that's very similar to fdic. as we know, when we put our hard-earned dollars into the bank, we're covered now up t to $250,000 because there's an insurance program which is paid for via an assessment on the banks. it's called fdic. and we all know because we worry about that. if there was anything that was learned from the great depression, is that there was a run on the banks. and guess what? the banks were out of money and people literally lost their world. so in those years a long time ago fdic insured. very important. we're doing the same thing here. we're saying that if there's a liquidation required of some of these hot shot firms that continue to gamble, that continue to take risks and something goes wrong, they're not going to be kept alive. they're going to be put to sleep and the money that is expended to do that will come from the financial sector itself. and taxpayers, again, shall bear no losses from the exercise of any authority under this title. mr. president, what else does the dodd bill do? it en

the fdic levies deposit insurance premiums on a bank's total domestic deposits.ut domestic deposits are not the best means to analyze the safety of banks. financial assets other than deposits create risk in the system, nondeposit assets are held disproportionately by largerrer, noncommunity banks and can be more complex and asse assets that are more likely to show a bank's skphoe sure to -- skphoe sure to risks -- exposure is to risks. the meltdown was caused by bad mortgages which were packaged into risky mortgage-backed securities which were used to create derivatives. these risky financial instruments and the large institutions that created and held them are what led to our financial crisis. so our amendment is particularly timely because the fdic has now said that banks are going to have to prepay into the insurance fund for three years, and all of that will be due this year. so, a three-year assessment due at the end of this year, it is so important that we have a fair assessment ratio. and that's what the tester-hutchison amendment will do. it will have a r

banks would be still contained within the fdic. they have a long history of being able to resolve banks in financial trouble. but i think i can only say i share the opinion of the judicial conference, and i think it's shared by a number of presidents of the federal reserve banks. in a recent testimony before the joint economic committee, charles i.plauser, president of the federal reserve bank of philadelphia, stated the following -- "i believe the most credible way to do this would be to amend the bankruptcy code to deal with nonbank financial firms and bank holding companies. expanding the bank resolution process established under the fdic improvement act as the current senate bill does would give regulators and policymakers the opportunity to exercise a great deal of discretion in a liquidation or restructuring to reward some creditors and not others. a bankruptcy proceeding would follow the rule of law and thus would be less susceptible to manipulation by private parties or the political process." so that's the opinion of the p

it would be under the fdic. we'd have no authority to adopt any rule without the approval of the same bank regulators who have routinely ignored or opposed the needs of consumers. let me repeat that. the weak consumer protection agency created in the shelby amendment would have no authority to adopt any rule without the approval of the same bank regulators who have routinely ignored or opposed the needs of consumers. and it even would give bank regulators a veto over consumer protection regulations. and that is totally unacceptable. so if you are for wall street reform, you have to vote "no" on the shelby amendment. this is the moment of truth. either you're going to stand with the people of this country who were innocent victims of greed on wall street or you're not. you want to stand for the greed on wall street, if you want to stand for the weakening of the protections they already have which are if a too weak, vote for this amendment and let's go forward with the dodd bill, which has a strong independent con

those are not agencies where the fdic gets involved.s always, if you have a question or issue with an insured bank that you do business with, you can file a complaint with them or the bank regulator. you can go to our web site and it will instruct you on how to file a complaint. we can get you to the right to regulate to. i wish you luck in your endeavors. -- richard to the right regulator. i wish you luck in your endeavors. host: a financial regulatory bill. if the housing giant and a lover subsidizing or become small enough to fail, it will affect people that cannot pay them back. guest: i think one group was part of the problem. wall street was part of the problem. fannie mae and freddie mac did buy a lot of the mortgage-backed securities that funded these high-risk loans. i think fannie and freddie are good examples of too big to fail. they were allowed to operate in a way that was highly leveraged. they got into trouble. this is an initiative that needs to be dealt with. i would not put it all on them. there is plenty of blame to g

