has and the liblets that the fdic has. and right -- the liabilities that the fdic has. and right now the significant liability that the fdic has is what we call our contingent loss reserves which is the funds set aside to cover the loss of failures over the coming year. rand so that's the fund balance. difference between assets and liabilities. for liquidity, that really gets to the mix of assets that the fdic has. we started this period with over $50 billion in cash and cash-like instruments. as a result of this resolution activity, some of that cash has been turned into liquid assets as a result of what we get from bank failures. so i think it's worth keeping that distinction in mind. with that i'll turn it over to diane. >> sure. staff has projected the fund balance in the reserve ratio for the near term as well as over the next several years using the most recently available information on expected failures and loss rates. we expect through 2009 through 2013 the fund could incur approximately $100 billion in failure co

. >> and the fdic looking to fatten up its cash reserves now that it is being wiped out by failing banked whom will be left with the bill, all ahead on this edition of "first business". >> you're watching "first business" with tom hudson and beejal patel. >> two keys to any kind of emerging stack for the u.s. and global economy squarely in focus this week with the u.s. housing market on tuesday and the job's market on friday. tuesday is going to have the s&p case chiller home price index looking at month-over-month stability, maybe finally in home prices. >> tom, also on tuesday, the fdic, as we mentioned is meeting to figure out how to replenish the insurance reserve fund, especially at a time when close to 100 banks have already failed in 2009 and experts are predicting hundreds more could likely fail in the coming years, especially with that big wild card, commercial real estate. we don't know how bad that could get in the coming year than is going to be pretty critical for these struggling banks. >> we will talk more about the fdic and decisions ahead in the coming weeks. and it is no

>> i think the fdic charges a modest impact. but i think we should put it in broader context. there's going to be a price that will have to be paid for continued credit losses for the damage that's been done to the economy on the fiscal side. banks are going to pay part of it, not only in this but also in higher capital requirement. and i think we are going to have a credit market that is going to be affected by this for a long time to come. >> susie: how are you seeing -- everybody has been worried over this past year about money flowing through the credit markets. what kind of shape are the credit markets in right now? >> well, the credit markets are still fragile, they're improved. and i think the drug on growth is substantially less. there's also good news and bad in that with the levels of housing and activity consumer durable demand so low the system didn't need to generate that much credit to get us to grow again. but the healing is slow, it's in the right direction, but i would not expect or characterize credit markets as having come close to normalizing at this stage.

but the headf the fdic, sheila bair, has come up with a solution. she wants banks to prepay $45 billion in iurance premiums. >> susie: another kemeasure of the housinmarket is showing improvement with pces marking monthly gains. what does it mean for th housing recovery we'll get some answers from noted economist. >> the dand will go wild in twto three years. so holon to your horses, everybod real estate is coming up, there's nooubt about it. >> paul: this south florida homebuilder thinks hpy days will soobe here again. he'll ll you why. >> susie: then, 's all about revenue en it comes to eaings. while cost cuts lped companies ke their numbers during the recession, wall stre's now lookinfor revenue growth. >> pau i'm paul kangas. >> susie: and i'm susie ghar. this i"nightly business report" for tuesday, septemb 29. "nightly business rert" is made ssible by: this programs made possible by contributions to yourbs station from vwers like you. thank u. caioning sponsored by wpbt >> sie: good evening, everyone. prepay us $45 billio that was t message tod

we're also facing as the fdic announce on the troust list. 28% of the banks that are insured by the fdicn the first quarter. in the second quarter, rather. had losses. and so we are certainly not out of the woods. we're in for difficult times. >> why are we seeing the banks going under? because of unemployment that it's sort of a lagging indicator where people take a couple of months before defaulting on, or not being able to pay the mortgage? >> there was a period of time, if you recall, when the administration was trying to figure out how to properly monitor the modification programs, when we actually declared a moratorium on foreclosures. and that went on for several months. that moratorium ended several months ago, now we're seeing a buildup in the pipeline that is in some result of the moratoriu >> so how -- where does it go, then? in 2010 we have the headwinds of a default in the reality estate market. >> it's been a mounting problem that we've been talking about for the last year. it's also in discussing -- matt mentioned the real estate, most of the option arms are resetting in 2

the fdic is an insurance company. if they lose a lot because failed banks, then the remains banks have to see their presumis jump. there's no question the banks have to pay this money. >> steve, let's talk about that. is this the right time for this bank assessment? is it going to damage capital, hurt lending? >> i think to the extent that it's prepaying, it's not damaging. the way i would look at this is as a user tax. this is going to come out of the time cost of money imposed upon depositors. this won't be free for the depositors. this is like a gasoline tax. >> so it's going to hurt the consumer essentially? >> paying it and not going to pass it along. maybe dick has another thought on that, but i don't think the banks are going to prepay money from two years down the road and not charge the depositors. >> dick, let me ask you, it's a separate issue, but it's related. how much capital to the banks have and do they need? is this the right time to force this? >> the banks have too much capital at the present time an

