the first part of the topic, fed up with the fed calls for a review of fed policy. has it been good? has it been bad? what's the score guard? -- score card? central banks generally don't have a very good history and track record and the fed certainly has it's black marks over its history as well. but let's look at where the world has come in the last several decades because a lot has been learned and monetary policy has been dramatically better around the world including here in the united states. so let's start with paul volcker's fed that killed the inflation of the late 1970s. when the inflation rate in the u.s. got up to 14% or so. since that time, it's averaged about -- since two years after that, as he brought the money supply back under control, inflation has averaged 3% per anum for that several-decade period. real g.d.p. has averaged about 3.2% which is its average for the last several hundred years in the united states. up through the first quarter of this year. and over the -- this decade, through 2006, leaving out the recession that we are now-i[in,t ave

bubbles on the fed.ed basically has done a very good job. >> you think immack cue lat inception. only the fed creates money, you taught me that. >> when you create money, it's odd for it to go to one market and have inflation in one sector and deflation in another. that's basically what happened in the housing sector and to some extent in the stock market boom. nobody ever gave the fed the instruction it was out there to stop bubbles in this first place. >> michelle, you hear it. >> robert mcteer is a very sound thinker, michelle, i'm sure you know that. you hear these defenses. he's foxtrotting all over the stage. i love the guy. michelle, what about this other issue congress itself is to blame because they've give a dual mandate, you should fight inflation and unemployment. there's no real trade-off between the two. how about the fed protecting our money for a change, like the dollar, wouldn't that be a good idea? >> it would be a wonderful thing, what i'm hearing from my constituents, what members are

so the first half of the topic, fed up with a head, calls for review of fed policy. has it been good, has been bad, but what is the scorecard? and i don't want to go back to the entire history of the central bank. central banks generally don't have a very good history and track record and the fed this certainly has its black marks over its history as well, but let's look at where the world has come in the last several decades because a lot has been learned. and monetary policy has been dramatically better around will including in the united states. so let's start with paul volcker the fed that killed the ablation of the late 1970's. when the inflation rate in the u.s. got up to 14% or so. and since that time its average since two years after that to as he brought the money supply back under control inflation has averaged about 3% but that several decades, real gdp has averaged about 3.2% which is average for the last several years in the united states up to the first quarter of this year peridot and over this decade and through 2006 leaving out the recession that w

only after the fed declared it was adequately capitalized.s inability to access risk once again threatens to undermine the fragile economy and erase the 2.5 billion in tax payer funds provided cit under t.a.r.p.. they would make the fed responsible for identifying and regulating those findings that in the fred's you are systemically significant and preventing systemic shock. republicans believe the fed's core mission and conduct of monetary policy seriously undermined its regulatory responsibilities or expanded in this way. let me conclude by saying at a time when our economic economy faces serious structural problems and threat of inflation if we maintain our current course on spending patterns it distracted and overextended central bank subject to potential political interference is a luxury we cannot afford. republicans believe really think the federal reserve cut its current regulatory responsibilities and focusing on the core monetary policy mission would enhance the fed ability to execute an effective exit strategy and ensure interest r

when ll the fed begino removehose officers?> well, when we've gotten into situatiohere ompanies were actually failing and had to be supported,irst i shoul say that this was not a fed operations. th fed and the treasury work cloly together so it's bn a broade, and the fdic has participated as well. in those caseshere mpanies were prevent from failing,he shareholders typically lost virtuay all their money and we did replace the officers. take for examp, aig. aig's ceo was fid. the shaeholders lost all their money. br stearns, bear stearns sharolders's lost all their money and the comny was ten over by forecompany. so you know, in most cases, we ha replaced t leadership and we haveade sure the shareholders have lost the greest part of theiralue. >> got an e-ml, mr. chairman. this is from carl denninger florida. the qstion is sce this crisis began with people unablto pay their bills and continues to be mked by this problem, w does expanding creditolve the problem. isn'that going tobe like giving a drunk a bottle of whiskey and call

so much money floating around. >> the fed has been doing the necessary things to keep the money stock from going down. which is not, of course, they have been run in the printing press but it was due to the banking crisis and the huge losses in the banking sector and a lot of money destruction so they stepped in to compensate that which is a little bit more subtle i think then just saying they kept on pumping up money. did did all the necessary things to present the money-supply from going down too much. >> in now, when i read the book i was unsure how to feel about the fact this very important person is an expert on the great depression. should we be glad that the person running our economy is focused on the depression? it doesn't sound -- >> probably one of the good things of the bush administration have put in their given his background given a good timing, go ahead iraq paul krugman says there haven't been enough money pumped into the economy and our other economists are starting to warn that the deficit has grown so much that it is getting very dangerous so how are you feeling? i

