that's not the way the fdic rules work. we can accept or reject catcher prepositions and required him to a performance and if that is in the best interest of the government. another thing that we can do that is more difficult in bankruptcy is -- there are several things -- if you have an fdic type process you can prepare. at a lot of these institutions it was known for some time there were troubles and i think now that everyone is under the number of potential supervision by the fed that will be even more so the case so you can prepare for a process several months of advance in this is what we do for smaller institutions now appear if you can also set up a bridge to provide temporary funding to unwind the transaction as a write-in and propose something that is much more durable in bankruptcy. i think it was ironic some of the bankruptcy professionals were suggesting their big government funding of bankruptcy bioprocesses which i shudder to think about but i think if you are going to provide a short-term government funding t

and making some fdic-assisted acquisitions. according to a really quick note that citigroup put out recently, first horizon is one of the top six regional banks in terms of its capacity for fdic-assisted takeovers. the deal is likely to be so small, such a small one, that it doesn't hurt existing shareholders too much. plus, this is one of the little kickers here, you would be getting a great chance to buy more at a discounted price, something the shorts don't want to hear. and there are many short sellers in this name. they shouldn't have -- there will not be enough stock for them to cover all their negative bets. trust me on that. i'm giving you the good. let's talk about the problematic. it's not a perfect one. it's not a straight-a student. in fact, the bank is more like a c-plus who's on her way to becoming a b-plus student. oddly, that's really good, because it's got improvement. and that more than perfection is what money managers right now adore in a banking stock. that said, the wall street analysts still haven't warme

>> the globe and give the oversight to the fdic -- the law would give oversight to the fdic. what it would do from our perspective, besides being quite disruptive for banks and regulators, is close of an important source of information and connection to the broader economy. economy. >> there are a lot of small banks. i think this is one area where it is possible that having more than one supervisor is not a bad thing. , because the fdic has a legitimate interest in knowing what is going on among a lot of institutions. >> another issue i am interested in is looking at how we have become dependent on debt across the board, especially financial firms. the president of the kansas city fed wrote last month, the financial crisis has shown the levels risk-taking and leverage can go when our laws it -- our largest institutions are protected. a stable and robust financial industry would be more and not less competitive. equitable treatment of financial institutions will end the enormous competitive advantage the largest banks enjoy all over the country. as we think of how over leverag

not fdic chairman sheila better on financial regulation. she spoke at an economic policy conference here in watching to and hosted by the national association for business economics. it's about a half an hour. good morning. for those of you who do not know, i am the president of the national association for business economics. and i would like to welcome all of our members here today. for those of you who are not members, nabe is the nation's largest organization of this is professional economists. we are extremely privileged this morning to have as our first speaker sheila bair, chairman of the federal deposit insurance corporation. ms. bair has held that position for the past four years, appeared which i believe would have tested the mettle of any mere mortal. ms. bair holds her law degree from university of kansas and has broad and deep experience in various banking and financial issues. she has worked in academia at the newark stock exchange, on the hill with the senate, the treasury, and the commodities future trading exchange. she's r

i say that because i don't even know if the fdic, if one of these banks fail i don't know if the fdic be able to handle the enormous liabilities of deposit insurers. i don't think they could. >> again, i am agreeing with you. a critical comparative of financial reform is to make sure we have the tools and authority to do just what he said without the taxpayer being exposed to our butts of the innocent victims, families across the country. >> instead of leaving allowing banks to become too big to fail perhaps we should give someone the authority. >> to limit their risk taking. you read this in january. right now we have a cap on the share of the nation's deposits in the individual bank can hold that is unnecessary constraint. it is a good idea. it is a good thing. but it has this following a fact which is unfortunate. you can become bigger overtime as long as you find ourselves with other sources, not deposits. so it has the effect of still allowing size and concentration, but in more risky forms. we propose to complement that cap with an additional cap on total size so that you don't

now, the fdic was able tofind other financial institutions to buy all of the troubled banks except the one in utah. 37 banks have failed so far this year. >>> earthquake victims in haiti probably feel like they can't catch a break because yesterday they endured one of the heaviest rainfall s since the deadly earthquake. the rain swamped homelesscamps. and next week former presidents clinton and bush will travel there to meet with relief workers and government officials. > we certainly cover a lot of them, and you never know how a police chase is gog to end. but what happened in arizona tuesday was in no way typical. police in phoenix tried to pull over a suspicious pickup, here it is. the driver hit the gas instead. the helicopter crew from affiliate ktvk followed the action. >> at times he was going about 90 miles per hour. then police decided to back off when he was kind of getting in the residential neighborhoods and stuff like that. they were suspicious of mething in the back of his truck. from what i can tell, this is an f-150. it looks like it's silver or white. and in the ba of

