed that. if you take care of business now and start this now, later, it will be better. everybody stops driving the car when gas prices went through the roof. when i

it is against this backdrop that the events at citi and at many other banks and financial institutions took place. specifically, on november 4, 2007, citi announced an estimated $8 billion to $11 billion in write-downs related to subprime related holdings. that same day, i resigned as c.e.o. of after i left citi incurred even greater losses, which eventually led citi to receive over $45 billion in federal tarp funds. as the commissioners are no doubt already aware, the largest losses at citi emanated from what were perceived at the time to be extremely safe, super senior tronchs of c.e.o.s that carried the howest possible risk of default. it bears emphasis that citi was by no means alone in this view and that everyone, including our risk managers, government regulators, other banks, and cde structurers, all believed that these scattered showers held virtually no risk, a perception strongly reinforced by the above aaa rating, bested by the ratings agencies. citi's writedowns on these specific securities totalled some $30 billion over a period of suction quarters and i -- six quarters an

if you look at merrill lynch, look at bear stearns, look at citi bank, bank of america, proprietary trading was at the heart of huge losses in their positions. i would just argue the presumption is an error. >> senator, you talk a lot about cracking down on conflicts of interest regarding wall street trading. okay. fair thuf. let me just ask you, though, with respect to goldman sachs in these e-mails where they went short and they hedged their mortgage position, isn't that the business they're in? i mean, don't they owe that to their shareholders? isn't that what they should have done as a prudent business decision? >> well, if you're hedging your own position, that's one thing. but if you are selling securities and recommending it to your client while internally you're betting that those will go down, that is enormous conflict of interest that can lead to the design of products basically mislead your customer. that should be off the table. that shouldn't be happening. the goldman discussion highlights that. >> there's an issue of the timing. when they started buying them, they didn't reali

city is a unique institution. the only truly national u.s.-based bank in gives it advantages in many of its businesses around the globe. too big to fail is a harder issue. my own view is that we are past the days of small localized banks and financial institutions. w450eu8 they certainly have a place in the financial landscape, the financial world we live in is complex, interconnected and global and i think this demands sophisticated, global and diversified financial institutions. that said, i certainly do not believe it is good for the united states to have a financial system with a failure or threatened failure of key financial institutions will imposed the kind of dramatic and near catastrophic damage on the entire financial system and the and national world economy that we saw when lehman failed and numerous other financial institutions, including citi needed extraordinary government assistance. . assistance. we must find a solution to this problem, whether through resolution authority, greater regulation, increased capital requirements, or all of t

, small banks, smaller than citi that are failing or have failed already. there are 700 or so as possible failures. i suppose that all of these are not national banks that some of these are national banks. >> sadly, yes. >> sadly, yes. >> now it seems to me that if there's one thing that a regulator ought to be able to do, it is to make sure that a bank has complete files on loans, and that it is only making prudent mortgage loans. but we hear, at least, that most of these banks are failing because the loans that they had made and most of these banks make mortgage loans either commercial or residential, but principally residential and hold them on their balance sheet. what is the reason that so many of these banks made loans that are now seeming to be imprudent and what role could the regularlator, particularly your office have played in preventing that from happening? >> well, i want to be careful here, because i was speaking about residential mortgage underwriting, not commercial mortgage underwriting. when it comes to the banks that have failed, there hav

questions about his job after he left government when he became one of the most powerful players at citi bank. that helped drive the sub prime mortgage crisis. expect ruben to be grilled over allegations by a former employee who testified today that he warned management the company was taking on too many risky mortgages, but he said the company ignored those warnings. john, we believe this will be the very first time bob ruben is going to be forced to answer in-depth questions about citi and his role in the financial felt down. it will be a big day. >> a big day tomorrow, a down day today on wall street. the dow industrials fell about 72 points. also weighing on the market, news that general motors lost $3.4 billion in the last quarter of 2009. officials say there's a chance gm could turn a profit by the end of the year. let's head to the magic wall. we'll continue our focus on the mine tragedy in west virginia. when we come back, we'll go wall to wall on the safety of that mine, with a history of problems and citations, should there have been enough problems raised? we'll ask the congressman

we've got citi, jpmorgan and bank of america all reporting numbers that were pretty good. there's two problems. number one, much of the gains we've seen already priced in the way the stocks are trading. ci citi's up 37% year to date, bank of america up 22%. the problem is the financial reform thing you were talking about the senator, that throws a monkey wrench into potential earnings down the road because it could be much more aggressive than the street expected. much of the gains in the s&p 500 for earnings this year are financial gains. that could be a big problem. halliburton came out with numbers that were very good, 3 cents above expectations. more importantly, north america really has improved. recounts up. they may have opportunities to increase the pricing level. here's the concern -- natural gas prices are way down. if this continues, there will be pressure on halliburton to cut prices for all the rigs that they have out there. and speaking of lower prices, sharon over at the nymex, i see oil down $2 again today. >> it is, and bob, the traders here have a lot to w

