what is the fed waiting for? how bad do things have to get for the fed to take some action to boost the economy? >> really, the fed doesn't have to see things get a lot worse, but they have to see things not improve. the economy has deteriorated over the summer, they need to see the economy reaccelerate, and if it doesn't reaccelrate fast enough, the fed will act. we se need to see another bad report, and the inflation rate closer to zero. and i don't think treasury bonds would be the only thing they could buy. they can buy mortgag mortgage-backed securities, and since the housing market is still bad. >> susie: let's say that the fed takes action in the way you're talking about, pumping more money into the economy. will it make a difference? will businesses borrow more, spend more, and hire more? will it make a difference? >> nobody knows for sure. we're in uncharted territory. many within the fed system don't think it will make a difference. and there are others who think if it makes 3/10s in a economy that is o

one fed policymaker today called on the central bank to respond "aggressively and vigorously." that's what boston fed president eric rosengren told "nightly business report" in our exclusive interview. his view is critical because he's a voting member of the central bank's key policy- setting committee. >> tom: but susie, two other officials-- the presidents of the minneapolis and philadelphia fed banks-- disagreed with rosengren. they said today they're opposed to the central bank making another round of bond purchases to boost economic activity. >> susie: when i talked with rosengren, i asked him to explain why he thinks the fed should respond so vigorously. >> so by vigorously, the economy has been growing slower than any forecasters expected , and slower than we'd like to see. we want to get back to full employment. if we're going to do that we need more aggressive monetary fiscal policy if we're going to be able to get back to full employment over a reasonable period of time. and the inflation rate is low, we're at a rate a little below 1% if you measure it by -- we've sai

then we put it to the fed. so that's just a swap of collateral from one institution to the fed. >> right. >> over and above that, we had collateral. as evidenced by the fact that we posted $50 billion, i actually found out now it's more than $50 billion, but i'll settle for the 50 within the broker dealer. than didn't just jump up out of the night mysterious. that was there. so we had the collateral. there's another piece, which i'd like to address, if i may, which is this question of fed backing naked. or unsecured. the first place $600 billion balance sheet. 50% of it is a match book. it gets sold. >> right. >> very easy. the remaining $300 billion, a lot of it is on-the-run securities, governments, corporates, equities, $69 billion of it was less liquid assets. of that, close to 20 was residentials, not to get too far into the weeds. >> yeah. >> ut those had been marked so aggressively that a number of people said that the rest of the street had to mark their resi where lehman marked it's resi, it would be a

on the fed's views, the fed is taking criticism for not, quote, recognizing the obvious etc. we knew that house prices were rising quickly, but as of 2003-2004, there really was quite a bit of disagreement among economists about whether there was a bubble, how big it was, whether it was just a local or a national bubble. so we were certainly aware of that risk factor, but you know, frankly, we by time, it was evident that it was a bubble and it was going to create rusk to the financial system, it was rather late to address it through a monetary policy. : even under very 60 trillion dollars of equity value in markets around the world. it is a small amount of money. small amount of money. the loss of $400 billion of equity is nothing to the regulatory economy. what happened is the financial system had these fulmer abilities which i talked about in my long her testimony and what was relatively small factor in the scheme of things triggered these weaknesses that led to a much bigger crisis. so what i did not recognize and i thought said price was contained -- the system had flaws

on the fed's views, the fed is taking criticism for not, quote, recognizing the obvious etc. we knew that house prices were rising quickly, but as of 2003-2004, there really was quite a bit of disagreement among economists about whether there was a bubble, how big it was, whether it was just a local or a national bubble. so we were certainly aware of that risk factor, but you know, frankly, we by time, it was evident that it was a bubble and it was going to create rusk to the financial system, it was rather late to address it through a monetary policy. : even under very bad scenarios the total losses in some prime mortgages were unlikely to be $300 billion which is a lot of money when compared to global financial markets. it was just a small amount of money. the loss of $400 billion of equity is nothing to the regulatory economy. what happened is the financial system had these fulmer abilities which i talked about in my long her testimony and what was relatively small factor in the scheme of things triggered these weaknesses that led to a much bigger crisis. so what i did not

the congressman could not answer the question so he went to the fed and the fed wrote back, alan greenspan wrote this letter back to the congressman transferred to the constituent who wrote it. the last part of it is so instructive here. because he said in a letter consequently well knows a government may emit bills of credit or make anything but gold or silver or legal tender in piven of debts which is accurate, the federal government is not limited in what may designate as legal tender. okay, now what he is saying there is if we are not prohibited from doing something we can go ahead and do a. that turns the constitution ride on its head. the constitution of the united states empowers government to do very few things, almost all of it is an article one section eight in the constitution. but what has happened is you go to some congressman today, where do you get the authority, he's liable to tell you we are not prohibited from doing it and therefore we go ahead and do it which is awful and part of the problem is so few americans understand the constitution enough to be able to say, hey, t