this is a matter for the fdic, the occ, ots and the fed. what we are doing is encouraging them to continue to provide more care and balance and n the guidance to examiners across the country so they are not overdoing the tightening. not contributing to it. they put out guidance in november to help clarify how examiners should treat loans oh to eliminate some of the risk. i will certainly carry the message to them. >> ms. emerson and i and other members will submit questions for the record. we thank you, mr. secretary, for your time. we thank you for your direct answers. we want to work closely with you to make sure the recovery is strong and that the things you inherited january of last year are dealt with properly. we thank you for your time. >> thank you very much. >> the meeting the adjourned. . . >> in congress this week the house returns monday at 12:30 for morning hour followed by legislative work at two. >> next, a senate commerce committee hearing on the proposed merger between nbc universal and comcast. we will hear from brian robe

the fdic? there was some support for that idea. the fed made good sense. it was proposed by senator corker and others. frankly one of the reasons why it's important is because this agency will be funded out of fed funds, reserves, not that the fed has any control over those funds. if i went and asked for assess ments on financial institutions or depended on an appropriation to fund the agency, we've seen what other administrations in congress... and congresses can do in starving things like the federal trade commission and others. i felt this is probably the best choice of the choices available to me. again we'll go through a debate and discussion about this. i think it makes better sense there than the other alternatives other than free- standing for which there didn't seem to be the support. >> woodruff: quickly, you also give the fed say-so over institutions, the biggest institutions those with over $50 billion in assets. >> there are about maybe 60, 70, 80, 90 of those institutions in the country. we also have limitations on the auditing functions of t

>> the law would give the oversight to the fdic. state banks, but what it would do from our perspective, besides being quite disruptive for banks and regulators, it would close off an important source of information and connection to the broader economy. >> thank you. any thoughts, sir? mr. volcker? >> this is one area we agreed earlier as to whether you have one regulator or a variety of regulators. there are a lot of small banks. i think this is one area where it is possible to argue having more than one supervisor is not a bad thing. it does not pose the same systemic risk, but there is value to the federal reserve and may be some value to having more than one agency, because the fdic has a legitimate interest in knowing what is going on among a lot of institutions. >> another issue i am interested in is looking at how we have become dependent on debt across the board, especially financial firms. the president of the kansas city fed wrote last month, the financial crisis has shown the levels risk-taking and leverage can go when o

richard shelby, the ranking republican is using the fdic. the administration is more inclined to house that with treasury if it's want going to be a stand alone agency. >> probably some time next week the come they will mark this thing up in two weeks and we expect it to go to the senate floor and then things will percolate because the action within the senate banking committee is not going to be the last word on this. a long way to go, larry. >> so, john, in terms of insightful news analysis who's going to win this? you mentioned treasury. you mentioned stand alone and you mentioned the fed. what are you betting on? >> interesting question, larry. at some level the white house and chris dodd in particular, since as you know, he's retiring from the senate, they just want to get a bill. how do we get republicans and make republicans cooperate or induce a larger number of republicans to cooperate? and so they'll get some pushback from the left if the regulator is made too week in that process, so i would bet that the thing ends up at treasury.

in fact, it's the largest yearly decline since the fdic was createded.how would you analyze and interpret this data regarding decreased lending at lending levels? is it -- does it show a significant degree of lack of progress in financial stability or other factors in your interpretation? >> well, there are many possible reasons for the decline in lending, and this has been widely discussed. is it can be due to a natural caution during a recession on the part both of borrowers and lenders. and we will, as i'm sure you know, have announced a program to provide to make available additional capital to mid-sized and small banks who do outsized amounts of lending to small businesses across the country. we've announces a $30 billion program. we're hoping to get congressional approval for aspects that have program and to move it forward as rapidly as possible. and that program is geared to lending because it will -- it provides for a sharp reduction in dividend payments to treasury on the part of banks that lend materially more than they are today. >> one impor

will it be at the fdic? is it going to be treasury wherever it is. secondly that it should have some kind of coordination with the safety and soundness regulator. that's what's important. >> woodruff: and how does that connect to these payday loans? >> well, i think it connects to everybody. if you have bad actors and you have people that are being exploited anywhere in america, we should have a level playing field. we shouldn't put up that with that. >> woodruff: federal regulators for the payday lenders? >> if that's part of the scope. if that is what happens at the end of the game, that's the way it will work. >> woodruff: senator, another part of this is this plan would instruct the federal regulators to study and then enforce the so-called volka rule, the proposal by the former chairman of the federal reserve that would put a ban on deposit-taking banks from trading for their own account. what is your view of that? >> well, i like the spirit of the volka rule. i was at the hearing. i have a great respect for dr. volcker. i was the only republica

