that list is kept private by the fdic experts say the fdic has been methodical with handling these bank failures... but some believe they are happening at a slower pace than expected considering how widespread the problems are... i think the fdic is allowing these banks to hold on a little longer. it's happening because 1 they are overwhelmed and 2 - because there's no reason to force them into bankruptcy.. if they can hold on for another 3 to 6 month period. another reason? the fdic is givng banks time to find buyers...so that losses are kept to a minimum. the fdic has a total of 23 billion dollars in reserves to handle future bank failures... plus it will collect a 5 billion dollar payment at the end of september... from a special charge on banks. all of the fdic's funds are made up of premiums charged to banks... the agency is also able to borrow money from the treasury department if needed - but that money must be repaid. the price tag of to rescue the financial system could top more than 23 trillion. the special inspector general of the tarp strategy will tell congress on tuesday t

that's the fdic, the treasury, and the federal reserve. at issue, when and if cit will have access to the fdic's temporary liquidity guarantee program. or the tlgp, which was supposed to be a component of cit becoming a bank holding company last october. to refresh your memory, this program allows all of the banks to roll over maturities. it allows the company to buy the guarantee of the fdic and issue bonds up to three years in maturity. you pay for that 100 basis points a year. cit so far the only institution that got significant tarp money, $2.3 billion in tarp funding, and has yet to have access to those programs. regulators are mulling a solution while the company is doing extraordinary things to keep meeting payroll. but sources say a package needs to be finalized soon or the company will struggle severely. some say possibly declaring chapter 11 and leaving 1 million snaul businesses unable to meet payroll. sources say the application was filed from cit last year and italian initially was asking for $10 billion and then an additional

what can you tell us about your unhappiness with the fdic? >> well, i'm unhappy in two separate regards. one, in terms of the overall policy. they're proposing a rule that would say if private equity funds by a bank, a failed bank that needs to be rehabilitated, and wins the competitive auction for it, it would still have to have a 15% equity ratio. that's about three times what they make the regular bank, a publicly traded bank, have. and it is almost two times what they require for a bran new start-up bank that inevitably will lose money for the first few years. so it seem totally out of whack that they would require that. then they require in the second thing, if this goes through, and that is that if we owned like percentages of two different banks, we would have to cross class rallize the investment. well, my partnership documents prohibit that. and so do most private equity funds. not that i would want to do it, even if we were permitted, but as a matter of the ral of the game, private equity funds don't do that. >> are they breaking th

there was an fdic input on this, the fed and the treasury. there was some reports that the fdic came in and said, wait a second, guy, this is not systematically important. treasury telling me, we all had that same conclusion. when it came to the amount of money that was needed from the government, they just said, you know what, that's too much money. now -- >> we continue to get stuff, like this e-mail that just came in. citi's collapse will destroy -- gl cit's collapse. >> i'm sorry. will destroy the new york garment industry. factoring is a need for the industry. >> we just talked to the man who makes patio furniture. you can say there are other places to get it and there's not a need for small business lenders but we get anecdotal evidence through our e-mail that a lot of people who think they won't be able to get this from other banks. >> people will feel this.y that's the most difficult part of going through this kind of financial turmoil. people feel the foreclosures. people feel unemployment going to 10.5%. all of these have enormous

when the fdic close is a bank shareholders and creditors if the first loss. when we call for resolution mechanism we are not talking about propping up the field firm and its management. we are talking about a process with bank is close, shareholders and creditors suffer severe losses and management is replace in assets of the failed institution are sold off. this is harsh but it quickly reallocated act -- assets and to the private sector into the hands of better management and also sends a strong message to the market that investors and creditors will lease losses in when an institution fails. so-called make assistance which put the interests of shareholders before that of the government should be prohibited. make no mistake i support the actions regulators have collectively taken to stabilize the financial system. lacking in the price the resolution mechanism we did what we had to do. but going forward and open bank assistance by any government entity should be allowed only upon invoking extraordinary systemic risk procedures and even then the standard shoul

they haven't done that the fdic seems to have said no thanks to cit's application, hey, we are still talking to the fdic, became the bank holding company, they continue to try to transfer assets from cit to their cit bank, which, of course works lessen their own funding requirements at cit, as for the funding requirements go back to the 10q, 10 billion for the month that will end next march, they have a debt payment due next year they are worried about. estimated liquid i had, 6.4 billion, need 10, only got 6.4. by the way, also have 5.3 billion in unfunded financing commitments. in order, they have said to a company we will lend you this money, the company hasn't pulled it down there is a fear right now that those companies, seeing the distress that cit is in is going to say i want my money, make sure it doesn't go away. that will only serve to make things worse for cit as it tries to struggle through this period. now, you saw the stock prices, more indicative of the financial health of the company would be the bonds, if i can show them to you, not trading -- trading at distressed p