there will be an orderly liquidation mechanism for fdic, the federal deposit insurance corporation, to unwind failing systemically significant financial companies. secondly, shareholders and unsecured creditors will bear losses and management will be removed. third, regulators will still have the authority to break up a company if it poses a grave threat to the financial stability of the united states, a very important point. large bank holding companies that have received tarp funds will still not be able to avoid federal reserve supervision by simply dropping their banks. most large financial companies are still expected to be resolved through the bankruptcy process. and the bill will continue to eliminate the ability of the federal reserve to prop up failed institutions like a.i.g. was. these measures represent a fundamental change, mr. president, in our country's ability to protect taxpayers from the economic fallout of having a large, interconnected firm collapse. these measures will end the idea that any one company is too big to fail. these measures will prevent large failing fi

so we were able to step in and manage this for the fdic.e in good shape and life goes forward. we just finished fully integrating. we have three new city national branches and the other five we integrated because we were so close. sometimes 100 yards apart. >> one of the things that i wasn't sure about is what are you doing in new york? why are you in new york? >> we love new york. >> you can't compete against the big guys here. >> in 2002, we opened a private banking business upstairs on park avenue. today it's a billion dollar bank all by itself. >> how does anyone know you? >> referrals. word of mouth. we started with bicoastal clients. we have broadway shows. better service and the capabilities of the 26 largest american bank hidden away on park avenue. we like new york so much, we'll open a second office upstairs on the west side by the end of the year. >> i got to tell you it's an amazing story. i remember when you were a real little bank. there's a chance that you could be one of the top 25 banks in the next three or four years. >> w

the bill, underlying bill also provides the government, and here specifically the fdic, the authority to discriminate among creditors of the same class. all you have to do is look at what happened when the federal government took over general motors and you saw the government's $15 billion gift to labor unions, to the disadvantaged of the -- to the disadvantage of the bondholders. this is the same sort of abuse that has propagated and continued under the underlying resolution authority in the bill, and it needs to be fixed. it needs to be changed. this underlying legislation also forces companies that are financially sound and that have done nothing wrong to contribute to a fund to bail out organizations and institutions -- i should say companies that have been irresponsible and done exactly the wrong thing. and i must say that i really wonder why we are rushing through this legislation so fast when the very commission that congress has created to report back to us, the financial crisis inquiry commission, is not supposed to report until december. so in a very complex and complicated

bill and the senate bill is overderivatives and over whether banks that have de-- deposits that are fdic insured, that have access to the discount issue can also play in the deriffs it-- deriff toughers and swap markets and the current bill says no. >> rose: and in the field of synthetic biology and the quest to create synthetic life, craig venter joins us to explain how his research team has created man-made dna in a living organism. >> charlesie, this has been a 15 year process. started back in 1995 when we sequenced the first two genomes in history. and started just asking some questions about basic cellular life. and we wanted to get down to a minimal cell to see if we can understand what were the essential kpon enterits of life. it has taken 15 years to get us the tool set to adequately begin to answer those questions. but along the way, we realize this was potentially a very powerful technology with a lot of implications to other areas. >> rose: financial reform, and synthetic biology when we continue. funding for charlie rose has been provided by the coca-cola company, supporting

anyone who looks at it closely will admit that the fed, occ, sec, and to some degree that fdic were all lax in the area of over said. no question. coming out of this crisis, you not see that type of event happen again in the foreseeable future. the regulators understanding made big mistakes. moving the banks around for the sake of moving, i never saw that as constructive. it would only have disrupted things. most of your financial institutions are affected. we're talking about small, main street, regional banks. most would rather have the fed doing their audits and being there oversight then moving to a brand new agency. having to bring the agency up to speed on their activities. most of those billings were not the cause, were not affected, and were not the engine behind that economic crisis. that economic crisis. they do not deserve to have to go through this huge relocation simply because we're trying to make a public statement. online, i think the idea of taking all this authority from the fed was not good. i did not support from the beginning. >> we have about 10 minutes left. for v

that is what the tester/hutchison amendment does by requiring the fdic to change the assessment to a more accurate measure. a total assets with tangible capital parker would broaden the assessment base and what better measure the rest gave bank poses. a bank's assets include the loans outstanding and security one only need look back to the last two years to know that that is more likely to show than just the pauses. >> it was not the deposits, it was caused by matt -- bad mortgages are packaged into risky mortgage-backed securities to create derivatives. >> the use of large institutions are what led to our financial crisis. our amendment is particularly timely because the fdic has now said the banks will have to prepay into the insurance fund for three years and all of that will be due this year. the three year assessment due at the end of this year it is so important we have a fair assessment ratio and that is what this amendment will do. it will have a ratio for rather they zero in to the deposit fund. but so i am pleased to be the sponsor of this amendment to the merged group that

