source: sheila bair, fdic chair ♪fullscreen quote: "no matter how challenging the environment, the fdicas ample resources to continue protecting depositors as we have for the last 75 years." tom.. sheila bair went onto say - no insured depositor has ever lost a penny of insured deposits.. the fdic has been planning for future failures since the crisis began unfolding last year. in the second quarter, the agency had 42 billion dollars in its deposit insurance fund. thanks to banks paying higher premiums ... the fdic has been able to beef up that insurance fund considerably... from about 13 billion in march. the agency also has the ability to borrow a half trillion dollars from the treasury department if it has to. experts say it's a sizeable cushion... considering small and regional banks will continue to see losses from their portfolios... as they are forced to write down bad loans. most of the problems stem from real estate loans... causing 49% of the losses... followed by credit cards.. with 20%... and commercial and industrial loans...at 17% the entire banking industry lost three-poi

. >> the fdic has already brokered two sales banks deals this year, two positive equity firms. will today's decisions open those flood gates. >> i don't know about flood gates but it seems to me it's a sensible decision that they made to back off from their 15% requirement to 10 so you could get more interest on private equity. the bank failures of course as we know are mounting and look like there could be quite a few going forward. so you want to have as many pools of capital as are interested be able come in and take a serious look at investing in the new recapitalized bank that will go forward. >> jeff: i counted more than 70 failed banks just this year alone on the fdic website. >> it's 81 this year-to-date. >> jeff: 81, okay. >> if we look back to the late 1980's, i'm not talking about savings and loans, i'm talking about commercial banks. there were eight years in a row at which more than a hundred commercial banks failed. >> jeff: with that in mind does the fdic really have a choice on this. they have to bring in these deeper pockets from somebody who has the cash and a

i don't think that's true of the fdic per se but the fdic has thoi about congress and there is plentyf that in congress. >> absolutely. rich, what do you think? >> again, the track record is very sketchy. the fact is -- >> when you say the track record has been sketchy, in other words, they haven't done well on these investments or they're -- >> well, few and far between. >> so you don't necessarily think they're going to be there with the capital if they're allowed? >> they could be there but -- >> they haven't. >> they haven't been there. reluctant to venture -- if these transaction, even though it's the highest number of bank failures since 1992. you look at the track record of private equity. numbers have just nose-dived from 2007. and now you're seeing firms trying to work out the debt they incurred on things that are still going to have to be restructured in 2013 and 2014 when it matures from the initial deals. >> another issue we ought to focus on is the fact that who owns private equity? you're saying private equity are mature long-term investors. some of the pension guys, the

one is the fdic always takes sesi sesive excessive reserves.billion of unnecessary reserves, which is what carried the fund to negative territory. and then secondly the banks start kicking in money as they turn profitable, the fdic increases their premiums until that fund is restored. it only took three years between those two items. >> chris, premium increases on the bank. now the last time we spoke, you weren't all that optimistic about the economy. sheila bair is saying this a lagging indicator. we have a steep upward slope in treasury curve which should help banks. they borrow short of zero and no longer had a considerable net interest rate profit, et cetera, et cetera. but, regarding what bill isaac said, can banks take this sort of tax increase you all are describing? >> can they take it? sure. is it going to take them longer to get back to normal? it will be if they have to pay more to run the fund but obviously we can't let the fdic fund go bad. >> we can't let any deposits default. that's what you're saying. that's the bottom, bottom l

. >> t fdic has alread brokered two sales banks deals this year, two positivequity firms. will today's decions ope those flood gas. >> i don't know about floo gas but it seem to me it's a sensible decision that they made to backff fromheir 15% quirement to 10 so you could get more interest on private equity. the bank failures of course as we know are mounting and loo like tre could be quite a few goinforward. you want to have as many pools of capital as are intested be able come in and take a serious look at insting in the newecapitalized bank that will go forward. >>eff: i counted more than 70 fled banks just this year alone onhe fdic website. >> it' 81 ts year-to-de. >> jeff: 81, ay. >> if we look back tothe late 1980, i'm not talking about savings and loans, i'm talki about commerci banks. there re eight years in aow at which more than a hundred commercialanks failed. >> jf: with that in mind do the fdiceally have a choice on this. they haveo bringn these deeper pocke from somebody who has the cashnd at this point it seems liket'snly the private equityunds that have tho