were you aware that your agency, each of you, gave a aaa rating to four tranches of a $386 million citi bank subprime deal in december of 2007? were you aware of that? >> no, i was not. >> i was no longer with the company. >> okay, and the press release from your firm now, i'll just address this to you, and mr. mcdaniel, when you rated the citibank deal, stated that you expected heightened losses and it accounted for that in the structure of the deal, but, 37% loss, the actual losses as of today, they exceeded any expected loss, obviously when you rated the deal. but, it is -- does it surprise you that you were still rating those subprime rmbss in december of '07? after what happened in july? does that come as a surprise to you? >> i am surprised that there was a subprime rmbs security issued in the market, to the extent we had updated our views, and felt that those views would now be sufficient to provide protection for the ratings assigned, i can understand why the rating committee would do so. >> mr... >> let me go back again, 24-b, there are a lot of interesting things there, your chief

giants like aig or citi bank have swelled too a size if they collapsed they could bring down the entire financial system. loosely translated meant the government must bail us out. that's the part we debated on the tv and the op-ed columns should we prop them up. but simpler meaning of the phrase it was too big. anything to big to fail is by definition too big. we thought we'd spun a kind of magic that would suspend the laws of gravity. ever since reagan the libertarian economist would insisted that self-interest alone was enough to hold at bay the possibility of collapse, that's why the amount of retail space per person in the u.s. doubled from 19 to 38 square feet between 1990 and 2005. it didn't make rational sense but it made sense as long as the minimal held. the spell broke in the summer of 2008. and after that there was only poor alan greenspan looking less like the master magician and more like the tired tiny wizard behind his curtain. his belief system turned out to be flawed he testified in congress. i made a mistake in presumes that the self-interest of organizations that they

the fact that since the crisis started, the six institutions in addition to goldman that include city bank and wells fargo, hsbc, morgan stanley, all these big banks now control 2/3 of the deposits and g.d.p. of this country. six institutions, they're raiding equity out of our local communities, they're too powerful and too irresponsible. they're not doing loan workouts in places where i come from and i want to thank the gentlelady for calling into question their business principles you have so ably put on the floor here as to who their interests really are, and that's my bottom line question. who do these people represent? they seem to be getting bonuses at extraordinary levels in the billions of dollars, when people in my district have fallen off unemployment benefits, companies like j.p. morgan chase don't return phone calls to do loan workouts, wells fargo, they're just totally irresponsible. they have too much power and they are thumbing their nose at the american people at a time when our people are just hanging on and i want to thank the gentlelady for holding the special order this

how then did our investment bank end up incurring such large losses? what went wrong? the losses that citiurred that relates to the cdo business arose from the extremely high rated cdo tranches, the super seniors that everyone at the bank and most in the industry believed were among the safest instruments. these super senior were above aaa. which meant their chances of default were deemed to be extremely low. it is difficult now to put ourself back before the time of the financial crisis. but it is important to understand the following critical point: citi's losses from its cdo business did not result from a fixed-income group places high-risk bets in the proprietary trading business and reach for outside profit. to the contrary, our mwai primary losses stemmed by client-driven activities resulting in the holding by citi of low-interest yielding, very low interest yielding and were understood to be later de depreciated in value. this is when the lower rated cdo security started to decline in value. when we took significant steps to produce our exposure to these riskier cdo positions, but e

the city banks of the world? >> i don't think so.for what it is worth, i felt we had strong due diligence practices and didn't change relative to those types of loans in terms of what we were looking for because we still felt one of the reasons why those of us who have been lifelong in the mortgage industry and i came from the side of working from the investor before was at the end of the day the one thing that drove our opinion was our belief, can this person make islam? can this person make this payment at the basic level. if the answer is that we probably don't have a reason to be doing this loan. >> one short question, when you look back on this to think that there should've been some sort of regulatory supervision of your business activities and that of your industry specifically that segment that was not necessarily monitored by the federal reserve as a bank would he? >> i think the person who is investing the money should know what they are investing in. as a hard money lender myself i love my personal funds and i grew up in t

