the fdic found that even 60% of low-end consumers have never had an overdraft fee.ed to be standard that parents in school would teach kids you balance your checkbook. you are responsible. if you let people, you know, do the equivalent of bouncing a check that means more that the rest of us have to pay. and 75% of checking accounts were free, and now it's 38%, because of an inintended price control where some of the big retailers -- banks aren't the only fat cats, like wal-mart and home depot lobbied for that where banks had to cut their charges. and that shifted to the consumer. >> if i could just respond to that. >> sure. >> the consumers that assess these overdraft fees. they represent the absolute low-risk. why? they are consumers to the bank. but there is confusion surrounding the overdraft fee, because some consumers are unaware that they have opted in. again, there's a complete disproportionality between the fee assessed to a consumer and the actual overdraft that takes it to -- >> may i come in with an optimistic upshot at the nexus of predator and market fo

you ran the fdic. much nastier is washington now than what you were dealing with, when you were dealing with people on both sides of the aisle? >> considerably. we have so many safe seats for the incumbent. the thing they fear is attack from within their own party. so the liberals will not move to the middle and the conservatives will not move to the middle because in either case they will be challenged in their primary. as a former clinton strategist told us, in the middle you only get 22% of the vote. so you have to go to each side. >> i think the incumbent, the way they had gerrymandered the oftricts, are safe in 90% cases. so there are only a few seed up harsh -- so there are only a few seats up for grabs and the incumbents are worried about a primary challenge. look at mitch mcconnell. it has become much more partisan than it was when i was in the government in the 1980's. >> bill isaac, former fdic chair, one of our guest hosts for the hour. don't miss bloomberg's show "all due respect." this is

the fdic guarantees the depositive its and that's that. that's what they want from the fdic.t. too big to fail, end it. >> i don't disagree with you on the too big to fail. the banks and the culture problem, i think part of the problem is they don't understand the culture and the dynamics driving it. i have done research on bank culture specifically and two of the biggest, most prevalent mind-set is bias of complexity. meaning that people think that by making these more entry kate, sophisticated structures makes them look smarter and a strong motivator and making it more complex. on top of that, you have a culture where they don't raise issues and red flags. hold on a second. if you look at the transcript of the london whale, you can see in the text messages, don't, don't, don't tell the boss yet. this is $2 billion into a bad trade and they think they shouldn't raise the issue with the boss so taking complexity and -- >> fair enough -- >> -- nobody can manage that situation. >> i think you're probably right. the risk is unmanageable. richard fisher of the dallas fed believes

havenstein got to fdic the budget was $100 million they were overspending that entire first year to there they ended up having to settle the case for half a billion dollars and he took no action until after charges were filed so that doesn't speak to good management. in fact what he would do and what he did is not something we want him to do to the state of new hampshire. he started talking about blowing and 90 million-dollar hole in her budget and taking us back to the bill o'brien years. havenstein: again it was all about leadership. it was all about facing problems. frankly problems that needed solving and i solved them. in contrast the government -- the governors facing problems when it comes to unfunded pension liability and others that she is not willing to face into and not take aggressive action and frankly as a result in my opinion she has not earned a second term. >> moderator: i want to play another ad because it's not only the governors tough ads out there. let's take a listen. >> some second terms are mistake. maggie hassan's first term expanding obamacare new hampshire and

give her thoughts on the state of banks in general, plus new easier mortgage regulations is former fdicheila bair. welcome back. good to see you. >> thank you. thank you, kelly. >> can you begin with chris's point? is there something to it? >> no. the liquidity rules and the risk based capital rules to treat treasuries as zero risk and there's government incentives to pile into treasuries. that is absolutely true. and if they're right, if this is, you know, a very low risk, we hope it is certainly in the foreseeable future, should be, then that may or may not be okay and skews relocation to sovereign debt and impedes investment in the real economy. it is what it is. they want to make sure in the next down it is turn they can liquid assets to meet the obligations. weren't able to do that a lot of them in the crisis so that's the reason for it but it has a -- absolutely sigh there anything wrong? say regulators have a just in case policy as the fed was ending the bond buying program. anything wrong with that? >> well, i'm not sure. you know? i think that would be remarkable that if they c

. >> it's fdic insured.t's a victimless crime. >> that "breaking bad" episode showed it wasn't victimless. we have a serious bull market in cyber crime. last month we learned about the home depot hack. 56 million credit cards at risk. yesterday we found out a cyber attack when jp morgan may have compromised the accounts of 17 million households. in a world with biggest most important companies can't protect customers how are you supposed to protect yourself? tonight we take a closer look at a company that may have part of the solution called digital infrastructure security with very promising offers. the i.d. enabled atm software allows smart phone to connect with atm. information that can be stolen. it uses your smart phone's camera to bio metrically identify you through the shape of your face and the phone interacts with the atm to get your money. almost no chance of personal financial data being stolen. another app does roughly the same thing. rather than relying on user names and passwords you use camera