the head of the fdic, sheila bair, has said this. they say this to be counterproductive to consumers and the stability of the banking industry. chairman volcker has said this. this bill is fundamentally flawed on the issue of how it tries to regulate derivatives and will literally do harm to our ability on main street to be able to get credit. we did offer an alternative. it was voted down. as you walked around the floor of the senate, numerous democratic senators would come at -- come up and say, "we know we have a problem but we cannot address this until after blanche lincoln's primary is over." that is not the way you should legislate. if that law will go do harm to our country, which it will, we should correct it. the proposal was offered and voted down party lines. that is extremely frustrating. it does not lead to one having confidence that this bill is going in the right direction. >> senator, have you heard that after tuesday's primary that democrats are open and willing to bring output an amendment to address this is you you

schapiro expressed her frustration at why the fdic could not do more. and the reason they couldn't do they were unable to do to curtail this fiasco because the fed had lobbied to recall glass steagall. and they were the architect of themselves, taking the tools of the toolbox so to speak. and then going to congress and saying that we had no way of stopping this because we didn't have enough tools. i was just wondering -- >> caller, nomi prin. >> you're right. you're pointing to a real disingenuous kind of component on the whole argument on the both sides. glass-steagall was repealed in 1999. that allowed big banks to safe deposit their money and a deal with creating loans and also bet. betting requires speculative trading requires putting capital behind it. you can choose where you can put that capital and you still can. instead of putting capital behind creating or renegotiating new loans with individuals, we want to put capital against betting subprime loans or oil on food on anything else we want to bet on. that's just the choice. we will move it on

in fact the fdic closes banks almost every week and yet devos-- depositors almost never notice because the fdic has the ability to pay them off while they go through this ordinarily process of closing down the bank. the problem is we don't have a mechanism for companies aren't that aren't bank so, if you go back to 2008 when lehman brothers failed we had no choice but to let them go bankrupt and that created chaos. when american international group came along, not wanting to repeat that experience, we had to bail them out and pay off all the creditors 100 cents on the dollar with. the new mechanism we can do it with any kind of company, not just a bank, what we now do with banks. we can take over a company on the verge of failure, make sure that it closes in a fairly orderly process while hopefully imposing enough losses on the people who invested in it that they will think twice before lending money to them in the first place. >> woodruff: stacy-marie is mael, what would you add and would they were vent the taxpayer rescues that we had to implement, the government had to im plement th

and, as the chairman knows, the fdic has decided to prefund the fdic now for the next three years by the end of this year. so if we change this formula and assure that the community banks will not carry the heavier burden from the bigger banks, that's going to have an impact this year in the liquidity of those banks and their capability to lend. so i appreciate very much the chairman's support and look forward to having our amendment either voice voted or record -- i'm happy for a record vote because i think we will win overwhelmingly with the chairman and ranking member's support. thank you, mr. president, and i yield the floor. notice the absence of a quorum. the presiding officer: the clerk will call th roll. quorum call: quorum call: mr. franken: mr. president? the presiding officer: the senator from minnesota. mr. franken: i ask for unanimous consent that the quorum call be dispensed with. the presiding officer: without objection, so ordered. mr. franken: thank you, mr. president. mr. president, today i would like to talk a little further about the problems with credit rating ag

on the second one basically the opposition is coming from the regulators, such as the fdic, sheila baird the federal reserve staff. which points out accurately that this would actually weaken our ability to get a strong and sound derivatives market. you can get a very strong and sound derivatives market by pushing derivatives into clearing houses where you have adequate capital, as you call it. margin, liquidity. for the counter parties to participate in the deals and you have a counting house, the guarantor of the deals. and you make sure the clearing houses are themselves adequately capitalized. and at the same time to an extent there's a standardized contract, you pet them own an exchange. this would work while significantly weaken the ability of us to have a strong vibrant capital credit market in this country. and would actually undermine the regulator's ability to stay on top of these various derivative type strunts. >> let's, you would, you took a long time with that, you just -- >> the most complex. >> and its most simple level, what it is, is insurance, where one company, an or