harris who testified yesterday, the former co-chief of citi's investment bank, but i think that mr. prince was in some part trying to pay him a back handed compliment. >> it is funny that he would just mention two names. >> two names. >> that struck me to name names like that while he is on the hot seat. well, mary, where is the accountability? who do you think should be accountable? >> i am not sure i'm the person -- well, that is above my pay grade, but i think that there are a couple of things that you take from listening to these hearings. first of all, you can understand the frustration on main street, because you are listening to people who have been paid hundreds of millions of dollars saying i don't have access to the data, i don't have access to the numbers that would suggest that maybe this is a risky position, i am depending on other people, and other people say i was depending on the rating agencies to give high ratings to what turned out to be risky securities. so again, i'm not sure that there is one person to blame, but it is human nature to look for one person, but i

citi's first-quarter profit that the bank reported yesterday, small comfort to the thousand or so shareholders who showed up today. chairman dick parsons did tell them citi has turned a corner. they remain angry about the losses they've sustained and angry at legacy directors, including parsons, who they hold accountable for all of sit ti's troubles. here's a small sampling of what investor grievances we heard at the annual meeting today. >> we need new blood in citi bang boa bank board and a change of the present chairman. >> i feel strongly that they're trying to do the right thing, but is it too late to do anything that will bring about quick success or increase value of a stock? >> reporter: all that anger, not resulting in any changes today. all 15 of citi's directors were elected to the board. six shareholder proposals defeated. seven management-backed proposals were approved including one on say and pay and another that gives the board the option to conduct a reverse stock split if necessary. ceo vikram pandit tells investors he feels a lot better than last year, though challenges remai

review in december 2009 where again the peer other federal reserves commented on the supervision of citi bank by the federal reserve bank in new york and they said it was less than effected although the team is well qualified and generally has sound knowledge of the organization, there has been significant weaknesses in the execution of the program. i just wanted to point out these were internal reviews as the iny of supervision. you indicated what was important to go after fraud, embezzlement, inlegal activities, and you've been clear on that. very quickly, the warning in 2004, there was an increase in the number of suspicious activity reports from 2003 to 2006, your own federal reserve in 2005 put out a white paper on the detection investigation deterrence of mortgage loan fraud. just quickly, what was the single most important thing that the fed did in light of the evidence to prevent fraud in mortgage? >> well, first of all, enforcement against fraud and misrepresentation is one of the key elements in any market society. you cannot have an effective market society if counterparties cannot

the city banks of the world? >> i don't think so.worth, i felt we had strong due diligence practices and didn't change relative to those types of loans in terms of what we were looking for because we still felt one of the reasons why those of us who have been lifelong in the mortgage industry and i came from the side of working from the investor before was at the end of the day the one thing that drove our opinion was our belief, can this person make islam? can this person make this payment at the basic level. if the answer is that we probably don't have a reason to be doing this loan. >> one short question, when you look back on this to think that there should've been some sort of regulatory supervision of your business activities and that of your industry specifically that segment that was not necessarily monitored by the federal reserve as a bank would he? >> i think the person who is investing the money should know what they are investing in. as a hard money lender myself i love my personal funds and i grew up in the industry. i

mcdaniel, when you rated the city bank deals that you expected heightened losses and it accounted for the structure of the deal a 37% loss they exceeded any expected loss. but does it surprise you you were still retain those subprime rmbs december 2007 after july? >> i am surprised there was a subprime rmbs security issued in the market to to the extent that we have updated the views and felt that those views would be sufficient to provide protection for the ratings assigned. i can understand why the rating committee would do so. >> but may go back again. a lot of interesting thing is your chief credit officer wrote october 2007 both issues and the weaknesses the organization needs to address after the subprime market collapse. one of the things that he wrote under market share share, paragraph five come ideally competition would be primarily on the basis of ratings of quality that is ideally with a second component surprise him third of service but unfortunately the three factors is proving the least powerful. >> two lines down he said the real problem by awarding not mandates solois

council is holding hearings on withdrawing all city funds from "too big to fail" banks. >> the city has got to meet the challenge. >> reporter: in new mexico, a similar bill would move billions of state dollars into small banks and credit unions. >> we're going to hopefully send a message that we support the community banks and the credit unions what support our communities. >> reporter: one candidate for governor of oregon has made moving the state's money a center piece of his campaign. >> big banks have proven they cannot be trusted to act in the public's interest. >> reporter: but what's it's actually like to move your money to a local bank? on the website i found one very close to home. >> good morning. >> hi. >> reporter: it was friendly enough. >> how are you? >> reporter: and neighborly though i don't really know scott wilson. >> you live down the block from me. >> that's right. >> do you most of your banking here? >> all of it. >> i like this bank. i've been with this ban be for over 30 years. >> reporter: you're also a customer of this bank, obviously. >> yes,

