. >> morgan stanley.ry about that. and they sell off their oil trading unit, sold off their best most profitable businesses. so why am i buying this company now? >> you've got to ask yourself two questions. one-r financials investable right now? i would argue with the economy turning historically they definitely are. two, what companies are you going to pick within financials? citigroup is cheap. citigroup has as strong a balance sheet as anyone out there including jpmorgan. they've got exposure to international consumer, which is the one business globally that's really growing -- >> they're probably -- >> -- and doing well. and you've got the catalyst of institutions eventually buying. because if you're short exposure to citigroup and it's up 30% when the market's up 9%, you have a problem. you can't keep that up all year. the stock continues to move up they're going to have to come in. >> want to ask you, jeff-b a development in the after-hours session, and that is senators lincoln and dodd have reached

consider that where you'd be long morgan stanley. let's remember that right now ahead of the earnings we're looking at this thing trading at about ten times forward earnings right now. so if the stock came in you might own it -- >> if you can, mike, really specifically break this down because there's a sweet spot to this trade -- >> sweet spot is 27 bucks. if the stock goes down to $27, that's where you've hit the home run on this one. and an important point is that by not putting out any premium we're not necessarily saying okay, this is the kind of trade you always want to do if you have to put money out to do it. what we're saying is if it does continue to go lower this is one way to capitalize on the fact. and also create a level where you say here i'm comfortable -- >> here's another example of a situation where people say i don't see morgan stanley mentioned in any of these circles as far as goldman sachs but the stock has underperformed goldman massively. the stock was down in sympathy today. i like this structure and i'll tel

howie hubler the trader at morgan stanley. morgan stanley the wall street investment bank. he's regarded as the hub of a little -- of the smartest group of traders and they trade sub prime backed mortgage bonds. they agitate. they're not satisfied making just millions of dollars a year. they want to make tens of millions of dollars a year so they start to agitate within the firm for a piece of the action, for a bigger piece of the action. they want to be given sort of like their own little hedge fund within morgan stanley owned by morgan stanley. so they're given it. and it becomes the morgan stanley proprietary trading group. and they very soon months after they're set up they make an enormous bet and it's a complicated bet but the gist of it is they end up owning about $15 billion -- they buy in a matter of a couple of months $15 billion of punitive -- of triple a rated cdos backed by sub prime mortgage. >> wait, wait. >> all right, sorry. >> cdo. >> collateralized debt obligation. now, what is that? all right, so the loans create the bonds. the bonds -- the loans go into

the six companies that now hold 2/3 of the wealth of this nation, and they are goldman sachs, morgan stanley, j.p. morgan chase, citigroup, bank of america, and wells fargo. they have enriched themselves handsomely. they doubled their importance since the beginning of this crisis while quashing community banks across this country, seeing forced mergers and institutions like p.n.c. bought up as local community banks that didn't do anything wrong and were not permitted to do

it becomes the morgan stanley proprietary trading group. very soon, months after they are set up, they make an enormous bed. it is a complicated bet, but the gist of it is they end up owning about 15 billion of triple-a rated c.d.o.'s backed by subprime mortgage bonds. >> wait, wait. c.d.o.'s? >> collateral liesed debt obligations. what is that? the loans create the bonds. the loans go into a trust. the trust is suppliesed in that there are -- there are junior and senior claims on this trust. if you are entitled to get the first dollars that get repaid, you have less risk than the person who gets the last dollars. so you have a lower rate of experience and the higher rated bond. the person who gets the first losses gets a triple b rated bond and a much higher rate of interest. what wall street did is they took the triple-b minus rated bonds, piled them all into another trust, sliced that up, and 80% of that is triple-a rated. so what howie hugler bias is essentially a pile of triple-b rated bonds, a $15 billion pile of them. he does this qu

next to her, carl harris as -- carla from morgan stanley. carla is the code to girl for i.p.o.'s -- karl is the go-to- girl for ipo's. she knows finance, wall street, and has lived it. "fortune" enter one of the 50 most powerful black executives in america. she is amazing and brilliant. she gives back. she established a scholarship at harvard and also at bishop high- school. she gave back to her high school. good for her. deborah is with citigroup. she just trying them in 2009 as a personal wealth management organizer. before that, she was a finance machine. she is a perfect person to be up here. she ran the schwab institution and was the executive vice president. for 17 years before that she was a big wig at bank of america. she was appointed by president george the the bush to the board of directors to the sec. she graduated from the university of montana. i am a journalist and we do our research. finally, dr. laura tyson from uc-berkeley. i have a particular affinity with laura. she is the only woman running a major business schools in this nation. she has distinguished herse