now, the fdic if the bank goes down, the depositor is not going to go down because we have the fdic. what if a big bank goes down and they owe money all around and if they can't pay the people who they owe and they can't pay the people who they owe and next thing you know, the whole economy is going down. those people will be paid out of a fund that will then chop them up and pay the creditors and they will be done and over with. some people argue that there should be a fund after the bank has failed, after there has been a too big to fail fall. that's not a good idea because if a large bank fails, it's going to have an impact on the market and drive the market down and we will be trying to collect money from people who didn't mess up after they have less money and i think that's a huge mistake. but that is another point of view people have been sharing. the fact is, we need to have an anti-bailout fund, which is a fund that calls for resolution of the large firms when they make big mistakes and don't do the right thing that they should do for the depositors, for their shareholders o

we never thought we would have fdic for an organization that had commercial banking in it.ocal bank. it should not be included under the same roof as an investment banking operation that is high risk, high return. swraoebgd this argument five -- we could have this argument five years ago and i could say let's see what happened and see where we are. you hear, look, we can't break up those banks. you don't understand, ted. we need these banks to compete internationally. let me get one thing really straight. do you know what we're going to do under our bill if brown-kaufman passes? we'll ask citigroup to go back to where they were in 2003. was citigroup competing internationally in 2003? i think they were. we're not saying we're going to take it apart. all we're trying to do is get them back to what they were. and goldman sachs, the balance sheet on an investment bank like goldman sachs will be scaled down to $850 billion to a more reasonable level. that sounds pretty draconian. ask them to go from $850 down to $450. would anybody like to guess what their assets were in 2003?

and checking account federal insurance, and there is a role for the federal government to ensur the fdicn particular. freedom to succeed and responsibility if you fail. break up these huge conglomerations that have become too big to fail, limit the federal guarantee just to the deposits under fdic, and let the free market decide who the winners and who the losers are. >> what i would like to ask you about is the environment. in november california is going to be asked to vote against the landmark green house emissions law, and do you belie there's global warming? and do you believe it can be controlled? >> i think we should have the courage to examine the science behind global warming. even people who are convinced that global warming is real are also convinced that a single stat or a single country acting alone can make no difrence. i believe it is a disastrous flop. i believe the cap-and-trade will be east relief -- equally disastrous. the lock is a killer. while shells would we have bipartisan support for a proposal that says it should be suspended until unempyment in california reach

was there a tug or a pulled that fdic may be could move in that direction or the fed should? did the sec take it upon themselves to do this or were they encouraged to do it by virtue of the appropriateness of what you could do? >> questions going to the formation of the program i think need to go to chairman donaldson simply because i wasn't there for that part. the program was created before i got there but speaking for myself it was a freshly minted program when i arrived. it'd just been the subject of several years of consideration by the sec's top of the national staff that represented their best thinking. i've been developed by rule adopted unanimously by all of the commissioners. indeed when i became commissioner, i was in this room for my confirmation hearing sitting next to the director of the division of market regulation, erik's predecessor who became a member of the commission. so, she was extensive continuity for this program because she had been there when the thing was designed. so we had all the same people in place who authored the program. the deputy director

taxpayer-funded assistance from the fdic and the fed should not be going to support a bank's gambling it should be supporting sound economic growth. in an ideal world we would treat derivatives products like all other investment products and trade them on exchanges. this is a strong bill particularly now that we have adopted senator cantwell's antimanipulation amendment. we're finally going to impose some order and allow sunlight into what has been completely and is currently a dark and opaque market. lastly madam president i'd like to talk for a moment about too-big-to-fail. the financial ingredient of the financial crisis came when massive, interconnected wall street banks and investment houses like a.i.g. and citigroup and others gorged themselves on risky derivatives backed by predatory mortgages. whether thesewhen these bets went bad the u.s. government decided these banks were too-big-to-fail and the u.s. taxpayer was forced to settle their hundreds of billions of dollars in obligations. these too-big-to-fail banks are getting even bigger. right now the five biggest banks contro