baxter said to me there is a way for the fed to do that but only if the fed board adopts a resolution of some kind which changes the nature of what they normally do under 13-3 to make it more like the discount window. they can take assets that are not liquid and use them for the purpose of making a loan to the institution that is suffering a run. you said you are willing to do anything to save lehman. is mr. baxter correct? could the fed board have adopted a resolution that will take any good assets and monetize them? provide the liquidity so that lehman can continue to meet withdrawals or the run that people are referring to? so lehman brothers had a holding company and a rubber deal. i'm talking about only the holding company. >> for everyone's information, the appropriate dealer was eligible to bar from the primary dealers facility and was allowed to do so so the question was should we create a new lending provisions to allow loans to folding company? >> yes. >> we were able to do so so long as we had sufficient collateral and we were prepared to do that. i was ready to call the bo

which is why many fed-watchers expect tomorrow's meeting will end with the fed promising to take further action if it doesn't see more progress towards price stability and maximum employment. darren gersh, "nightly business report," washington. >> tom: here are the stories in tonight's n.b.r. newswheel: word the recession is over gave wall street a shot of confidence. the dow rose 145 points, the nasdaq added 40 and the s&p 500 was up 17. trading volume was still light, with 954 million shares trading hands on the big board and just over 2 billion on the nasdaq. the recession may be over. but apparently nobody told the housing market. the national association of home builders' monthly sentiment index was unchanged for september. it's stuck at an 18-month low. hewlett packard and oracle are making peace. late today the companies issued a joint statement saying they've resolved litigation surrounding oracle's hiring of ousted h.p. c.e.o. mark hurd. no word on any financial settlement, but the companies say they'll continue to work together. they've been business partners for two decades. >

on the fed's views, the fed is taking criticism for not, quote, recognizing the obvious etc.we knew that house prices were rising quickly, but as of 2003-2004, there really was quite a bit of disagreement among economists about whether there was a bubble, how big it was, whether it was just a local or a national bubble. so we were certainly aware of that risk factor, but you know, frankly, we by time, it was evident that it was a bubble and it was going to create rusk to the financial system, it was rather late to address it through a monetary policy. : the thinking was if house prices did come down some, and the 30% was not what people were contemplating, the economy could manage that ok. i said what i said. it was based on the observation that even under bets scenarios, the total losses in adjustable- rate mortgages were unlikely to be more than $400 million, which is a lot of money, but compared to financial markets, $60 trillion of equity in markets around the laconic it was a small amount of money. the loss of $300 million in equity would mean almost nothing to the econo

. >> susie: fed chairman ben berannke says the fed had to let lehman brothers fail to avoid an economic disaster. >> tom: two years after the collapse of lehman, will things be different in the next financial crisis? you're watching "nightly business report" for thursday, september 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening, and thanks for joining us. ben bernanke said today it's a myth that lehman brothers could have been saved, perhaps preventing the financial crisis. susie, the fed chairman also says he's partly to blame for creating that myth. >> susie: tom, bernanke was the star witness on capitol hill today, answering questions from the financial crisis inquiry commission. the committee was commissioned by congress to figure out why lehman failed, and to answer the bigger question of what caused the financial crisis. >> tom: bernanke's testimony was a look at the lesson

the time will come when the fed will normalize monetary policy. at that point, we have a list of tools that will allow us to drain reserves from the system and normalize interest rates to bring us back to a more normal water policy. -- in normal monetary policy. >> is that correct? ther is a microphone right behind you. >> think you for your marks. i wanted to ask you briefly, in regards to the shattered banking system which he spoke at length about, what have we learned about -- what have we learned and what do we need to learn about how the -- about the traditional undstandings of monetary policy. >> as i discussed in my remarks, the main problem -- there are many problems, but the single most important problem is we have a regulatory system which was designed fundamentally for the 1930's, which was a period when our financial system was essentially banks. there were some innovations and changes in financial regulate -- regulation. we tried to monetize the financial regulatory system. unfortunately the animation in the system which created the u