mike khouw will show you how to buy protection on morgan stanley for free. plus, has this man mastered apple? >> the stock's going to gazillion. >> pretty much. now dan nathan gives you the setup ahead of earnings. and buy the write way. scott nations shows you how you can mint money off microsoft, whether it goes up, down, or nowhere at all. "options action" begins now. >>> and welcome to the show. i'm melissa lee. these are the "options action" traders here at the nasdaq marketsite, home to the world's third largest options exchange. days like today are why you need to know about options. let's get in the money right now with earnings for the brokerages just days away what is the options market telling you? we saw huge spikes in volatility today. how do you read the tea leaves as to what it means for the -- >> i think investors in financial companies thought they were off to the races after seeing jpmorgan earlier in the week and bank of america today. you know, this goldman news today, we said it a couple weeks ago, goldman sachs has been like the governm

you see that with morgan stanley. three times the trading revenues they had this quarter, the prior quarter, than they had the same period last year. much of that from fixed income. but remember, wells fargo is the important thing, is that we saw increasing in earnings overall here. the top line was atad below expectations here. they also note that credit has turned the corner. that's the important thing overall. one issue i saw for wells fargo, maybe this will be for other companies, we're still not seeing a lot of loan demand growth, and that could be a big issue going forward. keycorp, similar situation, reported a smaller than expected loss, though. nonperforming loans, again, decreased for them. a number of companies are raising dividends. we saw with freeport mcmoran, they came out, beat the earnings and raised the dividend. we've seen that before. mcdonald's, boeing, they'll be opening flat today. they beat on the earnings front here. for mcdonald's, the rise in first-quarter sales was terrific, but remember, c

that fits right into a project i am working on at morgan stanley. i am heading the emerging manager platform where we will partner with the emerging asset managers targeting minorities and women. we view our role to be a partner to accelerate the growth of those managers and bring to the table all the things that the struggle with like the access to the right infrastructure platform, back office, the access to capital, access to the institutional relationships, and others. we will partner with them to introduce our relationships to get the right infrastructure platform they could not get on their own and to introduce them to the right retell platform. -- retail platform. more importantly, provide the strategic guidance. compensating your team appropriately. people and asset management to not like change. -- people in asset management do not like change. to bring that talent to bear in that community is going to be quite in packed full not just in the next 20 years, but the next five years if we get it right. >> the small business area, this is somet

i bought iai, which includes both morgan stanley, goldman and the exchanges. i brought a chart along of the nyx, the nyse's stock against goldman sachs. if you look at the two, they're generally correlated. goldman sachs should be priced above 190. and my guess is it's going there. but even as the market goes lower, i think it will go down less. >> do you like those ideas there, sglon. >> i do. grasso has been pounding the table here for the investment banks. i think they're going to bring a lot of product to market. a lot of m&a activity. yes, i think this is an outperforming sector. >> steve is often right on these things. congress goes back to work next week. the administration is fresh and confident off the health care reform. financial reform is flooat leas going to be back in the headlines next week. they're looking for a story right now. here's your fly in the ointment. i think you're right. i think the brokers look great. the deal flow looks great. the headlines aren't going to be good. >> i think financial regulation, as tim said, is coming down the p

morgan stanley won't let him go on the air. he would probably do it anyway if he was feeling bloody-minded want to be a famous person. television. cornwall capital who i had to badger really until letting me on an island somewhere waiting for this end because the lastso they actually all spoke to "60 minutes". they all talked to the producers of thing but there's no way my>> why did mike burry who you>> yes. >> yes, that's a great question. and i think that there's ahe felt -- he thought he had diagnosing what was going in the american financial system. against the sub prime mortgage and it wound up being a veryand then the world moves on and nobody notices what he's done even though it actually is an incredible investment triumph. so when i called him to talk to had three years of e-mails to document his every move. really felt had been neglected. just reinforcing that. >> well, the next day amazon you're number one and here we are a week later when this is being taped, you're still numberbut you didn't show up on the is inter

asset inflows were strong morgan stanley. wells fargo net income declined in the quarter and revenue of $24.4 billion missed estimates slightly still earnings of 45 cents a share beat forecasts as howard atkins said credits getting better. >> one of the reasons we're confident credit has turned is the stabilization and improve. we're experiencing in early staged delinquencies across the major consumer portfolios. >> still except for auto and student lending, wells remained soft. corporate clients about new loans, but overall doesn't see demand picking up until the economic recovery takes hold. once it does, wells is well situated having taken care of it. wells says it appears chargeoffs peaked in the fourth quarter earlier than expected and also said 2008 acquisition is exceeding expectations both culturally as well as fascially. we'll head down to the floor of the new york stock exchange where trish is standing down there with bob. >> thanks, mary. part of the reason we're seeing a bit of an upside on the dow is that investo