the fdic inshes deposits that puts the american taxpayer on the hook. stop insuring deposits of integrated banks. (?) >> when is the fed crossing the line into the culture of the bank as opposed to the actual capital assets. they should have say over capital assets. what they're saying is the culture -- i think the fed is overstepping -- >> it's a pure threat. they're threatening action. they're not actually using the laws and applying them. i think charlie is being reasonable on this. we just spent a trillion dollars on bailing these jerks out. we shouldn't have bailed them out. let me just make this point. you spent trillions of dollars bailing these guys out. it hurt the american economy. the reason we bailed them out is because we had to. they're so big that the economy would have -- >> every enterprise that was bailed out, neil was highly regulated. more regulation begets more regulation. we should follow charlie's advice, start freeing up the system. they don't solve the issues. neil: any idea what you guys have. >> break them up. >> break them up

fdic says it. well, no, we're not going to. fdic hasn't said it at all. the miscarriage of justice going here. but the banks are hated. go after the guys who wrecked us. put them in jail. >> when we come back, we'll count down to the opening bell. we'll get cramer's mad dash, take one more look at the futures. got 37 companies, major companies, reporting earnings. we have not yet gotten some. we'll be right back. i was out for a bike ride. i didn't think i'd have a heart attack. but i did. i'm mike, and i'm very much alive. now my doctor recommends a bayer aspirin regimen to help prevent another heart attack. be sure to talk to your doctor before you begin an aspirin regimen. >>> 6 1/2 minutes until the bell. dow chemical, pretty good quarter. >> there have been a lot of upside surprises that when people sit down with them they want to know how good they really are. this was one where i was concerned that perhaps the top line would be weaker because of europe. they have big business. taking advantage of the raw costs going down in the united states, selli

today, existing home sales rising 2.4% in september reaching the highest level of the year and the fdic easing mortgage bond rules for banks to boost home lending. zill zillow joins us now. real estate people tend to be extremely bullish and say everything is wonderful even when things aren't necessarily. go against your dna here. we have given bullish headlines. is the market cooling down? >> those are bullish headlines. i agree with what they say about the market. the housing market is cooling. to give you more data earlier in the year home values were increasing about 8% year over year and now 6.5%. we think over the next 12 months they increase about 3%. the rate of appreciation is slowing. what is driving this is very counter intuitive. as home values have increased homeowners in negative equity have decreased. now around 17% of all homeowners with a mortgage have no equity in their home which is terrible but better than it used to be. if you are upside down on your loan you can't sell your home and that leaves to constrained inventory. parts of the country like las vegas or florid

we have a continuing result -- we have fdic covered loans which have high yields that are just runnings a natural thing. what all the banks are seeing today is continued suppression because of relatively flat interest rates. with that when rates go up, it will improve our spreads and approve our earnings. obviouslyelayed, that is technically not good for us. if it's dealhand, eight, we will probably see a boom in mortgage refinance. that will add volume and profitability. it's not all bad. i personally don't think it will be delayed that much. policy has to be taken from a fairly long-term view. janet yellen the board have a very good grasp in terms of where they are going. i would doubt that she will signal an immediate dramatic changes with regard to current events. we have ebola and the european situation and so forth. were going to change midyear anyway. i would expect them to stay the course. while it may be off two or three months, it will not be off much. >> thank you so much. we will be back intwo minutes on "in the loop." ♪ 50 system and is passÉ eritreans bloomberg television

in general, there are five. , office of comptroller of the currency, fed, the fdic. are comforted. the u.s. and packs all around the world. they need to harmonize. that is why the 18 banks are taking a voluntary step, which will be followed in the future. >> bart chilton, former commissioner of the cftc. tom? >> we will come up with a nobel prize announcement. from the university of toulouse. >> he covered banks. this is on banks and regulation. >> a theme for our hour. do not miss mike mckee speaking to us about a nobel prize awarded to jean tirole, 2014 nobel prize for economics. ♪ >> good morning. bloomberg "surveillance." michael mckee and my favorite moment of the year. the award for the nobel prize. statistics,eritage economy tricks, the history of reigns supreme. jean tirole takes the award. >> you did not win. the call list. scientificole, director of industrial economics at the university of toulouse. it is the swedish prize in economic sciences. >> now we have that out of the way. that in some was categories, large organizations dominate. the theory in the past was how do

fdic is constantly demanding these companies hold more and more regulatory capital. it destroys profitability and keeps shorter margins. >> so have the regulators gone too far? >> they don't really care about profitability. the only thing they do care about is cashback. >> and with jpmorgan about the data breach and further clarity on that? >> i think we'll get them talking about it. i think we'll get them talking about the outlook for trading, the investment banking business, the currency and fixed income trading. volatility over the last couple of months has been very low. trading volumes has been subdued on that side of the business. >> in general, potentially raising the rates environment, which of the banks are most likely to profit the most from that? >> wells fargo is probably the most directly exposed to it. jpmorgan has much more fee income, is much more exposed to volatility into trading. >> and let's talk more generally about some of the other companies, of course, due to report tech. another big sector we have coming up. are you looking for any big spriet