i mean, doesn't sheila bair have a right to protect the fdic -- >> everyone knows that if the fdic hasing, the treasury department will be will to back it up, the federal government -- >> sheila knows the treasury's going to be behind her, why does she act like it's her money, then? >> she has the right to be careful. we're not asking her to waste the money. >> so you say give the fdic guaranteed, cit, do it. >> if they've done it to ge, which has a little worse capital balance sheet -- >> but they have all of these other --. >> but if you're there to try to get the capital markets working again, with cit and ge and thes others, if you just -- it's like a natural disaster. you go in, you throw in the food, you throw in the medicine, you throw in the temporary shelter and then you pull back. part of the problem with the federal reserve is nobody knows, nobody believes they will pull back. in terms of cit, ge, securitization market, they should have done this three or four months ago as aggressively go in, get the thing working, pull back and say when the pulling back and why the pullin

big money at the fdic. the private equities meeting to say let us buy banks. are the nation's banks fixed or do we need this money and now? then a big bet by the american indian seminole tribe on gambling. 600 room, europe's biggest casino, huh garry and the ceo is with us exclusively. as american states get more desperate, they may tax the internet. that is that could hurt us all. the show starts now. we had been lower and up nearly 5% now. commodities are a big story and oil remains down as it has been through the session and nasdaq and s&p are also low. see if the dow withhold through the gains. find out what names they are focused on. rebecca jarvis is here and we want to start with you. the name you are focusing on is a significant mover. >> up 2.4% and the nasdaq index, the biggest of the big names. two things i want to point out to viewers. maybe not as bad as the previous recession. he said if there was a rebound here, dell stands to benefit and the second thing is there was a customer service survey that came out and outperforming everybody. when we a

well, you know, that way they can have access to tarp, fdic money, get money from the fed in the discount window. that way, they can be saved. right. right. so kashkari, after he makes this decision, he's out. i mean, he's still in the system. he's out. he has been replaced now by gary gensler. what a surprise! gary is the former partner at goldman sachs. now, once kashkari has made goldman sachs a bank holding company, they don't have that pesky s.e.c. thing, you know, to look them over. instead, no, no, no, they have a guy named steven friedman. he was the former chairman of goldman sachs. now overseeing them, because

the fdic wants to see capital, potential go back into banks. they want to see solvent buyers.oncern i heard was private equity, both from the fdic and the administration, is a short-terminate of private equity. private equity is a short-term investor and they want long-term ownership in banks. they want the stability of ownership. i believe that is a fundamental challenge for private equity and how we work through this in the comment period to get the fdic and the government regulators comfortable that when private equity makes an investment, they'll be there for the long term, because -- >> how long are you going to be in your banks? >> well, i selected investor partners who understand the long-term -- >> wilbur ross? >> and carlisle blackstone, but to be frank with you, if you view the injection of private equity capital almost the way we view the government investing in these banks, these investments will jump start, i believe, something that will develop later on. and hopefully when these banks get -- when these banks get restructured and start to grow, we can take these b

that is not fdic, but if you are a cd inverse for and you want fdic, the market meltdown made fdic very important. >> gregg: we saw the dow jones close before 9,000, let's throw a party. i don't want to be premature here. there is a down side on that? >> absolutely. 9,000 is heck of a lot more risky than it was back on march 9th when it closed 6500. now, the calls to my office have gone up. people want to get back in. they wanted to get back in. the idea is to buy low and sell high, not the other way around. be real careful not to go chasing returns. >> gregg: what about treasury yields? what about treasury and you got to remember your age. >> absolutely. this is really important. you want to stay age appropriate. don't just consider your risk tolerance but what did you at 55 years old is different than what you do at 80 years old. treasuries are interesting. ben bernanke can only control the short end of the curve. they have moved up to three and a half and actually hit 4%. but that is really important. that is a huge rate. you can already see that markets are nervous and that the treg

unless you are the fdic, most of us look forward to friday and not the fdic. on 20 of 28 fridays of this year, the fdic seized banks and which could be the winners. finally a few hedge funds have figured out how to make money on twitter. >> lance armstrong is within seconds of leading the tour and if he wins, so does one of the world's most corrupt governs. you can't make that stuff up. that's our show and it starts now. >> see how stocks are shaking out. a big friday here in the summertime. trading down by about 45 points and a half percentage point and the nasdaq is broad on the session. the s&p is down by a little bit more than three points. looking at oil, not a lot of time and the nymex is trading down 72 cents. it's about 1.2%. what is the thing you need to know. let's go to bertha who is down to the new york stock exchange. what's the mood like? >> continuing and waiting for the big news next week. one that is interesting is chevron. it's a warning and not with numbers about earnings, but saying look, second quarter our refining margins were hit hard an

