mary thompson joins us with the details. a nasty story. >> it really is, all after a year and a half investigation by a senate subcommittee. it's unearthed some dirty lending practices at the failed thrift. in a statement, carl levin said washington mutual built a conveyor belt that dumped toxics assets into the financial system like a polluter dumping poison into a river. in 2003, up to 75% of the loans bought didn't meet the thrift standards, and even though senior management knew about it, did little to try to change it. employees went so far to cut and paste bank statements from current clients to create files for new borrowers so they would be approved more quickly. it was in the employees' interests to do this, because they were paid on volume rather than the quality of the loans they approved. in another instance, loans generated by one office in california were so defective, aig stopped writing insurance on them, subsequently alerting the otc, the office of thrift supervision. levin says wamu did this in pursuit of b

mary thompson, what do you have? >> melissa, senator carl levin came out swinging ahead of tomorrow's hearing on the investment bank's role in the financial crisis. goldman will be the case study tomorrow. and at a press briefing earlier levin accused the bank of putting its own interests ahead of its clients'. >> for large fees goldman helped run the conveyor belt that dumped hundreds of billions of dollars of toxic mortgages into the financial system. >> e-mails like this one from ceo lloyd blankfein as evidence goldman kaz was cutting its exposure to the housing market and off-loading its bad assets to customers without telling clients that had gone bearish on housing. in the e-mail he writes, "could/should we have cleaned up these books before and are we doing enough right now to sell off cats and dogs in other books throughout the division." levin goes on to say contrary to goldman's claims that it didn't make a large directional bet on the housing market its proprietary trading operations profited handsomely in

some breaking news here, head back to mary thompson at headquarters. mary. >> for years washington mutual engaged in fraudulent lending practices to build its subprime securitization business. these are the findings of the senate permanent subcommittee on investigations. it released its findings today. it is probing subprime lending's role in the financial crisis. and in its report it alleges through high-risk lending, lax controls, and destructive pay practices washington mutual infected the secondary mortgage market with billions of defective loans. it did so in pursuit of profits generated by selling these loans to wall street firms that in turn repackaged them and sold them to investors through a process called securitization. now, among the allegations, washington mutual's subprime lender long beach consistently bought and resold mortgages that didn't meet wamu standards even though wamu senior management knew about it but did little to improve those practices. within its own prime lending operation employees at wamu went so far as to cut and paste

mary thompson has all the numbers, coming up. >>> welcome back to "power lunch." . we're almost halfway through the trading day. ca cutting 1,000 jobs and greece launching a u.s. bond issue in the next month hoping to raise between 25 $5 billion and $$25 billion alcoa joining the parade of companies to the tune of $80 million. michelle? >> lots of fire, julia. directed at the t.a.r.p. program and mary thompson says it's turning out to be profitable for the feds. >> some of the profits easing the t.a.r.p. pain and two parts are proving positive. those aimed at financial firms. snl financial tallied up on firms that repaid t.a.r.p. and found the treasuries received an annual return on 8.5% on these investments. over 400 banks and financial firms borrowed $244 billion through t.a.r.p.'s capital purchase program and the targeted investment program which was set for citi and bank of america. intended to strength on the financial system and bolster bank's balance sheets but it seems it's bolstering the treasuries, too. snl looked at 49 firms including morgan stanley and s

mary thompson is in washington, and she monitored the hearings. what did you learn, mary? >> well, when you listen to the sound bites that we played the quotes from mr. rubin as well as mr. prince, a couple of things come to mind. first of all, i don't think that there is one person they are blaming, because they both repeatedly said they trusted citi's operations manager run by david bushknell, and the cdo's that caused the losses in citigroup were rated aaa, so it is not only the people who believed the aaa ratings, but the rating agencies as well, and there were a number of people to blame for the oversight of rating which turned out to be a risky security with a high rating. i am not sure he was blaming mr. harris who testified yesterday, the former co-chief of citi's investment bank, but i think that mr. prince was in some part trying to pay him a back handed compliment. >> it is funny that he would just mention two names. >> two names. >> that struck me to name names like that while he is on the hot seat. well, mary, where is the accountability? who do you think shou

let's get to mary thompson back at hq. ma mary? >> mark, those better-than-expected numbers continue to roll in from the financial sector. this morning morgan stanley and california banking giant wells fargo posting strong results. morgan stanley reversing a year-earlier loss, posting earnings excluding a 21-cent-a-share tax benefit of 78 cents a share. those results 21 cents ahead of estimates as revenue more than tripled to $9.1 billion. the bank's new ceo, james gorman, saying the company still has work to do, but the work the firm has been doing to improve its trading operation appears to be paying off. revenue in the fixed income unit was well above the $1.3 billion from last year, a key reason for strong results in the first quarter. compensation expenses in the quarter rising to $4.4 billion from $2 billion last year, one reason is the venture with citi. still, the compensation ratio declined to 49% from 68% because of the increase in revenue. yesterday, rival goldman sachs said its compensation ratio for the quarter was 43%