and the branches of the fed.although throughout business, branch means in effect another office, not even a separate incorporated subsidiary. so most of the world your branches as part of your tree. do you think it's appropriate to have privately elected governors serve in what appears to everyone to be a governmental capacity? >> the boards of directors of the reserve bank i think above the reserve banks have served a valuable function in the federal reserve. >> yes, sir. , in germany and before world war i they had what many people thought was either a good government. but your voting power, your control over government, any agency is dependent upon how rich you were. you could argue was a very good government that it made very good decisions right up until sarajevo. i'm not asking you whether it's good government. whether you have made good decisions. what i am asking is isn't consistent with what we celebrated on the fourth of july to have such governmental power in the hands of those elected on the basis of

people ought to know. >> what are you looking at in terms of auditing the fed or reviewing the fed? >> how much money the -- what obligations the fed has taken on that could ultimately be a charge against a taxpayer. we don't know how much money they've taken on, obligations they've taken on in dealing with buying assets, there working with treasury and aig and other things. we need to know what the fed's doing there. we do not need to conduct monetary policy. but other things dealing with regulation and things that could imperil the fed and the credit of this country we need to know. >> do you believe that the fed does in fact have an exit strategy in terms of winding down some of the programs, the lending facilities that are out there? >> i think they do. but right now i don't think they're near that point. >> what is the exit strategy, then, senator? >> excuse me. the exit strategy would be some of the tools the fed could work with. >> senator, would you like to get some water? i'm going to have my cameraman give you some water there. we'll get you some water. my apologies that w

discussions and the data that goes into fed's decision compromise the fed's ability to function? >> it would provide a sense that congress was second guessing or trying to overrule the decisions. >> okay. this one includes you but includes the former chairman. it's been clear to me for years and finally it is now to just about everyone else, that the fed's monetary policy for the last decade has been flawed. former chairman greenspan attempt to smooth normal economic cycles killed the so-called great moderation and led to bigger recessions than we would have had if he followed traditional monetary policy like the taylor rule. the way to get the fed back on track is to reduce your responsibilities, not increase them. to start, we should move consumer protection and banking regulation to somewhere like the fdic. then we should make the fed's sole responsibility, the stability of the dollar since a stable currency would lead to a stronger economy with higher employment. what i want to know from you is what you think the goal of monetary policy should be, stable currency or something

the fed has some other important functions as well.e set short-term interest rates in order to try to keep the economy on track. we have a mandate from the congress to move interest rates up and down as needed to try to promote employment and to keep prices stable, keep inflation low. so monetaryw= policy, move interesting rates around is very important. we have lots of other things we do as well. we work with other supervisors to try to make sure the banking system is stable. and we've had a lot of work to do on that in the last couple of years. and many people don't know, we also do consumer protection. so if you look at your credit card bill, will you see the periodic statement, the structure, the lines and the way that's organized was determined by the federal reserve. and the federal reserve sets a lot of the rules associated with how credit cards can be charged, kinds of penalties, fees, and so on. so broadly speaking, financial stability, trying to keep the financial markets stable, monetary policy, interest rates to move the e

if the fed, let me put it this way, if the fed reacts too slowly we will have inflation. there isn't the slightest doubt about that but i have all the confidence the fed has the knowledge and the technical ability to make this move in a timely way. >> my guess is if the fed started to take the money away they are going to get a lot heat for it. politicians are going to not like that idea. >> that's the big problem because certainly the fed will have to move in this direction before the unemployment rate stops increasing. before the unemployment rate stops increasing. so, you're all americans, i think. you can easily imagine how the political authorities will react when the unemployment rate goes up from 9.4 to 10.2 and at that point in time the fed will start increasing interest rates. that would be a lot of ugly comments but that's the we would have to go. yes, sir. >> are the banks refusing to lend to the economy in order to beef up recruitments will for the war? >> for the war? >> the two boards. >> the question goes to whether having a bad economy gets people to join

>> emily: one of the this the fed >> one of the ings the fed chairm was talki about today was employment. he said we may not see a peak in unemployment until a ways away. explain to ople. wh do we an when we talk out a jobless recovery? >> f various rsons these ll beginto rise whe a cession is over howevere don't see lot of job growth. that lag behind. in 200 when weere coming out of theast recession and also in the ear 19's, we d just that where g.d.p. and production and sales all went up and jobs did not grow. >>uzanne: you will have to excuse us. have apparely a fire-safety st here on the floor of the w york stock exchange. just bear with us for second. can y? >> yes. >> suzanne: can you plain for me the paradox of a jobless recovery? how is it possible that you ca still having an economy that's recovering d all these people are stil losing bs? >> yh. the actual job losses will begin to abatefor lar sectors of the job market. in particular, e service sector. that's wre 90% of us wor -- nine out o 10 people work there and i expect that as the receion draws a close, th summer, that we'l

