there's a standard for fdic access. an fdic involvement.is this interagency memorandum -- and i ask this of you, ms. bair, is this memorandum being renegotiated? what's the status of this memorandum?ñc- >> no, it's not sufficient and it is being renegotiated. >> and why is that? >> because as our i.g. pointed how the it's circular and it requires us to show risk before we can get access and frequently we need the access to prove the risk. so we really need much broader authority to be able to go on. when we feel it's important to protect the depositors fund and risk of exposure. >> mr. bowman, what's your reaction to that renegotiation? >> actually, i have a couple of thoughts. one is going back to your earlier question about information and the access to information. you know, my sense is -- and again, i go to the report of the fdic i.g. that was issued today. in that document it states categorically that the fdic had sufficient information to arrive at and concur with the c.a.m.e.l.s. rating that the ots had entered into. that's a signifi

don't try to say the fdic was sitting there. your agency had primary responsibility, not fdic. as a matter of fact, you even pushed them away, your people, because they department have primary responsibility. you pushed them away, you didn't want them to have a seat at the table, you wouldn't even give them a desk. but your people made these findings, not fdic. you didn't want fdic to be meddling around in the your backyard. now, let's go back to your agency. year after year you make these findings. is that, in your judgment, adequate regulation? >> those are all items that are taken from examination reports, and they're sort of taken out of context -- >> no, they're not. i read the context. i gave you the context on these. >> the, i believe the 2006 examination report states that in the coffer letter -- cover letter that risk management practices and internal control environment continue to improve in 2005. and then in the -- >> well, i read you 2006. >> right. >> okay. so it says it hadn't. they remained. >> the 2007 general comments for the year 2006 and through the first qu

trying to keep the fdic at bay. to document what happened, we are releasing today another big book of documents as well as a joint report by the treasury and fdic inspectors general examining shortcomings in fdic in and ots oversite. -- oversight with a lack of oversight and agency infighting. before its fall washington mutual held itself out as a well run that was a pillar of its community but tuesday's hearing showed that behind closed doors, the bank's management was surrounded by deep-seated problems including shoddy lending practices and poor quality loans. this chart which is exhibit 1i from tuesday's hearing shows how over a five-year period from 2003 to 2008, washington mutual and its subprime lender long beach loaded up with risk. the bank dumped low risk 30-year fixed roads in favor of high risk subprime option arm and home equity loans. low risk loans shrunk as we can see from that chart frominatns . high risk loans grew from one-third to three-quarters of the bank's home loan business. those high risk lo

access and fdic involvement. is this interagency memorandum, and i ask this of you, ms. bair, is this memorandum sufficient now, or is it being renegotiated? what's the status of this hem reason ran dumb -- memorandum? >> no, it's not sufficient, and it is being renegotiated. >> why is that? >> because i think as our ig pointed out it's circular in that it requires us to show risk before we can get access, and frequently we need access to prove the risk. so we really need much broader authority to be able to go in when we feel it's necessary to protect the deposit insurance fund or gauge our risk exposure. >> and, mr. bowman, what's your reaction to that renegotiation? >> i have a couple of thoughts. one is going back to your earlier question about information and the accessed information. you know, my sense is, and again, i go to the report of the fdic ig that was issued today. in that document it states categorically that the fdic had sufficient information to arrive at and concur with the camel rating that the

the fdic to review loan files. spring 2008, wamu raised additional capital but the amount raised approved to be insufficient. virtually all other high of risk mortgage lenderses had closed, gone bankrupt or chosen to be acquired by other institutions. wamu's board rejected an acquisition offer from a large commercial bank in favor of a capital infusion that allowed wamu to retain its independence and management to stay in place but limited future options for raising capital. in both july and september 2008 warks mew suffered substantial didn't dpt deposit funds. by 2002, cash declined to a dangerously low amount for a institution that had seen average daily withdrawals exceeding $2 billion. the next day the o.t.s. closed wamu. it has been an extraordinary challenging time for the nation's banking industry and we have all learned lessons at many levels. i am very proud at the fdic's role as an advocate for banning against practices and fighting against large bank capital reductions and most importantly for maintaini

so what i was asking is are we going the see more expansion and more fdic-assisted transactions? >> yes. across the country, that i will a exist, and we will participate in deals as the time right. we have now taken on two transactions, both of which have many merits, and which will justify our combining with the rest of our franchise and systems. we are going to put in place a new system here. >> joe, let me get your take real quick, joe, because we are running out of time here, but let me get your fatake on comme real estate. elizabeth warren on the show last week saying that 50% of the commerci commercial loans are under water, and banks like yours are going to take the hit. >> we are in fact a commercial lender, and the multi-family loans and the commercial real estate represent 92% of the portfolio, but in every cycle turn, and including the difficult one that ran from '87 to '92, we in fact had no losses in the niche. when you take the composite of the assets, commercial assets that we have, we had no net losses for that entire period, and in fact, no net losses in commerci