mary thompson will have details from the conference call coming up. but in the not-too-distant future, let me give you a few highlights, if i can, from those numbers, which looked to be not bad. we'll take a look at citi, how it's looking to open. you can see perhaps up just a bit. not a huge jump there. the stock had hit $5 a share before falling significantly on friday after, well, hitting $5 on thursday, but on friday with the goldman news and the rest of the market, it took a bit of a tumble. highlights to tell you about at this point. well, fixed income, no surprise there. so many firms, investment banks have been doing extraordinarily well in the fixed income markets for any number of reasons. citi among them. fixed income revenues of $5.4 billion were up 77%. interesting to note, as well, that expenses were down rather sharply, 6% decline in expenses overall or about $800 million taken out of the expense base of the company over the last year to $11.5 billion for the quarter. and allowance for loan losses was up to $48.7 billion. that is about

mary thompson is at the meeting in new york. >> hey there. citi's first-quarter profit that the bank reported yesterday, small comfort to the thousand or so shareholders who showed up today. chairman dick parsons did tell them citi has turned a corner. they remain angry about the losses they've sustained and angry at legacy directors, including parsons, who they hold accountable for all of sit ti's troubles. here's a small sampling of what investor grievances we heard at the annual meeting today. >> we need new blood in citi bang boa bank board and a change of the present chairman. >> i feel strongly that they're trying to do the right thing, but is it too late to do anything that will bring about quick success or increase value of a stock? >> reporter: all that anger, not resulting in any changes today. all 15 of citi's directors were elected to the board. six shareholder proposals defeated. seven management-backed proposals were approved including one on say and pay and another that gives the board the option to conduct a reverse stock spli

. >>> i'm mary thompson with your cnbc market wrap.a morning plunge to finish modestly higher. the dow jones industrial average adding nine points, the s&p 500 up two and the nasdaq gaining 14. >>> concerns about greece continuing to weigh on the markets, this morning it was news that its debt in relation to gdp was higher than expected. stocks began to recover around midday, despite a wave of lackluster earnings forecast. qualcomm shares plunging and nokia plunging 13% on a weak forecast due to stepped-up competition in the smartphone market. >>> and posting earnings after the closing bell, amazon moving sharply lower, despite beating expectations. >>> microsoft also on the decline after hours, the tech giant beating on earnings and revenue as well, citing strong sales of windows seven and the xbox. now back to "hardball." >>> welcome back. we saw thousands of tea partiers rally in washington on tax day last week and a recent political poll shows the movement is split between social conservatives, who look to sarah palin as their lead

mary thompson is live on capitol hill with the details. mary? >> hey, michelle, he just wrapped up about half an hour ago and if you were expecting any kind of mea culpa, you didn't get one. greenspan did admit to making mistakes 30% of the time during his 21 years running the fed but he wasn't more specific about it when asked if some of the mistakes ran up to the housing bubble and the financial crisis he said, i don't know. in the more than three hours of testimony, greenspan blamed long-term monetary rates. that alang with demand for securityized subprime mortgages. from european banks and fannie and freddie mack. >> the search in demand for mortgage-backed securities was heavily driven by fannie mae and freddie mac, which were pressed by the department of housing and urban development and the congress to expand affordable housing commitments. >> greenspan said half the fed tried to slow subprime lending during the housing boom and congress would have thought it was craze so that and a role as a regulator not an enforcer and limits what the

i'm mary thompson outside the hilton where citigroup is holding its annual shareholder meeting, the third meeting for vikram pandit. the last two, the cbo received or heard an earful from the hundreds of investors who attend these annual gatherings. we had a chance to speak to a couple of them before they went into the meeting and asked them to give us their review on the board and the management over the last year. and those reviews were mixed. >> i think they're doing okay. i personally am going to hold on to it. >> i'm here, again, to express my displeasure with the board. particularly the fact that there are still incumbent members on the board that have taken us through this entire financial debacle and reduced our company from what was to what it is now. >> one of those incumbents, dick parsens, arriving earlier today. he's revamped a board which now includes four new members. most of the directors arriving together earlier this morning. now when pandit takes the stage, does he so knowing the company he runs is in better shape than it was last year. fresh off of strong first quarter

we have mary thompson here with the latest on this. can the reputation of the firm survive? >> it's an interesting question. you know, legal and governance expert that cnbc spoke to has been calling goldman's handling of its problems subpar while criticizing the board for its silence. michael says well not devastating yet. over time it could hurt goldman's brand, as well as its business. >> boards and ceos and cfos are fairly risk averse right now and couple that with the aggressive marketing that goldman's competitors will be doing and i think that's a recipe for long-term damage. >> ford motor company and blackstone chairman said they will be remaining clients but more voices need to be added to that chorus and that goldman needs to be more vocal, too. it denied that fraud charges detailed why it believes the charges are false and sending lloyd blankfein and its army of oothers to testify before the senate on tuesday. still too many say it's not enough. the firm's board needs to step up. acknowledge there's a problem and assure investors that they are working on it. howeve

mary thompson joins us with more from washington. >> reporter: good morning.prepared testimony released yesterday, blankfein says without his clients' trust his firm can't survive. but senator levin chaired the subcommittee for permanent investigationsed goldman breached that trust. >> the evidence shows that goldman repeatedly put its own interests and profits ahead of the interest of its clients. >> reporter: in his claims with e-mails like this one from goldman mortgage executive daniel sparks who wrote in late 2007, he wrote, real bad feelings across european sales about some of the trades we did with clients. the damage this has done to our franchise is very significant. levin's committee examining the role of financial banks and the crisis. he says goldman and others built a conveyor belt that dumped billions of toxic housing stocks into the system. goldman bet against its own money making $2.37 billion in 2007. >> its own documents show that it engaged in what one top executive described as, quote, the big short. >> reporter: blankfein counters the firm