>> the law would give the oversight to the fdic. for state banks, but what it would do from our perspective, besides being quite disruptive for banks and regulators, it would close off an important source of information and connection to the broader economy. >> thank you. any thoughts, sir? mr. volcker? >> this is one area we agreed earlier as to whether you have one regulator or a variety of regulators. there are a lot of small banks. i think this is one area where it is possible to argue having more than one supervisor is not a bad thing. it does not pose the same systemic risk, but there is value to the federal reserve and may be some value to having more than one agency, because the fdic has a legitimate interest in knowing what is going on among a lot of institutions. >> another issue i am interested in is looking at how we have become dependent on debt across the board, especially financial firms. the president of the kansas city fed wrote last month, the financial crisis has shown the levels risk-taking and leverage can go wh

of the consumer financial regulation agency -- center shall be suggested that it be housed in the fdicty, an independent head and an independent budget. an independent authority to do what it needs to do. that will be the test we will look for as this legislation moves forward. the president's -- a president is very serious about this proposal. if you look back over the course of what has happened as a result of and what may have caused a good portion of our financial downturn, subprime lending, the easy availability of credit cards, these are things that should come under greater per view in a consumer financial protection agency. >> can that -- >> i don't know the degree to which we have looked at what senator shelby has discussed. to my understanding, at some point this week we are likely to see legislation unveiled. we will certainly evaluate that, but our test and the president's test is to ensure strong independence for consumer financial protection. >> even without commenting specifically on his suggestion of the fdic, the crux of the debate that might lead to financial regulati

in fact, it's the largest yearly decline since the fdic was createded.ow would you analyze and interpret this data regarding decreased lending at lending levels? is it -- does it show a significant degree of lack of progress in financial stability or other factors in your interpretation? >> well, there are many possible reasons for the decline in lending, and this has been widely discussed. is it can be due to a natural caution during a recession on the part both of borrowers and lenders. and we will, as i'm sure you know, have announced a program to provide to make available additional capital to mid-sized and small banks who do outsized amounts of lending to small businesses across the country. we've announces a $30 billion program. we're hoping to get congressional approval for aspects that have program and to move it forward as rapidly as possible. and that program is geared to lending because it will -- it provides for a sharp reduction in dividend payments to treasury on the part of banks that lend materially more than they are today. >> one import

we've been part of the fdic program and part of our own program.we have said to the treasury that we are willing to work with them as to what the program is. we have just seen the details. it is prudent for us to go that before we sign on. >> it has been out for awhile and i would look forward to what i hope is a positive response. my time has expired. >> thank you. mr. pandit, you started your testimony by saying your company is a fundamentally different company from the company two years ago. nonetheless, citi continues to pose significant systemic risks. citi is often cited as the poster child for too big to fail. it is a combination of commercial bank, investment bank, etc. i understand your response was that we are dealing with the problem of systemic risk in too big to fail by making citi a stronger company. some may agree and some may disagree. instead of that, why do you not concentrate on breaking citi two more pieces, so that no one piece is too big to fail? why not break it up? the markets are clm. -- calm. you'll not have as big a compa

the fdic during the crisis extended guarantees to virtually all bank borrowing of less than five-year maturity. they were very sweeping measures, as i recall. does not inconceivable that something like that would be necessary again -- it is not inconceivable that something like that would be necessary again. i think that the resolution authority is really meant for the big institutions, there is no doubt about that. it should act in a way that reduces the chance of spreading panic to the market's so that the smaller institutions are not affected. there is no fail-safe method for all of this stuff. i think something broadly defined is still necessary. >> earlier you passed by the issue of going beyond europe and you did not say much about china. you also mentioned earlier that 30 years ago japanese banks were big and held up as a paradigm. you also said volcker role looks forward but is looking backward. even though chinese banks have not call into some of the practices that got us into trouble, if you look forward and you look at the enormous increase in size in chinese banks, isn't t

they include fdic chairman bill isaac -- former fdic chairman bill isaac, john reid, nobel prize winningnomist joseph stiglitz, president of the federal reserve bank thomas hunter, bank of england governor mervin king, among many others. a chastened alan greenspan also added to the chorus, noting, and i quote, "if they're too big to fail, they are too big." in 1911, we spoke up standard oil, so what happened? the individual parts became more valuable than the whole. maybe that's what we need to do." unquote. greenspan greenspan, in my opinion, has never been more right. but even this extraordinary step of splitting this institution apart is not sufficient. cleaving investment banking from traditional commercial banks will still leave us massive investment banks, some with balance sheets that exceed a trillion dollars in assets. for that reason, glass-steagall would need to be supplemented with strict size and leverage constraints. to ensure that regulatory forbearance does not permit another lehman brothers, we should institute a simple statutory leverage requirement. for instance, a lim