bank's own lending starnldzs. >> i witnessed business risk practices which made a mockery of city credit policy. >> reporter: despite the bank's losses, prince and rubin each left citigroup with tens of millions of dollarss in compensation. >> it doesn't fit the scale test no matter how often you feel really, really sad. >> reporter: citigroup has paid back $20 billion to the government. but taxpayers still own more than a quarter of the bank. katie. >> couric: anthony mason, anthony, thank you. in other news, it is the biggest nuclear arms agreement in a generation. in prague today, presidents obama and me medvedev signed the trees that calls for deep cuts in the nuclear arsenals. chip reid is traveling with the president in prague. and, chip, how important is this new start tritey. >> reporter: katie it would cut the nuclear arsenals strategic weapons in the united states and russia down to about 1500 weapons a piece. that's still a lot. that's enough to destroy both nations many times over, but president obama says it's an important step along the road to a nuclear-free world, and he says it's going to take gener

bank's own lending standards. >> i witnessed business risk practices which made a mockery of citi credit policy. >> reporter: despitee and rubin each left citigroup with tens of millions of dollars in compensation. >> it isn't fit the scale test. no matter how often you feel really, really sad. >> reporter: citigroup has paid back $20 billion to the government, but taxpayers still own more than a quarter of the bank. anthony mason, cbs news, new york. >>> this is a great story temperature two long lost brothers in canada found they didn't have to look far to find each other. tommy larkin and steven were adopted as children by separate families. after years of searching for each other, a post-adoption agency told them they had been living on the same street for the last two years. >> new finland would have been really exceptional, but across the road is just -- is something amazing. >> i couldn't believe that. that was crazy. and took me about three hours to get the nerve -- three hours and probably four pots of coffee to get the nerve up to call. >> isn't that incredible? the two brothers now spend a lot of time tog

wal-mart, city bank, ups. >> gretchen: we feel sorry for bob? >> we should feel sorry for all of us, including bob. bob could have a much more fun job if he weren't my accountant. >> brian: bob didn't look like he was having too much fun. >> gretchen: you're for the flat tax. people can check out the show. i know it will be good tonight on "fox business" network. >> brian: what time? >> 8:00 o'clock. >> brian: we'll watch. starring john stossel. action hero. good job, john. straight ahead, a look at the beautiful dog, she could save a life as well, maybe even yours, the search and rescue dog puzzle and her handler are here live. plus -- >> gretchen: let's check in with bill hemmer. >> good morning to you. great show this morning. good morning to all of you. two astronauts, both walked on the moon, both with a very different opinion in the president's plan for space. buzz aldrin and gene surgeonen are live, we'll talk to both of them. also who does the tea party want to knock off this november? the group comes

the city banks of the world? >> i don't think so. for what it is worth, i felt we had strong due diligence practices and didn't change relative to those types of loans in terms of what we were looking for because we still felt one of the reasons why those of us who have been lifelong in the mortgage industry and i came from the side of working from the investor before was at the end of the day the one thing that drove our opinion was our belief, can this person make islam? can this person make this payment at the basic level. if the answer is that we probably don't have a reason to be doing this loan. >> one short question, when you look back on this to think that there should've been some sort of regulatory supervision of your business activities and that of your industry specifically that segment that was not necessarily monitored by the federal reserve as a bank would he? >> i think the person who is investing the money should know what they are investing in. as a hard money lender myself i love my personal funds and i grew up in

banks and financial firms borrowed $244 billion through t.a.r.p.'s capital purchase program and the targeted investment program which was set for citi and bank of america. intended to strength on the financial system and bolster bank's balance sheets but it seems it's bolstering the treasuries, too. snl looked at 49 firms including morgan stanley and sachs that have paid $18 billion repaid in treasuries. netting $5.6 billion in profits from the sell of the company's warrants. even after factoring in t.a.r.p. money the company is up $10 billion and it is a number that could go higher. that's because snl didn't include 18 companies that have repaid t.a.r.p. but whose warrants have yet to sell firms like wells fargo was not included in this data. and did not take into account the sale of 7.7 billion shares of citi which at today's price is at $7.7 billion. the anticipated gains to offset future losses on troubled smaller banks, 74 of which stopped paying dividends in february in the t.a.r.p. money they borrowed from the government. >> enough to offset the losses. >> not all of it. cbo estimating losses on t.a.r.p. in total the $700 billion about $106 bill

on goldman sachs today, how do you think some of their competitors such as deutsche bank and citi are feeling, and do you think they will see more cases brought against them? >> i think that the government likes to bring a string of cases, but where they go first is their best shot. although we saw that against bear stearns. it didn't work. the justice department lost. do i think that goldman will lose clients over this? i think anytime there's something bad you're going to lose a client or two. but you know what the clients are motivated about? making money. and if goldman provides moneymaking ideas, business flows right back. it's the nature of the beast. don in my home state of pennsylvania. don. donald, speak to me. >> caller: i'll give you a real big boo-yah from the phillies game here. boo-yah! >> i like that, but my dad and i were commiserating. you know, other than halladay no one's gotten past the fifth yet. these are things of course i think about while i'm debating about the goldman thing. but you know, i'm like a guy, and it's a guy thing maybe. except for the female fans.