. -- the fdic is moving on actions here. they are talking about a filibuster a bill that would address those issues as we do in our legislation i will work on the assumption that the glass is half full and when we bring the bill up maybe this week, it will have the votes. this will allow us to debate this legislation, consider amendments, and move forward. if we can get specific ideas, that will help us. >unless you move forward, you'll metal find the answer to the question. >> [unintelligible] >> i hope this week we can get to the bill. we will not object to a motion to proceed. there will be no need to file a cloture motion. >> it sounds like you think the republicans do not want to be involved theme i talked to our colleagues. >> we want our colleagues to work on these issues. this has not been a partisan effort at all. quite the opposite. i know the republican members of this body are frankly tired of being asked to both no on everything. they want to be part of a solution and they have good ideas and many are in this bi

the fdic is coming in there. you're letting the holding company come under. i have no problem with that. what they're saying is with institutions like lehman brothers, where there is no regulated part where the public interest is taken care of and not let to go to total chaos, the government has some leeway or some access. >> any bankruptcy court -- i've got to get out. what has some debtor and possession financing, that could come from the creditor side too. that's a normal bankruptcy process. why is it that i think that experienced bankruptcy judges, roger, might be better than some certain treasury officials. >> the experience of lehman, i guess, is one they don't want to repeat. it wasn't very pleasant. i really think we're talking about a small part of the bill. this is $50 billion. you know, i think the derivative regulation, which is really bringing derivatives into the regulatory architecture we set up in the new deal, these are instruments that grew up outside of it. it's much more important. the $50 billion stuff is headline stuff. >> i agree. i thi

. >> it was an fdic. they were pushing hard. are you at all embarrassed by this? >> i am. >> a good good >> i am by nature, mr. chairman, humble person. i'm a casual person and an informal person. and it's not all unusual for me to address the people who run the institutions that i supervised was responsible for supervising by their first names if i know them, particularly if i'm 10 years older than they are. >> is the apologetic nature of that e-mail -- >> i make no apology for that e-mail whatsoever. >> you make any apology for the six-month delay in making public -- >> i don't know if apology is the right word, but i regret there was a six-month delay. >> you don't know why? >> i don't recall now. it's been two years and i care remember yesterday, let alone two years. but i regret that it took so long. >> this is not some ordinary institution. you know what the largest -- largest institution that's ever been taken over by the fdic bank. so this is not something for asking me to kind of look back at som

i think everybody understand ises what the fdic did -- understands what the fdic d i think we could come to conclusion in solving that very, very quickly. i just wanted to say that that was not part of the title that senator warner came up w the focus has been on the $50 billion sphundz. i think senator warner eloquently talked about. there was a lot of gaivment the fdic wanted $50 battalion as a debtor in

the fdic wants to see a prefund. the treasury would like to see a postfund. they'd like to see it come after the fact. i want to digress for a second and say that i hope the reason that treasury wants a post-fund is not because in lieu of having a pre-fund of $50 billion from these large institutions, they want to see a bank tax. as a matter of fact, i'm going to be surprised if, after republicans argue against a pre-fund and it's changed and the administration comes back and chairman dodd comes back and we end up with post-funding, both of which do the same thing, i might add, and both of them work, it's going to be interesting to me to see if whether that argument basically has led to treasury then having the ability to come back and -- and do a bank tax. i think at the end of the day, that's something that they've

sort of the way it's done in the banking industry with the fdic.e certainly can and should work to prevent any more taxpayer bailout, but we also need to close the book on the last one and make sure that taxpayers get back every dime they pay to rescue the economy. a key piece of that legislation was a provision requiring them to assess the costs of the program and to, "submit a legislative proposal that recoups from the financial industry an amount equal to the shortfall in order to ensure that the program does not add to the deficit or national debt." that got a lot of people to vote for it. it was a tough vote even then, and i think we have to live up to those words. they should not be ignored. in keeping with the requirement under tarp to make sure that taxpayers are whole, the administration did live up to its responsibility. if proposed, the financial crisis responsibility fee to be assessed on financial institutions with over $50 billion in assets. and is proposed by the administration, the fee would amount to .15% of the liabilities of thes