the stiff on from the fdic, i should say? >> right, you know, a little unclear, you know, i'm not confidence there, but i would say that it does appear that the fdic has only made one exception during the course of 2009 and that was granting tlgp but hasn't made any others. >> if they were to go under, who really would be hurt by that? who has a lot of the credit from cit, it's probably not a great environment to go out and get another line of credit. who really is vulnerable? >> if you're talking about the customer standpoint, they are the largest factor, the retail community would be hurt from that standpoint. obviously there would be bondholders and, you know, as tim had mentioned the government did give him 2.3 billion of t.a.r.p. money. >> and lastly, the trading opportunity if there is one here. tim geithner today was making comments about the ability to step back in and backs off cit if needed. is there an opportunity in that -- do you think the government would ultimately step in, and if so, could we then see a sharp

and of course at issue is whether or not cit is going to have access to the fdic's programs.t assumed it did ever since becoming a bank holding company last year. what would you do now with cit? how do you see that situation?? >> well, without a lot of details hard to give good advice. but i believe washington will come to a resolution here. i think the ekd holders may be not in great shape. i suspect some conversion maybe of preferreds. $5 billion of preferreds out there could be converted to common much like the banks. but i'm not sure equity holders will be well taken care of in this situation. >> tom, what do you want to avoid in this environment? >> there are still regional banks, banks with about 5 billion in assets to 20 billion in assets, where they have as much as 30% to 50% of their loan portfolio in commercial real estate. so those are the banks that are still going to feel some great effect. they may not have enough capital. so those are the ones that we're avo avoiding. >> all right, gentlemen, great conversation, we appreciate it. busy day here with this market

president obama said the mechanism would be similar to the fdic deposit insurance. fdic chairman she liber is expected to push for the fees in testimony before the senate banking committee today. on to the market, the dow is ending its winning streak. starbucks and apple had better than expected earnings. one person says the worst has passed for the u.s. stock market. financial and technology companies will probably improve. negative mason is based in baltimore. stock and index futures are indicating a higher open for us ahead of the trade. from in your stock exchange, michele for wbal tv 11 news. >> thank you. >> the time is now of 22. coming up, we will get another look at your morning commute with traffic and weather to get it. >> short-term struggles for the orioles. it yields to longer-term sunshine. we will tell you why coming up next. >> do not forget to e-mail us your answer to the watercooler question of the day. do you support the senate's decision on concealed weapon permits? email us your response to watercooler@wbaltv.com. >> the orioles have a new home

>> the fdic -- interesting, the fdic have government backed loans but we're hearing they've been hesitant to make that kind of loan because they don't want to set a precedent giving these loans out to companies they don't deem to be healthy, the loans are meant for healthy companies. >> no fed discount in the short window. there is a run on the bank part of cit, they can't raise any funding. >> exactly. >> i don't know, this is a little bit of wet blanket. i will process that. if you get any new information, thanks so much for your report. >> i will. >> we will turn back to the profits rally. our gurus standing by. several segments with new gurus to make sure your report is rallying along with the markets. >>> the bank play, even i get it right one time in a row once in a while. i still think banks are a big buy. >>> the democratic nationalized health care bill, it is so bad i'm now scoring it as bullish because it will never pass. senator kay bailey hutchison of texas has the republican response to today's democratic announcement. we are "the kudlow report." we are coming back. let's lea

the fdic co-chairs a working group to address just the situation where a u.s.rm with large international operations gets into trouble or vice versa. one advantage we have in the united states is we require banks to be chartered here organized under our law and insurance separately and regulated as if there were domiciled here so if there was relation for those entities if they get into trouble. we do not require the opposite, banks and financial institutions must be organized separately so we suggest in the written testimony that might be something to think about what greater legal autonomy and organization withmr. chairman. >> senator brown. >> i want to follow -- thank you each of you for your public service during very trying difficult times. i want to follow on chairman dodd's given to the systemic regulator. i was intrigued by center bombings statement that we don't want to be all started by wall street and that we in the senate not be outsmarted by wall street by u.s. regulators not being in the structure we built be outsmarted by wall street and i think