bank was also a big hold oreer of th cdos. >> well, with the same equity firm, they worked with ubs and merrill and citi and deutsche, and all of the main banks and it seems like these banks and the cdo managers knew that this is what magnitar was doing. >> i urge you to go on the website to look at the research they did on them. it is interesting reading. >> and now kotick, tick by tick, and there is concern that the goldman could be the catalyst for wall street. here is what the technicals are saying and what we should be watching for next week is jordan kotick, global head of strategy with barclays capital. jordan, good to see you, and what are the technicals telling you right now? >> certainly volatility in the market. there are two things coming off of the charts that will mean something for the financial sector. number one, the u.s. financial sector, the first thing to notice is that thefinancials is that it is not outperforming, but performing with the market. you have had a rally in the financials of 25 off of the low. there is not a technician out there who doesn't feel it needs a correction, but distinguish between

they've been moving. >>> aiming to cut the bank's assets by 40%. he said citi'sis banking focussed and calling for more derivative transparency and argue that shadow banking has to be regulated. probably puts him in line with a lot of the regulatory reform measures moving through washington now. >>> swiss banking giant ubs posting the highest profit since the start of the credit crisis. >>> and the euro hitting nearly a one month high against the dollar and the yen after euro zone finance ministers agree to a rescue package for greece. that's not been pulled by the greeks yet but leaders agreed to a $40 billion aid package. it's unclear if greece will activate it but we'll go live to athens shortly for more on this story. >>> our guest host today. before a top consultant to the financial service agency he helped mold economic policies as fed reserve governor. our guest for the next two hours mark olson, governor 2001 to 2006. great to have you here today. >> pleasure to be here. >> this is an important time in the economy and feels like an inflection point. you c

i no at the last fomc meeting the president of the federal reserve bank of kansas city tom hoenig descented in regards to the use of language about low rates for an extended period of time. he basically made the argument that that does not give the feds the flexibility, the fed the flexibility it would need in case the recovery happens at a quicker pace and that people are starting to build expectations into the marketplace because of the low interest rates. do you just ask you first of all, can you have the flexibility that you need and then if the economy improves at a quicker rate, can you be flexible without shocking markets that are building in the expectations about the low interest rates? >> yes we can. mr. hunt specific concern was the sam one i talked to mr. royce about which was about bubbles and asset imbalances. and as i say, we're looking at that issue but i think it is very important to keep in mind that when we talk extended periods we're not saying a fixed period of time. we're saying a period of time which depends on how the economy evolves and our statement very specifical

grasso, do you like any of these names based on what we've already heard from the likes of the citi and bankof america? >> i always like the transaction-based cards. mastercards and visa. i'm out of my visa. had a nice healthy profit approaching 30%. you can never laugh at a profit, you got to take it off the table. that's what we're seeing across the board, taking profits off the table. worried about risk at this point. >> steve makes a great point about mastercard. that's something american express, what a great franchise. that stock has doubled since july effectively. their master trust data i think they came out with on april 15th was pretty good. i think you'll see a pretty good quarter out of american express. don't know if that turns into a rally in the stock, but i think the worm has turned a little bit for those guys to the up side. >> remember their most important characteristic, they're not a bank so they're not on the naughty list. they're in the sweet spot of financials that you don't have to worry so much about. >> let's do a quick take your position. karen, your shareholders i

banks. it's gonna be everybody you've heard of. goldman, merrill, citi, b of a, j.p. morgan. most of the major desks on wall street have had c d o and synthetic trading desks. so, this is just the tip of the iceberg and as soon as this case its momentum, it will be applied. the same setup will be applied to the other banks and the prosecution will continue way through the summer. we're just getting started. what are are the synthetic cd o's that banks are cooking up? i mean, how you make one and then lie about what you put in it? well, right, there's two points to your question there. you make up a cd o by saying these assets will behave in a certain way. and that's what you get. a bet on a derivative transaction. this bond will survive, or won't survive. the question lies, and here's where the case is in the civil suit is. whether it was a material omission, they forgot to mention about how bad this bond was. or they intended to not pervade the information to their customers. and that's where the legalities lie. do they know it, or they but it know it, or were they lying abo