i don't know whether this is a technical change or a policy change but in any care the fdic will only be able to, when it takes over a de funt entity, they will only be able to borrow 90% of the value of the assets they have taken over so that they have a liquidity to wind that entity up. and that is considerably different, just by taking a couple lines out of section 210. now, you had called that bill, and that specific part of the bill, t.a.r.p. on steroids. you believe the senate bill would get us down this path again. you are saying now that senator dodd has given you his assurance that the language will be changed and if a citigroup, a goldman, somebody is teetering on the edge, the fdic steps in, it cannot use more taxpayer's money than that firm is worth. so, if it has to sell the whole thing the day after tomorrow, the tax payers would not lose a dime? >> exactly. now, there will be money collected in advance from wall street, but that's wall street's money. that's not taxpayer money. >> but this doesn't change the criticism of the federal reserve's involvement in giving some

but i have to tell you, the extension of authority here to the treasury, to the fdic that allows themand losers in the marketplace, that keeps alive this deeply flawed concept that some institutions are too big to fail. i just think it's an approach the american people have utterly rejected across political lines in this country, and they want to see us do what republicans are offering, end the era of bailouts entirely. end the era bailouts entirely. let's reform the bankruptcy code and get these big institutions that make bad decisions in the same bankruptcy courts small businesses have to go to. >> don't you always have to have -- bankruptcy courts are very slow procedures. don't you have to have emergency procedures for treasury, for the new york fed, for some entity, fdic, to dismantle a bad institution quickly? >> well, i think the federal bankruptcy courts if we added a new chapter to the federal bankruptcy code could be given the authority to move very quickly to interdict with these types of vast and complex financial firms but the very idea that we ought to have bureaucrats i

the sheer size of these institution trump anything that the fdic has touched. at $639 billion, lehman was 10 times bigger than the largest bank and a.i.g. over $1 trillion in assets. there is another problem. since nearly all of the liabilities that banks and thrifts unwind by the fdic are insured deposits, there is a strong presumption of government backing behind these two -- too big to fail institutions. and by applying this model to the largest of our financial institutions, the legislation will signal that the government-provided safety net goes over to a wider portion of our market and what does that mean to the large col petors, to the smaller firms? suddenly, they face a differential in their borrowing costs that are -- that can reach up to 100 basis points. 78 basis points cost. that's the cost that small institutions have currently that is higher than the borrowing costs of institutions that face this implied government bailout or have been been bailed out by the government. you saw it with respect to the government-sponsored enterprises. how much low

that's true with the fdic. it's true with the fed and this bill has specific language in it that provides for that. there are those who say why not get rid of the $50 billion fund and the problem will go away. no, the problem doesn't go away notice you correct that other language as well. i will not try to substitute my judgment for others who say that we need the $50 billion fund. i will say that fund -- that, therefore, there will be instability in the market. i also suspect that those who have an implicit guarantee from the fund are more likely to receive credit, for example, at a lower rate because there's more of an insurance that the lender or equity investor will get money back. there are downsides to this fund. but leave those aside if you want to do away with the fund, ok. if you want to keep the fund, ok. but what you shouldn't do is provide that beyond that the taxpayers ron the hook. here's the problem, lehman brothers i'm told is well over 00 billion in -- $600 billion in liabilities and a $50 bill

honing the fdic accountable if it fails to properly conduct resolution that uses the resolution of aeady to provide bailouts and not allowing the government to be in any nonbank financial company systemically important and worthy of taxpayer funds at the fed discount lender. mr. president, as many of my colleagues are beginning to realize it doesn't matter what we say. what matters is what is in the bill language. and the language in this bill right now would allow for bailouts. i urge my colleagues to read the language carefully. i've been assured, however, the about provisions would be addressed the they have not been addressed yet in the german's substitute language. we need to see language from the majority that clearly addresses the issues i've set forth. my hope is by tuesday this can be resolved quickly with both of us offering a joint amendment. nonetheless we are left with a bill this afternoon that will create massive intrusive new government bureaucracies, damage job creation, reduce private investment in productive projects, make risk-management more difficult and threate