the fdic does incorporate the concept of risk based pricing. this is in proportion to the risks they're taking. this is a fundamentally sensible principle. this is already in practice in the u.s.. many countries would like to replicate that practice. we have a good chance of getting support. we have an obligation to do what is necessary and appropriate for the american taxpayers. >> if you can pay off a 7% on out there, there's a difference for 27% lawn and a 9%. you testified last week before the appropriations committee that you had not seen the gm at. in that ed, the ceo claims they have repaid their government on. you know that the taxpayers loaned gm over $19 million. that loan was certainly not repaid in full, have you seen that advertisements since your testimony was the same misleading advertisement? can >> i am not seen that advertisement. we want to make sure that they are not in the position -- who want to make sure they are in the position of running their companies. we have made it clear to lay out the full scope of our investments

guest: the fdic that insures bank deposits, it will have a role in winding down firms that are too big to fail. if they are in trouble, the fdic has given that authority to take control of the firm and break it down as it does with failed banks now when it takes them over. there are a number of differences between house and senate versions that need to be worked out. the securities and exchange commission is actually going to sing a number of changes, more mandates for investor protection, a lot more responsibility in did giving shareholders access to nominate directors. and past and a senate amendment, by senator al franken, changing the credit ratings were done. it would create a panel in the sec that would basically route companies to the credit rating firm to give out credit ratings rather than letting them go out and select their own credit rating agency and that was seen as one of the calls of the crisis in terms of allowing companies to go and find a rating firm that would rate its securities at the highest rating and ultimately -- obviously we do with mortgage juries, a lot of

fdic closed three smaller banks in georgia, michigan and missouri, bringing the total to 72.. now back to on the record. >> greta: pollster frank luntz is taking the pulls of voters -- the pulse of voters. >> we had the tune to look at 35 ads. they are coming fast and furious. it looks like there's three new ads per day. by the start of june, there is going to be 10, 15 per day, new. i thought we would show fox viewers three, all effective, some positive, some negative. let's start with the michael bennett ad. running for reelection appointed to the senate in colorado. we showed these ads to a focus group. the higher the lines climb the more favorable the reaction. red republicans, green democrats above 50 good ad. if both climb above a 50 it is an outstanding ad. let's take a look. >> i've been in washington only a year but it didn't take that long to see the whole place is broken. it is time to give them a wake-up call u that's why i'm for freezing congressional pay until we get our economy back on track. i think senators and congressman should lose their own health insuran

the fdic is continuing its investigation into the causes of the financial crisis and the star witness is currently still testifying. that being the bear stearns former ceo, ann sherman, jimmy cayne. over the last two and a half hours, the public has probably heard more from jimmy cayne in that short time frame than they did in the 15 years he was running bear stearns. now, cayne, during the hearing, has deflected a number of questions about bear's final days, saying as nonexecutive chairman, he wasn't involved in day-to-day operations at that time. he did say he was deeply shocked the 85-year-old firm went under, though he saw little problem with the business model. one of high leverage, overreliance on its mortgage business and overreliance on short-term funding. >> that was the business. that was really industry practice. in retrospect, in hindsight, i would say the leverage was too high. asked what he would have done differently, he said he didn't have an answer, but echoing comments by other bear executives sea foreseeing the crash in housing that sparked the financial crisis was

the fdic does incorporate the concept of risk based pricing.is is in proportion to the risks they're taking. this is a fundamentally sensible principle. this is already in practice in the u.s.. many countries would like to replicate that practice. we have a good chance of getting support. we have an obligation to do what is necessary and appropriate for the american taxpayers. >> if you can pay off a 7% on out there, there's a difference for 27% lawn and a 9%. you testified last week before the appropriations committee that you had not seen the gm at. in that ed, the ceo claims they have repaid their government on. you know that the taxpayers loaned gm over $19 million. that loan was certainly not repaid in full, have you seen that advertisements since your testimony was the same misleading advertisement? can >> i am not seen that advertisement. we want to make sure that they are not in the position -- who want to make sure they are in the position of running their companies. we have made it clear to lay out the full scope of our investments in