city. >> it's interesting, by the way, congressman -- by the way, i love talking stocks with you. not all the banks went up. a lot of these big banks went down. citigroup, jp morgan chase, and u.s. bancorp actually fell. but you're right, the u.s. bank index was up. what would it take to gain your

inflation, or the lack of it, is one reason the central bank seems to have the luxury of a little extra time. citi economist bob diclemente says policymakers may even be a bit nervous about deflation. >> they want to be convinced, too, that the recent slowing in inflation isn't part of something undesirable. that there isn't some sort of undercurrent of weakness that isn't evident. so, i think stable inflation is probably an important element. >> reporter: but some experts say an end to the fed's pledge to keep rates low for an extended period could come as early as this summer. you may remember that's the famous language contained in every fed policy statement since march of last year. >> even then, when they change the language, it will be a new phrase that also suggests the fed isn't ready to hike yet. so, they're not going to go straight from extended period into hiking interest rates, there will be a transition period. >> reporter: when those rate hikes eventually happen, they'll likely come in baby steps, or quarter point moves. experts say the fed will use a measured approach designed to av

from stanford and works in new york city, not far form banking's movers and shakers. but she leads a team at the acumen fund that's invested some $40 million to support enterprises that serve the poor. >> on good news from pakistan... >> reporter: with donations from 200 philanthropic individuals and organizations, they've invested in a dairy farm in pakistan, a mosquito net factory in tanzania or a seed factory in kenya. it's a new approach to venture capital. she calls it patient capital. an investment that pays off slowly, that encourages profit, just not excessive ones. she insists this middle way will work better in today globalized economy. >> if our current situation teaches us anything, it's that unfettered, unbridled capitalism isn't working. certainly not in interconnected worlds where we need to find ways to include everyone into the global economy. and on the other hand the ills of charity, alone typically can reach low income people but also not at any level of scale and too often it creates dependence rather than a sense of dignity. >> reporter: she's sp

it is against this backdrop that the events at citi and at many other banks and financial institutionspecifically, on november 4, 2007, citi announced an estimated $8 billion to $11 billion in write-downs related to subprime related holdings. that same day, i resigned as c.e.o. of after i left citi incurred even greater losses, which eventually led citi to receive over $45 billion in federal tarp funds. as the commissioners are no doubt already aware, the largest losses at citi emanated from what were perceived at the time to be extremely safe, super senior tronchs of c.e.o.s that carried the howest possible risk of default. it bears emphasis that citi was by no means alone in this view and that everyone, including our risk managers, government regulators, other banks, and cde structurers, all believed that these scattered showers held virtually no risk, a perception strongly reinforced by the above aaa rating, bested by the ratings agencies. citi's writedowns on these specific securities totalled some $30 billion over a period of suction quarters and i -- six quarters and i believe it

like jpmorgan chase and bank of america, city is benefiting from strong revenue. re still cautious about the economy. investors are sending bank stock up more than 2%. that's helping out. smaller banks still having a tough time. the fdic closed eight banks, washington and california and massachusetts and florida and michigan so far this year, 50 banks have been closed. so we did hear the early numbers there. we did hear the bell. we should be able to take a look at the numbers. i am looking at red but not much of a number. i am still seeing a downward movement here. the s&p is down slightly. the dow is down six points for the dow. we are looking at a slightly lower open as we go. nasdaq, off five points. 2476. she mentioned airline stocks with our good friend richard quest from cnn international. they are under pressure because they stand to lose so much money, millions of dollars from disruption of flights to europe, which may keep richard quest in the building for a little longer. >> forgive me. i went right to the business at top. didn't say hello. how you doing

dan, you got the citi meeting, goldman, the latest bank to proverbially hit it out of the park.hat do you think about financials? >> i think we found our michael orr in the earnings front. after getting blind sided last friday, the market found support on the earnings front. had a gap opening last thursday, broke down, will look to fill that gap today. i would like to see the xlf trade as the banks continue to trade higher. >> anything else? >> other than that, looking at volatility, the one reason i think that we're seeing a market kind of support itself here is that realized or historic volatility is around 9.25%. the fix, if you look at forward looking volatility, 7.34% coming in this morning, a big gap, so i think we're going to continue to see volatility to come in. that's the place we're seeing right now in the -- >> dan, thank you very much. we appreciate it. >> you're welcome. >> mark, by the way, goldman hitting it out of the park to ensure their debt, jumped on the fraud charges and they're back down again. >> you're watching the opening bell. the big board, it is the