second, the fed caeffectively pay nks more to keep reserves with the fed, redung the incentive make new loans. and third, the fed can b and sell securities, a technic tool it uses to keep inflati in check. >> so we dhave a number of tools to do it, and we'rquite aware this issue, and we will not allow the broad meases of money circuling in the economy to rise at a rate rapid enou that it would cause inflatio eventually. >> reporte there's just one problem: rnhart says it's portant to remember the earliest this ex strategy would ke effect is next year. >> we don'know who the federal reserve chairman will be nt year. we don know if the congress will be considering a federa reserve reform a of 2010. there are gointo be lots of mechanisms to put pressuren the federal rerve. >> reporter: so inhart says, evenhough the fed has an exit strategy, it may n feel free to put it to effect when the time comes. darren gersh, "nightly busins report", washiton. >> paul: the troubled asset reliefrogram or tarp that ben bernanke helped pass through congress ifacing new scrutiny. the spial inspector genera

and he defended the fed's actions, suggesting that if the fed had not stepped into the banking systemt fall there could have been a depression. >> i was not going to be the federal reserve chairman who presided over the second great depression. for that reason, i had to hold my nose and stop those firms from failing. i am as disgusted about it as you are. i think it's absolutely critical as we go guard that we put in a new system that will make sure that when a firm does not succeed in the marketplace, that it fails, that it's absolutely critical and i support that 100%. >> reporter: that video, by the way, comes from the news hour's website. they're going to air the full town hall over the next three nights on the newshour with jim lehr. bernanke defending the fed's independence and opposing as he did last week a bill in congress with a lot of support that would allow the general accounting office to audit the fed's monetary policy statement. the fed chairman saying, i don't think the american people want congress making monetary policy. finally, it seemed as if he softened his oppos

the fed isn't perfect. as the guardian of our financial system, the fed in the past has come up short in a number of ways. i'd only say that wile we consider making the fed the lead systemic regulator, the fed and we must examine how it can improve its functioning to take on these new duties. happen about the arguments against? while ensuring financial stability may be too big a job for just one regulator, even if the fed takes the lead, coordination with other regulators will be essential for success. coordination with regulators and central banks abroad may be even more critical than being in sync with regulators at home. markets and institutions are global, but our regulation is largely local. so i like the president's recommendation for its financial services oversight council and international cooperation and coordination especially. last, what about reassigning some federal responsibilities to other agencies? regular haters should do what they do best. and for example, as others have said, consume are

that follows the second day of questions for fed chairman bernanke. ray suarez has the story. >> reporter: those tough questions came today before the senate banking committee. top of the agenda for senators: the fed's authority and its response to the financial crisis. chairman chris dodd of connecticut. >> reporter: richard shelby of alabama, the committee's ranking republican said he disagreed with an administration proposal to give the fed more regulatory power. >> in the end, it was the failure, i believe, of the fed to adequately supervise our largest financial institutions that required the deployment of its monetary policy resources to stave off financial disaster. in light of the fed's record of failure as a bank regulator, it should come as no surprise that congress is taking a closer look at the fed and reconsidering its regulatory mandate. >> reporter: some senators supported bernanke's responses to the economic crisis. still, many had questions and criticism. democrat chuck schumer of new york pressed the chairman on the fed's new rules f

the fed; and american jihadists. that follows our newsmaker interview with the house speaker nancy pelosi. judy woodruff talked with her this afternoon at the capitol. >> woodruff: house speaker nancy pelosi, thank you very much for talking with us. >> my pleasure. >> woodruff: if "a requests" is the beginning of of the health care reform and "z" is the president's signature, where do you stand in >> we're somewhere in the middle of the alphabet but we have a long wait to go. i would say we're probably around a-b-c-d-e-f-g-h-i-g-j-... i've been singing with my grandsons. about "can can can can" i would imagine. we have a long way to go. >> woodruff: the house energy and commerce committee. a lot of attention with the blue dog democrats, self-described fiscal conservatives with others on the committee essentially and with the leadership, you, essentially cutting back on the public plan. there are there's already concern being raised by progressive democrats that too much is being given to the blue dogs. what do you sa

specifically the fed chairman ant fed are opposed to legislation for expand gao audits inside the fed. we should hear from the chairman in about 20 minutes. back to you. >> all right, thank you, hampton pearson. you're seeing barney frank's committee room. she holding a hearing on the too big to fail thing. >> yes. >> don't want to confuse anybody b. the it sounds like they're not going to define what too big to fail is. >> right. so that's what barney frank's committee is doing. then there's the committee hearing that's listening to chairman bernanke. then there was something interesting in what hampton outlined in his remarks, bernanke apparently is saying that the exit strategy mechanisms will work automatically. >> automatic unwind. >> what was that about? >> we're going stro to understand better the mechanism by which it triggers an automatic unwind if there is some kind of mechanism they're building into the system that triggers that. i also thought the unemployment, the commentary about unemployment stabilizing but remaining high through 2010 and 2011, that's a little ner nerve