but this bill that's being touted is such a great financial reform bill, will also allow the fdic to guarantee debt obligations of failing wall street firms without limitation and without congressional approval. you want us to vote for a bill that allows debt guarantees for failing wall street firms without this body, approving of them? and you call that a financial reform bill? also under this so-called financial reform bill, really more of a financial deform bill, the secretary of the treasury is authorized to purchase debt without any limit. washington gave back the power as soon as the revolution was won. four years later we got the constitution and we never allowed this kind of insanity since then. and, yes, secretary paulson under a republican president created this monstrosity and bailed out his buddies effectively. but it's got to stop. it's got to stop. and this bill is just more and more and more of the same. on may 5, 2010, for people keeping track, that was yesterday, freddie mac requested an additional $10.6 billion in bailout funds. between fannie mae, freddie mac, the

there's no judicial review of payments by the fdic, those things we would like to see, sofrt rule of law -- sort of the rule of law -- at least that i would like to see. mr. president, what happened is we developed a resolution title that was to be used only very rarely because we had hoped that a bankruptcy title would be developed that financial companies would go into, but that hasn't happened. so what does that mean? that means it's far more likely -- far more likely -- that the resolution title would actually be used instead of bankruptcy. the fact is i'm under no illusion that senator sessions' amendment is going to pass. as a matter of fact, i doubt very seriously that this amendment is going to pass. my intent to vote for the sessions amendment is not meant, is not meant to say that i disavow the work that senator shelby and senator dodd did. it's not to disavow the work that senator warner and i spent a great deal of time wedlocking on. it's to say -- a great deal of time working on. it's to say i do believe we have done the work necessary to make sure there was a bankruptcy

the fdic in particular. freedom to succeed and responsibility if you fail.uge conglomerations that have become too big to fail, limit the federal guarantee just to the deposits under fdic, and let the free market decide who the winners and who the losers are. >> what i would like to ask you about is the environment. in november california is going to be asked to vote against the landmark green house emissions law, and do yobelieve there's global warming? ando you believe it can be controlled? >> i think we should have the courage to examine the science behind global warming. even people who are convinced that global warming is real are also convinced that a single state or a single country acting alone can make no difference. i believe it is a disastrous flop. i believe the cap-and-trade will be east relief --qually disastrous. the lock is a killer. while shells would we have bipartisan support for a proposal that says it should be suspended until unemployment in california reaches 5%. if that is not and and mission that it is a job killer, what is? we must

. >> which brings to mind, do you think that the fdic presently has a capable staff that would be able to come in and run goldman sachs if you got into trouble? the answer to that is absolutely no. nobody is going to believe they have the capability to do that, but that is what we are setting up in this bill. we will give them a broad power. it will come in. they will pick winners and losers. they will make decisions. we have none of the expertise to do that, but that is what we're going to give them. >> my experience with the fdic is limited, because we have only been a bank for a short time. i respect them to quite a great degree, but that has been in connection with their existing functions. >> there is no question that they do a good job when they closed on friday and open it up on monday. but they are using experienced people in the banking business to make decisions on that, if not the fdic. there is no one near the capability of goldman to take over goldman and read it. yet that is what we are writing into the bill. do you think that is a wise decision? >> i am not sure what the

second, the bill creates an unlimited new debt guarantee program at the fdic that can be used to prop up firms instead of closing them down. both of these bailout powers puts taxpayer directly at risk and make bailout a permanent part of the financial system. instead of putting all of these bailout powers into law, we should be putting failing companies into bankruptcy. bankruptcy provides certain and fairness and protects taxpayers. under bankruptcy, similar creditors are treated the same, which prevents the government from picking winners and losers in bailouts. shareholders and creditors also know up front what losses they are facing and will exercise caution when dealing with financial companies. later this week i will join several other senators in offering an amendment that will update our bankruptcy laws to deal with modern financial firms and with -- and permanently end bankruptcies. excuse me -- and permanently end bailouts. if this bill is not going to take away government protection for financial companies and send those that fail through bankruptcy, then it should make the

president, i'm very pleased that the fdic chairman, sheila bair, has strongly endorsed our amendment. a recent letter to me, chairman baird called this proposal -- quote -- "a critical element to ensure that u.s. financial institutions hold sufficient capital to absorb losses during future periods of financial stress. with new resolution authority, taxpayers will no longer bail out large financial institutions. this makes it imperative that they have sufficient capital to stand on their own in times of adversity." end quote. mr. president, chairman baird also noted the importance -- chairman bair noted the importance of ensuring that banking companies and large nonbanks are held to the same capital and risk standards that are implied to insured banks in order to protect against excessive leverage that could de stabilize our financial system. as chairman sheila bair put it, this amendment accomplishes this goal simply and directly. it makes no sense that capital and risk standards for our nation's largest financial institutions are more lenient than those that apply to small depository