morgan stanley is holding up all right. jp morgan, that stock was $48 a few day ago. we're clearly seeing some pressure. these are the biggest names that are out there, the ones that would be the most affected by financial regulatory reform. remember that bill that came out of agriculture last week essentially prohibiting these guys from acting as swaps dealers, that's still in there right now. >> definitely causing some prep dags within t-- trepidation within the financial sector. >> when you look at the whirlpool number and see what's going on with the raising of estimates, how rare it is when you get a company that has 6.50 to $7 for the year, now whirlpool is talking $8 to $8.50. when you get unit growth rate of north american up 11% when that was the weakest area for them, that's a sign that things are getting better. >> isn't it part that things were so bad that things are now looking so good? >> yes. that kind of earnings beat, that kind of raise is sufficient to move the stock dramatically here. if you say, well, gee, is it all priced in, the answer is no. not

howard hubard is a trader at morgan stanley. he is regarded as the hub of a small group of traders. they were not satisfied making millions of dollars, they wanted to make tens of millions of dollars. they started to agitate for a bigger piece of the action. they wanted to be their own little hedge fund. very soon, months after they're set up, they make an enormous debt. it is a complicated bet, but the gist of it is that they end up owing about $15 billion of triple-a-rated cdos backed by subprime mortgage loans. that is collateralized debt organizations. the loans go into a trust and the trust is sliced. there are junior and senior claims on this trust. if you are entitled to get the first dollar to get repaid, you have less risk than the person who gets the last dollar to get repaid. the person who gets the first loss gets a triple b-rated bonds and a much higher rate of interest. what wall street did was that it took the triple b-rated bonds, sliced it up, and 80 percent sign of that is triple-a-rated. how hubler buys is essentially a pile of triple b-rated bonds. he does this v

it's called morgan stanley, and i'm sure you know what fund that is that's having a risk issue right now. they're about to write down a loss. writing down the loss -- i get feeling they might just be reinventing themselves and become a good buy. >> oh, bill, this is a tough call. when i read about that loss, i said how could everyone else be on the mend, be on the repair, and these guys still have such a big loss? i was disappointed. i come out on the other side of the trade. i am bearish about that. and let's remember, those of us who follow the options market, and i do closely, because goldman sachs, the expiration occurred today, there were a lot of people who were what's known as selling puts. that meant they felt there was no way goldman could drop. that meant they ended up being artificially long, and in other words, they didn't know they would own goldman, and they panicked which hence added to the waterfall effect at goldman, turned it from the stream into slowly niagara falls. so don't believe that things are as bad as goldman from the stock, but do believe that morgan stanl

morgan stanley will not let steve go on the air. he does not want to be a famous person. he does not want to be on television. charlie and jamey, who i had to badger, i think they are on an island somewhere waiting for this to end. they actually all spoke to 60 minutes and talk to the producers and said that they would explain things, but there was no way their face was going on television. >> why did mike, who described as shy, agree? >> why did he agree? a year-and-a-half ago, he felt completely betrayed by the financial world. >> he is on the screen right now. >> he felt neglected. he thought that he had been buried pressured in diagnosing what was going on in the american financial system. he had made a lot of money for a lot of people. it wound up being a very unpleasant experience for him. and then, nobody noticed what he had done. so, when i called him, he was the one character who was very eager to talk to me. he had a story. he had a three years of emails to document every move. the 60 minutes people were reinforcing that. >> you are still number one on an assign

you look at morgan stanley, in fact those numbers were fantastic. that's a place to probably -- >> especially with the political overhang why not get out of the outperformers? let's bring it back to some of the stories we're following in the after-hours session? check on ebay, which gary sid should have prereleased these results, taking down its second quarter guidance. and you see the stock here at after-market session lows. joe, what do you make of this move? >> across the board you have some earnings here. whether it be ebay or whether it be qualcomm. that clearly the exuberance that was in these stocks is coming out. it's basically exhausted. if you look specifically at ebay, you have to wonder if craigslist is beginning to present a little bit of a challenge. they're definitely going to be the currency headwind with the euro and british pound declining. so ebay right now is a trade that's breaking down. qualcomm's another name that after-hours is trading on the down side. clearly, the iphone is taking away some of the revenue from qualcomm. sam

this will have remarks from high ranking executives from goldmansachs, morgan stanley, and citigroup. this is just over one hour. >> we are going to begin. i apologize for the sound system. [no audio] [inaudible] >> thank you. may we just say what an amazing job she has done. >> you talk about secretary geithner giving us the support to do this. he absolutely deserves quite the attention. we are so lucky to have had him here today to introduce the event. welcome to everyone here for my be watching on treasury.gov. if you visit that link, there is a twitter link that you can purchase a pay -- so you can participate.