this morning, they will hear from fdic chairman sheila bair. in the afternoon, mary schapiro, who heads the securities and exchange commission will speak. that is at 1 p.m. eastern. that will be live on c-span. on regulation is born, "the wall street journal" is reporting that policies that set the pay for tens of thousands of bank employees nationwide would require approval from the federal reserve as part of a far-reaching proposal to rein in risk-taking at financial institutions. the feds plan reported by "the wall street journal" would for the first time in jack to government regulations deep into compensation decisions traditionally reserved for the bank's corporate boards and executives. we will hear from two regulators today, sheila bair and from mary schapiro. and they will wrap up the day hearing from larry summers who heads the national economic council. that speech live this afternoon at 3:30 eastern over on c-span. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conv

>> it seems to be having that -- fdic has always been there to protect us from bank failures. we've had over 120 bank failures in the past two years. so what's happened is the fdic bank so to speak, their fund that goes to bail banks out is becoming depleted. it's just about as low from the ratio standpoint as it was with the savings and loan crisis we had in the late 1980s. web it gets low they have to repleasurein it in some manner. they've been debating the best way to replenish it. there was an option where they could access a credit line with the federal government. they stayed away from that because it would be more akin to a bailout. and government bailouts are obviously not as popular now after we've gone through this mess. sheila bayer, the leader of the fdic decided to take three years in advance of the banking fees, the banks can write them off over the three years so they don't have to expense this all at once but basically means they are preparing all the way through 2012 and then that cash will go to the fzic, about $45 billion, it will replenish and prepare them

the fdic may soon ask banks for a bailout. we'll analyze the proposal. >>> and world leaders are gathering for a one-day summit on climate change. uuuuuuuuuuuuuu >>> legal low, everyone. you're back for our global equity roundup. we're joined by becky in our studio. >> the ftse 100 is higher this morning after losing a bit of ground yesterday. we're up almost 1%. about 51 points or so. we are mosh more than making up for declines that we saw yesterday. as far as the gainers are concerned, the basic resources stocks not doing too badly. tulw oil is not the doing too bad, as well. carnival also featuring there, shares of carnival adding almost 3%, in fact. they're coming out with their earnings later in the day, the third quarter earnings. in the meantime, though, bank of america and merrill lynch have added to the stock today. okay. i'll let you have a go, stephane. >> thank you. on the french markets today, we have agricole trading higher today after the company gave a priority to its debt reduction. after they decided to sell

the fdic has come into the situation. one big bank failure could wipe out the remainder of what they're funded for. they need additional money. >> this is an ingenious plan. this big trust fund so to speak, whatever. when the bank goes under you go ahead and pay out the depositors. the other way is to go to treasury and ask them for the money. that's all of us, by the way. that's taxpayer. or to go to the bank and raise if fee they're assessing on these banks and just force them to hand over more money. they're still getting money from the banks. at least the banks are getting some interest. is there a downside? >> it sounds kind of anefarious. the problem with some sort of surcharge may be going back to the trough and saying hey, guys, we need another round, these j banks are in the midst of recapitalizing. on one hand the government is saying go out there, lend. on the other side it's saying we're going to take money out of your hive. >> they get interest. cnbc's steve liesman was chasing down the story earlier today. i

bank of america may of the fdic $3.5 million. wells fargo over $3 billion. jp morgan just over $2 billion. the ftse wants to avoid asking the treasury for help. we had a lower date regarding the markets than yesterday. stock futures pointing to a higher open today. retailers are declaring a war as the holiday shopping season approaches. wal-mart is expected to announce it will offer about 100 toys for $10 or less. kmart announcing its fab 15 toy list, the hottest toys of the season. and the layaway program may help some consumers get an early start to shopping for the holiday. reporting for wbal-tv 11. >> thank you. we will see you back here at 6:15 for your next report. coming up, we will get a ledger morning commute and traffic and weather together. >> here why john harbaugh 0 cannot wait for this sunday's game. that is coming up next. >> do not forget to e-mail us your answer to the water cooler question of the day. do you agree with critics that president obama should stay in washington instead of traveling to copenhagen in a push to get the 2016 olympic

safe and people got creamed so great we have the fdic.ow, however, banks so stupid lending money the fdic is out of money and need more money. couple of options. you could go to the treasury and say lend us some money. you could go to the banks and say we have to hit you with a onetime big tax and the banks don't want that because it will kill their earnings a little bit. healthy banks will lend the fdic money and that is good. >> it's good, but i guess the fear is that it's like somebody is drowning and you send somebody to save the drowning individual and they drowned and you send somebody to save them and you go from 1 to 10 to 20 drowning victims. >> this is where the bailout comes in. it's a sneaky bailout. because, of course, this loan is going to be guaranteed by the government because no way the government is going to sit and have the big banks that make the loan get hurt by it so probably implicit guarantee there but, still, we have do have some reasonable healthy banks, at least on the surface, in part from the bailouts. why not