and fdic in order to fully investigate and go after these big institutions, because what happened after 9/11 was that the white-collar crime division of the f.b.i. was reduced to 75 investigators, 75. the s.e.c. has 25 going after the largest financial institutions in this country. we need to both on the civil side and the criminal side, investigate and prosecute. when you have this level of implosion in an economy and lots of few people are getting rich and everybody else is suffering, doesn't that tell you that something was fundamentally wrong? some people say it was rigid, that control fraud may be, in fact, riddled through the system from the top down to every community we represent. h.r. 3995 would add 1,000 more agents and beef up prosecution in this country. mr. garamendi: just before we took the floor here for this discussion, i was listening to our republican colleagues say that government regulation is wrong. well, no, not in the case of wall street. the statistics you just gave us, did you say the f.b.i. had 75 agents for all of the united states to deal with wall street? at

i know the model, i know the papt patern, even though it's done in a pretty good fashion with the fdic when a company has to go under. in the 1980's we had 3,000 banks that went under. they were split up, sometimes, and dealt out and sold to other investors that had a better track record with managing banks. all right. that was good and it works well in the micro version. but when you -- when you get into the macro version of big business and you have tim geithner as the secretary of the treasury making the decision on a business that's too big to be allowed to fail and calling in sheila bare and calling in ben bernanke and saying, don't you agree, they're too big to be alloyd to fail, so -- allowed to fail so let's prop these people up? what would help is if we deal the assets of that company over into the company that's too big to fail. you pick the winners and pick the losers out of government and who wins? the people that pay the lobbyists, t people that have paid for the most political influence. government cannot make rational decisions on business. they make political decisions

. >> the bank holding company would have to pay to the fdic. that's a factor in this tax.additional added expense. how do you think that will propose and what do you think that will do to current competition? >> what i'm proposing here i would want to net into the fdic premiums that are being charged as well. one of the things we saw was we felt we had raised enough money, again, the wrong thing to be doing because you want to be able to always be providing the right kind of incentives. but any that are being offered should be folded in with what i'm saying. i'm not trying to propose anything on top of that. it's complimentry to what they're doing. >> thanks a lot for all your questions. >> in his weekly address, president obama urges the senate to pass the financial regulation bill which he says will create consumer financial protection and prevent unnecessary risk taking by banks. he's followed by chris lee with a republican address. he worries about the threat to job creation and offers his party initiatives to reduce federal spending. >> on thursday, i talked with them

was there a poll that the fdic may be could move in that direction? did the sec take it upon themselves to do this or were they encouraged to do so by virtue of the appropriateness of what you could do? >> question's going to the formation of the program i think needed to go to chairman donaldson because i was not there for that part. the program was created before i got there. speaking for myself, it was a freshly minted program when i arrived. it had just been the subject of several years of consideration by the sec proxy top staff that represented their -- the sec's top staff. it had been developed by rules adopted unanimously by all the commissioners. when i became commissioner, i was in this room for my confirmation hearing sitting next to the director of the division of market regulation, eric's predecessor. she was extending these. we had all these people who offered this. all these people seem to be connected to harvard university. >> wasn't as robust as you wanted it to be or as robust as it could be under your structure? -- was eight as your

the bank can take -- through the fdic, they take control and wind it down in an orderly fashion.that for a nonbank financial institution. and the other thing is the consumer protection agency. it's not a stand-alone agency but it will have an awful lot of authority and the idea is to try and prevent people from taking bad -- or bad practices under underwriting bad loans. and the word sounds like consumer protection. no one is really opposed to that. a number of republicans from wall street folks are opposed to the idea there will be a powerful czar and that's something they want to try to water down in the conference. >> and frank, it's sort of two entities, the nonbanks and this affects banks as well. >> absolutely. you have the huge banks on wall street. there are some of them we don't have a day to day contact on, like goldman sachs which doesn't have the retail, like an atm like the big banks, but they deal in derivatives. it is simply a financial instrument that is based on the value of something else. like it's not a mortgage, but it's based on the value of the mortgage. an