dollar per american jim furyk captures the tour championship clinching goals the biggest bonus that fed ex cup in the process. and on home ice we catch up with surrogate fever of the russian population aims to live up to expectations in a second. but let's get going with an update from the russian premier li where two wins from their previous three games still hasn't been enough for itself to climb out of the relegation zone this summer a side easing to a three no winner on g. and monday's sole fixture. seeming to understand the predicament they find themselves in blasting home three first half goals to victory something off the fact that effort opening their account within minutes on the clock even off then made it two on twenty eight minutes with another scrappy. verted penalty from yes give me seven right before the break the tie down and dusted three nil the final score the same or a side of me and second from bottom those automatic relegation spots you boys own g. also sitting a little too close for comfort to the drop zone and it doesn't get any easier for them games with spartak

for the fed ex cup trophy in my hands right now it's just a great icing on the cake and over in paris ricky john perry left the inaugural vivendi cup title for his maiden european tour victory the twenty three year old englishman following up a birdie on the seventh with another one on the towns and pubs football was enough to clinch the title or the experience we carry finishing on seventeen will be bound you'll have an ad for us that was the lone swede in the second place while his compadre down half way stage of the dutch jeremy soundly and was in a five way tie for third. yeah let's finish by heading on to the mat west sunday saw the finale of their while their ethnic gymnastics championships how here in moscow constantin pop up of reports. it's the first time russia has hosted the biggest event in richmond gymnastics so the pressure was high as the country is the clear trend setter in the sport but you never know a little is being done to make this or even more popular here we don't need that with me gymnastics around the world it's easy to work with the ration a real pleasure ma

or bond buying that the fed is doing on their own balance sheet. but we will be looking for any clues as to the future direction of the u.s. economy and what the fed could do if they need to to step in to try and improve things. keep an eye out for that. the futures currently suggesting that we'll see some pretty mixed trading ahead of that fed decision later on today. willie, back to you. >> anna edwards, thanks so much. we appreciate it. >>> still ahead, "monday night football" comes down to the very last play as the defending super bowl champ new orleans saints battle the niners in san francisco. they needed every last tick on the clock to settle this one. highlights ahead. >>> plus, bristol palin in her highly anticipated debut in the ballroom. the reviews are in and, well, sounds like she may be resting comfortably back in wasilla very soon. "dancing with the stars" and a check on weather when "way too early" comes right back. ready to try something new? campbell's has made changes. adding lower sodium sea salt to more soups. making it easier

we looked at the memos from the fed and from the fdic. i asked myself, "why did lehman not fit that criteria ?" they both seem to be in a position where they had systemic risk. one was in m1 was out. >> first of all, we do not have a list. i think as you will find in the discussion this afternoon, the difficulty with lehman was not that it would have had a systemic effect. it has been shown they did have a systemic effect, but we did not have the tools to do anything other than what we did. lehman needed for more liquidity than the federal reserve could provide on a secured basis. without that security, we are not authorized to provide landing. we did not have the authority to provide capital. >> and me press you on that, mr. alvarez. he wrote a opinion on march 9 which i would like to enter into the record. you said at that time that the statutory "acts least the collateral within the reserve bank." you said that for the loss to be fully secured -- i am sorry. this is march 2009. he went on to say that requiring most to be fully secured

but what the feds knew was not. now according to the documents he placed this in a trash can outside of famous wrigley field drinking establishment, slugger's. the bar where the batting cage is upstairs. you've probably seen it in movies. shortly thereafter, bunch of black suvs swooped in and swooped out, and concert goers and partiers on park street probably never knew they were in the midth of what would be a terrorist bomb blot and they were also never in real danger. >> shepard: it was a fake bomb supplied by the government. couldn't the defense argue it was entrapment? >> well, the f.b.i. says they were very aware of that. and because of that, they the suspect a number of opportunities to back out. still, because he said he wanted to proceed with the bomb plot, they thought the safest route to proceed was to provide him with the fake bomb. >> we certainly considered him to be a serious threat to the public. and if we didn't provide him with what he thought were materials he needed to carry out his plot he very

. >>> well, the fed speaks, sort of. and why frivolous speech isn't necessarily the best idea while you're on holiday. your early morning buness headlines are straight ahead. >>> plus, right now, he's down about as low as can be, but least one friend is proudly standing by him. >>> also, the twins clench, yankees increase their lead. and what do you get when you combine tiger woods and michael jordan? you're watching "early today." >> good morning, and welcome back to "early today." here are some of your top headlin this rning. >>> a new book by bob woodward claim there have been big battles in the white house over the president's strategy in afghanistan. some doubt the plan will work. woodward says president obama himself has been at odds with military commanders. >>> pastor terry jones may have canceledhis plans for burn a koran day, but he's still going to get a bill for it, a $200,000 bill from the city of gainesville, florida, for beefed up security. the gainesvle city manager admits he doesn't know how much legal a