another is banks could lend to the fdic. whatever happen, americans should know their deposits are safe. >> i think what depositors need to understand is we have the full faith and credit backed by the government. we have substantial lines of credit with the treasury. no reason why anybody would need to worry about their insured deposit. >> reporter: here's what happens now. this proposal is out there. the banks can comment on it. we're expecting a final decision to come sometime in november or december. many more details. want to point you to this story. this is on cnnmoney.com. >> good stuff as always, poppy. appreciate it. >>> former vice presidential candidate sarah palin has finished her memoir just four months after signing the book deal. palin's advisers say it is going to be called "going rogue, an american life." i know that sounds familiar. the title refers to a comment by a john mccain adviser who complained that palin wasn't following his campaign playbook last year. her publisher moved up the book's release date

former fdic executive and ceo telling us how many are coming and whether or not the fdic is putting thestop the bleeding as the second hour of "squawk box" begins right now. good morning, welcome to "squawk" on cnbc. i'm carl quintanilla with joe kernen. becky is on assignment. good to have you, fred. welcome back. it's been a few months a lot has happened since your last appearance. joseph, we've had a lot occur. >> we need an update on the lodging industry at this point. is it getting better? >> we thought it would. we thought august would be a pivotal month, the end of august because we're preparing against a very, very low august last year. we thought august would show an uptick. august is not. august revenues down 18%, 19% year-to-date. haven't seen much improvement. >> hold that thought. let's look at the markets quickly. we need to look at futures up. >> they are up. good day in asia overnight, oil has been relatively flat. for most of the session, as we saw inventories come down, down $0.15. ten-year hovering around 34. software giant or cal, $0.30 per share in line. offset slow

bill: your bank account is guaranteed by the fdic. what about your cash? we showed you what the government has put out, public service warnings. still many of americans are doing distracting things while driving. ( music, cheering ) score delivery pizza... hut! hut! ( thud ) ouch! minus the delivery price. ♪ for fresh delivery taste without the delivery price, it's digiorno. ♪ bill: we will find out how dangerous texting while driving can be. a test track created by ford motor co's is designed to help drivers see the impact of these distractions that kill far too many american teenagers every year. we have with us jim gramm and hillary, she is beginning paid. -- the pig -- beginning paid the -- theguinnshe is the guinn. jim, how much more aware are teenagers after they drive your course? >> we like to tell people that learning to drive as a lifelong process. every bit of information we can give help. when they leave it we hope we understand how -- we hope that the kids understand how distracted this makes them. they will learn quite a bit by doing this exe

here we have the fdic, you know, closing down certain banks, taking on the assets of these banks. and we know that publicly the fdic has taurkd about the reserve funds being down substantially. >> you know, the really tough part about this is that the risk is there. it's the risk in these smaller banks. and i have to say, at least based still on the questions i asked today in this hearing, no one has a really good sense of how big it is. no one has been able to quantify it. and so we've got this unknown risk out there. the fdic is taking it on to the point that, you know, the boat is riding low in the water at this point. i'm not sure how much more capacity we have to take on risk. and it's not clear to me that it's been resolved. spl exactly. which is obviously the word. the government has made money on the investments and certainly some of the banks, certainly, the investments they made like in citigroup, and others. but your panel predicted yesterday that the government would probably lose a substantial portion of its investments in gm and chrysler. can you tell us about that?

the fdic has assessed an emergency bank fee this year. sheila bair says she would like to avoid tapping a $3 billion credit line with the treasury. >> the s.e.c. is holding a public round table today to discuss new regulations for the lending market. this includes reinstating the so-called upparticular rule where investors can only short a stock after it rises or ticks higher. short selling has been blamed for worsening the investment crisis. but others say short selling enhances liquidity in the market. >> coming up here on "worldwide exchange," stocks are snapping a three-day losing streak thanks to a nuri of m&a. we're still a little lower in europe. plus, deflation deepens in gentleman opinion. we'll he assess whether the government will need to launch fresh stimulus measures to boost domestic demand and investor attention turns to third quarter earnings. are we underestimating how productive have become? how you could start saving. >>> hello. welcome back. you are watching global exchange here on cnbc, "worldwide exchange," or global

the fdic's deposit insurance fund, which insures your bank deposit up to $250,000. the fund has gone from $50 billion two years ago to $10 billion and that is funded through premiums paid through banks, about $12 billion a year. we have learned that tomorrow the fdic will ask the banking industry to prepay three year's worth of premiums so we're talking about pulling about $40 billion back into the deposit insurance fund to help get through this crisis. bret: now, if you don't have fox business network, get it. >> you will miss these stories! bret: well, we'll get them on here. >> thanks, bret. bret: bad news for the embattled group acorn. bank of america has suspended its current commitment to their housing unit which helps people with debt and foreclosure issues. acorn is being frozen out by many government agencies as well, following the airing of undercover tapes showing workers advising prospective clients on how to break the law. well, crude oil prices rebounded today after hitting a two-month low last week. november futures were up 82 cents to settle at $66.7