today the fdic insisted customer deposits are safe. >> the fdic was created specifically forimes such as these. our resours are strong. your insured deposits are sa. >> reporter: here is how the fdic works. its insurance only covers deposits up to $250,000 for individual accounts per bank, up to $500,000 for joint accounts. checking and savings accounts, cds and money market deposit accounts, not mutualunds, all count toward the cap. any money over that limit is at risk. and experts say now is the time to move it to safety. >> either moving some of the money to a separately titled acunt to lift your covere ceiling, or just move some money to a different bank that way you can maintain full coverage >> holding both individual and joint accounts, a couple can protect up to $1 million in one bank. the fdic insures americans posits at some 8,200 banks and financial institutions. no insured depositor has ever lost a penny. and the fdic says no one ever will. tom costello, nbc news, washington. >>> on wall street today, the dow extended its rally for an eighth straight day up 37 points. when

jeff: with that in mind does the fdic really have a choice on this. they hav to bring in these deeper pkets from somebody who has the cash and at thi point it seems like it's only the private eqty funds that have those deep rerves. >> well th certainly have to look for sources ofcapital and this is on of them. sohat's why i think this is a reasonable step f them to take. >> jeff: you know, for a bank to buy a failed bk, it only takes 5% as a mimum capital reirement. why doest the fdic just bring in allheay down to pody so private equity funds a the banks are comting on an equal lel. >> as i understd it, it's for a bank to buy one. i think it' a strong argument that it would be better to ve one set of rules that's nsistently applied to everybody. there w one ve against the prosal today by the acting director of the office of thri supervisio and as i understand it from e press, s reason was he tught there should be one set of res and erybody should he the same set of rules plied to the th's pretty strong argunt, i'd say. >> jeff: doouhink the fdic will

and the fdic says no one ever will. tom costello, nbc news, washington. >>> on wall street today, the dow extended its rally for an eighth straight day up 37 points. when we continue tonight from boston. ted kennedy's friends from the neighborhood, he had a lot of (announcer) excedrin pm. relieves pain fast. plus a sleep aid to help you fall fast asleep. excedrin. what ache? when sixty percent off is at stake, so today, she's talking to her doctor about overactive bladder. teri decided she's tired of always stopping to "go", so today, she's talking to her doctor, too. if you have overactive bladder symptoms, today is the day to talk to your doctor and ask about prescription toviaz. one toviaz pill a day significantly reduces sudden urges and accidents over 24 hours, all day and all night. plus, toviaz comes with a simple plan with tips on food and drink choices and training your bladder. if you have certain stomach problems or glaucoma, or cannot empty your bladder, you should not take toviaz. toviaz can cause blurred v

tails, the fdic loses. and before it takes the colonial loan portfolio, remember, it's not possibly the fraudulent part, that goes to the fdic, it has marked down the loan book by 7%, meaning they expect the percentage of loans to go bad, that's twice the number of bad loans that the other deals from the fdic have taken and they are thinking about buying down, jpmorgan getting washington mutual and getting into a little bit the washington mutual is a little bit less. get this, they're assuming up front that 67% of the construction loan, 67% are going to go bad. as long as the overall default rate stays under 37 and the construction loan default stays under 67, it's going to be a breeze for both. and bb & t should see enormous upside. the best part after this deal is done, bb & t's estimates, what it's going to earn go higher. that's something called accretion. it's accretiaccretive. there's no better way to get your stock price up than increasing your earnings per share. >> all aboard! >> so tonight, as you

plus, the latest on the fdic quarterly report on problem banks. larry? >> i'm larry kudlow, everyone. citigroup up about 70% in the last month. aig, fannie mae, freddie mac also on the rise. we'll discuss whether there is still an appetite for these risky stocks. this is "the call." we are cnbc. >> stocks trading negative to find better than expected results on both gdp and jobless claims. and the fdic reporting the number of problem banks rose sharply in the second quarter. home builders also lower, after toll brothers reported a widening second quarter loss. right now, the s&p is also to the down side. and the nasdaq is not doing too much better, an over 1% drop for the s&p 500. and the nasdaq is only getting 1995, below 2000, a drop of 1.5%. we have hampton pearson in washtd, bob pisani with the market reaction. but hampton, let's begin with you. >> well, first, here at the fdic, its second quarter banking profile tells us that by the end of june, its list of so-called problem banks was at a 15-year high, some 416 institutions with combined assets of

but the head of the fdic says the fund protecting those deposits has dropped sharply, hit with almost $4 billion in losses. >> susie: up and down wall street, folks are wondering why so many banks are failing when the economy is improving. coming up, a look at the disconnect between bank health and the recovery. >> paul: call it the benmosche effect. a.i.g. shares surge 27% on hopes new ceo robert benmosche can turn around the troubled insurer. >> susie: then, we talk with robert toll, c.e.o. of toll brothers. the luxury home builder's loss widens in its latest quarter. but he says orders are starting to pick up. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for thursday, august 27. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. 7//& >> susie: good evening everyone. there are now more than 400 american banks on the government's so-called "problem list". that's the biggest number in 15 years. but don't worry, your money is still safe. the f