doubt already aware, it bears emphasis that citi was by no means alone in this view and that everyone, including our risk managers, government regulators, other banks, and cdo structure all believe that these held no risk. it was a perception strongly reinforced by the above aaa rating bestowed by the ratings agencies. citi's write-downs on the specific securities totaled some $30 billion over of period of six quarters. it is fair to say that this factor alone made a substantial part of the difference between citi's ultimate problems and those of other banks. was not aware of the decisions being made on the trading desk to retain these super seniors, given the perception that these were extremely low risk, it is hard for me to fault of the traders who made the decisions to retain these positions on citi's books. having $40 billion of aaa-plus rated paper on the balance sheet of a two trillion dollar -- $2 trillion company would not raise concern. it is important to appreciate that the cdo business which was a small part of a large and complex financial institution was being managed. in retrospect, it turned out that that risk assessment, while wide

the first set of hearings had chief executives of four big banks -- j.p. morgan, citi, bankamerica, morgan stanley, -- citigroup, bank of america, morgan stanley, but not citi. basically looking at citigroup as an example of one of the extreme cases of securitization going on where mortgages, many of them subprime, bought by by years that otherwise would not be qualified for a home mortgage were packaged and sold by citigroup to investors. at such a high rate, so that when the underlying mortgages began to default, that created a cascading series of reactions appeared -- reactions. host: folks at "the financial times" were so intrigued, headline coverage on the fact that citi relied on outside advisers on its decisions on to jordan nations. did you find it interesting as well? guest: i found it interesting, but one of them things about securitization and why it is difficult to explain and one thing that frustrated the commission is the process got broken up into some different segments. you had the mortgage originators, you had the banks that bought the loans, that pac

tom honan, president of the federal reserve bank of kansas city, said recently -- "our nation's largest banks would be well served to take lessons from our community banks. why? because community banks have been committed to providing the credit and services needed for small business, they know their customers, and they can make good, solid loans that are supportable." in texas, richard fisher, the president of the dallas federal reserve bank, said -- "the provision in the bill would leave the dallas federal jurisdiction -- federal reserve jurisdiction with only one or two bank holding companies, down from 36 member banks or or $74 billion in assets that he now has supervisory authority over. the fed should know the needs and the economic conditions throughout the country, not just new york and washington, d.c." it is precisely the ability to foster bottom-up growth through small businesses that sets community banks apart from other financial institutions. unlike the big financial institutions, we see in the headlines bailouts and bonuses, community banks don't have a systemic risk to o

so -- >> so we apologize -- >> the bank of america person is on the citi board? >> mea culpa. >> and if you're looking at activity again, citi has been off the charts, traded 3 million contracts last week, traded nearly 3 million today. 2 million of which were calls once again. people have been attacking and goes for the 5s, the 7s -- >> the may 5s. >> expecting the stock to start moving through 5 soon. >> one thing that was noticeable was vikram pandit saying we absolutely couldn't have survived without taxpayer support and just taking the complete opposite tack from others that feel they didn't need support or just trying to get behind the -- >> that was nice. but the one thing that stood out for me about citibank's numbers is what we said was going to happen is their trading revenue's down 30% because they've sold off a lot of high income assets. and you're saying where is citi's business going forward? fromfrom a trading perspective this was a big problem for these guys. showed up in the numbers. everyone else bank of america was up 12%, jpmorgan up 4%. this

cities are suing wells fargo again. baltimore and memphis today filed new federal lawsuits accusing the bank of giving african american borrowers expensive home mortgages that led to an epidemic of foreclosures. those empty homes cost the cities tax revenue and forced both to spend more on public safety. wells fargo says it stands by its lending practices, and wants to help homeowners in need. the suits were filed as the naacp dropped its lawsuit against the bank. as part of an agreement, wells fargo will let the civil rights group review its lending practices. >> tom: the texas banker accused of a $7 billion ponzi scheme, allen stanford, has added a big name to his legal defense team. harvard law professor alan dershowitz is now working to free the jailed businessman. stanford is accused of 21 counts of conspiracy and fraud. dershowitz says keeping stanford in jail is unconstitutional, and he'll argue his case all the way to the u.s. supreme court. >> susie: the deadline for filing your federal taxes is just one week away. if you haven't started work on your return, there's no time like the present. and kevin mccormally is her

banks. the bottom line is that governments of any color, of any national city, need a healthy banking system to carry on to develop the growth for the future. there has to be some accommodation between the public and moral outrage on the one hand, and the bare bones of market realities on the other. >> still no doubt the timing of this is absolutely ideal. >> well, absolutely. >> right? i mean, bottom line is absolutely perfect. you want to pass the regulation bill, the timing of this couldn't have been better. >> i suspect at the end of the day, however perfect that timing, you're going to see some old-fashioned trading going on to make sure that, you know, you don't throw the baby completely out with the bath water on this one. but reform, yes, is coming down the pipe. >> okay. let's move on to our global roundup of equity markets. ahead of the u.s. open at the beginning of the trading week, global equity markets are firm. we'll kick off. anna is here in london. >> thanks very much, ross. insven sis is the biggest gainer of the london markets today, up 3.98%. we've got some of the mining s