also due out tomorrow, morgan stanley, wells fargo, and ebay. and that's tonight's market focus. >> tom: november, 2008, was a tough time to be an investor. it was just weeks after the lehman brothers collapse, the bailout of a.i.g. and the government takeovers of fannie mae and freddie mac. it's also when tonight's "of mutual interest" guest took the reigns at the putnam voyager fund. portfolio manager nick thakore joins us from boston. weed. >> nick, welcome to "nightly business report". nice to see you. >> hi, tom. it's nice to be here. >> tom: i want to take a look at voyager's performance over the past one year, the past three years, and five-year periods. the market has changed significantly since you took the reins in november 2008. has your strategy changed? has the market rallied? >> i think the market rally is not something that is getting in the way of what i'm doing. there are a few reasons people have had a hard time embracing this rally. they got really hurt in the down-turn. they look around and they say i don't buy into this econ

steve is technically employed by morgan stanley, and they don't want him to go on the hair. he doesn't want to go on television. and charlie may and hawkins, the young man at cornwall capital, who i had to badger to let me write about them, i think they are on an island. the last thing they wanted was to be on tv. they spoke to the producers and said i will explain things to you, but there is no way my face is going on television. >> why did mike, who you characterized in your people as shy and not liking people -- >> he doesn't like social interaction. >> why did he agree? >> that is a great question, but there is a simple answer. a year and a half ago he felt completely betrayed by the financial world. >> he's on screen now. >> and he felt neglected. he thought he had been very pressured in diagnosing what was going on in the american financial system. he had made a lot of money for other people. it wound up being a very un pleasant experience for him. then the world moves on, and nobody notices what he has done, even though it was an incredible investment triumph. when i

an analysis by morgan stanley shows that total credit outstanding including households, financial firms, businesses and governments amounted to roughly 350% of gdp at the end of 2008. clearly, this is unsustainable and the mckinsey global institute noted deleveraging can last a painful 67 years after a financial crisis. do you believe that we're too dependent on debt and leverage, mr. chairman, and if so how should we encourage and restore fiscal responsibility and restraint in the use of credit and debt across the board? most importantly for the financial sector, but also for government, businesses and individuals and families. >> i think there are debt concerns and the effect of protectors differently. for the banking sector, for example, there was too much leverage. that's part of the reason why we have the financial crisis. no reserve and other agencies are working internationally to try to develop higher more rigorous capital standards, which would portray two-phase and chloe so not to disrupt too much the recovery. but going for there needs to be higher capital, lower-level genera

talking to some folks at goldman sachs, talking to some folks at morgan stanley, the thinking is now if the equities market is going to reach the targets of 1300 in the s&p, quality names, energy, materials, technology, which has kind of underperformed, that now has to lead the market higher. and i think today you saw the beginning of that. if you look at the xle, that was up 2 1/2% today. and that was rallying in the type of environment that would suggest to me that it was reach out and grab, i just need to own it, i want to buy it. >> let's go do brian kelly who is back at e.c. on the prop desk tonight. you're taking a look at your charts. you're going to spit out some fibonacci retrace sxmts this and that and all that. but bottom line what does this mean, brian? >> a couple things. first of all, the 1230 level on the s&p 500 is very important technically. it's a fibonacci extension on the hourly charts. it's a fibonacci extension on the daily charts. and it's a 61.8% retracement of the 2007-2009 downtrend. so you have all these technical indicators, everybody looking at it, everyb

morgan stanley reports at 8:00 new york time. last week, ceo james goreman said the company's head winds were mostly behind them. at 8:00 in the morning, forecast to earn 42 cents a share. investors will look for signs that the economy is slowing, but steadily improving. in frankfurt, morgan is trading up 5.75% and wells fargo is up about 1%, ross. >> nicole, the imf has urged g-20 nations to implement two taxes, a tax on balance sheet profits will help cover costs of any future bailout. the proposal for those who believe any changes will damage the competitiveness and wants them implemented as soon as possible. as we said, we have a listing today of the no fly ban in europe's air space has reopened after five days of virtual plain free skies. in britain, the restrictions were lifted and flights have begun to land at london major airports late last night. within the past hour, officials say that the intensity of the volcanic eruptions has fallen by 80%, perhaps a further sign that things are returning to normal. although it may t