the fdic needs this money to protect shep peter, thank you. difficulty for activist group known at acorn. some workers were recently caught on camera giving advice on many topics. >> that sparked outcry with the feds moving in to try to cut ties with the 'group. one of the big corporate partners is bank of america. until the group fixes its problems. acorn reports it's not surprised and it's working to resolve its issues. a judge in utah ruling that elizabeth smart can, in fact, testify against the man who is accused of keeping her hostage. it would mark the first time elizabeth smart comes face to face with the suspect since that highly publicized kidnapping. the back story, in case you don't remember it, investigators say brian david mitchell took the 14-year-old from her home in salt lake city back in 2002. nine months later elizabeth smart discovered while walking with michigan they will and his wife. din indicted the than that include kidnapping now a hearing is being held whether mitchell is mentionly competent to stand trial. he has qui

fdic. what are they saying, what are we looking at, mary? >> the fdic wants to raise an additional $45 billion for the deposit insurance fund voting this morning on a proposal inquiring insured banks to prepay this year. their assessment for 2009, all of 2010, '11 and '12. it increase by three basis points in 2011 raising the rates to 16 to 19 basis points from 12 to 16. this year, there will be no special assessment. the prepayments and future recessments will replenish the rapidly shrinking insurance fund. in june of last year, the dif held $55 billion in liquid assets, currently stands at $10.4 billion and will fall below mandated levels because of an increa an increasing number of failed banks. the number of failed banks is zpoekd raise along with the cost of dealing with them. projecting from 2009 to 2013 the cost will be $100 billion up from a previous forecast of $70 billion. most of the costs will be incurred either this year or next. the fdic is forecasting more bank failures because of continued deterioration in insured institution

taxpayer funds a foot the bill of loans and guarantees the fdic would provide. these infusions of funds, a little meaningful accountability. it'll be hard to know when they will be paid back. it generates the impression that society can avoid the losses. that is false. it would merely shift those losses to the new approach. under the expansion of authority, bank holding companies will regard themselves as explicitly backstop but the full faith and credit of the u.s. treasury. that is a moral hazard. it to be disaster -- it'll be a disaster for keeping the lid on this. bankruptcies by financial institutions cause great harm. nothing could be further from the truth. the ultimate cause of the financial crisis were to misguided federal policies, mainly the enormous subsidies for mortgage lending and the implicit guarantees provided by the fed actions and u.s. history of protecting financial institution creditors. this generated an enormous misallocation a capital. it traded a bubble. they had to fail because their assets were grossly overvalued and no leman's billio

i ask for a response from the fdic -- i asked for a response from the fdic and did not get one. just a question about the future. what happens if we get another wave in this crisis? jon: he was a master of the political process on capitol hill, but can you dance? it is a side of former house majority leader tom delay that few have ever seen. he is showing off his wild side on the season premiere of "dancing with the stars," achieving a high score. he says that he was not prepared to get in touch with his feminine side. he finds out tomorrow night if he lives to dance and other day. -- if he lives to dance another day. jane: we are continuing to see what is unfolding with these terror notes that homeland security have issued. it has been called the most dangerous situation since 9/11. we have new details on that and how this is security threat may be tied and for all of us, coming up. also, we are watching flooding into a plant area. the death toll from the flooding in the southeast stance at age. -- stands at eight. w i'm driving off the lot in a used sub-compact. ♪ ♪ f-r-e-e, t

you know, the fdic only has so much. today, the fdic is expected to propose that banks prepare three years' worth of fees in an attempt to replenish the fund, the insurance fund. their requirement could hand the government agency between 36 and $54 billion, some industry insiders have called on the fdic to borrow the money it needs from the treasury rather than putting more stress on the banking industry, which is still troubled. the fdic's board is going to meet today at 10:00 eastern. >> last week in the times, they said sheila bair would cut off her right hand before she would ask for money from tim geithner on this. >> with her buddy. >> with her buddy. but other people say you really don't want to borrow money from treasury because it would send a bad signal that this is a serious emergency. other banks say maybe it's not as bad as getting a one-time fee that goes towards future payments, as well. we are also on white collar crime watch today. the scattered showers will consider whether to hear the appeal of jeff sk

i assume he's going to crow about the fact that the fdic doesn't have to issue that fdic-backed debtnks. that's a huge milestone, isn't it? >> and i don't believe it. i don't think that the fdic is ready to back out of that yet. >> really? they said it today. you think they're still going to keep doing it? >> we have to wait and see. most of the banks we're talked to, maybe there's one or two out there that can issue debt, someone like a goldman sachs. these guys can issue debt. the question is can they do it in an economic manner to keep interest rates low. that's going to be difficult to do. i don't think in any form that the fdic can back out of the system yet. what we've heard is the fdic is already talking about extending that well into 2010. i don't know they're really to back out at all. >> david, are you as skeptical about that? >> i don't think they would be announcing it if they didn't intend to do it. it's too much of a negative if it fails to happen at this point. so i think you will see them coming out of it. i think they will be able to. >> as far as the written testimo