the fdic does grand deposit insurance to all of them. it has been after they have been in operation, where someone is facing a problem and they seek to change the charter to avoid a downgrade or enforcement action and move to a different charter. that is what troubles all of us a great deal. >> in terms of choosing the charter at the outset, the thrift charter is unique in terms of the kinds of business that an entity would want to engage in. people choose a charter based on the business plan. in terms of people switching charges because of some received favorable difference, there are 50 to choose from, 52 to choose from, with the federal charter you have two. anyone who is looking to avoid some kind of supervisory enforcement action, as we've talked about here, we as a collective group have taken steps to avoid that, to make sure it does not happen for the wrong reasons. >> one, nothing from all of you, i think accurately reflecting -- one commong thing from all of you, i think accurately reflecting that the source of the crisis was fr

hampton pearson is live in washington with what the fdic is planning on doing.y. >> good morning, larry. 81 bank failures, including 17 so far this month, the fdic is dealing with the biggest number of collapses since 1992. now, during this current crisis, the fdic has been working with acquiring banks to share in those losses. the guarantee bank collapse in texas will cost the agency more than $3 billion. in an attempt to attract more buyers for failed banks, wednesday afternoon, the fdic board is expected to relax restrictions on private equity firms, private equity firms buying collapsed firms, details worked out. as far as the fund, regulators say look for more special assessments, as was the case during the s & l crisis. >> this happened in the late '80s, and banks will be assessed to replenish the fund. that is normal reaction. i think it is important to understand that going forward in good times, in good times, we should be allowed to make that fund much, much larger. >> remember, last year, the mortgage melt down saw the fdic dealing with, among other t

so when you look at the fbiddin for the fdic deals, i actually think the fdic's doing a pretty terrificlook at the kind of price thats that they w able to obtain for the last two auctions by bringing in strategic buyers, the losses have been minimized in both those cases by very strong bidding. so i think the fdic is doing an excellent job in managing what is obviously a difficult situation. >> and of course yesterday the ndic voting 4-1 in favor of making it easier for private equity firms to buy failed banks in the u.s. good idea? >> i think there will be circumstances where the right buyer may well be the private equity. i think what the fdic has been trying to do is make sure you have a level playing field. i think in some circumstances the private equity firms had an advantage given their capital structure. as you know, the rule is 10% tier one ratio for them. we obviously keep capital well in excess of 10%. so it's hardly a punitive number for them. and i think there will be circumstances where it's good to have the private equity players in. i also think the fdic's been very enco

that money is depleted from the fdic's insurance deposit fund.. which consists of premiums that banks pay into. we spoke to jim cahn.. of vestian.. about which types of banks are most likely to fail. "banks most at risk.. have the most real estate loans.. specialize in lending to real estate developers.. builders of single family homes.. most at risk.. with large commercial real estate portfolios." the number of failed banks is still historically low - and these failures are more of a burden to local communities...and probably do not pose a risk to the overall financial system. the ripple effect these failures will have.. is that it'll make it even harder for smaller businesses to get loans... and the situation could force them to close their doors as a result of their banks failing. these days.. smaller businesses that are still able to keep their lines of credit intact... consider themselves very lucky in this economy. "makes me feel good.. sometimes we take it for granted.. that we have such a good bank.. that's always given us a line of credit

the fdic does grand deposit insurance to all of them. it has been after they have been in operation, where someone is facing a problem and they seek to change the charter to avoid a downgrade or enforcement action and move to a different charter. that is what troubles all of us a great deal. >> in terms of choosing the charter at the outset, the thrift charter is unique in terms of the kinds of business that an entity would want to engage in. people choose a charter based on the business plan. in terms of people switching charges because of some received favorable difference, there are 50 to choose from, 52 to choose from, with the federal charter you have two. anyone who is looking to avoid some kind of supervisory enforcement action, as we've talked about here, we as a collective group have taken steps to avoid that, to make sure it does not happen for the wrong reasons. >> one, nothing from all of you, i think accurately reflecting -- one commong thing from all of you, i think accurately reflecting that the source of the crisis was fr

relatively active we have seen certainly a significant increase was star tube as a strategy of the fdicing forward? i think is one of more of the three arch strategy than anything else. if you look at the institutions and financial institutions out there there are close to 2000 who have significant that breed of trouble clearly the fdic doesn't have the money the resources nor the political clout to take over the financial institutions with that. there's probably 600 or so will need to be taken over in short order and is probably what they are trying to do and letting the other ones mentioned them to be more than and adequately capitalized and hopefully at some point in the next five years get back to being more been well- capitalized or maybe get some consolidation. consolidation is being sold in today's market because the private equity firms that want to come to market are being hampered by the constructions the bank holding companies guidelines put on a private equity also many people don't want to do deals outside and when they deal with the fdic which gives them a soft loft situat