. >> lehrer: and sll to come on th "newshour" tonight: turml in iran; trusting th fed srecy and the fed; and erican jihadists. that followour newsmaker interview wh the house speaker nancy pelosi. judy woodruff talked wi her this aernoon at the capitol. >> odruff: house speaker nan pelosi, thank yovery much for talking th us. >> mypleasure. >> woouff: if "a reques" is the beginning of of t health careeform and "z" is the prident's signature, wheredo you stand in >> we're somewhere inhe middle of the alphabet but we have a long it to go. i would say we're probably around-b-c-d-e-f-g-h-i-g-j-... i've been singing with my grandsons. about "can can canan" i would imagine. we have a long wayo go. >> woodruff: e house enegy d commerce committee. a lot of attention wi the blue dog democrats, self-described fiscal conservatives with others on the committe eentially and with the leadehip, you, essentiall cuing back on the public pla there are there's alrey concern being raid by progrsiveemocrats thatoo much is being given to the blue dogs. what do u say to them? >> well, firstof all, i don't le

that follows the cond day of questionsor fed chairman bernanke. ray suez has the story. >> rerter: those tough qutions came today before the senate bankingommittee. top of the agenda f senators: the fed'suthority and its response to theinancial crisis. chairman chris dodd of connecticut. >> reporter: richardhelby of alabama,he committee's ranking republic said he disagreed witan administration proposal to give the d more regulatory power >> in the end, it washe failure, i bieve, of the fed to adequately supervise our largest fincial institutions that ruired the deployment of s monetary policy resources stave off finanal disaster. in light of e fed's record of failure as a bank regulor, it should come as nsurprise that congress is taking closer look at the fed and reconsideringts regulatory mandat >> reporter: some senator supported bernanke's respons tthe economic crisis. still, ny had questions and criticism. democrat chuck schumer new york pressed t chairman on the fed new rules for the credit card industry, which ke effect a new law sied by the

-- the fed is making in terms of the exit strategy.what metric or metrics are most compelling that allow you to read a recovery and given, in your testimony there is a correlation between inflationary fears and your prediction of when the recovery begins, essentially munaf villosity kicks then and the money supply, the recovery and the inflationary pressure or concurrent, so what metrics the u.s. valuate that allow you to get ahead of that curve when that knock on the fed has always been that they are too late reading the trends? >> it is a very difficult problem and even though we have these unusual circumstances it is really the same problem we always face as you just pointed out, picking the right moment and taking your appropriate pace. since monetary policy takes time to work the only way we can do that is by trying to make forecasts, make reprojection and we use large amounts of information including qualitative information, and if the receive, formal models, a whole range of techniques to try to estimate where the economy is lik

that's tied into fed policy and the confidence in the markets over fed policy. >> this is christine herethe aussie dollar getting a boost from hawkish comments. do you think australia could be the first to hike rates? >> australia has surprised not just the central bank but the markets as well. we had positive growth reported recently. they avoided recession. they still have positive annual real gdp growth and to have inflation very much above zero yes, on the circumstances of what's gone before, they are in a much better position. the aggressiveness on which they cut policy, fiscal stimulus on top of that has seemed to work well. if china continues to recover, then the prospects for australia look good. on valuation, the aussie is beginning to look stretched again. the rba are intervening. nobody really wants excessive currency strength including australia and new zealand. i would be reluctant to forecast aggressive further gains. >> you mentioned china, are you surprised that the u.s. is not more forceful to let currency appreciate more rapidly? >> not at all. that's understandable. th

the fed didn't respond to it.e've all talked about, listened to jim bunning, last week we talk about the 1994 fact, the hope of legislation. that was 14 years before the fed under your leadership stepped up and responded to that situation with a series of regulations, dealing with the residential mort galk mark mortgage market. there seems to be a pattern of the failure that leads us appear to be concerned about whether or not there is just a momentary response to a crisis in front of us, to step up rather than the kind of consistent behavior that we would depend upon for the federal reserve to act when it comes to consumer issues that have been hammered by the problems in the residential mortgage market as well as in some of these consumer products if give me a reason why you think this is something i should be less concerned about given this pattern of behavior. >> i understand your concern entirely. it's not literally true the federal reserve was inactive. we did step takes and took the hope authority to broade

the fed needs to be independent on one hand, but there has been pressure with regard to the fed and monetary policy or the regulatory side. you just saw the fed succumb to pressure from congress on regulation of credit cards and the like. on monetary policy, the report was done that said the current chairman pushed the fed about a half dozen times and keep the rates low, but there is always that pressure. >> still representative, this would raise it to unprecedented levels. are you comfortable with the gao second-guessing machine tear policy decisions? >> i haven't signed on myself. i am waiting to see. we have to make an analysis of whether or not we would be subjecting the federal reserve to a congressional or political control which has always been separate and successful without that control. i think we have to look at it carefully before we go to that extent. the importance of this bill and why it's getting so much support is the yet that many people are fostering putting the federal reserve in charge of systemic risk as being the uba regulator. if that were to occur, we have to have ot