shouldn't we be worried about the fdic running short on cash? >> how would you like fit the ir sk asks for taxes three years early. the bangs don't like it'ser this. that's one way to look at the scenario that's potentially unfolding today. the government, not going to let the fdic fail, so they're looking at options including this report that they will ask banks to cough up three years worth of fees early. you know, pay your future fees early. and this is really a sign of the extraordinary times that we're in. the fdic is supposed to be baling out banks but they're basically going to the banks and saying can you bail us out? it's because so many medium and small-sized banks have been failing. it's helped 75 banks so far this year. it's drained it of its reserves. it's trying to spread the money around for maximum stability. >>> yesterday we had some big mergers we mentioned that a big merger may not affect your everyday life but it really helped the stock market and that's because a analysts say more mergers is a sign that there's optimism out

do you worry that the fdic may not have enough money? >> we cannot run out of money.back and we had the authority to assess the industry and cover the costs. we have up to $500 billion and we can tap into it if we need to. right now our resources are $42 billion. that is more than enough. we are looking at whether we need to assess the industry or borrow from treasury. they have nothing to worry about. nobody ever lost a penny of uninsured deposits. for the industry, they want to keep what they will borrow from treasury and pay it back later. that happened once in 19 none and the fdic's history. we paid it back in three years. that may be an option. never say never. i would like to rely on the resores if we can. >> that was fdic share woman sheila behr. if you want to see poppy harlow's interview, log on to cnn money. that will do it from here in sunny california. erica hill is holding down the fort in new york. erica? >> movie lovers around the world remembering the late patrick swayze. it wasn't just his acting that left a lasting impression. his impact on dance. (p

it is a little butt of a conundrum for the fdic. do they drive banks down by charging them more money or do they hope they don't go under and they don't have to take the insurance money. they are any little bit of a sticky situation here. >> we'll see how that works out. we'll he soo you once again tomorrow morning. >>> metro wants to keep a close are eye on its passengers. coming up, some new security measures that they are installing but some people aren't so happy about it. i'm sarah simmons. i'll have the details coming up of -- plaintiff -- using kmart layaway makes me wonder if everything... wouldn't be better in small amounts. - like yard work! - and exercising! and your casserole... would not be one of those things. kmart layaway lets you plan ahead. pay a little at a time, and pick up everything... you need, when you need it. there's smart, and there's kmart smart. there's nothing more important than our health. so when it comes to health reform, we need a solution that works for all of us. now the president and congress ha

you need to start buying cds, fdic protected cds.hat's our preferred place for cash until rates go so high that we'll be lured back into the interest market. arturo in florida. arturo? >> caller: yes, jim, this is arturo in boca raton sending you a big boca, ba, ba, boo-yah. >> it's a stuttering boca boo-yah and fitting for this segment. what do you have? >> caller: since march the market has been on a real tear. >> smoking. >> caller: yeah, and during the same time walmart has been trading within a real narrow range. my question is why doesn't the street show any love dmr stock? is walmart a buy or sell here? >> people shop -- first of all i will say when i was at my walmart in weekend it was jam-packed so you can't use that kind of anecdotal evidence. walmart is the place that people think that you buy when things aren't going well in the economy. when things get better, people think that they start going to kohl's and nordstrom's and start going -- the tiffany, you know what i mean? what's going on is people who make big decisions

we did the post office, the fdic, fannie, and fredi -- the post office, the fdic, fannie, and freddie? >> the same thing with medicare, with food stamps, the same thing with everything from low interest loans to money for the u.n. this government has misread virtually every spending proposal, and now, after bailing out anybody, it wants to put $900 billion more. of all of the arguments i heard tonight, i think that what is the weakest, and i think the president is going to regret putting a specific price tag on it and suggested that is all is going to cost. sean: making private insurance companies subservient to the state, and here is the track record we have. they have taken of the automotive companies, taking over banks, dictating the pay for ceo's, and i do not think they can compete. is this not the nationalization of these companies by definition socialism? >> i keep thinking, here is the government that gave us the compassion of the irs, the efficiency of the post office, and the effectiveness of katrina, and now they want to take over our health care? sean, use those three toge