our guest host, former fdic chr don well.im for the next half hou keepinan eye on moscow. the president meeting with russiapresident. you're lking at a live shot inside the emlin. e lastime these two gentlememet was in london. and the both sides say ey are hoping to ild on the excellent took place there. words, that it's really cold in russia today. unseasonably cold. medvedev tol a translator, 's cold outside but wa inside. we'll see how warm it gets when they tal about cutting nucar senal, aiding nato. it will fascinating discussion later on today. >>> checking on the market on this monday, futures have been -- have gotten off to a relatively weak start. some modest improvement over the course of the morning. joining us today from the cme, lincoln ellis, managing director at the lynn group. on the other side, joe joining us from fx solutions. good to see you both. >> good morning. >> link conner, would awaiting not just the president but earning season kicking off in the middle of the week. some projections is have been goi

and the second part of that is give the company access ultimately to the fdic. my understanding, by the way, melissa, is the fdic didn't like that these asset goes into the bank and the fdic fund becomes liable for that they said, you know what no mass on that. >> exception or something, isn't it? >> allow the transference in there. >> a shotgun marriage to get access to the fdic guarantee of bonds. >> not just bonds but also -- >> but the -- you know that is what the big thing was, shelia bair says no. she is striking a blow for capitalism, i have to give her credit. the question to scott peltz, scott, you look at the numbers here, cit, okay, i don't want them bailout, i don't want them too big to fail but i would like to see this resolved. 1 million businesses what, the reports are showing, a lot is retailers, 70% of all short-term u.s. financing known as factoring, okay, for 40 billion annually. that is not small potatoes in this current environment with the mid market still in trouble, as we all agree. how important is cit and how important is this deal towa

as of these entries and this the fdic, treasury, t.a.r.p. and others, you supported subsequently in the report by the other charts so for example if you want to see when the federal reserve portion is two go to the next page and table 3.5 we list of the programs described in the same information, the current balance and the total support related to the crisis. when you add up these to these charts that is where the 23 prints $7 trillion comes from. >> added the 16 trillion is between the federal reserve treasury and the fdic an operating assumption that have been working off of basically the balance of this year because there was no easily available was well and so this was a significant increase demand that is one of the reasons we've done this and come under some criticism for having done this but every time we will look as if a different newspaper there would be a different paper and it was important to put the time contexts to collect and major numbers and try to do here. >> what level does it go into in terms of actual recipients of the

they determine that the fdic is not systemically risky. >> it depends on what they invest in.t if they start investing in uranium or plutonium. the line is blurred. it's not just financial systemic risk, it gives them a reason to step in and say any of the people are too involved in a sector they don't like. >> the other thing that sounds problematic is who the investors are. i don't know why they need to have the information. i can understand leverage and what kind of systemic risk, but who the investors are, why is that? i don't know. maybe they're just looking for lobbying money from the hedge fund industry to make that go away. seriously! >> so they'll get off their backs. all right, it will be interesting to see what the reaction is from the industry in the coming days. >>> moving on time for the "fast forecast" where meteorology meets the markets. greg tricoli is here with your five-day forecast. what do you see from the s&p? >> melissa, how are you? >> i'm great. it's a cloudy sky shirt behind you. >> joe's porn shirt is interesting, but pete and i have the right tie on

cit put in for guarantees from the fdic back in january. but sheila bair, the fdic chair, sat on the application. she provided no reason for doing so. we're miffed at that, outraged, frankly. basically, bair with this cit drop-dead decision made up her own mind about which companies should live and die, without any explanation for justification whatsoever. it doesn't get anymore capricious than that. i'm flabbergasted with what happened to cit, but i can tell you, i think it stinks. if the government thought the peak, ceo was reckless, just replace him. especially since cit's business directly impacted small business. and made them survive or thrive in this awful environment. and that is exactly what president obama's imperative right now for this economy. we need real explanations here. we need sheila bair to come back on the show, no softballs, answer why cit should not have been treated like virtually every other lender. of and instead got the shaft. does bair answer to no one, the president of the united states, whose book of brothers d

consumer credit -- >> but it was taken over by the fdic and more coming. >> at a zero interest rate and steep curve, revenues and profits are rolling in, can earn their way out. please stay right where you are. this great debate will continue because i think the profit and economic debate is at the very heart of this summer rally and whether people will take more risk. coming up, can we fail by the s&p 1,000. what about s&p 1200. credit spreads are back pre-lehman. are we going to have a pre-lehman stock market, 1100 and 1200 and so forth. later on a top stock pick will tell you where to dive in. i say it's not too late. find a bank you hate and buy it. find a bunch of stocks you love and buy it. find some index funds. it's not too late! you're watching the k"the kudlo report." the animal spirits are improving, gridlock in washington, heck, public policy in washington, stand there and do nothing and capitalism will live on! the world is changing but i still believe in america and free market capitalism is still the best path to prosperity. announcer: what's your cialis moment? when she