. >> big story in the journal this morning, jpmorgan is reportedly close to a deal with the fdic. the great could result in tax refund of backside 1.4 billion for the bank. the deal stems from part of the economic stimulus bill. that law let companies apply losses from 2008 or 2009 against the taxes they paid in the previous five years. wamu is said to be eligible for $276 billion in refunds. so it's trying to claim more than half of the total refund. the journal says more than 250 companies have said they expect to get about $12 million in federal tax refunds under the law. and it doesn't take a genius to know that the stimulus bill, helping big banks are going to be the new wig firestorm. >> it's not just big bank. but there will be pushback that comes from this. the bill excluded any banks from took t.a.r.p. money to get help. jpmorgan says, we should be exempt because we took over wamu. although the wamu bondholders are fighting saying we should get some of those pay backs, too. this is the lead story in the "wall street journal" today. you'll see a lot of pushback from taxpay

the fdic attributes these losses in part to bank compensation practices. current pay practices encourage this excessive risk taking because short-term gains are heavily rewarded, even if they're unsustainable. and the negative consequences of severe losses are often externalized and shifted to the shareholders and, ultimately, when we have to bail them out to the public taxpayers. the federal safety net for financial institutions encourages traders and executives to take unnecessary risk, and the most obvious example is the $700 billion wall street bailout, which i and other senators here initially opposed. executives that should have been left without their shirts instead were left with golden parachutes. so let's take an example: the c.e.o. of bank of america resigned at the end of last year with a $73 million severance package. bank of america, mr. president, is one poster child for a poorly managed financial institution. why? it received $45 billion in taxpayer funds to avoid insolvency. to put this in perspective, that is almost $150 from every man, w

implemented in these non-banks that are involved with that, you take a look at them and then if the fdic or whomever you assign it to isn't doing the job than they are held accountable for that. so that's my approach. >> sandy, how do we reach the non-banks with regulation? >> welcome a few -- it's not -- it's not regulation. it's the enforcement. and you're right. well, i agree with tom. you have to have -- the rule making is not in force but it is the supervision. we for the supervision side as tom mentioned for the banks, that's pretty clear. it's the supervision of those non-banks, and in the enforcement side, enforcement right now is in different agencies. some of it goes to justice and some of it goes to hud and would be important to line up the rulemaking with the enforcement, and then the supervision depends on what the institution is. and as tom said, we've been taking the supervisory part of it as it relates to the banks, and we've been very diligent about that. it's been -- those non-banks. i think it's going to have to be a good definition of -- we are going to have to figure

the fdic was able to find other financial institutis to buy all the troubled banks. except the one in utah. >>> everyone can be forgiven from stealing a cookie from the coolie jar. but a man who stole the money from the sale of girl scout cookies may not be forgiven so easily. >>> police in atlanta have arrested a 20-year-old man who may have killed a teenager for his cell phone. roderick smith is charged with gunning down 19-year-old anthony beavers wednesday night. police say beavers refused to turn over his new touch screen cell phone toith. the two struggled and smith shot beavers. it happened at a train station, officials say this is the worst incident at one of the train stations in four years. >>> actresses demi moore and nia very doll lows may have helped to save a boy vie yes their twitter accounts. two other people also reported the threat on twitter and called authorities. >> i saw it on demi moore's page because i follow her. it's kind of complicated, and she responded to him and said are you serious and he said yes. >> we're very grateful to the people w

>> well, the original programs were all designed out of an fdic effort to address subprime mortgages that were resetting. and now we are trying to apply that concept to a very different program. this is a problem of people who don't have a job and can't afford the mortgage. so i do question the entire approach. >> paul, let's get back to the idea of whether or not the government should be involved in helping people just because they don't have a job, and not that that is not important or serious or they should not have our sympathies, but should the government be involved in resetting the mortgages for people who have lost tlar job? >> well, one ning is this hamp program, and it is basically a way for the government to stop foreclosures or to postpone it well into the future, because you have to apply all of the different hamp rules to foreclose on the property, so this will slow down the foreclosures by a government mandate and that is what this program is about and i don't think it is anything more than that, and the government does not want to say, we won't let them foreclosure, b

funds to the institution, and why treasury, the federal reserve and the fdic guaranteed over $300 billion of its assets and liabilities. although i doubt if citigroup's credit card branch banking or its commercial lending division created the too big or too interconnected to fail problem, it is critical the taxpayers fully understand why the failure of specific investment strategies and business operations within citigroup threaten the underlying financial stability of our country. the taxpayers are also interested to learn treasury or financial markets considers citigroup as presently structured to big or too interconnected to fail and yet eefr reversal will necessitate additional t.a.r.p. funds. perhaps the troubling aspect is the moral has yard risk arising from the implicit guarantee generated by the willingness of the united states government to bail out excess risk taking in all considered business decisions undertaken by certain financial institutions. in addition, the implicit guarantee afforded those financial institutions considered too big or too interconnected to fail may plac