the fdic is trying to build up its inventory of cash.depleted by almost 100 bank rescues of this year. the ftse masked banks to pay it three years worth of premiums ahead of time. it would amount to about $36 million. they have never asked for prepaid insurance fees before. the banks were caught holding last year and itas a year ago today that the dow had its biggest one day. drop ever, 777 points. we're not looking like we will have that big of a drop today. stock index futures are slightly: -- are slslightly lower. >> thank you. have a great deal. >>> 6:37 is your time. >> one be returned, it should fairfax franchise its parks and sports fields? >> it is new. it is outside the box. >> the new plan to raise money for the county. >> michele was talking about the stock market. where do we stand now? i am matt brock. we will of that coming up. >> we will be back with your latest traffic and weather. growing up we didn't have much, but education was always a priority. my mom sent me off to college with just four 20-dollar bills. so i know t

banks are getting closed by the fdic. regulators have closed a georgian bank in atlanta, 95th bank of the year. first citizens bank and trust will assume the de pos its. they had total assets of $2 billion, total deposits of approximately $2 billion as well. the 95th bank to fail this year. often happens on friday afternoon. a lot of breaking news. listen to this. this is going to be a big headline tomorrow in the paper. the "wall street journal" is reporting that the chinese sovereign wealth fund has given oak tree capital management a commitment of # billion to invest on their behalf. that will be a huge coup for oak tree capital management, the managers of that fund frequent guests here on cnbc. china sovereign wealth fund, remember, for so long they were investing in different actual companies around the world. but now it looks like they're investing in hedge funds as well. and money managers. oak tree getting $1 billion according to the "wall street journal." and they are poised to invest directly in more hedge funds

we did the post office, the fdic, fannie, and fredi -- the post office, the fdic, fannie, and freddie>> the same thing with medicare, with food stamps, the same thing with everything from low interest loans to money for the u.n. this government has misread virtually every spending proposal, and now, after bailing out anybody, it wants to put $900 billion more. of all of the arguments i heard tonight, i think that what is the weakest, and i think the president is going to regret putting a specific price tag on it and suggested that is all is going to cost. sean: making private insurance companies subservient to the state, and here is the track record we have. they have taken of the automotive companies, taking over banks, dictating the pay for ceo's, and i do not think they can compete. is this not the nationalization of these companies by definition socialism? >> i keep thinking, here is the government that gave us the compassion of the irs, the efficiency of the post office, and the effectiveness of katrina, and now they want to take over our health care? sean, use those three togeth

banks that would like the idea because they could spread out the cost over time, but as far as the fdic is concerned, this is not one of the options. melissa? >> they're going to borrow from treasury. we know it. >> kind of the blind lead tg blind. >> no. at least the banks get paid. they would get paid. >> the government borrows from the private banks. i like it very much. >> steve, you guy are crazy. >> i think it's an interesting issue. the only question is how they pay and i think taxpayers will also pay here. >> it is taxpayers that are paying because the fdic is going to pay interest, where does that come from? >> it would come from the banks. >> the economy grows. look, you've got this positive curve and zero interest rate, but if the banks grow, then everybody's going to be paid off and we'll live happily ever after. i bet sheila bair's taking a close look at this. >> but steve said they're not. >> it's on the table. >> but it sounds like they're tamping down this story as being the leading option. there are problems with going to the treasury aborrowing. >> what's the problem w

regulatory reform, key points from the fdic chair, reform must rest the issue of too big to fail andnce is not big enough to handle systemic risk firms and assistance must not be used to prop up firms. >> make no mistake, i support the actions we took to stabilize the financial system. lack in process, we did what we had to do, but going forward, open bank assistance should not be used to prop up a firm, only to give system-wide support. >> on the question of mark to market accounting and toxic assets, she says good for security firms, but does not work as far as the banks are concerned. we will hear from s.e.c. chief and president obama's top economic adviser, larry summers. >> thanks so much. he's offering legislation to exit the t.a.r.p. program. it's the first we've had of an exit strategy. joining us live from his home state of alabama is republican congressman, spencer bauchus. thank you so much for joining us. let me ask you, it does look like you're making some pretty good money lending this out. i'm reading an article that says the interest exceeds about 15%. why do you want

the fdic though is coming under pressure.ir deposit insurance fund, a big pot of money that they hold to protect against bank failures and to protect consumer dep sits is dwindling and they've taken very aggressyi steps but they're going to have to take more steps. earlier this year they assessed a $5 billion premium on the banking industry to pay to help sort of replenish that and most expect they'll do that again in the next few months because they have to. they've also set aside billions of dollars. so this is a -- it's a growing problem. host: have they had a voice in howing to resolve this problem? guest: they lobbied for congress to raise the ability to borrow money from the treasury, steps like that. they've also changed the way they assess banks to pay. because that's the way it works now. it's sort of like car insurance for the rest of us. but banks pay in and they get the fdic seal on the door and people can feel confident. so for consumers it's not goirning to be a big deal because they won't -- it's sort of behind