lost mandate. -- the fdic's mandate. he would identify and assess access to the deposit insurance fund. to summarize, the regulatory reform should focus on eliminating regulatory gaps i have just outlined. proposals to create a unified supervisor would undercut the many benefits of our dual banking system. most importantly, they would not address the fundamental causes of the current crisis. >> thank you very much. and i apologize, sheila, for not properly introducing u.s. the chairman of the federal deposit insurance corporation. i just jumped into that and i apologize. the comptroller of the currency, we thank you very much, a well-known figure to this committee, having served on this side for a number of years and now the sec. we thank you. >> i appreciate this opportunity to discuss the administration's proposal for regulatory reform. the sec supports many elements of the proposal, including the establishment of a capital monitoring a systemic risk, and other issues. we also believe that it would be appropriate to es

there's a call center and you see the number right there. 1-877-ask-fdic.have a mortgage with colonel or one of those banks, no official word on colonel yet, keep paying that mortgage exactly as you do. the terms of your loan there won't change. if you need to change anything, you'll be notified by the fdic in the case of a bank failure, again, not the case with colonel. >> if colonel does collapse and it appears it is on the brink of it right now, how big of a failure are we talking about? >> that is why this is getting so much attention. colonial has more than 300 branches and across five states in the south, alabama, georgia, florida, nevada and texas. they have about $25 billion in assets. pretty big bank. take a look at the list there. that's look aththe biggest bank failures in u.s. history. this would be the biggest so far this year and the sixth largest in u.s. history coming right after the american savings & loan back in 1980. so far this year we've seen 72 banks fail in this country, add that up, that has cost the fdic more than $16 billion, but

bair will discuss how much is left in the fdic's deposit.the board voted wednesday to ease restrictions on private equity investments in failed banks. regulators lowered capital requirements and drop measures forcing buyers to kick in more capital after their initial investment. 81 banks have failed so far this year, but only two have been bought by private equity firms. and president obama's pay czar, dan feinberg, is expected to formally approve the pay package for aig's new ceo next week. robert moss is slated to received $10.5 million bucks. ben mosh has reportedly reached out to former aig chief hank greenberg for advice. greenberg tells reuters he believes ben mosh has the best chance to succeed at rebuilding aig. aig shares rose 4% in after hours trading yesterday. you can get more news, videos and blogs as ross mentioned at cnbc.com. >> absolutely. still on the program, another twist in the opel drama. could the german government be forced to refinance? investors will be looking at a u.s. revised gdp data due out today. >>> a mixed a

who are members of fdic. one big bank, citigroup, aig cost more than all the banks in the united states. >> between the two of them. >> i think my concern with all of those.... >> it's not, but the tip of the bubble went away. we coughed up, elevated level. they could fall another 40-50%. >> that is what needs to happen. no one likes to see people thrown out of their homes but that foreclosure profit, mortgage is between a borrower and a lender. >> it will be quicker. >> if you want to drag it out five to ten years. >> it hasn't hit the commercial real estate market. what is it going to happen next. we keep pouring money out there. it's got to stop. let the market fall is it's going to. >> terry: surprise, surprise the same banks is the ones with the commercial banks, as well. and more government control, we're going to expose another hidden gem in the bill. hidden gem in the bill. how one plan could affect youec ♪ bicycle, what are we waiting for? the flowers are blooming. the air is sweet. and zyrtec® start

an agency such as the fdic. the third concern that i have is a question of the -- really the leadership of the federal reserve. historically, this is -- the chairmanship of the board of the governors of the federal reserve is an extremely high profile appointment. it's an individual who tends to be close to and to need the confidence of the financial markets and there is a real question as to whether there is any record in the history of the federal reserve of effective response to systemic risk in advance of crisis. this was not the case benjamin strong in the 1920s. the leading figure at the time, although not the chairman of the board. it was not the case of the alan greenspan in the run-up of the test crisis. we had a doctrine which, in effect, denied that systemic risk that could bring down that system. it was articulated at the peak of the federal reserve and it seems to me we had a test of that proposition and it came up wanting. itoes seem to me that there are reasons to be worried about vesting the auth