i've got fdic insurance just like you do. if you have a checking account or savings account, any financial institution in this country you have fdic insurance. to try to call that a bailout is really being disingenuous. both the democrats and republicans spent a lot of time dismembering regulation of wall street. it's time that we reregulate wall street. >> gregg: you may call it semantics, but there is a difference between bankruptcy and bailouts that trps end up paying for. mr. griffin, let me go to you -- the reason is this. financial institutions that got taxpayer bailouts, its practice that in fairness begin under president bush have emerged in far better shape than millions of americans and geithner admitted that it's wrong and unfair. so won't this bill perpetuate the unfairness that americans just hate? >> i think you are right. this is what we were facing at that time a situation where we did not have a mechanism to deal with firms that were systemically significant that were failing. now what republicans are saying,

the investment banks, the commercial banks, fdic insured banks, securities trading. bring them all together. one big happy family. one big pyramid. it will be fine because it will make us more competitive with the european financial institutions and it will be great i said, i think that's nuts. what are we doing? let me just use some quotes from 1999 on the floor of this senate. november 4, i said fusing together the idea of banking, which requires not just safety and soundness to be successful, but just the perception of safety and soundness, with other inherently risky speculative is unwise. i said that we will in 10 years time look back and say we shouldn't have done that, we real glass-steagall because we forgot the lessonsf the past. in 1999 this bill will in my judgment raise the likelihood of future massive taxpayer bailouts. it will fuel the consolidation and mergers and the banking of financial services industry at the expense of customers, foreign businesses and others. i said we have another doctrine at the federal reserve board. it's called too big to fai

they came out -- the fdic, treasury came out and said that none of continental illinois' bond holders, the uninsured bond holders -- they would not take any losses in the continental failure. and this engendered quite a debate in the reagan administration. don regan who was the treasury secretary -- he wrote this in a memo to his colleagues. we believe it is bad public policy -- it would seem to be unfair and represents an unauthorized and unlegislated expansion of federal guarantees in contravention of executive branch policy. so he was against this. president reagan himself never said much publicly about the bailout. but an unnamed white house official said the president agreed with the regulator's compelling argument the other argument was a worldwide havoc. it was a sim to come. paul volcker said this bailout would not set a presidents but the markets knew it set a precedent and we got a new phrase in the financial industry if not in the public lexicon which was too big to fail. and the independent bankers association which represented small banks understood the imp cases of its p

the fdic wants to see a prefund. the treasury would like to see a postfund. they'd like to see it come after the fact. i want to digress for a second and say that i hope the reason that treasury wants a post-fund is not because in lieu of having a pre-fund of $50 billion from these large institutions, they want to see a bank tax. as a matter of fact, i'm going to be surprised if, after republicans argue against a pre-fund and it's changed and the administration comes back and chairman dodd comes back and we end up with post-funding, both of which do the same thing, i might add, and both of them work, it's going to be interesting to me to see if whether that argument basically has led to treasury then having the ability to come back and -- and do a bank tax. i think at the end of the day, that's something that they've been wanting to achieve, and it's interesting how this debate is evolving. but -- but let me go back to this -- let me go back to this pre-fund. at the end of the day, i think what all of us would like to see happen is to see these funds, these i

in fact, sheila bair who is the chairwoman of the fdic, someone who has been chairing the fdic with distinctionfor several years said it virtually eliminates the possibility of a taxpayer bailout so that's part of it. strengthening consumer protection. i mean, there has been, i think, an unfortunate generalization that consumer protections are bad for business. frankly, we should have discovered in the last several months that good consumer protections are very, very good for business. many of those consumer laws which would have protected people seeking mortgages which were ignored or exempted would have, i think, improved dramatically the mortgage situation, swro improved business, -- would have improved business, would have made the overriding issue of efficient capital easier. but when you have very little protection for consumers, they are at the mercy of those who are looking to make a quick buck. not one was watching out for them. but not only that, the individual mortgage didn't have anything as they say, any skin in the game they sent it to the securitization process, someone wrapped i

chairman dodd's bill provides both the fdic and the treasury department emergency authority to provide broad debt guarantees in times of economic distress to struggling firms. as written, it is foreseeable that the fdic or treasury could step in to prop up a firm under any circumstance, all without seeking to resolve and unwind the firm. the chairman's bill authorizes continued emergency lending authority for the federal reserve but conceivably only for large banks. under the dodd bill, the federal reserve would retain super advisory -- supervisory authority over bank holding companies with assets over over $50 million. the federal reserve supervision essentially predesignates the firms that are too big to fail. these banks would have the implicit backing of the government and the taxpayers, and with a competitive advantage, giving it access to cheaper credit from lenders expecting to be made whole. this puts our nation's community and independent banks at a severe competitive disadvantage. i will offer an amendment if this bill comes to the floor to permit community banks to remain un