bank of america, morgan stanley, jp morgan and citigroup finishing 4% lower on the day.shares plunging 7% today as investors worried about surging payments to other sites that direct search traffic back to google. >>> that's it from cnbc, first in business worldwide. now back to "hardball." >>> welcome back to "hardball." president obama got his health care bill signed into law. by why is he still having trouble getting most of the country to like what he's done? is there a disconnect between what's happening in washington in this city and what's happening across the country? ed rendell is the governor of pennsylvania and the former general chairman of the democratic national committee. your party chairman pennsylvania, tj rooney said democrats need to put away the rubber sheets and sleep in dry beds. i don't know if you can improve on that metaphor, governor. what's your view of the democrats wetting their bed in worry these days? >> well i think there's two reasons that you see that phenomenon. that the president is hailed in washington for being a strong leader and ce

again, all on annualized basis and morgan stanley was 17%. >> can i get a second motion here as much as middle america and washington was so livid at the wall street banks, we bailed you out. the fact the banks in the end did not cost us taxpayer money. the banks returned at an 8% annual rate the money they were loaned under t.a.r.p. >> we're still paying for fannie and freddie and they're going to cost us far more. >> it would cost us more if we hadn't bailed out the banks. >> exactly. >> but who's to blame for us having to go in there to bail them out in the first place? that's where the anger comes from. >> yeah, sure. >> just because we make a profit on the investment. >> justified. >> no, because we're trying to avoid having to do this in the future. let's remember that. >> far less punitive actions against those taken back and never pay it back. aig automakers. >> aig. >> aig is only estimated to lose the government $8 billion. according to the cbo, yeah. yeah. >> that's a big story,er too. >> mary thompson, thank you so much. >>> coming up next, iowa senator chuck grassley say

. >> and the other from morgan stanley. >> 5.5%. that's amazing. >> how do you look at this as being such completely opposite? >> depends on what you think about the economy. >> and how muchdy mand there's going to be for still buying u.s. -- >> someone's going to be really wrong. >> right. >> which is what we like. you know -- >> you can declare a winner. >> i respect them for making those. but i don't know what i think. what do you think? 3.25%, 5.5%? >> probably 5.5%. maybe 4.5%. rates are going higher, i think. >> i think is it possible for the economy to be stronger than people think, and for rates to stay at 3.25%? >> i don't think so. i think the rates are going higher for two reasons. but the economy stronger is the main argument. >> right, the economy being stronger. i do, too. but i still think that everybody, the consensus is that rates are going to 5%. >> yes. >> because of the -- did you see the article that quoted bill gross of "the new york times" i think on saturday, that said that the era of cheap credit is over. >>

bank of america, wells fargo and jp morgan chase, along with goldman sachs, citigroup and morgan stanleyuld also have an impact on companies like the parent of this network, general electric. the bill aims to close loopholes in an existing rule that says no single bank can hold more than 10% of our nation's deposits. it would also cap how much banks can borrow to finance their operations for speculation or lending, to an amount equal to 2% of the nation's gdp. 3% would be the cap for nonfinancial firms, like aig or general electric. joining us now, ted kaufmann, senator from the great state of delaware and one of the sponsors of the bill. senator, we talked to senator sanders yesterday, senator coburn from the republican side of the aisle. senator lincoln this morning. lots of folks are expressing verbal support for what you're describing. do you actually think you can get it done? >> we're going to find out, dylan. we're getting to the krumplging time. this is where we're going to find out. we'll find out who's who and where everyone is. the bill is going to come up and we'll try to mov

jp morgan, goldman sachs, general electric number three, morgan stanley, merrill lynch, down the line. lehman brothers and bear stearns were let fail. now goldman sachs' largest competitors in fixed income was lehman brothers. lehman brothers is gone. so goldman sachs now has total control over that marketplace. and so, of course, if the government is picking winners, which they did, they picked jp morgan, they picked goldman sachs, they picked ge, for that matter, and those winners are now able particularly in the banking sector as goldman is, able to suck up all of the business. it's as if all the other cable stations were taken out by the government and suddenly msnbc had all the cable viewers because the government decided to put all the other cable stations out of business. >> what do you make of the fact that now they're pushing back, taking on financial regulatory reform. many people thought this would be a slam dump and that who is going to go and say, i'm supporting and defending wall street? sure enough, some people are doing that. >> they both are. the democrat's plan prese