. >>> the fdic might need its on bailout. today, they will reveal how much bank failures have depleted the fdic's reserves. we'll talk more about this in detail coming up in our business beat in about 15 minutes. >>> republican bob mcdonnell says if he is elected governor of virginia, he will cut his own pay as part of budget tightening. current goveor tim kaine slashed his own pay 5% with the economy and the state's revenue began to slide. >>> new thisore than, a new complex could bring thousands of jobs to poplar street bridge county. according to the "washington post," the u.s. department of health and human services is considering a new location. if it is built, the complex would relocate about 5,000 federal jobs to the county from rockville. the dps' lease expires next july and it does have the option of staying in rockville. >>> checking another top stories we are watching, nearly 100 d.c. school custodians and maintenance workers will soon be looking for work. that is despite the fact that the city has been working on

the banks have been holding their own as well participating in this rally and the fdic now is making it easier for private equity for us to buy the failing banks by easing the regulations on capital requirements in this move happens as the pace of the bank failure since to pickup more than 80 banks have been shut down by fdic in and last year been fair with the number total to over 900 and time the fdic has been more than $20 billion building with these bank foreclosures. and part of the toxic assets that remain on the assets of so many banks. a03 now that the cash for clunkers program is over.. where does that leave the struggling u-s automakers now? most experts believe demand for new cars will go back to what it was before the program started.. but now that gm and ford are increasing production... just as that program has ended... does that put the carmakers in a tough spot of having too much supply in the face of weak demand? two of our experts have some different opinions on that issue. it's a problem the detroit 3 has seen many times before... too many new cars sitting on deale

the fdic can charge it only so much.ulators say they cannot rule out borrowing from taxpayers. >> big picture here, rich. after all the bailouts, why are these banks still losing so much money? >> mortgages. mortgages gone bad and assets tied to mortgages gone bad. business loans, consumer loans, millions of americans out there out of work having trouble paying those loans. regulators are worried about more of that coming down the road like the economy, the fdic says it will take time to clean up this mess. shepard: rich edison, thanks, remember all of that money, all the bad loans they were supposed to get out of there, they never got them out. new evidence tonight that the string of layoffs we have seen in this recession is finally starting to taper off. decrease in the number of newly filed americans filing claims for jobless benefits for the first time it was down 10,000 from the previous week and at the same time a drop in the total number of americans who remain on the jobless roles. that number down by -- down mor

the fdic may need financial help itself.agency will reveal today just how much is left in it's insurance fund which is running low because there have been so many bank collapses this year. now, if the fdic fund runs out of money it may have to borrow from the treasurepy. something that's only happened once. >>> elsewhere, microoff the is cutting the price of its high-end xbox 360. the new price at 300 bucks. sony recently cut $100 on the playstation 3 video game. >>> luxury home builder toll brothers is expecting a smaller than loss than previouslily expected. cancellation have also dropped. >>> accused fraudster allen stanford will make his first public appearance since his arrest in late june. our scott cohn is in houston waiting for today's hearing. what do we expect to hear? >> reporter: well, it should be a very interesting day, carl. the potential for high drama today in the courtroom of the judge and indications are the judge kind of likes it that way. the last time we saw allen stanford in public was the end of june

can the fdic run out of money? >> technically it's not possible. they have a direct line to the united states treasury and if were to run out of money $500 billion line of credit with treasury and they would take a loan from treasury and pay it back with interest. but what it tells you is that there is a failing, a failing bank problem in the country right now, heidi. just a few years ago several banks failed. and then last year it jumped to 25 banks and now so far 81 banks have failed and many analysts, heidi, say many more banks will fail. you know, the fdic has a troubled bank watchlist and it doesn't tell you the names of the banks but tells you how many were on there. 305 banks on that list and we're waiting to hear from sheila bear how many are on it and many expect hundreds more banks to fail over the last few years and your money is safe in those banks and you're insured up to $250,000 per account and no change in that. your money is safe there. but what it tells you is that some of these banks are facing tough times and the fed, the fdic h

the fdic will take over and protect you. it's not unusual when fdic comes in for it to be quiet. they don't want to spook everybody and if you're driving by a bradford bank now you can see the lines are already piling up because are afraid they will lose their money. the fact is that's what fdic is for. it's been around forever. it's fine. >> as a consumer it's got to be a little frustrating of the you belong to a bank like bradford because it's a smaller bank. >> in theory you feel you're part of the community bank and your money is safer and you have a relationship. the fact is, it's a building. there's people in the building, yes, you may know the person but the fact is, it's a business, it's a building. you're no safer there than you are at m abc news t or wachovia or bank of america and it's about making sure you have the accounts set up correctly so you don't have more than $250,000 in any given account. >>> i want to move on to questions we have. some from viewers. the recession. is it over? there's been so much chatter about this. you hear cautiously people saying yes, so

