a banker said, we are to overleveraged. too much stuff is on credit. >> when i was at the new york fed -- i went to the new york fed in late 2003. with my colleagues there, i sat around tables like this, and kept looking at this basic question. do banks have enough capital? do we think they have enough capital? we looked at what would happen if house prices fell. how large would the losses be? it was not just hypothetical. unless you force people to say, what would happen -- what if there was another great depression? what would happen? most people would say, we learned our lesson. it is not possible. losses that was large enough to shake the foundations of our system was so inconceivable. we started the early stage of stress testing. the policy response was so decisive. we started the early stage of that in 2006-2007. we would go to banks, investment banks, and say, you need to plan for a darker world. you need to build in greater cushions against a risk of severe financial crisis. they were dismissive, because they though

so few people saw how overleveraged we were? >> i like the way you framed the question. it's the right way to frame the question. the reason we had such a devastating crisis is because we had this long period, people call it the quiet period or the great moderation, where growth was relatively stable, house prices were rising. there was no memory of crisis, no memory of financial panic. so there was this basic level of confidence. there is a famous book called "manias in incomes." minske said stability beat instability and what happened is, over time, people became more confident the risk was small, so they were willing to lend more, borrow more. it was the absence of memory of crisis that helped feed that. in that sense, it's not surprising. it's a paradox to have a really devastating crisis like this, a system very vulnerable to panic, you have to have a long period where people lose the memory of crisis. so it's not surprising. more specifically, we had a decade-long period where after the great depression our financial system outgrew the constraints we put in place a

his company is not overleveraged. $2 billion in their capital structure. -- this company is not overleveragedeir capital structure. >> olivia is watching how oracle is trading. >> oracle has had a very good year, up about 20% so far this year. but there are concerns with the company, particularly with clout. they were supposed to move into cloud services. it, but are doing facing fierce competition from the likes of sap. and there are big pricing words going on in cloud -- pricing wars going on in cloud. things are going very well up until the crisis. 2007, 2008, in 2009, but then they picked up again and here we are going out to 2015. it does look like the top growth is pretty much flat. and for the ceo, there is continuing opposition to his huge pay package. he is still the number one top aide u.s. ceo, making nearly $80 million in the last year. pensioners are set to vote against it. >> it seems that the revenue pay likejustify a that. >> right, but for our valuations and prices that don't have to grow dramatically, can grow at around three percent of five percent, that gives us a tour --

high-yielding corporate debt or junk bonds, but overall she said the financial system did not appear to be overleveraged. for "nightly business report," i'm lease leels. >> for more analysis, let's turn to josh fineman, chief of xwroeglobal economist at deutsch wealth and asset management. josh, twhafs key message from your point of view from janet yellen and translate what her message means if you're an investor, a business owner, or someone looking far job? >> i think it's couple things. one is she reiterated the point that the economy's weakness earlier this year was largely transitory. shexpects the momentum to pick up as the year progresses. and the recent indicators have been supportive of that. but the other thing she stressed is that, while we've made a lot of progress, there's stale long way to go to repair the damage that was done, particularly in the labor market, that there's still a lot of slack out there. with slack still persisting, wage pressures and inflation pressures very, very dormant, it's not a recipe for the fed rushing for the exits. >> why is she worried about housing, josh? >>

we know that is a company that is overleveraged, driving up that's because it is making huge acquisitionst is trying to get their hands on the boat text -- botox maker for 50 billion. shares for nestlÉ are up .5% this morning. back to you. >> the cost of eternal youth. still with us is andy lynch. he is a management investor. what i would be to be a fly on the wall in an investment meeting greg d.c. deal after deal announced. what you talk about when you see these deals, the ge's? does it change your conversations? >> it does not because we are focused on return on capital employees. if a company comes in to us and says this is the acquisition we are proposing, this is why the returns we think we can make on this deal are well above our cost of capital. we will be happy to support them in the same ways we would support them if they want to do and organic investment. if you're not going to make any money doing this deal, we might have a different conversation and politely suggest that maybe they should reconsider. >> and institutional investor politely suggesting something? >> yes. there w

so we believe this is an overleveraged story.re value managers, but we just shy away from companies that have a lot of debt. if you include the debt with the p.e. multiple, you get about an 18 1/2 times total enterprise value to net earnings. not a great number. >> not a great number, no. rich, what about you? does the technical side back up what chad is saying? >> it does, mandy. when you bring up those charts, useal why at&t is a stock and chart i would not chase here. the first chart we're going to look at is the one year. you can see after a disappoints 2013, the stock does establish a very nice bullish double bottom, but you can see, after taking out the 200-day moving around. we've run out of resistance, that left us uniquely vulnera e vulnerable, and when we zoom out and look longer term, the story only gets worse. we've been in somewhat of an up trek, but so has everybody else. you hay to see that double top. but keep in mind, mandy, this stock has now made lower highs going back to the tech bubble back in 2000, the finan