. >>> seven more banks were closed by the fdic on friday. three are in georgia.bama, and minnesota. this brings the year's total to 37 banks closed since january 1st. >>> a federal judge has turned down a $657 million settlement for people who got sick from dust and ash after the world trade center fell on 9/11. the money would have gone to some 10,000 first responders, but the judge says the deal did not contain enough money and shortchanged ground zero workers. he wants now more negotiations. >>> well, a wave of student suicides being called a public health crisis at cornell university. there have been six confirmed or suspected suicides at the ivy league school the past two semesters. >> the stress of classes and whatnot, it can get you to that point and cornell has -- it's so big and you really have to push yourself to go out there and get to know people. you just get lost and you get lonely and i can see why people would want to jump. >> we have been knocking since friday, been knocking on every residential door reaching out to individual students and in gro

reasons why you are seeing so many banks, over 400 banks on the troubled bank list right now by the fdic. and are you going to see a lot more bank failure its this year as well. >> woodruff: so foreclosure is it being to hold back a more robust recovery. >> you know, and this is what we always see, is we tend to see the legacy. we saw the first part of the crisis was the sub prime minister crisis which is something structural that happened that shook us up. the result of that is a rescission -- recession and now we are having the residual affects and foreclosure of the recession. people actually lost a lot of jobs and they simply are in a worse economic situation that forces the credit card they took on, they are now just defaulting on it because they can't keep up the payments on the other three or four that they are keeping up the payments on. >> finally is the story sort of the same mixed economy story we have been telling for the last few months or is there something positive we can hang on to underneath all these statistics? >> the one thing that i think is positive out there is we

fdic? there are all these different agencies. and he's sounding a little bit more populist.rd. he doesn't like to be a populist but he's really making the case in terms of consumer protection. protecting the little guy. protecting the american families. that can sell. you know, i think that -- i think that people are waiting for them to get back to jobs. that's what i'd like to see them tackle. they did that jobs bill and they actually got some republican support. >> yeah. >> that was because it was mainly a republican bill. it was mainly tax credits and liberals would have liked to have seen more direct spending for jobs but i think that will come up again and we'll see if they get any republican help. i doubt they will. >> a lot of retired people, people with 401(k)s. not rich people, some money in the bank. some money in stocks and they do get the word, if they don't get it official. i got it from a wealthy friend of mine once, who said you know, all the money's made before somebody gets on the stock market. you really don't make money into the stock market and that seems

which you have under the safety net by deposit insurance protection, access to the discount window, fdicguaranteed bonds shouldn't be used to subsidize some activities on the asset side like proprietary trading or derivatives market-making so i would think what we need to do in this architectural exercise is consider what's outside of the safety net, what kind of things can be subsidized and it's a very tricky problemw/p(p% 'cause if you just say throw the risky stuff outside of the safety net, when your safety net doesn't protect the real economy anymore. but this notion -- and i know paul volcker is saying i'm nostalgic in glass-steagall but i am interested in compartmentalization and turning the large ones, like you mentioned the four or five like you mentioned back into public utilities where they're serving the economy and serving society. >> all right. dana and we'll do one more in the back and then we'll need to have to close this down. >> >> thanks to both of you and a question to both of you and thanks to the center for holding this important forum. my apologies not to be at the

what the fdic would have and what the occ would have.ink that's a practical and may be pretty arbitrary matter in the last judgment. i do think that we don't want to single out some institutions as too big to fail. i think we want a system in which particularly non-banking institutions can fail. that brings up many other issues in financial reform that don't rest significantly on precise quantitative amounts. >> my time has expired. i will recognize the gentleman, mr. baucus. >> german bernanke, was the new york fed aware lehman brothers was using an was usingrepo 105? -- chairman bernanke . >> the federal reserve was not the supervisor of lehman brothers. one of the issues that we were talking about was under the existing system, an investment bank like lehman brothers would not have a consolidated supervisor. we do not have that information. we had only a couple of people in the company whose primary objective was to make sure we got paid back the money we work lending to lehman through our primary credit facility. we were not the supe

the fdic did during the crisis extend a guarantees to virtually all banks. if i remember right, a very sweeping measure. i suppose it is not inconceivable that something like that would be necessary again, which is now focused on bailing out the large institutions. they benefited as well. i might say investment banks benefited as well, which is not something i particularly want to encourage. i think that the resolution authority is really for the big institutions. i do not think there is doubt about that. but it should act in a way that reduces the chance of spreading panic through the markets, so that the smaller institutions could be affected. there is no fail-safe measure for all this stuff. i do think, in the back of your mind or the back of the legislation someplace, that something like -- and happy as that may be -- unhappy as that may be, it is still necessary. >> you are earlier passed by rather quickly in your answer on international coordination, on the issue of taking that beyond europe. particularly, you did not say much about china. at the same