"the new york times" reports that so many banks have gone bust this year, the fdic is running out ofash and considering a plan to borrow from the nation's banks. the agency has a $100 billion line up credit with the treasury department, but regulators are reluctant to borrow from taxpayers. the fdic is announcing its plan to replenish the fund next week >>> there are only a few minutes left in summer now. folks in denver are seeing snow. the area had been enjoying sunny skies and above-average temperatures. a cold front brought several inches of snow to the colorado mountains and the foot hills. >> my goodness. >> it's wild between the south and out west. >> each time we get these extremes and this terrible flooding, is that due to global warming? one leading scientist, certainly scientists feel we are liky to see more and more of these extremes in a changing climate. so it does have a factor and does have influence. for instance, this august the oceans were the warmest temperatures in record. all these things and warmer atmosphere and warm moisture, you are seeing unfortunately more

bu the fdic seized 94 banks this year and funds are running short. "new york times" said the agency is considering a plan to borrow from the nation's banks. they have a $100 billion line of credit with the treasury department, but regulators are reluctant to borrow from tax payers. bankers like the idea of the loan because it is less painful such as getting hit with an emergency assessment or angering the public with another financial bailout, even if this one involved the government. officials say the fdic will issue a proposed plan to restore its financial health next week. >>> good news from wall street today. stocks gained some ground. dow was up 51 points. nasdaq closed the day 8 points higher and the new york stock exchange is up 78 points on your day. >>> when we com back on news4 at 6:00, police in arlington are searching for a guy they say showed a girl pornography on an iphone. >> new developments in the debate overhether to keep people under age 18 out of tanning parlors. >> president obama turns his focus today to climate change in middle

the fdic is supposed to bail out banks. asking the banks to bail it out because so many small and midsized banks have failed, 95 so far this year. it's had to shell out a lot of money. wants to make sure it keeps the system stable. >>> here's something that gave the dow a boost. there's the dow, up 124 points, not quite to 9800. getting closer and closer to that mark. pulled away from some of the highs, but a rally yesterday after some very big mergers. the big mergers may not affect you day to day, but they're a sign that the credit market is improving, they're able to borr borrow money to finance the deals and their leaders have faith that the economy ask is going to grow. that's good news in a bad economy. >>> this is a starbucks you don't have to stand in line for. it is rolling out its own line of instant coffee across the country. it's called via. they'll settlement sell this at. i don't know if you can just buy the packets to take home. they'll sell it at costco, target, starbucks. is that like folgers? i'm going wit

or new fertion of fdic or something else.hat's essential is taxpayer money doesn't go into it. the creditors have to face the prospect of taking the losses broadly and i don't think they generally expected that. the history of the u.s. going back a long time is creditors frequently get bailed out. that's what alan greenspan -- >> one point, which is that in general we have put a government guarantee around senior financial debt, and i agree with the professor, we must move away from that. i don't know how we do that and still have senior financial debt given in this country, but we must move away. >> it was an aesh temporarbitra the sand. one of the few people who have told us that allowing lehman to fail was the right decision. >> g-20 leaders meeting in pittsburgh today. wherever they go protesters usually follow. cnbc's carl quintanilla is in pittsburgh. what's the mood there now, carl? >> reporter: one of the big fears for the city has been the degree to which there will be protests. this is where they're largely expected

the fdic is likely to require banks to pre-pay, pre-pay three years of insurance premiums. now, one of the issues here is that we all know that the fdic has been examining and closing down banks, and now they're down to $10 billion in their reserve fund. actually, they are $10 billion -- they actually secure $30 billion for the next 12 months. so post-12 months they've got $10 billion. do they go to treasury for more money, or fdic likely to require banks to pre-pay three years of insurance premiums to bulk up that reserve fund. does that concern you in any way? >> i don't know, maria, if it concerns me. what i like is, we've gone through a pretty catastrophic period over the span of the last couple of years. and the approach that a lot of the financial institutions have taken with regards to risk has been improved. i think for the regulators to make more of an effort to turn over, frankly, every rock to try to find different ways to be able to manage that risk going forward is a good idea. not all of it's going to work, but i applaud the effort to do everything you can to

. >>> fdic chair sheila bair speaking this morning on the health of the banking system and future of global finance. we are there with her comments. >>> inside the numbers on palm, that stock has actually quadrupled already this year. investors have been betting on that pre, smart phone. peter breaks down the numbers and the market right now to key technical level. that means stocks are going to break out to the upside or potentially take a big dip down. we'll get to the bottom of that. we'll be back. >>> it's been volatile. right now it's up. it was down earlier in the premarket. now, the company had very strong sales of that pre, a smart phone. but that wasn't enough to pull it into profitability. outlook appeared to be cautious. keep in mind, as we said, this stock has quadrupled in value so far this year. go inside the numbers with peter, technology strategist with cannacord adams. peter, this is concerning. you say they're vague, not disclosing some of the most crucial data. >> yeah, i mean, what i don't understand is, is why you just don't tell everybody how many pres you sold.