that's out there on the market, and you understand the market you're buying into and try not to overleverageerri: so it's all about doing your research, understanding cap rates so that you can compare properties. now, when you look at the country, where do you see real opportunity right now? >> well, i think south florida is great. it's still coming out. gerri: really? they had a huge runoff though. >> they did, and there's sill some good opportunities there -- still some good opportunities there, i believe. in new york, boston, places where there's great education, great transportation, low crime. those are places that you can always count on. gerri: and tell me, are you talking multi-family, cop does, what kind of -- condos, what kind of investments are you describing? >> in a place like arizona, i don't think a lot of people are buying multi-family. they're buying single-family -- gerri: true enough. >> but it works the same way. you could buy several single-family homes, and it could serve as a multi-family that you would buy in new york or detroit or boston. gerri: you know, a lot of pe

regulators being asleep at the wheel and operated in the dark with no transparency whatsoever, became overleveragedrash. >> one of the regulators may be to blame, the federal reserve for creating this environment in which liquidity may disappear. >> when you talk off the record, and it has to be off the record was some of the regulators at the fed, they talked about getting home before congress and having to answer questions about the health of the banks. we are so hyper focused, too focused now. like theyke a mistake just did or others, they can manage treated -- manage it. creating thee seeds of the next problem. >> i would love to get both of you back together. if we can get you to the prestigious golf course -- >> it was years ago. >> we do need to focus on the stories that are going to shape the day. >> president obama, president putin, where are they? you can understand why mr. putin is pulling back. he has taken a lot of heat from around the world. what about secretary kerry? what is being done to hunt the scenes to try to save lives? in a fire ind odessa, on the west side of ukraine. >> the

if this is our overleveraged.e new fiscal stimulus is unlikely because deficit is still in the danger zone according to some rating agencies. will not rulearty the upper house, so the real question being how much change can he really implement, betty? >> is there too much uncertainty there, brian? >> i think we are given a slight resolution of some of the uncertainty that already existed, so this makes for a more conducive environment for investors to look for opportunity. given the landslide election that he had, i would be very surprised if he was unable to push through some sort of a ambitious agenda. he will not have much of a fiscal stimulus because he is about cutting the spending, but it will be very targeted, so i am actually a little but optimistic about the prospects for significant reform over the next year or so. if you look at indian stock, they are not at their all-time highs miami stretch of the imagination, so that should be pretty positive for long-term investors in that area. writes brian, thank

. >> but did you think they were overleveraged? >> he said he missed it and that's a big deal that he missed that. and he comes from a school of the democratic party very pro-deregulation to allow the build-up to build up and said at one point he was never a mediator. >> i will say this, i thought he was surprisingly honest. the book is a relatively honest portrayal of a guy who clearly is having all of these issues even though he says he's not and doesn't care what people think about him. it clearly does! you have to remember that he saved the system but there's a whole group of people who don't believe the in the system unto itself. the way it is structured today, make it never should have been saved. >> if i can immediately dismiss -- >> there's good reason. i wish instead of writing a review. >> we are more in tune with the actual reality instead of the revisionist narrative that we have now that we have had for five years so your whole argument is based on alicia's nep ati-- you can dismiss that all the criticisms of geithner

very attractive and again, you will get to a point where you want to make sure that you don't overleveragea real asset on long term. we have a very flexible debt. once we get delevered to the right levels, we will be looking for the way to return value to the shareholders rather than use all that cash flow to continue to delever like we have strategically decided to do in the interim. as far as blackstone, what i would tell you is i can't speak on behalf of blackstone. however, i can tell you they have been excellent partners. we took this company public because they want to participate in the continued growth and value of this company. they know there's continued value in growth available in this organization and they want to participate in that. i can also tell you they know how to do this and as the largest shareholder of the company today, they're not going to do anything that's going to degrade the value of our company or our shares because that impacts them more than anyone else. they will be very disciplined in their approach and i feel very good that all of the shareholders will be

that's what happened in 2008 everybody was overleveraged. we don't play that game necessarily. add. we aren't over leveraged. that's why we were able get to the next cycle without serious hiccups. i can feel it coming on. i think it will happen overnight. we all remember in '87 an even. >> water the trigger if. >> nobody know, really. i think a lot has to do with the financial oppression we are operating under now, where the interferes manipulates the price of anything on currencys. right now, it's interest rates. when voelker did it in 1981, he did it it for good reason. he drove asset prices down and interest rates up. two things happened when you have a financial oppression. there is huge misallocation of capital and a huge mispricing of assets. so when voelker did it to break the back of inflation, he drove asset prices down when he pulled it off. we had a 30 year bull market in bonds. bernanything in has driven up asset prices an driven down interest rates. so i don't know what's financial to happen when ahave to unwind this fed balance sheet. nobody has the experience of