right now the fdic is on the hook for those contracts. >> host: the argument against that is that if you separate derivatives trading from these banks they go into an area that's not regulated any more. >> guest: yes, you are right in saying it would be wrong to say we are going to push the derivatives into unregulated institutions. so my view would be within these diversified financial holdingdei company's derivatives activity should be done in the thoker-dealer subsidiary but that should beey regulated tigh. by the sec and there should beon systemic risks resolution t tgulation and windup of 40 for the whole hoping to become a holding company. unreguted buo push into the holding company isn't going to regulate but it's not directly e iting of the most intensewher federal safety net where you can an collect deposits at the quarter of 1% and lose them. >> host: jpmorgan chase ceo, jamie dimond, has said if this were to go through separate in derivatives from derivatives investment trading from banks that would cost some of thebill? firm's how much? billions? >> guest: i've seen an es

i don't think anybody wants to take apart a system of finance that has the different levels of fdic insured banking, venture capitals, hedge funds, all of these are important to this country's future. i'd like to see hedge funds and derivatives regulated. i've talked about that with senator feinstein and others for a long, long time. it's very important we have a system of finance that has the confidence of the american people and that we need in order to finance the production in this country. ultimately all of us would like the productive sector to be repaired and to grow and to hire people once again, employ people and have "made in america" signs put on products once again. all of us would like to see that happen. that won't happen unless you have a system of finance as well. we had a hearing one day here and we had three businesses come to that hearing. all three were small to medium-size businesses. all three had sailed through this deep recession with some difficulty, but were still profitable. all three were ready to expand, ready to hire more people, and none of them could find any

what about the cost of higher premiums on fdic banks who had to shore up the funds because so many smaller banks collapsed under the toxic waste and fraudulent spending of big banks. when these small banks go down, the damaged economy brought to us by wall street, the big banks gobble them up and even get bigger. can you put a dollar value on the mental and emotional strain citizens across the country are experiencing? it's clear wall street is doing just fine and it's equally clear that main street is not. madam speaker we need a full cost accounting of what wall street cost this economy and we're far from calculating it. i yield back my remaining time. . mr. jones: thank you very much. and madam speaker, the house of representatives passed a suspension bill that was h.r. 24 to redesignate the department of navy to be known as the department of navy and marine corps. that bill had 426 co-sponsors, colleagues from both sides of the aisle who believe that the marine corps has earned its right to be recognized and i want to thank senator pat roberts. senator pat roberts last january put in a

entities together with their functional specialization for market integrity or resolution like the fdic for safety and soundness of the payments system etc. and put in a place where they have to sit around a table with secretary of the treasury who because with the custodians of the taxpayers' money and responsible for the financial security of the country have to be in a position to be accountable to the congress for making sure that complement of regulators is running the system sufficiently conservatively without big gaps and not lagging way behind the markets. that's not going to force a perfect foresight but offers a better chance of forcing some need to be accountable looking across the system and making sure we don't create again huge gaps for evasion and arbitraged where the rules flag way behind risk in the way they did in this case. >> two minutes. >> let me ask you one last thing. there became prevalent in you, and economists, a view among some regulators during the last 10 or 20 years that financial markets were essentially self-regulatory. and geren and supervision, governm

but the federal guarantee to the deposits under the fdic and let the free market decide who the winnersnd losers are. >> i would like to ask about the environment. in november, californians are going to be asked to vote against the emissions law. do you believe in global warming? >> idec we should have the courage to examine the science behind global warming. even people who are convinced that global warming is a real are also convinced that a single state or a single country acting alone can make a difference. i believe a.b. 32 is disastrous. it is a job killer. why else would we have a bipartisan support for a proposal that would say it should be suspended until unemployment in california reaches 5%. if that is not an admission that it is a job killer -- the truth is that we must have a comprehensive immigration policy. instead of punishing producers of fuel and consumers of fuel, which is what the cap and trade would do, let us reward and motivate innovation so we can lead into the 21st century. >> mr. campbell? >> the evidence is not as conclusive that the united nations thought it