. >> jaret, that's just what sheila bair at the fdic does not want. that is one of the biggest sticking points for this whole thing. is there a deal there or is the fed going to roll this or what happens, jaret? >> i can't see them consolidating the agency. the lessons from the uk suggest that consolidating the power doesn't do any better of a job than the system that we have. >> didn't they miss the crisis also? >> yeah. it happened regardless of the structure. i think the first step that needs to be taken is they need to revamp the capital rules. they need to get rid of many of the exceptions. they need to get rid of some of the sec problems that discourage building reserves. and that should be the first step. and then they can spend some time to debate really what the most ideal structure is. >> all right. we've got to leave it there, gentlemen. thanks so much for joining us. we appreciate it. >>> also a programming note. john horowitz sits down with president obama one on one this afternoon. "mad money" 6:00 p.m. eastern time. then "1 year later"

the finance crisis has slammed the fdic's deposit insurance fund. >>> california's attorney general haservice, standard & poor's and trading as it investigates the ratings company's role in the crisis. they are looking into whether the agency violated state law by giving better ratings to shaky assets. that is cnbc, first in business worldwide. now back to msnbc. >>> i'm norah o'donnell live in washington. >> i'm monica novotny in new york. police are looking into possible motives for the murder other of yale grad student annie le after raymond clark was charged thursday with the killing much the two worked in a research lab that conducted experiments on mice. lee's body was found last sunday stuffed in a crawl space of the basement of the yale lab building. the hartford current is reporting the crawl space contained dna from clark as did bloody clothing hidden behind a ceiling tile. the newspaper also reports that investigators witnessed clark trying to hide lab cleaning equipment that was found to contain blood splatters. >>> now to the bigger picture, who is raymond clark? here is wh

fdic is weighing a loan from the treasury.dic said bank failures could cost 70 billion. >> to massachusetts the state leading the nation when it comes to health coverage. low rate of the uninsured is due to a man date requiring people to buy health coverage. many insurers are planning to increase premiums and there is concern that it will prompt employers to reduce benefits or transfer costs to the workers. individuals may be hit the hardest. >> massachusetts passed the reform law mand dating citizens to sign up for coverage. the goal was to lower cost. but they say the lowest number of residents nationwide. 6.2 percent and the premiums are still rising. the health plan covers 720,000 members state wide and expects the premium to increase 9.5 percent in 2010. other providers harvard and blue cross, blue shield forecast similar spikes in a state that covers the premiums in the country. >> premiums continue to go up. not because of the cost of running insurance plans, but because of the underlying medical costs. >> the higher co

. >>> then is the fdic about to ask for a bailout from the banks?teve liesman will have that. >>> also ahead a first on cnbc interview. you mentioned paul otellini will join us leave from the company's development forum in san francisco. >>> plus forbes magazine ten uncommonly clever economic indicators and the ones you would add to the list. we'll see you on the other side of news now. this is cnbc.com news now. >>> they have been ordered to make restitution to customers in connection with the ipo vonage several years ago. although borrowing banks is an option, it's not being seriously considered. >>> and shares of carnival are up about 8% following better than expected earnings. that's cnbc.com news now. i'm courtney reagan. >>> all right. second hour of "power lunch" continues now. welcome back. i'm bill griffeth. wall street bracing for some numbers that could move the markets here. we have $43 billion in two-year notes. the results of that auction due out any moment now. we'll bring them to you along with some analysis and, of course, market re

another 400 on the watch list at the fdic, the fdic promised to cover losses up to $80 million -- $80n by the banks that have taken over the 83 but it only has about 15 billion left in its reserve fund so. the fdic is on the verge of going broke. >> we've been talking about that. you say the struggling of the smaller banks could actually knock down the economy as a whole all over again. >> yeah. we want people to spend again and that's starting to happen. people are buying technology. but moderate size businesses that create most of the jobs need dreed grow. they go to the bank to buy the computer, so on. not only are the banks in trouble but banks don't have enough funds because of this problem so they can't loan businesses money to hire people. so we're getting a small time credit crunch in peoria after we had the big time credit crunch in new york. >> yeah. obviously that is exactly what we're talking about here. it's a flow of credit. has the obama administration done anything that can help out the main street banks? and why should they? >> this is where they have come up short. p

this question is tied to the important question of what the fed and the fdic's strategy is to withdraw public support for the financial system. you address these matters today in your written testimony. looming over this situation is japan's lost decade which you are quite expert. despite optimistic statements of the kind that we saw from the regional fed banks yesterday, the numbers that we see tell a tale of rising unemployment, rising foreclosures, a growing crisis in commercial real estate, which has been addressed in this panel, rising small bank failures and failing bank business lending. the danger of a vicious circle could overwhelm the strategy of helping the banks earned themselves back to health. i believe the treasury, the federal reserve, and the fdic can take credit for calming the crisis of last fall, another matter that you addressed in your written remarks. i believe the decision to infuse capital rather than to buy troubled assets that secretary paulson made and that you have largely carried ford was the correct decision and has borne substantial food for our country