meanwhile the fed is paying banks a premium to keep their money parked at the fed instead of loosening out. this is one of fraud after another on the american people. they might use the excuse they are trying to control inflation. chicken out. unemployment is skyrocketing. businesses can't get money so they are laying off more people. and we are thinking that somehow we have solved the problem here. i want to submit for the record this report out of the bloomberg news service, and i want to ask mr. barofsky -- >> without objection. >> thank you. i want to ask mr. barofsky this money is fungible as we know. >> yes. >> that generally speaking you would agree that there is just no question that a significant part of the money that is being parked at the fed like now is government money. that money from the government programs congress created. >> we would have to look institution by the institution but if we did so i would not disagree with what you're saying. >> i hope we can get another hearing because this goes to the heart of the entire bailout program. one thing after another, one be

>> almost all the new money the fed injected is still on deposit at the fed, banks hoarding the money and keeping them as excess reserves, rick cancelly. this has a certain 1930s feel to that and we need to talk about that i want to know what you think if bernanke goes too far with an exit strategy, he might disrupt the market, already partially exiting. maybe he should explain that instead of going further. >> first of all, all a that money sitting there right in excess reserves, one thing, not going to be taken back and a matter of time before it does move into the system. the real question is when that occurrence becomes reality is that going be the same time for the fed to tighten things up a very confusing dynamic? >> yes. yes. we see the velocity or turn over money, see it multiply throughout the system, see the excess reserves reduced, that's when they should and will tighten, dan. last word to you. >> i would just -- listen, i agree, rick has legitimate concerns and people in the market have legitimate concerns. i would just remind everybody it is not as if our fed chairman is

and bernanke's evolution from fed chairman to fed showman. now, it could be something more moderate than that, that he's just trying to explain to the public. and that's a good thing. or not. i mean, it's like no good deed goes unpunished, rick. fed chairman to fed showman, is that true? >> hey, he's a teacher. at heart, mr. bernanke is a professor. and i don't see anything wrong with trying to educate the average person who doesn't see inside the fed as to what he's doing. now, whether you want to call that explanation, is he worried about his place in history? or is he trying to carve out his job in the future? you never lose ground if the public gets more -- >> you know, rick, this guy has to go to charm school. i mean, he's never going to charm people. and you know what? -- >> are yeah, you know, that's a little unfair. because after the "60 minutes" interview his ratings went up. >> what's wrong, larry, with a little transparency at the fed? >> nothing. that's what he's doing. he's charming, he's elegant, he's debonair. john carney has t

it's on deposit at the fed. and it's called excess reserves. when you watch the hearings tomorrow, and you talk about them tomorrow night at the dinner table or the cocktail party, talk about the balance sheet, and excess reserves. you'll be a genius. then you'll be running "the kudlow report." anyway, coming up next, stocks are the best barometer of future business, and this market smells of recovery. our market gurus will tell you how to put your money to work. we're also going to have to take apart president obama's attack on banks and wall street. and later on, lendingtree is branching out. i'll talk mortgages and more with the founder and ceo. the fed's balance sheet, right now, it's gone into excess reserves, not going into the economy right. you're watching "the kudlow report." mr. bernanke can't make an exit strategy until that money is put to work. tools are uncomplicated? nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipping's complicated. not really. with priority mail flat rat

wants to extract the fed from the unprecedented private sector intervention. come august 4 you'll be able to read all about it in david wessel's new book "in fed we trust." ben bernanke's war on the great panic. tonight he'll tell us what bernanke was up to this week. >> that's right, gwen. the poor guy went to the hill three times, once in the senate and once before the house. he had a very consistent message. things are getting a little better and i deserve some of the credit. and barney frank told him no one got elected with a bumper sticker saying, you could have been worse. he said, you really do need to change the regulatory -- financial regulatory apparatus so we don't go through this again. and i'm 100% behind tim geithner, the treasury secretary and his plan, except for the things i don't want to do. he said to congress emphatically he hates this bill ron paul is pushing that has the surprising support of 2/3 of the house that would give the government the accountability office the right to audit the feds' monetary policy, their interest rate decision

the fed one the fight and got the additional 40 it sought. ten years later however it is clear the fed has proven it is incapable of handling that responsibility. ultimately i believe if we are able to reach some sort of agreement on systemic risk and whether it can be managed by strongly believe we should consider every possible alternative to the fed has a systemic risk regulator. thank you mr. chairman. >> thank you, center and we are still missing 1i think. i need 12. if i have a colleague that can count walter i'm willing to move ahead. after all, this is washington. [laughter] >> we will wait for the 12 to arrive. >> is their someone sitting here? [laughter] let me invite sheila bair and mary schapiro and dan tarullo and injured as people who hardly need an introduction people who've been before the committee on numerous occasions. sheila bair as we know is the chair of the federal deposit insurance corporation, served as assistant secretary of the treasury extensive background in banking finance and of course many appear have known her