the fdic does grand deposit insurance to all of them. it has been after they have been in operation, where someone is facing a problem and they seek to change the charter to avoid a downgrade or enforcement action and move to a different charter. that is what troubles all of us a great deal. >> in terms of choosing the charter at the outset, the thrift charter is unique in terms of the kinds of business that an entity would want to engage in. people choose a charter based on the business plan. in terms of people switching charges because of some received favorable difference, there are 50 to choose from, 52 to choose from, with the federal charter you have two. anyone who is looking to avoid some kind of supervisory enforcement action, as we've talked about here, we as a collective group have taken steps to avoid that, to make sure it does not happen for the wrong reasons. >> one, nothing from all of you, i think accurately reflecting -- one commong thing from all of you, i think accurately reflecting that the source of the crisis was fr

needed, the fdic can borrow fr the treasury to shore up it's depositnsurance fund, but elliott thinksaxpayers won't ha to any losses. >> my best gue is that taxpayerwon't have to put up anything.

but i have a lot of faith in fdic. but m&t bank is a good bank. >> reporter: the president of m & t's atlantic division says it will be bigger and better since former bradford customers will soon have access to more branches and atm machines than any other bank can provide in the regions. >> they'll have access to over 300m & t branches as well as 740 atm facilities. and this is the largest branch in atm network in the baltimore- washington corridor. >> reporter: former bradford bank customers will be able to use their atm cards emmitt's many locations beginning this thursday, september 3rd. jeff hager, abc 2 news. >> and jeff says m&t bank will keep the nine bradford branches open for now with all

fdic will handle the rest. most of colonial's customers should be okay. the fdic, as you may know, guarantees to protect bank account balances up to $250,000. >>> cash for clunkers is causing a cash flow problems for auto dealers. they say the federal government hasn't reimbursed them for their trade-in deals and put them in a cash crunch. some requests submitted nearly three weeks ago haven't been paid yet and may cause some dealers to opt out of the popular program. meanwhile ford motor company says the program has created such a demand it had to boost production at three of its plants. >>> as i mentioned we are keeping a first eye on the first named storm of this season in the atlantic. for more on that and your forecast where you are we check with meteorologist reynolds wolf. a busy day weather-wise. >> absolutely. it's been a fairly quiet season in the atlantic basin but things are cranking up a bichlt let me show what i'm talking about. we'll enlarge this picture and show you a couple of things we are kee

. >>> the fdic said its insurance fund fell 20% in the first quarter. that drop blamed on a surge of bank failures. the head of the fdic said there are no plans right now to tap into treasury funds to make up the shortfall. >>> we've gotten signals lately that the economy is starting to show signs of life, but then again, some troubling signs as well. the fdic's insurance fund is shrinking rapidly, and there's another drop in the country's gross domestic product. cnn's richard quest is spending the week in new york, trying to get a handle on all this. he's left his digs in london and joins us now live from manhattan. good to see you, richard. >> reporter: and good to see you. not only have i left my digs in london, i've now decided to become here, i've come to the west side of manhattan. you get two guesses, where am i in manhattan? where do you think i am? >> hmm, i'm trying to figure it -- oh, wait a minute this is that new park, right? all the millions and billions and theres of dollars went into this park, and you -- and it's -- right? i'm recognizi

and it's an fdic issue. it's going to meet next week to vote on a proposal to require pe firms to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks and now the ft reports that state pension funds have written a letter arguing that to require pe groups to maintain a tier one capital ratio is unduly restrictive. we'll talk about the issue with our guest host, don marron this morning, he rain painewebber and is now chairman and ceo of lightyear capital. >> always good to see don. >> it is. and he was chairman of ubs, but he had nothing to do with the swiss -- you know, he was the painewebber guy, so we're going to say, so, hiding a lot of money for people, weren't you, don? >> he can't talk about it inspect. >> he will say i was at painewebber and the parent, ubs, they do all this. >> that's their reputation. >> good chocolate. >> knew tallty and secret banking. >> make a lot of money in zurich. >> and skiing. >> and skiing, as well. all these people

the fdic basically ensure -- it guards $6.2 trillion. now the fdic itself is in trouble right now.s funds went from $13 billion to $10 billion in a couple of months because of all the bank failures. so to it will charge bank more fees. if you have deposits of 250,000 per bank, per deposit, you're okay. the fdic will, will guard that. you'll get that money back. so, but, you know, that doesn't speak to the larger issue obviously of the fact that there are more than 400 banks on the fdic secret list of troubled institutions. that is a lot. many of those could go under, because as you said, we've been through the kind of, the personal housing market failure of the bursting of the bubble. now it looks like commercial loans, commercial real estate could be about to have trouble. that is going to hit the banks hard. >> eric: we saw what happened with the financials, the banks, bank of america, citi bank and their stock last year. what could it do to the banks, the folks that have financial stocks? what do you think will happen once this hits? >> it's interesting. i was just doing some re