he was fired in 2008 just before the fdic took over wamu, and jpmorgan bought the banks assets in what some say was the steal or deal of the financial crisis. >> mary, wamu, their senior management knew? >> they did. they did know what the report shows is a number of e-mails to, in some cases the audit committees of the board about these lacks practices at a variety at the subprime lender, as well as some of the prime operations. >> and where were the regulators? >> the regulators were notified. as i said in my report, both the fdic and otc were notified of these, i guess you could say, shoddy practices, but but they didn't do a lot about it. the regulators will get to say their part on friday, because they're being brought to testify before the subcommittee on friday. >> this is a front-page story. >> it will. >> unbelievable. more corruption in that area. mary thompson, thank you ever so much. >>> let us turn to what i am calling cowboy monetarism. in short, i want traders to be totally scared to death of a john wayne-type federal reserve shooting out the lights on higher interest ra

that means you get a few powerful people in washington, secretary of the treasury, head of the fdic. you walk in a large institution and say we might designate you systematically risky. we want you to do "x," "y" and "z." i can assure you they will do "x," "y" and "z." that's what happens in putin russia when he takes over lucas oil. that's not the way it should be. giving up the prerogative is remarkable. >> bret: bill, what about this question -- is the american public more skeptical of wall street banks or the federal government now? >> they are skeptical of both and they think, and i think you can curb wall street banks without giving unlimited authority to the federal government. brad sherman, democratic congressman from california on the house financial services this afternoon said this afternoon, the dodd bill, the senate bill that we are discussing has permanent unlimited executive bail-out authority. democratic congressman saying the truth. chris dodd, we showed a chris of him saying it ends too big to fail. it doesn't. that is just not the case, i'm afraid. of course it has

sheila bair chairman of the fdic. welcome. pleasure to have you in the studio. the president making a big push for it. critics say that compromises in that bill will make it difficult to execute in an emergency. it makes it ownerous. supporters of the bill say it ups capital requirements and increases transparency, but there have been some compromises that have people worried, which is it? >> well, we think overall it's a good bill. we think one area that we've been particularly focused on is the title two of the bill, which provides for an orderly way for the government to take over a large financial institution, if it is failing. and unwind it and break it up and sell it off in an orderly way without taxpayers having to take any exposure and imposing it on shareholders. this is a process the fdic long used for banks and it works well and it is a process the smaller institutions have to deal with and we think larger institutions should have to deal with the same type of robust process that imposes the losses on the shareholders and creditors. with this new reso

quote, the fdic will guarantee the banks under certain circumstances.that has to be carefully defined or we're going to have taxpayers continue to be on the hook for these obligations. like i said, we haven't done anything to fannie and freddie in the legislation. that is going to be a continuing taxpayer obligation as well. as i said before too, those firms, the ones teemed too big to fail have an advantage over the smaller banks, the community bank. we just met with the community bank representatives in arrest. they fear this will make them uncompetitive. these are the big boys. result we will end up with a few really big banks and maybe some that aren't, that are in kind of a medium sized of operation and almost all of the smaller banks having to go out of business because of this anti-competitiveness that will result from the legislation. now one of the other ways in which what i've been talking about occurs is through section 113. the financial stability oversight council. this is one of the entities. it's the federal reserve authority to prop up a

killinger also says the bank's seizure by the fdic was unfair. wamu was a main street bank he believes was unfairly punished during the financial crisis. >>> next on the show, the fico factor. what's more important? a golden resume or a high credit score? is there about to be a massive shift in corporate america? >>> welcome back to "street signs" with your daily realty check i'm diana olick in washington. executives from the nation's largest banks told the house financial services committee that principle reductions in loan modifications raise serious concerns. many cited fairness to correspondent borrowers and all agreed it would raise the cost of mortgages in general going forward. >>> home prices fell in february for a seven straight month. shows prices down.6% month to month but down 7.5% from july of '09, foreclosure, they say, are to blame. >>> and donald trump, trumps karl ican and gains control of his bankrupt casino company. ruled for trump entertainment resorts was better for creditors. the ruling paves the way for three atlantic city

let's put them in -- fdic, real estate, security, put them in one big holding company and things will be great. it will allow us to compete with europe and others. here's what happened to the biggest financial institutions in the country. they've gotten bigger, bigger, and much, much bigger. that happened even during this collapse. even during the deepest recession since the great depression, they've continued to grow. now, let me, again, describe some of the origin of this, the cesspool of greed. one person -- i talked about him in the past -- makin making $3.6 billion in one year, one person, $3.6 billion betting against america, selling short. by the way, if you're wondering, that's $300 million a month or if this person's spouse says, how are we doing sweetheart? he can say we made $10 million a day every single day. now, this is on the internet right now and this is the origin of all of this greed and it goes up from here to a security to a hedge fund to an investment bank and they're all making obscene profits right on up through the collapse. by the way, they're doing it again.