>> the feds want to make it easier to wiretap the internet. we will look at that and see what people have to say about that idea. >> a face-off between a senator and a processor turns ugly. >> a face-off between a senator and a processor turns ugly. growing, evolving, literally transforming our lives. now imagine the possibilities of what tomorrow could bring. at at&t, we support a core set of standards that will guide the internet into the future... to protect users, and reward innovators, for years to come. we support a fair and open internet - affordable and accessible to everyone. transparent networks, managed in ways that are clear to all users. we support the fcc's plan to bring high-speed internet to everyone in america by 2020. and we are committed to keeping the internet working, as the economic engine that's creating jobs now. working together, investing, keeping information and ideas flowing freely, we can ensure that the internet will continue to grow and influence the future... in ways we can only imagine. because the future has a

open and i lie second in the fed ex standings behind. both with dollar signs in their eyes where the finish. top of the standings will get a staggering ten million dollars it's. elsewhere martin kaymer of germany has won the dutch open the u.s. p.g.a. tour fourteen under overall four straight ahead of his closest rival christian you'll see of sweden in paraguay for but it seems a naughty climate is set to make his ryder cup debut as celtic manager next month. formula one now mark webber is back at the top of the driver's standings there after finishing sixth at the italian grand prix which was won by two time former champion fernando alonso the spaniard started from pole but was overtaken by reigning champion jenson button on the first corner however his shaky start was nothing compared to what happened to lewis hamilton the briton was three points clear at the top of the standings before the race but went out on the first lap articulating with ferrari's free from last mclaren driver was unable to steer properly after the incident and re

the fed left interest rates but signaled it will take steps to help the economy. however, the feds are taking a wait and see approach to see if the economy can heal on its own. >>> breaking news out of washington, d.c. senate republicans have blocked an effort to repeal the law banning gays from openly serving in the military. this is part of a larger defense bill that authorizes $ $726 billion in military spending over the next year. the democrats needed at least 60 votes to advance the bill and that included the vote of susan collins. just know she arked with republicans -- she argued that republicans were not able to have a leeway -- >> i think we should welcome thevies who are willing and -- the individuals who are willing and able to serve their country. i cannot vote to proceed with this bill under a situation that's going to shut down the debate and preclude republican amendments. that, too, is not fair. >>> republicans are also furious that ds moved ahead with the vote before the pentagon finished an assessment on how to lift the ban without causing proble

next another fight with the feds.this time a mayor of a small pennsylvania town not happy with the federal government. find out why that mayor goes on the record, next. >> governor sarah palin goes rogue again. a certain woman might be thanks her for it. ♪ ♪ [ male announcer ] it's a universal gesture... ♪ a way of telling the world "you did it!"... without saying a word. introducing the mercedes-benz sl..amg. [ engine revs ] ♪ the best or nothing... that is what drives us. oh. about what? uh, they don't really think you're an exchange student. what? they think you're a businessman, using our house to meet new clients in china. for reals, player? [ woman saks chinese ] they overheard a phone call. speaks chinese ] something about shipping with fedex to shanghai. and then you opened a bottle of champagne. that was for a science project. [ man and woman speaking chinese ] i'm late for..occer... rehearsal. [ man speaks chinese ] you and i are cool? i'll be home by curfew. [ male announcer ] we understand.® you need a par

and ten million dollars american jim furyk captures the tour championship and the fed ex cup in atlanta grabbing golf's biggest bonus in the pros. and it's in pittsburgh may be overwhelming favorites to be crowned russian football champions this year but says certainly haven't given up the chase the imam easing to a three male win a way to sit on sunday no waiting around for says scott in this one with less than the minutes on the clock wagner has the ball in that strike. and the man with the blue have played a big part in the number two as well loved taking the defendant out of the way should be fourteen up save. for two male and forty eight minutes. the second half was one sided but didn't have the ball cross the time line again until the death toll much that said the players sweeping out of their eminence for email the final score thirty eight points behind me that's a meet with exactly the season to play. now it says to rivals did not have the exact opposite luck on the day going down three mail at home to spar technology it did do and got the ball rolling just after that how fall m

on capitol hill, fed chairman bernanke, f.d.i.c. chair bair, the c.f.t.c.'s gensler and comptroller of the currency walsh were among those testifying. together, along with treasury secretary geithner, they're the newly created financial stability oversight council. a key author of the law, senate banking committee chairman chris dodd, called on the team to work together. >> this organization is not intended to be a top down, but rather a collective gathering of equal partners in all of this. and i would expect that no one to hide behind the work of the fed or the treasury, nor to be intimidated by it. >> susie: the group has to write hundreds of rules to put financial reform into place. it holds its first meeting tomorrow. >> tom: the european debt crisis isn't over. spain today lost its triple-a credit rating. moody's downgraded the country on worries about its budget deficit. the credit rating agency says spain must convince financial markets it can pass a budget that cuts the deficit. spain's unemployment rate is 20%, and its economy is predicted to grow