right now i'm believing goldman, believing morgan stanley.l play the same game and they're all delusional. i don't think they're doing anything wrong. please make me a little less angry sir. >> i talked today in a 7th grade middle school in brooklyn for teach for america. inner city school, queens collegiate, really fabulous school. i asked people what they thought of wall street. they said all crooks. one kid said it was rigged. they obviously get away with everything. i tried to explain to them that in the end you can't own money in a checking account and make any money. gold has gone up. these were difficult concepts. i tried to use simple procedures. real estate not coming back. that in the end stocks remain the best game in town and you always have rotten apples. every single era has rotten apples. the goal is to avoid the rotten apples and realize that there are some riggings. donny, some things are rigged. >> in every business. okay. rotten apples. jim cramer you're in charge of regulatory reform. you have geithner's ear. tell him what

in doing the financial reform you make it impossible for the goldman sachses of the world, the morgan stanleys of the world, the citigroups of the world to be the large global players that they were in the past? >> excellent question. i think actually we will have quite the opposite. i think that our system as a whole ask not going to just be more stable, but i think our institutions will be much stronger on a relative basis, relative to their global competitors in these markets. because, again, the basic strategy that guides reform and guided our response to the crisis is that you bring more transparency, bring more disclosure, you force more capital into the system earlier, and you make sure you put in place basic things that make markets work better. the great defining strength of our system was not just the broader integrity of disclosure requirements, but our system was great at taking the savings of the world and giving them to growing companies to good ideas. so the great companies of our time were built on the strength of that basic system, and we're going to make sure we preserve that

if you have a morgan stanley or a goldman sachs under indictment now, and they go down, the whole economyoes down with them. that's exactly what happened. look, i'm going. >> the whole economy hasn't gone down. >> bill: i'm going to call you john near row, fiddle while rome burns. >> morgan. >> bill: morgan didn't do anything. >> i don't know that goldman has. >> bill: under indictment now for what you said, fraud. it's got to be more specific than that. you have got to make the laws you can do this, you can't do that nobody thinks goldman is going to get convicted. everybody thinks they will walk. >> all the business goes to london or singapore. >> bill: there is a risk on that. >> don't get email on the iphone don't get the inventions. goldman directs money to the people they think will make the most. >> bill: produce good stuff. >> always come back to america because this is where the cash is anyway, we have a disagreement on this. i think we absolutely need some oversight. but i do agree with you that the feds have not -- do not have a good track record. but i put it in the fbi hands.

in december, morgan stanley stopped making payments on five san francisco office buildings worth half what they cost in 2007. in january, developer tishman speyer gave two manhattan apartment complexes on which it had borrowed $4.4 billion back to its creditors, including the california teachers pension fund. current market value-- $1.8 billion. and in february, the mortgage bankers association sold its washington headquarters, on which it owed $75 million, for $41 million. continued ownership, said the mba, would be economically imprudent. >> yes, i'm defaulting. yes, i'm walking away. but i'm not going to keep running a business that is losing money as the days go on. >> reporter: so a lot of folks aren't bothered by walking away any more than they're embarrassed by having bought during the boom-- the latest one or, for that matter, the one that created this corner of florida in the late '50s, when the rosen brothers, a couple of salesmen from baltimore, thought to develop cape coral. historian gary mormino. >> they bulldozed everything over, they brought in an aggressive commission

so that there's no more of this morgan stanley dialing up goldman sachs and making a $10 billion side bet that nobody knows about. because the minute they can do that, the minute they can engage in essentially side transactions that are opaque, it is the minute they become intertwained and none of them can fail. they're in this desperate because you don't know how exposed they are to each other. all you know is that they are exposed to each other. >> what about the products themselvess? some of the characters in your book-- which i so enjoyed-- made an enormous amount of money by gambling. by betting against the system. they made a lot of money. people lost a lot of money on the other side. and i wonder what the social utility of those products were. >> let's take a single product. i think... look both collateralized debt obligations and credit default swaps if we could go back in time and not have them be invented we'd all be better for it. >> i'm with you. >> there's always an argument why these things make sense when they're created. but they quickly spin out of control. so credit

really strong economic forecasts for this year, i take macroeconomic advisors, forecasts, or morgan stanley forecasts which calling for growth in 39.3 to 3.5% range, they do not see the unemployment rate coming very far down. they see it trending down, maybe, to maybe a low of 9.3, 9.4. but this delinking of the employment growth from the outpoint growth is something that's very disturbing. and that's why the focus really needs to be on what can we do to generate jobs. >> glenn hubbard, how do you explain that discrepancy between the two, between the growth and the number of jobs being created. >> well, the underlying productivity and growth in the economy remains strong during the downturn and it is still strong now. which means we have to have very high headline gdp growth. typically in a severe recession, a first year bounceback is on the order of 6%. while the numbers referred to and i agree with her and say the low to mid 3s are possible, those are nowhere near 6% so we're just not going to see that kind of a snapback. >> and what is the reason? >> well, this economy, this recession wa