he is the fed head, mark.that meeting, he can go and face its financial press where experts cross-examine him. >> larry, i agree with you but on the other hand, i don't think we should ex-age rate, the vast majority to of the financial press, except for cnbc are going to be softball questions. >> all going to go melissa is going to go steve's gonna go. >> all shouting at the same time. it will be ugly. we are going to leave it there. >> glad we solved that. >> trish? >> i'm going to go to, and i think actually i'm going to start a petition, we will get that going for us. okay. "power lunch" coming up at the top of the hour, bill griffeth, would you sign the petition and what you got in store? >> put me down. i do get cookies for that as well somehow? >> sure why not. >> coming up, back to school well under way this summer. find out hot winning retailers are as a result of all of that. good news also by the way, "newsweek" magazine has declared officially the recession is over. now we just have to survive the r

, butn the crises gone t places fed chairmen haven't ne before. did a press conference t the naonal press club. he went on 60 mintes" and sunday night e's doing a own meeting in kansas citythat wi be on news hour. ose are things greenan never did. i hink hisprimary ambition is peoplare suspicious of the fed and goinover the hads of congre to say, look i saved e country and here's w i did it, trust e. then it mas him a little mre lily to be reapinted, then that's an add benefit. >> wil he be reappointed? >> i think if thepresident had to decide rig now, i thin the odds favor reappointment. you can bet on th internet on this. and i checked before i cme ov, nearly 70 odds of reappointment. but i hink the white house will wai a whle becase if something else goes wong, if the econy goes south and the need somebody to blame, they would like to hae the opportunity. gwen: i'm curious. he was gving a version of the green cutes spee, things are getting beter. s optimism is uted. is ijustified. >> i think if yousay are we at the risk of havi another great de

, including the fed's policy. tell us briefly about that. mr. bernanke, of course, opposes it. >> he strongly opposes it. he talks about transparency. he's for transparency except for certain things he doesn't want to be transparent. there are just a few things that are sacred. that is what he does with the discount window and the monetary policy. what he does with international agreements. is there one example given recently the federal reserve, not under bernanke, a federal reserve chairman went to the imf and insisted the imf pay off loans to the bank and pay the interest. it's that kind of mischief that goes on, they can have agreements with other government, central bank, international banking, financial organization, dealing with trillions of dollars and the american people don't know what's going on and the congress until recent really didn't care. during this crisis now fortunately from what i've been trying to, do we're getting more attention because i think people are recognizing how important it is. >>

fed chairman ben bernanke begins two days of testimony on capitol hill. caterpillar, coca-cola, dupont, merck and united tech will be out today. others include schering plough, blackrock, continental, southwest and state street. apple and yahoo! will be out after the closing bell and there are many, many more. ron bloom goes before the house judiciary committee at 11:00 a.m. new york time to answer questions about tremendous structuring of general motors and chrysler. that is your global stock watch. >>> coming up on "worldwide exchange," we'll have analysis of the information out of the uk. >>> and china is getting ready for another ipo, the world's largest. but is now the right time to invest in the market?  >>> i'm christine tan. in asia, china's state construction plans to raise more than $7 billion in the world's biggest ipo this year. >> i'm ross westgate in europe. swedish truckmaker volvo warnings of slumping demand after a quarterly loss. >> and i'm bertha coombs. ben bernanke outlines a fed plan today for the policy of quantitative ea

it is stretching the resources of the fed. it complicates its ability to carry out monetary policy functions. at a time when our country faces -- let me say this, if we continue to do the things, continue to have stimulus packages and deficits, we are going to have crippling inflation. i think the fed will have its hands full dealing with inflationary pressures without being distracted and over extended by these new powers. the republican plan would therefore relieve the fed of some of its current regulatory responsibilities and allow it to focus on monetary policy. thank you very much. let me close by saying that we need to end the bailout that the fed has been instrumental in carrying out over the last 18 months. thank you. >> the gentleman from texas will be recognized for four minute. >> thank you. i am delighted you are holding these hearings today. this is a subject we have talked about for many years. we had earlier discussions. the position of the fed is that they reveal a lot of affirmation. they still argue the case

fomc staff agrees that the fed already has and can develop tools. agreeing, however, that most backup liquidity facilities should be extended into early next year. market kins, the minutes say, remain fragile. hour however, if improvements continue, a number of those facility may not need extension beyond february 1st of next year.. the committee agreed to changes to program of asset purchases is not warranted at this time. while it might provided some additional support. were uncertain. the economic outlike revised upward. but labor market conditions remain a major concern.. the updated economic outlook for the remainder of 2009, gdp, in a range of a negative 1.5% to 1%. unemployment in the 9.8% to 10.1% range, and core pce inflation, 1.3 to 1.6%. looking ahead to 2010. positive growth, unemployment declining slightly, and core pce inflation, 1.0% to 1.5%. a slow recovery, trouble with the job markets and moderating inflation concerns. erin? >> thank you very much, hampton pearson. >>> the gdp decline -- that is right? >> yes. >> i'm just making su