when the fdic closes a bank shareholders and creditors take the first loss. mccaul for resolution mechanism we are not talking about propping up the failed firm. we are talking about a process where the failed bank is close, with shareholders and creditors typically suffer severe losses and were management is replaced and the assets to the failed institution are sold off. this process is harsh but it quickly reallocates assets back into the private sector and into the hands of better management. also sends a strong message to the market that investors and creditors will face losses when an institution fails. so-called open bank assistance which puts the interests of shareholders and creditors before that of the government should be prohibited. make no mistake, i support the actions the regulators have collectively taken to stabilize the financial system. lincoln a mechanism we did what we have to do, but killing ford, open bank assistance by any government entity should be allowed only upon invoking the extraordinary systemic risk procedures and even then the

the idea would be to have something analogous to the current fdic laws which allows the fdic to intervene before actual failure, seize the company, sell off assets, in it order to avoid a costly bankruptcy. >> back to the independent issue. i know there's been discussion and i guess one of my major concerns is you've received criticism here today about activities that have taken place. i find it difficult to believe that anybody, even as intelligent as you are, can actually look out and see what all systemic risks are. and i see that as not possible. i mean, there are going to be other failures down the road. i think we know that regardless of what we do. that's the way the market works. and i guess i have a fear that if you become or the fed becomes a system he can regulator and you miss it and you are, it is going happen again, we all know that, that that will be -- that will create an opportunity for even further attacks, if you will organization your independence. and i wonder how you might respond to that. >> it's a good point, senator. i would note that just taking the administratio

reality is paulson working with bernanke and sheila bair at the fdic and yes, tim geithner at the new york fed and yes, president george w. bush who supported all this, they did what they could at a time of great peril, when the entire financial system was in danger of utterly unraveling even with the credit freeze we experienced and caused a deep recession. did they do everything right, heck, no. we can debate this forever. in wartime, you have to just keep moving. that's what paulson did. he was the guy behind this rescue package, not just for bank of america and merrill, but getting the loan guarantees from the fdic, getting the interbank guarantees for the entire banking system.. the t.a.r.p. money was supposed to go for toxic assets, couldn't get it done, wound up injecting it as capital and unfortunately, the banks are paying back t.a.r.p. and that episode will come to an end. most of all, the former darth mouth lineman and ceo, former treasury secretary hank paulson was tough, he stood up, said, i did it, glad i did it, it helped save america. by the way, take a look at bank of

>> the fdic -- hold on a second. >> -- paid for with bank fees. not paid for with taxpayer money. >> dennis, you and i -- >> hold on a second. let me ask this question to everyone out there watching right now. the main thing that happened here is people got some money, they paid it back, the government made money, and they made money, and made money off the interest. when did that become wrong? >> i'm all for them making money, ben -- >> but you don't like the way they're making it. >> excuse me, can i -- >> wait, wait. >> guys, we've got to go one at a time. julie first, then jack. >> even hank paulson, yesterday, when he was testifying, the former chairman of goldman sachs said this crisis was not created by the american people, it was created by the big banks. implicitly in that is his own big bank, goldman sachs -- >> and therefore what?! >> they have not changed their pattern of behavior -- >> goldman sachs' risk exposure, the var, which says if all of the bets went against us in a ten-day period, how much would we lose? they would lose about

the fdic insurances your deposits up to $250,000. those cost the corporation more than $1 billion, bringing the total number for this year to more than $13 billion. >>> astronauts from the shuttle "endeavour" are preparing for the first space walk of their mission. the shuttle arrived at the international space station yesterday. at noon eastern time today, two astronauts will go outside the station to attach a platform for science experiments. it will be the first of five planned space walks. nasa says "endeavour" appears in good shape for re-entry this month even though a large amount of foam broke off the fuel tank at lift-off. >>> i'm reynolds wolf for hln. this is a look at your forecast across the nation. we have two big stories. let's get rid of the ugly stuff first. that is the chance of strong storms developing for portions of the four corners in parts of oklahoma, colorado and maybe into texas and new mexico before the day is out. you'll see a lot of cold air filtering through parts of the nation. high temperatures today no