good for fortress, goldman sachs, morgan stanley, all the -- >> i don't see the m&a here, gary. i don't see multibillion-dollar deals. >> there are. there's air gas. there was millipour. smith international. alcon, which is still pending. that's a number already. >> there's a half trillion dollars these guys have to spend. they're going to overpay -- >> free cash flow, another trillion that they could -- >> and then you have emboldened shareholders who because they see this bid are holding out for more and it create this feeding frenzy. >> i would characterize the m&a environment right now, it's not crazy. it's a healthy environment because there are strategic deals happening. hc wachlt was one of the best structured deals before the credit crisis. so while the word is they're going to come public, that's not a total surprise. it was expected. at the same time there were bad deals like the txu deal, which is still a financial disaster which needs to be worked out. so there are a lot of good deals that are coming and the private equity guys can monetize those. there are still a l

a, morgan stanley. b, the underdog, jefferies. c, the comeback kid, citi, which of course had a nice pop today. mr. vikram, thumbs up to you. log on to fastmoney.cnbc.com right now, tell us what you think. >> who dare challenge goldman sachs? >> oh, come on. >> more "fast money" coming up next. >> how do you trade the house that steve built? ahead of apple earnings tomorrow, we slice up the stock so you can play it from every perspective. it's "fast money" 360. plus, guy gets behind the wheel to give you an electric trade. when america's post-market show continues. >>> take a look at shares of ibm. they're off their after-hours session low bouncing back slightly. we're about almost an hour into the conference call. gross margins as jim goldman called it a little bit squeamish. let's go to brian kelly back at the prop desk. brian, you've got an interesting trade off ibm. >> absolutely. looking at these ibm earnings yes, they're disappointing but there are two things in here that struck me. it was consulting services up 18% and soft

banks or expedite lehman's conversion to a bank holding company as was done for goldman sachs and morgan stanley. there may be reasonable explanations for all of these but i do not know what they are. we cannot rewrite history. had the government acted to stabilize lehman brothers so it could have been sold our country's financial crisis might not have been nearly as severe and widespread. my thanks to the committee for the opportunity to speak with you today. i may not have the knowledge and expertise of the other witnesses before you, i am happy to address any questions you may have. >> thank you. we will hear from mr. william black, associate professor of economics and law of kansas city school of law. >> you asked earlier for a stern regulator, you have one in front of you. we need to be blunt. you haven't heard much bluntness in hours of testimony. we stopped a crisis before it became a crisis in 1991 by supervisory actions. we did it so effectively set people forgot it existed even though it caused several hundred million dollars in losses but none to the taxpayers. we did it by pre-emptiv

you talk about house of the big banks you mention goldman, you mention morgan stanley, you talk about the individual like citigroup who seem to be on top of this and you say a lot of these institutions if they did not have out lightproof that this was a bad deal. something was going on. they suspected that. did they have a responsibility to say something and to what and whom and when? and then you also mentioned a couple of european institutions kind of put madoff on the blacklist. they said they would not lend their clients' money to invest. the guest of the system had an ethical responsibility and we know that they sell george where they should have been. legally they did not have a responsibility and that proves self regulation in the cattle market doesn't work because of you see fraud or suspect fraud going on and you are not going to place a call to your regulator that disproves the seeley of the regulation could ever work. >> host: white you can feed into that? did they have experiences like you had where you went to the sec, they didn't understand you, the few people if they di

you reported earnings at the beginning of march, patrick, and at that point morgan stanley said this is the early stages of a turnaround. your stock is up 50% since the campaign started. give us some hard numbers as to what sort of sales you've seen since the start of the campaign. >> you said the jury's still out on the pizza. it definitely is not. people love the new pizza. we're getting great trial of the pizza and repeat when they have it. and we know if we get people to try this new pizza we win. >> how much do they love the pizza? give us some numbers, patrick. it's about mid-quarter for you guys. so that's fair. >> yeah. well, we're actually -- we finished up the first quarter, but stay tuned, may 4th we'll release the numbers. but as we've said previously, we're very happy the consumer response has been all that we had hoped for. >> so no order of magnitude, nothing in terms of the sales boost from the campaign? >> all that we'd hoped for, i can hope for a lot, melissa. all that we'd hoped for. >> vague man. let kaminsky at him. go get him, gary. >> that's a takedown, by the