william isaac is a respected former chairman of the fdic. he agrees -- quote -- "nearly all of our political leaders agree that we must banish the too-big-to-fail doctrine in banking. but neither the financial reform bill approved in the house nor the bill promoted by the senate banking committee, chairman chris dodd, will eliminate it." close quote. and simon johnson, distinguished m.i. at this time professor put -- m.i.t. professor put it succinctly -- quote -- "too big to fail is opposed by the right and the left but not apparently by the people drafting legislation." close quote. these are specific ways the dodd bill actually expands too big to fail. specific authority, specific sections that clearly do that. now a lot of the attention has been paid recently to the $50 billion prepaid fund, and that is problematic in my mind. but that's not the only, not even the most problematic section of the bill that expands too big to fail. all of these sections go directly to that issue. mr. president, my second main objection to the bill is that t

with you that would probably do without this $50 billion fund, is that the funds available for the fdic to bail out the creditors and counterparties of defunct financial institutions was not just the 50 billion, but 50 billion plus the possibility of huge loans from the treasury. and i'm glad that, first, by changing the house bill, even more with the changes we'll see in the senate bill, that senator dodd and i have discussed, we're not going to have that borrowing. and the taxpayers are not going to be on the hook. so i think we're moving more and more towards a circumstance if you lend money to a wall street financial institution, there's no safety net. so you may not want -- and even at 50 the dollar safety net israel to be small compared to what goes on on wall street. as to fannie and freddie, you know, we have bipartisanship in the house of representatives and 2005. we passed the bill to provide for much tougher oversight as fannie and freddie. i think it would have had a tremendous impact, and it really rating the size of this recession. and we pass it on a bipartisan basis. the

the banks pay a fee to the fdic, and when the fdic has to take over the fund, that is what they used. this is the equivalent. on derivatives -- derivatives need to be regulated. derivatives is what clogs up the system to begin with. the concept of too-big-to-fail came into existence because of the situation that existed. the derivatives were unregulated. nobody knew who was on the hook for what. all debt is insured by someone. and basically my understanding is the current legislation restricts, insurance. if you do not have an insurable interest, then you would not be able to buy or sell derivatives on that product. for example, if abc bank issues debt, the holder of that debt can purchase at a derivative, which is a financial guarantee. but someone who did not hold that debt would not be able to bet that they are going to default, or stuff like that. so the republicans are on a campaign to try to say that financial regulation is bad because banks do not want to do it. it allows them to hide risk, to continue to high risk, and trading in derivatives is certainly not a financial accumu

the fdic as receiver is in discussions, and there's been discussions about a settlement with jpmorgan that may allocate, as you say, a portion of this tax break, you know, to jpmorgan. we've been in contact with the fdic, we've been in contact with some of the creditors who have been objecting to this, and we're going to continue to monitor that situation. we haven't really taken any action because we're waiting to see how the settlements break down. but that's where it is right now, it's in bankruptcy court. ultimately, you know, whether it'll be a negotiated settlement among the parties or whether the bankruptcy court judge will make a ruling, there are complicated legal arguments on all sides that we've been reviewing. right now we've sort of been taking a backseat and watching the process to see what actually happens before making an evaluation, but we have been on top of this from our legal division to follow it. but it is, it's certainly a very complex discussion with the intricacies of bankruptcy law. at first our reaction was the same as yours, this doesn't seem to be able to

i mean, it's essentially, you know, they were talking about the fdic today.n a community bank, when a smaller bank fails, the fdic comes in, and in addition to protecting everybody's money in there, they figure out what parts of the bank are making money, what parts aren't, and they sell off different parts of the bank's assets to other banks or individuals or institutions or whatever. and so i mean i think that's -- but for me, this is like getting into the weeds a bit. i think there is a larger problem here. >> larry: which is? >> which is the economic system that is still rigged to benefit the few at the top while everyone else struggles to make it from paycheck to paycheck. that's if they have a job. and from where i come from michigan we've got -- >> larry: are you a socialist? >> no, i'm an american, i think. >> larry: favoring what political system? >> favoring the democratic -- that's what i mean. i favor democracy. >> larry: democracy says i can rise to the top and i can make more money than you. >> to me democracy means that everybody has a seat at