my staff also mentioned the department of just, the fdic are looking into each and every one of those. with tens of millions of dollars, countless agencies and individuals looking into each of these. my question is, miss tavenner, who's been looking at you? mr. wilshusen, in a nutshell, one of the things you said, they didn't have strong passwords. somebody could put in a short password and not change it, is that correct? >> that's correct, we recognize several control weaknesses with healthcare.gov. >> so somebody who didn't create a pass wort had a high level of service. >> if they used the password. >> so marilyn and her birthday if that were used would be easily tested? do they have lockout with control? >> we don't want to give information. >> we don't want to tell how weak it is. so i'll be careful on that. but there are techniques that are in place would have been much more secure. >> sure. and the weaknesses that we identify are all -- can be corrected and resolved almost immediately. >> so what you found a year into the site, they were not using best practices? >> we identifi

i don't understand why we don't charge the same interest rates for student loans as what the fdic chargesbanks that would lower the interest rates significantly, to make paying back student loans a lot easier. with the programs, that is another approach to help the young people. increased and the sissonne technical education with the job skills people need to find good quality education to take those into the workforce. or a technical college during the 24 years we've partnered with them with different aspects to help them grow and foster the increased educational opportunity. they went from over 4,000 students in excess of 10,000. level congress has to play to partner with state and local governments is absolutely critical and we will have to do more to reduce the cost of higher education and without that we won't have the skills of the job applicants we need to have to have good paying jobs to help the economy grow. >>moderator: tune minutes mr. hll. hill: that is a good question and we suffer at the k-12 level. state and local governments must do a better job to connect with a good qua

i don't understand why maybe we don't charge the same interest rates for student loans as with the fdicrges or banks which would obviously lowered interest rates significantly. it would make paying back your student loans a whole lot easier. the grant program, pell grants for example is another approach that can help our young people. increased emphasis on technical education, the kinds of job skills that people need to do to find good quality education to take the skills and to go into the workforce. technical college during the 24 years that i was at city hall we partnered with the various different aspects of helping them grow and helping them foster the increase educational opportunities. they went from over 4000 students to somewhere in excess of 10,000 students so the road -- the role that congress has to play in partnering with state and local government and our educational system is critical and we are going to have to do more to do that partnership and reduce the cost of higher education. without that we are not going to have the skill levels of the applicants who need to have

since the potential customers will be paying those fees are among the 10 million americans who the fdic bank. so peter, i want to come to you first. because, i tend to think of walmart's relationship between low-income and poor people in terms of thaw hay treat workers. recently they've been visible because of low-wage protests and also requiring -- it's now company policy for workers to purchase their own uniforms. on the other hand, i don't know how i feel about this. why should we encourage someone to provide banking services for low-income and poor people who actually need to put their money somewhere? >> free checking accounts, inexpensive banking accounts for people who don't have them, that's a good thing. walmart is going after a base that banks have found hard to serve. have shown # # themselves to be uninterested. it's cheap to this get a checking account now that interchange fees have made the free which eking accounts common, have basically made them a thing of the past. the other thing i would say is that walmart, you can look at walmart's wealth and the riches it has creat

my staff also mentions that the federal trade commission, the department of justice, the cfpb and fdic also are looking into each and every one of those. so with tens of millions of dollars, countless agencies and individuals looking at each of these, the question is, ms. tavenner, who's been looking at you? mr. wilshusen, in a nutshell, one of the things that you said at the beginning was, they didn't have strong passwords. so somebody could put in a short password and not change it. is that correct? >> that's correct. we identified several technical security control weaknesses with healthka healthcare.gov. >> so it created a huge vulnerability, especially if they had a high level of access, is that right? >> if they used a weak password that would be easily guessed, that would be increased risk. >> so marilyn and her birthday, if that had been used, certainly would have been tried. did they have advance lockout systems and detection in reporting? >> one of the things -- i don't want to get too detailed into the types of security controls so we don't give any information -- >> we don'

we have enough of a challenge trying to ensure that the states , the federal reserve, the fdic and the comptroller of the currency are on the same page as it relates to these things and i envy those that have one body to deal with as it relates to these things. sometimes they act in concert and sometimes they act alone if. and that can be somewhat problematic on the occasion. >> sometimes it's difficult to see where we've made progress on the regulatory standpoint. they are still looking at it in the chemical sector standpoint we have the chemical facility and take care anti-terrorism standards program where the industry has gone through quite the wringer in terms of having to comply with the regulatory standard and then whether or not it was being followed up on from the dhs perspective was in question. that's yet another layer that you are having to deal with. >> absolutely. i think that's the experience for us really kind of demonstrates it is a cautionary tale for policymakers who think they want to regulate the industry and go too far particularly in the cybersecurity realm. i kin