it's a big difference between fdic guarantee an the bank. >> g mac couldn't get the fdic backing until the treasury ga them capital. e what sheila bair wants is for treasuryo put up capital so she knows she is insuring something far more steady. >> michelle, you're a good taxpayer, you pay your taxes on time, you own it. you break it, you own it. michelle cabca remember a, we thank you so much. and rich karlgaard will tell us what if the obama initiatives fail, go down the drain? the independents are running away from obama. how bullish could that be for stocks? this here is "the kudlow report." we never fail. we'll be right back. ♪ on this endless ocean ♪ finally lers know no shame ♪ ♪ watching in slow moon ♪ as you turn to me a say (announcer) geocomotives. customers love thealmost as much as we lmaking them. ♪ my love (annouer) innovation today for amica's tomorrow. >>> all right. very big day in the markets up 2.5% across the board, led by banks and cyclical industrials and commodities and so forth. we have our distinguished market panel this evening, former american airlines ceo,

you're talking about increased fdic fees, so even though profits may be made, what are they going to be utilized for? they may not end up being in the arms of the shareholders. they may be taken by the government. and we're starting to see inklings of that right now with discussions of fdic increases in terms of fees. assesseded on healthy banks, as well as sick banks, as well. >> doug, what's your time frame on that? because you said in the short term, yes, they're probably going to continue seeing up sides. so if i'm looking at a three-month horizon and looking at financials, what do i do? >> i think if you're looking at it, you could try to play it, but there are safer ways to do it. in other words, i would go more for things that are guaranteed that you know the government is going to continue to spend money on, no matter what. for instance, that's what i -- larry has talked about before the reinflation trade. i would go for more of the government trade.. >> yeah. >> the government is going to continue to spend money in these areas. >> you know, it's so interesting, mike williams

they're still talking to the fdic.release late last night from cit saying we're still applying to this fdic program. they only became a part recently and did so in part to access some of these fdic programs. we may be seeing the government say, you know what? we're not that worried about you if you fail. that being said, failure may be some time off. here's what we heard from the treasury secretary speaking in london to reporters very shortly ago. the u.s. government has the authority and the ability to address the crisis at cit group. that's not really saying too much, is it, at this point? so cit finds itself in a position where it's got to figure out a way to gain funding. it has maturities of significance coming up in april, essentially up next year. at which point if it can't find private funding, it's going to run out of money. and when you look at april now, the question is, will people start to pull? will people start to pull accounts or depositors that have a deposit base begin to do so? will businesses start

first, the resolution of troubled financial institutions should fall to the fdic. and second, and globally, we must change institutions now too big to fail now being too strong to fail. remedies will include many of the options i just discussed. both fire walls should strengthen the fed's role as lender of last resort by reducing moral hazard, especially by reducing the chance that we will keep non-viable institutions alive. a concern you've expressed. what are the policy pros an cons? in my view, the pros outweigh the cons. interconnectedness means we must look across hoarsen talely at institutions rather than vertical silos. in my view, the fed has the most expertise. the fed is also best positioned to describe remedies and build financial shock absorbers. the fed isn't perfect. as the guardian of our financial system, the fed in the past has come up short in a number of ways. i'd only say that wile we consider making the fed the lead systemic regulator, the fed and we must examine how it can improve its functioning to take on these new duties. happen about the a

is goldman still using the fdic guarantees of their debts? >> i believe they are. >> and so are they taking risks off of those guarantees? >> if there is an opportunity for profit, i guarantee goldman is taking it, and i believe they are taking the fdic trade. >> what do you think about that? is that something that should be remedied? why should the taxpayer finance goldman's leverage? >> they already are, larry. they financed essentially these quarterly returns. goldman is going to look at this situation as a quasi hedge fund. heck, they are a hedge fund in many cases, to give outsized returns. few should be surprised when they get outsized returns.s. as you point out, the borrowing costs are so low. the question happens, what do they do when this relief rally or borrowing costs increase? that's when i'm going to say, how are they traversing this difficult market environment and i think there will be more struggle if not only in line for them, but also the financial industry. and i think it's something that people should really focus on. >>

fdic's leadership. we will have the same rules for other institutions. one thing i asked the financial community to work with us on is to have a way to put these people, these institutions to sleep. one question is how sharp should the sanctions be? should be the rule that any company that is that, the ceo is gone and the board of directors is gone? we want to be very unpleasant to be an entity that has done that. the second part is because we don't want to see too big to fail, there will not be that list. the administration has proposed to be a list of systemically important companies and the general sense in congress is out of the opposite effect. the administration sees it as a way to discipline the companies, but many see it as it would be a license to do well because people think you cannot fail. there will be no such list. the administration thinks creating a list of systemically important institutions would be a way of severely disappointed -- severely disciplining them. others think the list wou