the fdic which insures the smaller banks requires a thief from the banks. that is a way to self insurance. that is perfectly reasonable. >> what about derivatives? >> it is a 60 -- $630 billion industry which is not regulated. this is an attempt to bring regulation and accountability and transparency and like to bear on what goes on. the banks are fighting it. i get the biggest kick out of this part of if the banks were for this why are the jamie dimo ns and lloyd blankfeins of the world opposing this? >> but bush's administration did the bailout when we were on the brink of collapse. you would think they had nothing do with it. >> let the hair and a former banker on the panel. >> mitch mcconnell was wrong when they say they try to force this down our throats. we have had republicans negotiating this. you had senator corker from tennessee and you even had the senator from alabama, richard shelby trying to work something out. dr no from kentucky is on that kick. it is not true that the democrats are shoving anything down the republicans the road. they are ne

fdic, a bush appointee. she says it better than everybody. this bill ends too big to fail. nothing could be clearer and my republican friends know that. >> did it take catastrophe or near-catastrophe to get this through the heads of yourself and the other democrats, so that you at least, your party, could at least get it right? it looks like one party's got it right. some members of the other party may be getting it right. you're still hoping to get five or ten republicans to join you? >> the door is still open, chris. i've worked for a year at this my republicans on the committee know that i've reached out, i have signed republicans to work with democrats. on major parts of this bill dealing with the exotic instruments, the consumer issues, as well as the issue of too big to fail in resolution. all of this has been very well worked on. i introduced a bill in november. we changed it. we worked at it. so 24 notion, this is partisan bill, that still allows too big to fail, it's anything but a partisan bill. an

the fdic guaranteed bank debt. that would have would have been huge for washington mutual. they injected the t.a.r.p. money across the board. there were many thanks particularly wall street banks that liquidity was a major issue for them and they were saved by this. >> what was your relationship with the regulators before this? did you have a good relationship with the regulator's? >> we worked very closely with the regulators. we had frequent meetings with the otf has as i indicated in my comments. at the time i left which was in early september 2008, we had not been directed to raise any additional capital. we had not been directed to seek a merger partner so it is almost incomprehensible to me that two weeks later the company-- three weeks later the company sees. >> did you ever meet in 2008 with mr. paulson are mr. bernanke? >> i met with mr. paulson on a couple of occasions because i was a member of the thrift industry advisory council which means actually three times a year with the federal reserve. i did not

[laughter] sheila bair is chairman of the fdic. mary shapiro, elizabeth warren it is great to have you here. i am honored to share the stage with you. i thought i would start by having you give us a sense of your day today. our first goal today is to talk about your role and where you are today. we would like to get a lot of feedback from everyone in the audience, on the twister, and in e-mail t-mailwiller -- on twitter and in e-mail. elisabeth, will you start. what is your day to day like? >> i am located still in the academic world. my goals consist of things -- my days consist of things like teaching, office hours and the like. in addition to that, i serve on the congressional oversight panel. we turn out a report every single month. it is like doing a term paper every 30 days, on some aspect of the t.a.r.p. program, how deeply -- how the money is being spent, and if we are accomplishing our goals. i also continue to talk about the economics of a middle-class families, which i have been doing for a long time now. i advocate for

i think the american people have appreciated the fdic over the years, because the fdic was another way for taxpayers to be kept out of a problem because it's an insurance fund. the banks are taxed, and they put the money into the fund, and if there is in fact a bankruptcy, you're covered, your deposit is covered -- right now i think it is up to $250,000, am i correct? mr. dodd: correct. mrs. boxer: so this whole notion has worked very well. but in closing, because i don't want to interrupt, you know, the speech of my friend, because i think it's important, it seems to me suddenly there's been a huge injection of politics into a bill that really should have had, as you point out, i say to my friend from connecticut, bipartisan support. if in fact the republicans came up with the idea to have a fee on these institutions to protect the taxpayers, so that we have no bailouts, and now after meeting with the banks it feels like to me -- and these big institutions -- they've turned on their own idea. but they're using the language that is the opposite of what they now want to do because, as i

i monitored a panel with the heads of the fdic, the sec, congressional oversight panel and the president's council of economic advisers. this great group discussed not only their attitudes towards finance, but their powerful career paths. >> what kind of tough situations did you face did you think because you were in a boy's club? >> oh, what did you not face? >> my thanks to the treasury department for hosting that symposium on women in finance. that will do it for us today. thanks so much for being with us this weekend. my guest next week, former sekera tear of labor robert reich. keep it right here, where wall street meets main street. have a great weekend.