>> we are modifying second liens actively as part of the fdic program.we said to the treasury that we are all willing to work with them. we have just seen the details. is print for us to go through that before resigned on. >> it has been out for a while. i hope is positive response, and we will keep track of that. >> it started to testimony by saying citi is a fundamentally different company from the company two years ago. nonetheless, citi continues to pose significant systemic risk. citi is cited as the poster child for too big to fail. it is a combination of commercial bank, investment bank, an investment bank, for which glass-steagall had to be repealed so you could fall your business model. i understand your response that we are dealing with the problem of systemic risk and too big to fail by making citi stronger company. i want to focus on a different part. instead of that, why don't you concentrate on breaking citi into more pieces, so that no one piece is too big to fail? why not break it up? it can be done in an orderly fashion, not in crisis. t

the losses will cost the fdic $1 billion. >>> and still to come on eyewitness news saturday morning -> i'm alex demetrick and coming up, the hospital ship comfort returns to baltimore, ,,,,,,,,,,,,,, >>> we dot the first patients on the boat. >> as much as we missed them here, they need them out there. >> they were gone after two months and 843 of the procedures were surgeries. >> for him and the crew, it has changed their lives. >> now, i don't see them. >> reporter: the weight that began last january ended with a springtime walk down the gang plank. thank you for helping haiti. >> reporter: there's not only joy with the homecoming, but memories and the suffering eased by this ship's crew. >> you would see the people coming off of the boat and it was a spiritual experience. >> we provided a sense of hope for a lot of the individuals who survived the earthquake and for their families, they were happy. >> i missed you guys. >>> this is the first time that the comfort used all of the operating rooms and beds since 1987. >> good bunch of people! >> just doing it and knowing you'll be awa

and the second is that which you have under the safety net like deposit insurance, fdic guaranteed bonds, shouldn't be used to subsidize some activities on the asset side, like proprietary trading in derivatives market making in the otc area. so i would link what we need to do in this architectural exercise is consider what is outside of the safety net, what kind of things can be subsidized and it's a very tricky problem because if you just say for the risky staff outside of the safety net and it doesn't protect the real economy anymore. but this notion that there are no paul volker has been saying i'm not nostalgic about reinstating glass-steagall, similar to the mccain bill but i am interested in tobacco marginalization. turning large ones like you managed turning them back into public utilities where they're serving the economy and serving society. >> hi, dana, one more in the back and then we will have to close this down. >> thanks to both of you. and a question to both of you and thanks to the center for holding this important for them. my apologies not to be at the 30,000-foot mark

we've been part of the fdic program, part of our own programs to do exactly what you want. we said to the treasury that we're willing to work with them as to what this program is, we have just seen the details. i think it's prudent for us to go through that before we sign on. >> it's been out for a while. i hope it is a positive response and we'll keep track of that, thank you. my time has expired. >> mr. pandit, you started your testimony by saying citi is a fundamentally different company from the company of two years ago. but nonetheless, citi continues to pose significant systemic risk. in fact, citi is often cited as the poster child for too big to fail. citi is this combination of commercial bank, investment bank and insurance bank for which glass steagall had to be repealed so you could follow your business model. i understand your response to mr. mcwatters was that we are dealing with the problem of systemic risk in too big to fail by making citi a stronger company. there may be those who agree. there may be those who disagree. i want to focus on a different part. i

as former fdic chairman bill isakson called them, a wild west attitude on wall street and colossal failures by accountants and lawyers who misunderstand and disregard their role as gatekeepers. the rule of law depends in part on manageablely sized institutions, participants interesting in managing the law and gatekeepers more than a paycheck to they're clients. second, we must concentrate law enforcement and regulatory forces on restoring the rule of law on wall street. we must treat financial crimes with the same gravity as other crimes because the price of inaction and a failure to deter future misconduct is enormous. third, we must help regulators and other gatekeepers not only by demanding transparency but also by providing clear enforceable rules of the law -- rules of the road wherever possible. that includes studying conduct that may not be illegal now but that we should nonetheless consider banning or curtailing because it provides too ready a cover for real financial wrongdoing. the bottom line is that we need financial regulatory reform that's tough, far-reaching, and untainted by

we saw from from the fdic fourth-quarter report the largest top in lending in 60 something years. right? wasn't that what it was? though we also know that it's anecdotal and it depends on each community. and i are member dorothy we were talking and making business loans. so anyway, we do the best we can, which is we try and report the facts and then we hope that people will make up their own determinations. and now we can do is report what the facts are. >> thank you. i have found this very interesting, but i'm struck at two things. as community bankers, we probably have pretty good relationships with our local media. i'm struck because i'm not sure that good relationship can overcome the more cable channels and the broader media. the other thing -- >> will lead this event to go live to the u.s. capitol as the senate is convening for morning business. that's it. of speeches on any topic. then we'll presume on federal aviation administration and authorization bill that's been stalled since july. the bill contains an air passengers bill of rights, creates an oversight l2 speed the t