they are fed up. another too. you have a president today, for the first time he did not wait the last year of his second mandate, the last year of his last mandate, to take care of the problem, as w. bush did and as bill clinton did. remember, taba and camp david. the last year, the last months, racing to have his credit on the possible peace. obama did one new thing. the first year of his first mandate he took the problem in his hands. so it does not mean that he will succeed. it means that there is for the first time since long a real american will to help. a real goodwill between the two parties. and that is the second technical good news. >> practical, not philosophical. >> it is not philosophical. it is practical. i am fed up with philosophy in this conflict. fed up. >> i'm on the side of optimists, and i have one more argument for optimism, which actually should have been dan's, because it's dan's book which has made me -- given me one more reason for optimism and it's "startup nation." that israel is actual

. >>> well, it was a heart-breaker at fed ex field on sunday night. >> for the win from 35 yards away, he's got it! >> and then was zapped. after four quarters, it came down to the kickers. how fans are coping today. makes for a rough weekend. >> good morning to you. everyone had high hopes of this redskins team going into the game after that win against dallas. things were starting to look good for the burgundy and gold. at one point they lead houston, texas, with a 17-point lead. things were moving in the right direction at the half. then it really came down to who had the ball last. this game went into overtime against houston and it came down to field goals. the redskins ended up missing that final field goal, giving the ball back to houston, they ended up making that final field goal and ended up claiming victory. it was a bitter sweet win for redskins fans who said they were happy to see that the redskins were finally moving the ball down the field and ended up putting points on its board. at the end, it just wasn't enough. redskins fans were already looking toward the future. >

i am fed up with philosophy in this conflict. fed up.t's a dead end. >> one more argument for optimism which actually should have been dan's because it's dan's book which has made me -- given me one more reason for optimism and it's "startup nation." that israel is actually one country which has been remarkably successful in this post-industrial global economy. and to me that has to be hopeful. you know, israel really is a silicon -- a whole country of silicon valley. and i think that that sort of rise of this highly technical, you know, well-off, affluent middle-class israel has to be hopeful for the peace process. >> you're seeing venture capital investors in israel like shimon peres's son and others who are actually starting venture funds to invest in israeli-arab entrepreneurs and even in part of the palestinian territories pf salaam fayed, the palestinian prime minister, says we've got some promising start-ups in ramallah but we need the mentoring from israeli technologists and israeli venture investors. and that has opened, albeit

whhn the fed said it would jump in. >> property tax as well as a llt of fee increases. >>> as you knowence between fees and taaes. >>> it's not just the early campaign, criticizing one >>> with six weeks until the general election, you will be ehrlicc. john rye del tells us one campaign ad for o'malley is prompting criticismm not just a t.v. station.campaigg but from >> the ad is produced by the opallyyo'malley cal pain. >> as you know therr's a big difference between fees and taxes. >>> but ittincludes a news anchor from marrland public >> raising taxes. >> it's a clip taken from a public affair show, although reaction from voters was not a part of that broadcast. mpt executives said they did not give o'malley the permission to use the video. executives were concerned that theead might convey the messaae that m t.vpt supports the gover. ú% as for ehrlich, he is trying to clarify his position on fees that were approoed whhn he was governor. he calls it ironic that o'malley is promoting programs that are funded by those fees. >> because we're campaigning on the uccess of the chesapeake

the fed gave its potassium medicine the green light after passing facility inspections. watson fell 4% as a competitor returns to the market. and that's tonight's "market focus." >> susie: as we continue our series "budget blues," looking at the money struggles facing state and local governments, we turn to virginia. the state's governor is looking for new revenues from a product as old as the hills: alcohol. stephanie dhue looks at whether the governor's plan to privatize liquor sales will be a budget win or a hangover in the making. >> reporter: in town hall meetings around the state, governor robert mcdonnell is making the case for getting virginia out of the liquor business. >> i don't necessarily think it's a core function of government to have to distribute gray goose or jack daniel's, i think there's other things that are probably more important. >> reporter: the governor proposes auctioning 1,000 liquor licenses to retailers, like costco, giant, and 7-11, which already sell beer and wine in virginia. the state would also auction wholesale licenses and get rid of