the fdic is running low on cash, drained by 81 bank failures so far this year. added another 111 banks to the troubled list, that brings the total to 416. fdic boss sheila bair says in a statement, we expect the number of problem banks and failures will remain elevated even as the economy begins to recover. huh, cnn's christine romans is going to help us sort through this story. so, christine, banks are going bad. >> yeah. >> how much of a concern is that for the administration? >> you showed sheila bair there. and i want to read another quote, no insured depositor has losed a penny and no one ever will. if the banks are going bad, what in the world does that mean for my money? the existence of the fdic is to prevent you from losing money on your insured deposits, you're insured up to $250,000. about the administration and the challenges for its strategy to try to climb out of this economic mess that we've been in? clearly, the banking sector is still frail and still facing a lot of rinks for the small and the midsized banks. you talked about the number on that

so we have an arrangement with the fdic.is a fair premium for the deposits themselves. then on the loan-sharing on the lonz, this is very creative we created an upside potential for the fdic. so if the credit mark on the loans is too conservative, for example f we don't loose as much as we thought we would lose, then the fdic actually shares in some of that upside. so, you know, what we have to do is we have to work really hard to service all of those loans, work with those clients, make sure that we, you know, keem all of those deposits, which, you know, have been somewhat this a precarious position because of the -- you know, the challenges that colonial has had. so while it's a good deal for bb&t, it is not a great gift. people should not have that mistaken impression. it's a good transactions for fdic and bb&t. >> over the weekend kelly talked about the bb&t, worried they'll have to get short-term funding from treasury or raise assessments on banks. should we be worried about how much they have left in their powder keg t

during this current crisis, the fdic has been working with acquiring banks to share. the guaranteed bank collapse will cost more than $3 billion in an attempt to attract more buyers for failed banks wednesday afternoon and the fdic board is expected to relax on private equity firms buying collapsed firms. as far as replenishing, look for more special assessment. some risk an lives believe that may not be enough. >> i think it's fanciful to believe the industry can finance in the short-term through assessment. fdicville to formally pull on the credit line with the treasury to keep the visible balance such that we don't cause public unease. that's the issue. they won't run out of cash. >> remember as we approach the one-year anniversary of the financial crisis, last year the fdic was dealing with the twin collapse of washington mutual with some $307 billion in assets and indy mac under $31 billion. the fdic inshirts at 8100s around the country and most are open for businesslike the rest of us waiting for the economy to recover. michelle? >> thank you. when you hear abou

the fdic.its will be protected up to $50,000 per account. your atm card is still going to work, but you've got that $250,000 protection at any bank that is backed up by the fdic. that limit was actually raised, as you know, tony, last year, sort of at the height of the financial crisis when it was at 1 $100,000 and now it's up to $250,000. there's also some important things to note here. there are situations that you can get more insurance if you've got, say, a joint account at one of these banks, that will be insured as well as your individual accounts. use the tools. we'll follow-up. you can take a look at fdic online calculator, myfdicinsurance.gov and look at your account to see if you're fully protected. if you have any questions, call the number, 1-877-ask-fdic. and it's moving quickly, so we'll follow it. thank you, tony. >> appreciate it, poppy, have a good weekend. >> you too. >>> breaking racial barriers it's what we're talking about today in our "what matters" segment in partnership

the fdic board says this policy change does strike a balance. a controversial source of strength provision, which would have put private equity investors on the hook for more capital if a bank failed, that was dropped. the fdic says these new guidelines will be reviewed every six months. back to you. >> great stuff, hampton that is an opening. we'll see private equity funds coming to inpick up these failing banks think is a darned good thing. >>> moving ahead, former fed head paul volcker is back in the news. says he wants to see money market mutual funds treated the same as banks in regulatory terms. let's get a quick taken from our distingui distinguished guests, tony, and peter marici. here's the quest yes or no. we will come back and deal with this in great depth. should these money marngt mutual funds be regulated like banks. >> absolutely. they have large systemic risks and take on many regulations such as activities of banks. >> the funds are already tightly regulated by the sec. they're doing just fine, don't need regulation. >> i'm not

the fdic has closed 81 banks. we know the government can't manage the assets.elp private equity get in. but from the f dcht i want c standpoint, remember, when these assets are sold out into the market to private equity, this isn't the free market at work in terms of these assets being released into the wild. they still come with a taxpayer back stop. a lot of these asset sales have loss sharing agreements, the tax -- >> what's your bottom line, are you advocating tougher rules? >> i think fdic is bargaining hard for taxpayers and they should and they ought to think about tough capital standards, that's the right thing to be thinking about. you look at the mistakes made in the last few years, i think they're asking the right question. >> wayne, is this almost not quite the issue here when we talk about private equity right now they can't owe more than 25.9%, then they become a bank holding company which means the federal reserve oversees them. they'd like those rules to be eased, really get some control. >> i think there's two things that you need to keep in mi