you talk about how some of the big names coming you mentioned goldman, you mention morgan stanley, youalk about an individual at citigroup who seem to be on top of this. and you say, bar in the institutions, if they do not have a right earth that this was a bad deal, something with going on, they suspected that, did they have a responsibility to say something and watch and to whom and when? and you also mentioned a couple european institutions kind of put madoff on the blacklist you think said they would not lend their clients money to invest with them. >> guest: i would say they had an ethical responsibility we knew wall street updates well short of where they should have been. legally, they did not have a responsibility. and that proves that self-regulation the capital market does report because of easier fraud or suspect fraud is going on and you don't make a call to your regulator, will that disproves the theory of self-regulation can ever work. >> host: and why do you think they didn't do that? do you think they had experiences like you had, where you went to the sec and they didn

to talk about how some of the big banks mention goldman, you mention morgan stanley, you talk about an individual at citigroup who seemed to be on top of this and you say of the institutions if they do not have felt right proved that this was a bad deal, something is coming on, the suspected that. did they have a responsibility to see something and to what and whom and when? then you also mentioned a couple of european institutions and put madoff on the blacklist. they said they would not lend their clients' money to invest. >> guest: they had an ethical responsibility efforts were not falling short where they would have been. legally they did not have a responsibility. it proved self regulation in the capitol market doesn't work because of you see scott going on you are not been to place a call to your regulator. that disproves of a few rays of regulation could ever work. >> host: by using the get into that? you think they had experiences like you had where you went to the fcc, they didn't understand you, the few people if they did understand you even slightly they thought you were a

morgan, citi, bankamerica, morgan stanley, -- citigroup, bank of america, morgan stanley, but not citi. basically looking at citigroup as an example of one of the extreme cases of securitization going on where mortgages, many of them subprime, bought by by years that otherwise would not be qualified for a home mortgage were packaged and sold by citigroup to investors. at such a high rate, so that when the underlying mortgages began to default, that created a cascading series of reactions appeared -- reactions. host: folks at "the financial times" were so intrigued, headline coverage on the fact that citi relied on outside advisers on its decisions on to jordan nations. did you find it interesting as well? guest: i found it interesting, but one of them things about securitization and why it is difficult to explain and one thing that frustrated the commission is the process got broken up into some different segments. you had the mortgage originators, you had the banks that bought the loans, that package the loans, you had the outside advisers that worked with them and you have the invest

to be from citigroup which lost even more, or morgan stanley, some of the investment banks that lostreat deal of money in these various products in the mortgage market. nonetheless, certainly as you say, there will be focus on the short side of the trade as there always is. that having been in this case, mr. paulson pacific to the abacas cdo. >> when goldman reported results that first quarter where we got an idea of how they fared after everyone else was devastated by holding onto the longs, we said, doesn't it make sense? goldman is smart. at that point we were still in an environment where you could give kudos to having anticipated the housing bubble bursting. but in the benefit of hindsight now, everyone seems to think it was a slam dunk. that goldman nev maman knew it to collapse. they had a conveyor belt of securities to ram down clients' those as they shorted the housing market. that's what you're going to hear today. i wonder if blankfein is in a position to vehemently defend the firm or he's going to take -- as people apologize, we'll do better next time. >> reporter: that's

the six companies that now hold 2/3 of the wealth of this nation, and they are goldman sachs, morgan stanley, j.p. morgan chase, citigroup, bank of america, and wells fargo. they have enriched themselves handsomely. they doubled their importance since the beginning of this crisis while quashing community banks across this country, seeing forced mergers and institutions like p.n.c. bought up as local community banks that didn't do anything wrong and were not permitted to do this kind of wild-eyed business deal found themselves having to pay huge fdic fees and the net yield of all of this is, the big ones got bigger and the american people are continuing to be kick out of their homes and these institutions won't return phone calls and they have hold of the auction process and their investment intermediaries are holding the equity and the ownership in these properties. how is that good for this country? ms. speier: i thank the gentlelady from ohio. it's important to make the point that goldman sachs has never loaned a dime, has never offered a loan to americans trying to have a house. they've n

all that is left is morgan stanley. what do you think of that?>> i could stipulate that the question is not for me. my answer was to that question on the editorial page of the new york times, for all of you to read, to summarize we spent yesterday afternoon riding of my shots in case someone asked me this question today and the new york times was kind enough to publish it in the morning paper. the answer is slicing $12.4 billion off of goldman's market cap seems to me like a bit of an overreaction. the problem with writing that kind of thing in the new york times or having some video taped coming back to bite me in short order but it seems to me that this was a civil complaint. certainly doesn't read well. the complaint makes goldman sachs look terrible. the first thing that makes them look terrible is there has beenú y the case the sec put forward yesterday doesn't make them look very good, ethical or smart. what you have to remember, what i wrote in the paper today is we only heard one side of the story. i am not trying to defend goldman sachs,