given the fed-- given the feds alta my responsibility for the regulation of systemically in-- will providefurther incentives for the fed to hide its regulatory failures by bailing out troubled firms. rather than undertaking the politically painful task of resolving failed institutions, the fed could take the easy way out and rescue them by using its lender of last resort facilities or open market operations, even worse the could undertake these bailouts without having to obtain>x@ the approval of the congress. in our system of government, elected officials should make decisions about fiscal policy and the use of taxpayers' dollars, not the unelected central bankers. penning over-- handing over the public purse is simply inconsistent with the principles of democratic government. augmenting the federal reserve's authority of the rest burdening it with more responsibility than one institution can reasonably be expected to handle. in fact, the federal reserve is already overburdened with its responsibility for monetary policy, the payment system, consumer protection in bank supervision. i beli

the one thing that is similar, the fed made a loan that will be repaid. do not know -- in terms of aig -- giving the fed support as they made this decision. but once the action was taken, i had no dealings. i think the fed would be better to answer the question in terms of what they are doing right now. >> i do know that you were not there after the fact. we need the winding down of authority. what would have been different in this situation? another is a new situation, it looks like they will not be able to get a bailout. have we already set up the situation, that you create the conundrum of them, they say that they will only bailout these entities, and they just do not fall into these categories. so you have a disservice to the taxpayer, that you will encourage the companies in the future, when i get in the situation -- i should do this -- is that the problem with the proposal? >> i do not have all the facts in terms of what has happened. the regulators made this a bank holding company, with a regulatory recommendation to the treasury. we funded this pr

the fed is committed to accountability in its operations. we report on our activities in a variety of ways, including like the one that i presented to date. the fomc releases detailed minutes of each meeting on a timely basis. we have increased the frequency and scope of the published economic forecast of the participants. we provide the public with detailed annual reports on the activities of the federal reserve system that are audited by independent firm. we also publish a complete balance sheet. we have recently taken additional steps to better inform the public about the program's been instituted to combat this financial crisis. instituted to combat the financial crisis. we expanded the website this year to bring together already available information as well as considerable new information on policy programs and financial activities. in june we issued a report to the congress that provides even more information on federal reserve programs including breakdowns of lending a seceded collateral and other programs a established to address th

a lot of trader res hopeful the fed chairman might offer more details about the fed's kwaupt tafb easing program. but in an op-ed today in the journal entitled the fed's exit strategy, bernanke's says the fed's actions have softened the impact of the financial cries and then adds a policy of -- will the extended for some period. we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road. he goes on to talk about how to do that. you can watch his testimony live beginning at 10:00 a.m. eastern time. >> did you see some of the comments in the wall street journal about ron paul who thinks the fed should be completely abolished?g >> yes. >> at least audited. >> and bernanke says an audit would be disastrous, to go in and see what these guys have been doing. i didn't think anyone needs to -- >> we don't need to know house the sausage gets made? >> we're talking about pigs getting totally -- >> okay. some are eating breakfast. >> it's wrapped in intestine, carl. >> oh, anyway, california governor around 08d schwarzenegger and the state's legislative l

the fed's mandate right now. would you favor the fed in that role, or not? >> well, i don't want a permanent bailout agency, and that's what i'm afraid they're talking about. i've asked secretary geithner, i've asked the chairman, ben bernanke, are you going to use taxpayer money to bail out failed institutions? and they say they're the no. but it's -- but the law allows them to do it. the obama proposal allows them to put more taxpayer money -- >> but do you think that the person or the entity that is in that role should be the federal reserve, or do you think, as many people do, that some of what we're in right now happened on the fed's watch, and they should not be that super regulator? >> it did happen on the fed watch, and there are two or three big mistakes the fed made. i would say put it all on what the republicans say -- let's put it all in a bank regulator under an umbrella, which brings the occ, the ots, merges them, and brings them together. and then form a council to identify a systemic risk. and tha

gwen: on the hill, fed chaian ben bernankepushes te rese button. >>e have a much beter situion today than we wuld hae if we seen a colpse of the glob financial sstem last october. gwen: is anybody listing? covering the week, peter baker of "thenew york times," michael fletch of "te washington post," maril werber serani of "national journal", and david ssel of "thwall street journal." >> celebrating 40 years o journalistic excellence. live fom our ntion's apital, thiss "washington week" with gwen ifill, prouced in asciation with "national journal." rporate funding for "washington week" is rovided by -- >> weknow whywe're here. >> to design the future of flight insidand out. >> touild tomorrow's technolo in amazing ways. >> andreshape the scienceof aerospace fever. >> aroundthe globe,the people of boeinare worki together with a dream of generaons to come. >> that's why we're here. >> it createshalf the electricity that fuelour dreams. we have mor of it than any placon earth. ande're working on cleaner ways to us coal every y. there's mre informatn at