fdic will handle the rest. most of colonial's customers should be okay because the fdic guarantees to protect bank account balances up to $250,000. >>> yes, it can be tough to put money away in savings because, well, there are so many other demands but hln money expert clark howard says it is important to look ahead and has a simple formula to help your future. >> do you know the first time i retired, i was 31? retired today? i don't know. but the thing is, i have set up the finances in my life that i can ask myself that question. most of us can't. what's the key? there are actually two keys. one, through your working lifetime, you have got to live on substantially less than what you make. everybody thinks the big pay day is going to come from somebody coming and buying out your business or whatever or winning the lottery or somebody dies and you inherit. huh-uh. most people make it to a comfortable retirement by a simple thing, living life without too much flash, keeping the cash, and spending substantially le

burton c99 the fdic shows down three more regional banks over the weekend coming in chart talk we take a closer look at the regional banking index. as you know by now three more regional banks shutdown over the weekend by the fdic they're bringing the total number of banks to 72 add that to 25 bank fears last year growing because of the market mixed were in the banks that were closed in oregon and for the smaller banks less than half a billion dollars in assets call when you take a look at the regional banking exchange traded fund these are bigger banks but regional and make nature and use see below 24 is hitting those technical resistance at just a few months ago the city back to a least a year ago and you can see year to date since jane rarely is still down 20% four k r e so very much lagging the overall market and obviously there's continued pain that will come for these regional banks and the big banks double in this rally since march regional banks as a group has performed not so bad since march but we haven't seen that 89 percent return. a big watch as commercial real estate and

the fdic and shorts are deposits at banks. its list of problem banks has increased to 400, with combined assets of $300 billion. it's not just the troubled banks that are worrisome, it's the sobersides banks. the nation's largest financial institutions are even bigger than they were before the credit crisis prompted a government bailout. jpmorgan chase holds more than $1 of every $10 of deposits across the nation. the same is true of bank of america and wells fargo the newspaper says citigroup issues half of the mortgages in the country and holds one-third of the credit cards. regulators are concerned these banks may be operating under the assumption they can always does go to the treasury department for a bailout if they need to. let's look at stocks. squeezing out the gains yesterday. the dow jones is up eight days in a row. futures pointing to a positive start. keep an eye on shares of dell. before the close, it came out with quarterly profit and revenue that topped estimates it after cutting costs by contracting out 40% of

as with the fdic board a systemic risk council can act quickly and efficiently in a crisis. the combination of the unequivocal prospect of an orderly closing, stronger supervisory structure and counsel that anticipates and mitigates risk developing both within and outside the regulated financial sector will go a long way to assuring the problems of the last several years are not repeated and that any problems that do arise can be handled without cost to the taxpayer. thank you very much. >> thank you very much, chairman bair. the chairman shapiro. >> thank you, chairman donner, ranking member shelby and members of the committee i'm pleased to be with my colleagues from the fed and fdic. there are many lessons to be learned from the recent financial crisis and a key one is we as regulators need to identify more mature and reduce systemic risk before they threaten the stability of the financial system. however in efforts to minimize the potential for institutional failures to threaten the system we must take care not to unintentionally facilitate the growth of large interconne

. >>> fdic chairman has argued for more products. the fdic has taken over 69 banks so far this year in a tough period. >>> other names, first lady michelle obama makes her first appearance on the list at number 40. and that will do it for us today. thank you so much for joining us. we'll see you next week and next week, electronic readers, growing up with a digital book. the kindle isn't the only one out there. we'll check out to others. have a great week, everybody. we'll see you again next weekend.

. >>> fdic chairman has argued for more products. the fdic has taken over 69 banks so far this year in a tough period. >>> other names, first lady michelle obama makes her first appearance on the list at number 40. and that will do it for us today. thank you so much for joining us. we'll see you next week and next week, electronic readers, growing up with a digital book. the kindle isn't the only one out there. we'll check out to others. have a great week, everybody. we'll see you again next weekend. [ theme music ] ♪ >> tim: today's guests are two of the most recognizable figures in sports. they grew up together on the hill an italian section in st. louis. after world war ii both began catching in the major leagues. one with the new york yankees and the others with the cardinals. remarkably, their fame increased after they playing days were over and there's hard to believe -- and that's hard to believe. they were good players. one is a hall of famer as a player and the other as a broadcaster. it's my great pleasure to welcome two of