>> fdic, the federal reserve board office of thrift supervision are the ones responsible for trying tosure that the examiners get the balance right. some areas to be tougher, frankly. but we are careful not to overdo it and make the problem we're working through worse and the best thing to do is highlighting the problem for their supervisors. i can help reinforce that but they're independent. and i cannot direct what they do. i can encourage them to get that balance better. they're working on it. but they need to get the message out not just -- they need the message out of washington so that people in washington aren't just hearing it. people who do bank examis acros the country hear the message. >> i like the line of questioning of chet edwards. we have to learn and not make the mistakes and move forward. thank you. >> thank you, mr. chairman. i want to make an observation and then ask my questions all at once and give you most of my time to answer them. i just really want do point out that i wish that when i was in the minority in my first two years that we had been asked to come to

you can sleep a lot easier when it's in bank accounts insured by the fdic.n more than 75 years, no one has ever lost a penny of insured deposits. that's a lot safer than under your mattress. visit edie the estimator at myfdicinsurance.gov then you can sleep well. >>> health care reform is coming to every home in america. after the house votes in favor of the historic legislation. >>> plus, flood zone. a sigh of relief after the red river crests in north dakota. >>> and, tiger talks about his adultery, humiliation, and upcoming return to golf. >> i've done some pretty bad things in my life. >> it's monday, march 22nd. >> from abc news, this is "world news now." >>> on any other day, the tiger woods story would be the big one. he's finally breaking his silence. sort of no holds barred interview. but there's a bunch of other stuff going on in the world this morning that's sort of taking precedence. we will hear from tiger later on this monday morning. first to health care. good morning, i'm jeremy hubbard. >> i'm vinita nair. >>> a landmark bill overhauling the

. >> a record number of bank failures has depleted the fdic's insurance fund.er deposit premiums. >> the senate banking committee is expected to begin marking up senator bod's financial reform bill on monday. the house makes -- health care stocks may rally if the reform bill becomes law. he says this is partly because the reforms would he can panned insurance coverage. the latest in business with the bloomberg on the business report, i'm deborah kostroun. >> don't go away. first a look at some events going on around town. >> the carroll county mother is sharing her heartbreaking story in the hopes of helping other parents. she decided to move forward with a high-risk pregnancy despite knowing her son probably would not survive. jennifer franciotti has the story. >> and i'm very blessed for those pictures. beautiful pictures. >> they are a precious treasure for amy's ser reason moment for her -- with her newborn son. he lived only seven hours after his biferingt at baltimore's sinai hospital. midway through her pregnancy the mother learned he heart damage includ

i'm not arguing that the fdic doesn't need more funding in current circumstances but maybe it shouldn't also come out of the hides of the banks, particularly the bank that had nothing to do with precipitating this crisis. >> thank you so much. and again one of the reasons i chose to highlight our programs for getting for capital in small banks is precisely for the reasons you said. that we do realize that community banks have really -- you're on the front lines. you're the people that loan to the small businesses that we know have to come back to create jobs. independent bystanders in financial crisis that has been incredibly painful for all of us. on your bank examiner point, you know, of course, you have realized that bank regulators are independent as they should be. and it is going to -- but it is certainly something that we have heard and, you know, one of the reasons why we want to make sure that there is a program for getting capital into the small banks at a very reasonable price. so i'm really going to encourage you to look at the program because i think it's going to be very m

the fdic, the fed, [unintelligible] i did not say anything about them. >> that is what i mean. >> no. if you look at wawhat has happened and our financial crisis, we had bad mortgages. then you have easy credit. we have low rates. whenever we have low rates, the value of real estate and flights. if it is an inverse relationship that occurs. then you had a bunch of institutions in this country that work over leveraged. and then you had the ability to multiplied that with derivatives. take a bet -- then you take a base value and to a big emotional value. you had mortgages that were not written for. i did not mean barnum of the pyramid as far as society or anything else. thank you for clarifying that -- i did not mean bottom of the pyramid as far as society or anything else. thank you for clarifying that. at present, we have a pretty painful clause 4 ratings agencies. -- for ratings agencies. on the credit ratings site, we had a pretty big liability. this would call them to pay more attention to what they're doing. >> [unintelligible] was it to anyone of those are all of those? >> let me