and i think sheila bair, the chairman of the fdic told me that she is expecting a bill next week. and we will likely see this legislation come to fore by the summertime. so we'll see about that. professor edmund phelps, good to have you on the program. so appreciate you joining us. >>> up next on the "wall street journal report" one of the world's most recognizable entrepreneurs tells me his plan for going green. virgin founder sir richard branson is with us. he has environmental business to attend to. >>> then what your dishwasher says about the economy. how today's homeowners feel at home in a still-weakened market. >>> as we take a break, take a look at how the stock market ended the week. o's been saving y and who doesn't want value for their dollar? been true since the day i made my first dollar. where is that dollar? i got it out to show you... uhh... was it rather old and wrinkly? yeah, you saw it? umm fancy a crisp? geico. fifteen minutes could save you fifteen percent or more on car insurance. >>> this week marked the 40th anniversary of earth day. since climate change ha

fdic, which ensures the smaller banks, requires a fee from the banks, and it's a right to self-insurance. perfectly reasonable. >> you asked about derivatives. it's ab$603 billion enterprise that is basically unregulated. it exists in the shadows. this is an attempt to bring some regulation, some accountability, some transparency, some light to bear on what's going on. i get -- guess the biggest kick out of this is if the banks are farthest, which seems to be implicit in the argument, which is why are the jamie dimon and lloyd blankfeins of the world opposing it? >> you would think that -- after all, it was the bush administration, which i think rather courageously did the bailout, when we were on the brink of collapse. you seem to think they had nothing to do with it. >> let me hear from the former banker. >> the fact of the matter is mitch mcconnell was absolutely wrong when he said they're trying to force votes. we've had the republicans negotiating with chris dodd on a possible package. senator corker from tennessee. the senator from alabama, shelby, trying to work something out. the

also known as the fdic. an institution that is successfully secured the deposits of generations of americans. in the end our system only works, our markets are only free when there are basic safeguards that prevent abuse and check excesses and ensure it is more profitable to play by the rules than to gain the system. that is what the reforms we've been proposing are designed to achieve. no more, no less. and because that is how we will ensure that our economy works for consumers, that it works for investors and that it works for financial institutions. in other words, that it works for all of us, that's why we're working so hard to get this stuff passed. this is the central lesson not only of this crisis but of our history. it's what i said when i spoke here two years ago because ultimately there is no dividing line between main street and wall street. we will rise or we will fall together as one nation. that is why i urge all of you to join me. i urge all of you to join me. to join those who are seeking to

we had hank, we had been bernanke tim geithner and sheila bair, the head of the fdic. i have a lot of people in finance, and a lot of people in business and a lot of people the government, and i can't think of for people that would have done a better job of getting us through that. now it's kind of fashionable now to look back and pick out one of little aspect or another of what was happening, and our country's financial system froze up during that period. some of you in this room or at a party i was at in september of 2008 when the talk was are the money market fund safe? now, when you have 3.5 or more petroleum funds held by 30 million people, who on sunday and i are worrying about whether they can get their money, that money was half of all of the deposits held by the u.s. banks the time. you have a panic. you had commercial paper frees up an entirely and some of the biggest companies in the united states and some of them are described in this book they worry about whether they were going to meet their payroll in a short period of time to meet you at the sixth large

subsequently alerting the fdic and the california insurance regulators of these problems. now, the subcommittee is holding a hearing tomorrow. the key witness will be the firm's former ceo, kerry killinger. he was fired back in september of 2008, right before the fdic took over the thrift in what became the country's biggest ever bank failure. we'll be listening here on cnbc. melissa, back to you. >> certainly will. thank you very much, mary thompson. just to put this in context, karen, do you think this is at all an overhang for jpmorgan? is it something that jamie, your boyfriend should be concerned about? >> jamie, he doesn't know he's my boyfriend. let's clarify that. >> no? >> apparently not. but i don't know, it could be a day or two of bad press but at the end of the dawe i don't think this matters to the jpmorgan story at all. >> let's go back to our dealmaking conversation because that certainly was a big story of the day. joe, you're looking at sinopec. >> absolutely. i think there's a trade here. we talked about it last week on the show. it's the jungle book tra