the fdic insures your deposits up to $250,000. those four bank failures cost the corporation more than $1 billion, bringing the total for this year to more than $13 billion. >>> there could be some hope in sight for cash-strapped california. state lawmakers say they are close to solving the $26 billion budget deficit. california's president pro tem says that a deal could happen as early as sunday night. last night legislators spent three hours behind closed doors with governor arnold schwarzenegger. now, one of the major issues being debated, how to repay billions of dollars to the state's schools. >> usually thieves leave behind fingerprints and a huge old mess. one crook in north dakota left a note for his victim. mark neary's car was an easy target because he left it unlocked. the thieves made off with neary's driver's license and credit card. get this, also the thief left a note here telling neary he had amazing taste in music and advised him to lock his car in the future. >> the note was placed neatly over the top of the cds

>> staples telling investors it's actively talking about solutions that don't involve accesso the fdic'srary liquidity important program. shares were crushed on friday when the company warned there is no assurance its application would be approved by the fdic. there were media reports the company hired a law firm to explore a possible bankruptcy filing. people looking at that and using it as a barometer to how special businesses will get capital. >> this is the biggest loaner to small businesses. over the weekend, i saw people you would see other companies. but it's hard to imagine that ge capital is interested in expanding small businesses right now when they've been trying to pull back. >> there is opportunity. every crisis creates opportunity. the government is playing hardball with cit. i guess i understand. it's not as important systematically and not too big to fail. it's ratcheted up the risk to some extent and the governme is uncomfortable with the amount of risk cit has taken, i guess? >> that's true. >> we called you a democrat. we spoke in makeup. have i not moved you a little

give you an answer. >> we will talk to each other and overall especially in the leadership between fdic and treasury, there is a discussion happening on the proper role of the government going forward. that means for geithner and sheila baird. there may be disagreement in that discussion. >> otherwise why should ge capil get the money and not cit? >> because they had better lobbyists. >> clearly this is a size argument and that ultimately is a point where dan and i agree. in the future we need to take a hard look at the consolidation and the market segments that will drive this need to bail out the ones who are too big to fail. this is i think a good discussion and a good regulatory discussion to have happen. >> do you think it's fair to say and i'm sure there is other players, but ge is one of the biggest and it's fair to say that ge got access because they were politically powerful and connected or is that not? >> i don't think there is any question. absolutely. when you look at the companies, the financial situation is similar. i think it's important. >> i want to make a distinction.

the fdic already decided, wier not going to give you money.n 2 w50ebgs after snab from senator daniel inouye's office, you know just called in and checked on the status, central pacific announced, lo and behold, they're getting the $135 million from tarp. now, i'm sure that was on the up and up. after all, many lawmakers have worked to get money for the banks in their home states. also, 33 senators own shares in banks that got tarp. yeah, let me say that again, so nothing could be wrong. 33 senators own shares in banks that got tarp money, but inouye is the only one that stepped in on the bank's behalf. it is also a little different because inouye's personal ties to the bank, he started the bank and then 2/3 of his total assets are locked into the bank, as much as $700,000 as of 2007, but, you know, no big deal, i mean, he is a world war ii veteran and then he came home and founded the bank in 1954. why would the treasury not want to help that bank out, you know? why would they suddenly decide to prove this bank when 1,600 applications went th

the fdic already decided we're not going to give you any money.hey didn't meet the criteria for tarp money. a but then two weeks later, someone from the senator's office calling in to check on the status, they announced, lo and behold, they are going to get the full t $135 million from tarp. now, i am sure that was on thep. up and up.e after all, many lawmakers have worked to get money for banks is their homeen states. also 33 senators own shares inlt banks that got tarp. sure, let me say that again. 33 senators own shares in banks that got tarp money. but inoue is the only one that stepped in on the bank's behalf. also a little different because his personal ties to the bank, he started the bank and thenn two-thirds of his total assets are locked into the bank, as much as $70,000 as of -- $700,000 as of world war ii. so why would they suddenly decide to help this bank whenony 1600 applications went through and only 266 others got money? according to a statement, his staffer said he just simply leff a voice mail to see if the fdic got the bank's a