city leaders want verizon to bring their -- here. >> unfortunately, we have a long history here in baltimore of this sort of treatment by big corporations, whether it's banks or insurance companies, auto insurance, there just seems to be this prejudice that exists out there against baltimore. >> a city council meeting will be held next wednesday. verizon meantime announced it has no plans to expand files into any new markets. we have, of course, rain moving through the region. no, complaining, we need the rain. >> definitely. it is time we get the rainy portion from the clouds out there. talking about what's going on here. here what is we're talking about right now. some showers coming down across the area. heavier in perry haul and northeastern portion of the city. some of the tailing off to the west. it looks like we do have heavier showers over northeastern portions of baltimore county. northeast in bellaire looking at decent showers. crossing the bay, folks in chester town and west of that towards rock hall looking towards a few showers. we'll continue to see scattered showers down -- so this rain is crossing across the area behind this frontal boundar

community banks and agricultural banks like co-bank that are very small players in the marketplace in the same category with the goldman sachs and the citi this legislation does that in the derivatives title, for example, a community bank in moultrie, georgia, my hometown, is treated exactly the same as citibank on wall street in new york city. that's not right. they are not part of the problem. and we don't need a solution looking for a problem for them. so, i think what we've got to have is more bipartisan conversation and more -- a more realistic approach to trying to make sure that somehow we get to the middle as opposed to being in an extreme position where this bill is. >> what do we like? do you like the consumer protections in the bill? >> well, it's another layer of government bureaucracy, while i didn't necessarily think the idea of protecting consumers is nothing but good, this bill overreaches in that area from this standpoint, automobile dealers. all of a sudden they're going to be thrown in the same categry as a bank. automobile dealers were in and out of my office today talking about the fact that automobiles are going to

we're doing this in conjunction with bank line dc, this is a huge effort that the city administrator and deputy mayor santos and district commissioner purcell are putting together a campaign to get 10,000 new bank accounts and direct savings -- direct deposit accounts from washingtonians by the end of the year. this is to address some of the what you call the we're calling the unbanked and junk banked washingtonians who don't really have bank accounts because of either experiences they have. so we have banks there, you can put -- you can open a bank account there and these are accounts that will be low cost bank accounts for people to have. and that's all part of the bank line d.c. campaign that will be going on throughout the year. april is financial literacy month. >> clearly a lot going to be going on. it is this saturday, from 10:00 until 2:00. if you are interested in getting your tax returns done or looked at, you should call ahead. you as well. thank you very much for coming in. >> thank you so much for having me. >>> coming up in just a few moments, honoring history or is it a

it's clearly not the small banks who are cutting their lending. according to the kansas city fed, 45% of banks with assets under $1 billion actually increased their business lending in 2009. so what do the megabusinesses do instead of lending? they've increased their trading by 23%. they're trading with each other because they can make money. they're trading with each other on wall street because they can make money. they're not making loans to main street because it simply isn't as profitable for them. last year we let 100 community banks fail across the nation. meanwhile we spend $165 billion of taxpayers' money to keep the big six banks afloat. but the cost of having these six megabanks is even greater. the bank of england estimates the true social cost has exceeded th 4 trillion. 4,000 billion dollars. if we don't want more small business failures, if we don't want more bailouts, we need to do something about the unprecedented concentration of wealth among a few large banks. that's why senator kaufman of delaware, senator casey of pennsylvania, senator merkley of oregon,

it's a laughable number, as you know, because let's say bank of america or citi goes up, they went through's the question -- >> so, can you break up these banks so when they collapse they're not holding a gun to taxpayers' heads saying, give us a trillion dollars or we ruin the economy? >> in theory, part of what you do like anybody, you keep enough money in your bank account to make sure you don't get in trouble. so you keep bigger capital. there are banks that did that and didn't get any trouble. that's what -- >> jpmorgan. >> a big capital push. >> and jamie dimon as well. >> canadian banks did that. the difficulty for any administration is there is a desire, an anti-establishment position. banks are still driving the financial sector. they are providing credit to people, so they are interconnected to main street in a way that's essential. so the notion of sort of teaching people lessons, even if it's undesirable, even if you don't like the pay packages, wall street still serves an essential function in items of economic growth. >> pat, it's tough to go too far, correct me, on wall stre