after that, the fed became more independent, brought inflation down.t now that's exactly what it would do. if that carve-out is eliminated, the congress would have the authority anytime to ask the gao to come in and audit and look at that's not consistent with independence. >> lehrer: crosby kempner has a question about regulating. >> crosby kemper, mr. chairman. i've also been a banker in kansas city and now im a librarian. as a banker, i can tell you that the two banks who are represented here, my cousin and i, are two of the solvent banks left in the country. im the director of the kansas city public library and an amateur historian. and i've read your book, essays on the great depression. wonderful book. and you talk about two causes of the great depression. one is the failure to the federal reserve to provide an adequate monetary policy. it tightened too much during the days after the stock market crash. and you talked about the non- monetary problems, part of which was the failure, despite great liquidity of the banking system, to respond to the,

too much and too little of the fed. i think that we haven't given the fed enough power to overall control systemic risk in the economy. but on the other hand, we're asking too much of the fed when we ask it to constantly add to its bank regulatory and supervision powers. so i think we really need to decide what it is we want the central bank to do and what do we want other regulators to do. to me the big issue is if we load too much regulation on the fed we run the risk of compromising the independence of monetary policy. clearly a bad idea. >> yeah. and certainly that's been the buzz word recently, that the fed's, you know, independence is being undermined here with all of this debate about what the fed should be doing. >> i couldn't agree more. and i think it's an unwelcome problem for the fed. i think the congressional bill to audit the federal reserve is just an example of the kind of mischief that lies in the weeds. >> glenn, where are you on this consumer agency? a lot of people have come on this show, and they're

watchlist the head of the fed on capitol hill. federal reserve chairman ben bernanke begins two days of updating congress on the fed's view of the economy. the fed has been very cautious in its descriptions, saying only that the decline seems to be lessening. or falling at a slower pace. some in congress have been asking tougher questions about the fed's strategy, and ability to pull back the monetary stimulus such as very low interest rates and allowing banks to use questionable loans as collateral. and at the same time, criticism continues for the fed's effort to help banks not necessarily filtering down to consumers. one more item cops in suburban philadelhia busted up a ring of illicit retailing. turns out the kids weren't breaking the law by selling lemonade door to door. the local ordinance that bans sales without a permit doesn't apply to kids under 16. crest whitestrips has created a strip so revolutionary... you can use it while you do just about anything. it molds better... it grips better... and seals better. you can ev

we'll have the fed pulling back eventually on the purchase program. i think the curve can steepen more. >> okay. >> david, thank you very much. appreciate t.david greenlaw joining us today, and now we're going to go out to julia boorstin, and she is at a very interesting conference and has a very special guest with her as well. julia? >> reporter: thanks so much, sue. i'm joined now by barry diller, the ceo of iac. thanks for joining us. >> happy to. >> reporter: barry, it's been nearly a year since you spun off four different businesses including ticketmaster and lending tree. nearly a year later, what is the plan for iac? >> well, the plan is was in the original concept of when we spun these off. iac has research, it has match.com and ask.com so it has a whole series of businesses that are a billing and that's what we're doing and they are building. i mean, notwithstanding the economic mess of the day, the companies are all profitable. >> reporter: well, speaking of economic mess of the day, in your last earnings call back in april you said you didn

. >> fed chairman bernanke, thank you for being here. i come from an area that does a lot of manufacturing and is reliant on credit. what would have happened last fall if we had just walked away and had not passed the program? >> i think you would have had a very good chance of a collapse of the credit system. what we did see after the failure of lehman was for, for example, commercial paper rates shot up and availability declined. many other markets were severely disrupted including corporate bond markets so even with the rescue and even with the stabilization that we achieved in october, there was a severe increase in stress in financial markets. my belief is that if we had not had the money to address the global banks crisis in october, we might have had a collapse of the global system we would have a huge collapse that might have lasted many years. >> and have we lost many funds that the fed has lent? >> the fed on book value is a little bit under water on the aig, bear stearns interventions which we very much would like to have done

i've offed talked about this with him and fed chairman bernanke.e nine biggest banks to washington. they don't know what the meeting is about. he describes the meeting. they sat on one side. male speaker: bernanke, ms. bair sat on the other side and told them they would take t.a.r.p. money, like it or not. so i have one last. that was on october 13th. i want to go back to october 3rd. when we started down this bailout road, this bailout fever that grabbed washington wibt started on october 3rd where the united states government decided to give you $700 billion of taxpayer money. the premise of that action was you were going to clean things up and things were going to get track. and yet to date, the treasury has not purchased those assets. so i want to know, when did you know that you could not be able to do what you told congress -- i remember hearing -- sitting in on the conference calls. i remember when you came in front of lawmakers and you talked about, we're going to buy these troubled assets. and yet -- actually, ten days later, you changed d