the fdic insures your deposits up to $250,000. those four bank failures cost the corporation more than $1 billion, bringing the total for this year to more than $13 billion. >>> there could be some hope in sight for cash-strapped california. state lawmakers say they are close to solving the $26 billion budget deficit. california's president pro tem says that a deal could happen as early as sunday night. last night legislators spent three hours behind closed doors with governor arnold schwarzenegger. now, one of the major issues being debated, how to repay billions of dollars to the state's schools. >>> a lot of us are feeling stressed out about the economy but you might find a little hope along the side of the road here, billboards like this one popping up around the country since may. they were paid for by an anonymous donor. the hope is the power of positive thinking will help get the u.s. back on the right path. >>> all right. usually thieves leave behind fingerprints and a huge mess but one crook in north dakota left a note fo

citi may be hit by several charges, including a special assessment of the fdic. ahead of the results, let's take a look at the boards here. general electric is virtually flat. bank of america to the down side while citi is to the upside by about 4% out in frankfurt. ibm's second quarter profits meantime rose 12%, topping forecasts, although revenues lagged estimates. but that was overlooked as big blue is raising its full year outlook. ibm is benefiting from focusing more on higher benefit businesses. google's second quarter profits jumped 19% beating forecasts, but revenues only rose 4%. the ceo says although the economy has made it harder to sell john line ads, he doesn't expect it to get tougher. ibm is higher by 3% and google is giving back about 1.75%. joivening us now, nicu harajchi and daniel. daniel, let me begin with you. really, i sort of set this up as judgment day here, right? you've got bank of america and citi. it will give us a real good picture of where the money central banks are right now and, of course, general electric. what do you expect and

as of these entries and this the fdic, treasury, t.a.r.p. and others, you supported subsequently in the report by the other charts so for example if you want to see when the federal reserve portion is two go to the next page and table 3.5 we list of the programs described in the same information, the current balance and the total support related to the crisis. when you add up these to these charts that is where the 23 prints $7 trillion comes from. >> added the 16 trillion is between the federal reserve treasury and the fdic an operating assumption that have been working off of basically the balance of this year because there was no easily available was well and so this was a significant increase demand that is one of the reasons we've done this and come under some criticism for having done this but every time we will look as if a different newspaper there would be a different paper and it was important to put the time contexts to collect and major numbers and try to do here. >> what level does it go into in terms of actual recipients of the

and commercial banks pay the fdic money for that insurance, which gives us security.ere's a legitimate argument to be made that the wall street firms should be paying the government for this implicit guarantee, and they're not right now. >> okay, but you would agree that this is not what was sold to the american people. and the senate was pretty coy about all of this. the senate finance committee. i mean, because if you had said "bonus" in the same sentence as "financial collapse," it just doesn't fit. >> well, again there, i don't think that it's bad news that some of the banks are recovering. it's good news, right? i mean -- >> it is. >> would you prefer that some of these banks continue to need more taxpayer money? absolutely not. >> it is but did they need all of that money? you're the nicest person i've ever had a disagreement with. >> well, no. but the banks like goldman and jpmorgan actually didn't want the money. they took the money because they wanted the systemic guarantee. i think what is fair to say, ed, is did the government drive the hardest bargain it c

on trsday, the heads of the fdic and securities and exchange commission will answer questions from the senate banking committee - about fine tuning the framework for controlling systemic risk in the financial system. lawmakers are in the process of forming a blueprint for that powerful position. this week, the president submitted his proposal to congress - obama wants the federal reserve to be the systemic risk regulator.. overseeing large financial companies. but s-e-c chief mary schapiro says most of important decisions should be made by a *council of financial regulators - which would be responsible for setting standards for liquidity, capital and risk management. the s-e-c chief is proposing the systemic risk regulator have a *narrow authority to carry out certain actions only in extraordinary circumstances.... but otherwise... any action should be decided with input from the council of regulators... that's according to the sec chief. next week, high ranking chinese and u-s government officials will meet for talks in washington - and china is expected to again push for a stable u-s

basis because indeedwhen the federal resee usesuantitative easing to ge 0% were rate, when the treasy, fdic and deral reserve provide nks guarantees for losses. when they change the accounting rules sthey don'have to take sses on mark to market you can create any earngs power you want. but forlong-term call that the banks are going to have much ls leverage than they had before. they are going to be more highlyegulated than they wereefore. whenhere raitt interest rate goes to their nural level, they run natul now, will change the dynamic of the interest rate rgins inuch a way tt now all ase banks wille very profitable. sodding to that an exslended recessionary condion and i thk that the banks still have a long way to go before they are trauly healthy. now you told me that your set allocations two-thirds cash, and one-thirdtock. soou are puttingome of your client money into stocks. know you can't talk about specificbut what sectors do you fd attractive ght now . >> yes, this is our equity program. we are pai to go out and take ris for iestors. back in january and februy we were actually 95% i