it was big enough to cause the fdic $8 billion of public money. my impression is the so-called notion of prompt corrective action that we have been sold, that is not entirely credible at this stage and we need to maintain the focus that the next crisis may not look exactly like the last one. it is not only big institutions that can get into difficulty. >> i basically agree with what you are saying. i think the responses are, they're not -- there is thought attention given to it. in the house bill, you have the kind of situation that you seem to be describing. the agency'ies could declare an emergency where the use the old fashion formed to provide assistance to the market generally that would be necessary, it might be necessary in the conditions you are describing. i think that is important. the ftsdic extended guarantees o all bank borrowing of less than five years maturity, if i remember right. and i suppose it is not inconceivable that something like that would be necessary again, which is not focused on bailing out large institutions, although

we did not have no fdic. well, when president had the courage, and that is what is missing in washington right now -- he had the courage to take on wall street and set regulations on the banks, and a lot of the places you are refering, they started deregulating. all of these deregulations has brought this fraud in the banking business. host: peter eavis? guest: that is a very good point. we had a very long period where banks were allowed to do anything they liked, and they did. what it ended up as was the housing boom, were lots and lots of a very bad loans were written, and yes, a lot of them what had been stopped with better regulation -- a lot of them would have been stopped with better regulation. it has been a wasted crisis come in many ways, because we could clean it up and make sure such a crisis could never happen again. more important, to make it safer, much more safer, and i'm not sure the reforms that end up being enacted will make that much difference. i don't know what will happen next. maybe 20

i did a little research last night and there were a number of the fdic reports that were really interestingon a year-to-year basis, non current loans, loans that are past due, 67.5% increase across all banks. 702 banks impaired and by comparison just about 252 the prior year. and before that, in 2007, something like 25. it gives you the impact, the kind of a snowball effect. i think it probably reflects commercial real estate and the slow moving nature of this crisis is that -- it was 144% increase in restructured loans. that tells you that banks, rather than -- they are eating the losses, restructuring the loans, trying to keep some sort of incomes strain on loans but that speaks to how impaired and impacted the economy is right now. host: another issue on greased's financial situation -- greece's financial situation. and this morning and number of newspapers, "the financial times", fresh austerity measures. why is goldman being mentioned and what is ahead for greek finances? guest: goldman engaged in a practice on behalf of greece called currency default swap. it is real complex. but the

cra seem to be, and i do not know what people said, the fdic and the fed, most lending [unintelligible] >> i did not say anything about cra. >> that is what i am asking. >> no, no, when you look at what happened in the financial crisis, starting out with the bad mortgage, whenever you have low rates -- the value of real- estate inflates, an inverse relationship. with the ability to multiplied with derivatives. at the bottom of the pyramid you had mortgages that were underwritten badly. not as far as society or anything like that, thank you for clarifying. i am not sure that we know enough to do the right thing on the ratings, but at present we have a painful clause's four ratings agencies. i know that the house wrote that out of the code, and i am now saying i am opposed, but we would have had a very big liability placed on credit ratings agencies that would have caused them to pay much more attention to what they are doing. >>

the fdic is no longer providing guaranteees for the debt of bank holding companies.d the overwhelming majority of public investment in banking systems with private capital. we are undoing those emergency programs for the risks you pointed out. he with do not want these markets dependent excessively on government support in the future and we want to see private markets come back as quickly as we can. housing, though, still has been undamaged. that process -- if you look at what we've done in those other areas, you can see we have been willing, careful, and effective at walking back and unwinding the things that no longer play a useful and effective role in supporting recovery. >> i hear what you are saying, and i agree with that, as well, but one of the big problems here is that we really do not incentivize people to get into the securitization on the private eakt sector -- private sector because we made borrowing very inexpensive. they can borrow very inexpensively. they can go out and borrow the freddie and franny products and there is not a lot of incentives to go

reexamined all sets of proposals sent to us by the white house, the treasury, the federal reserve, the fdic of last year i offered my colleagues a discussion draft -- at least where i was. i didn't suggest it had cosponsors or backers, but i thought people ought to know where the chairman of the committee was. so i laid out a broad proposal dá@ @ bd4,xtgb) ç-- if i were goingi] to writes alone, i had some pretty sound çxdideas. çi then asked my fellow commite members, democrats and republicans to work on major parts of the bill. it was so complexç and bra thai did not think that any one member, even a chairman and a ranking member can actually put their arms around all of this. i asked various members if they would take on the responsibility. a democrat and republican working together to see if they could come up with some ideas. çit has been an enormous task. this is an incredibly complex issue. çi believe that we are well on our way to producing a strong bill. xdthe problem with our economy n systemwide. while there is a temptation to address only one or two issues, and kahlah de, w