i am very pleased to have paul volcker back at this table. welcome. >> thank you. nice to be here. >> rose: very good to see you. let's begin with what's transpired in the last year. how did the government do? >> well, the government was faced with a crisis of proportions that haven't been seen since the 1930s, anyway, and when you got to the fall and this kind of exploded in a rate they certainly didn't anticipate with succession of failures and new failures starting with their decision to support faepld and faekd which are already government supported institutions, things deteriorated and they reacted very strongly at that point with supporting the remaining investment banks, a.i.g., the world's biggest insurance company, they recapitalized or began to recapitalize in a matter of weeks the biggest banks in the united states. meanwhile air, broad something similar had been going on, but basically the financial system was taken over and supported by the federal government, a really remarkable event. and then as things have evolved, the government has provided not t

but again to the final point made by paul volcker -- but let me go to the final point made by paul volcker. he says the danger is that the spread of moral hazard will make the next crisis bigger. if last time you had a moral hazard problem in that there was a presumption that the fed was going to bail out 45% of the institutions, and you can conceive that it is a lot bigger than that, why would you not heed his words here and why would we not really be looking at some solutions to bring about market discipline and why would we be considering that others were right in this whole issue of the fed actually helping to compound our problems in terms of boom and bust cycles? >> we will give you a few seconds. obviously, you can respond briefly or you can do it in writing. >> the question is so complicated that i think that in writing would probably be better. >> the gentleman from minnesota would be next. >> i want to say that i support pol desperate to bring this legislation to the floor. before the economic and -- before the economic and financial crisis, the chairman did an interview on 60 mi

rose: that concludes part one of our conversation with paul volcker. tomorrow night he weighsn on taxation and oer issues about the decit. join us. captioning sponsored by rose communication captioned by media access gro at wgbh acce.wgbh.org sturbed. i can't go back. hey. yeah. [ laughs

but again to the final point made by paul volcker -- but let me go to the final point made by paul volcker. he says the danger is that the spread of moral hazard will make the next crisis bigger. if last time you had a moral hazard problem in that there was a presumption that the fed was going to bail out 45% of the institutions, and you can conceive that it is a lot bigger than that, why would you not heed his words here and why would we not really be looking at some solutions to bring about market discipline and why would we be considering that others were right in this whole issue of the fed actually helping to compound our problems in terms of boom and bust cycles? >> we will give you a few seconds. obviously, you can respond briefly or you can do it in writing. >> the question is so complicated that i think that in writing would probably be better. >> the gentleman from minnesota would be next. >> i want to say that i support pol desperate to bring this legislation to the floor. before the economic and -- before the economic and financial crisis, the chairman did an interview on 60 mi

. >> suzanne: former fed chairman paul volcker today criticized president obama's plan to impose strict rules on systemically risky firms. volcker says, even if the rules are adopted, we'll still have firms that are "too big to fail." he serves as an outside economic advisor to the president, and supports much of the administration's regulatory reform plan. but volcker told congressional lawmakers the proposed rules could encourage even riskier behavior. >> suzanne: meanwhile, volcker's former agency wants to keep one of the tools it's been using to cope with the financial crisis. the federal reserve wants to make the term auction facility or t.a.f. permanent. that program's used to make short-term emergency loans to banks. the central bank is scaling back the lending program's operations because of the improving economy, but the fed wants to keep it as an option. >> paul: the last few weeks have seen a surprising increase in merger and acquisition activity on wall street. and for the most part, the deals are being done with cash, which led us to wonder-- how much cash do companies have

paul volcker calling on restrictions for risk taking.eports chairman -- smells like peppermint. chairman of the economic advisory board suggests banks should be restricted to trading just on their client's behalf. what a concept and not with their own fund. fountainers of skype has sued ebay and investor group agreeing to buy the phone service accusing them of copy right violation and potentially disrupting that $1.9 billion deal. and let's take a look where gold is this morning. metal hitting an 18-month high yesterday as the dollar slid near one-year lows against the euro. let's get a quick check now on the market. >> can they put you in front of an actual chart? >> they are taking away the green screen right now? >> kevin ferry -- >> that's good stuff. >> kevin ferry of cross os -- >> that's real. >> is it real? >> chronos futures -- >> we've been all over the map already, kevin. have you ever seen any of the show? did anything we said float your boat or anything happening? get your mind out of the gutter. anything you see there reall

. >> rose: occasionally you'll see arguements that paul volcker and others wanted the administration to go further in regulatory reform than it's willing to go. do you know any confirmation of that? >> i don't know about the specific debate with paul volcker, but i can tell you this has been a very, very intense debate within the administration with some people... some forces, some individuals who are more comfortable with a more unregulated wall street or less regulated wall street saying that the obama administration should not regulate too much. and others, perhaps more of the progressive wing of the democratic party, the liberal wing, wanting more regulation. and i think it's difficult to argue on the merits that the... for want of a batter term, wall street pro-business types in the administration didn't win out. because with the exception of this consumer financial protection agency, there is nothing the administration is proposing that wall street is really fighting tooth and nail. >> rose: my impression from watching is that the secretary of the treasury, tim geithner, is inc

and we don't know if there's another paul volcker in our future or not. but it is concerning to me, and can't be unwound is a question, as a banker, i get routinely. and in a theoretical way, yes, yes. the economy grows. fiscal policy becomes more appropriate. the fed does a good job in withdrawing reserves and raising rates, but this is an imprecise world. they have no more knowledge about than you do. and therefore, you're going to have to air on the side of negative. so income proding real estate, proper amount of a commodity exposure, and income -- and common stocks. things that can adjust price. things that have the ability to hedge the dollar, like a commodity does or a multinational u.s. corporation. as buffett said last wee in "the new york times," the fate of the dollar rests with the congress. my only response was only in g. [laughter] so every erican should be concerned about the possibility i would argue the probabili of that in the next three to five years. >> one of the things i don't think we want is a long-term creditor. because you don't

he ran into a bit of opposition from former federal reserve chairman paul volcker who said this too bigrasing here, but mr. volcker saying there is a limit here. is there? julia epstein says these bailouts are working. maybe we should cool. it. >> i don't think he is saying that. i don't think anyone would deny that the economic recovery plan is working but i call them bridge loans, recovery plans for major institutions whether it is wall street or the auto industry is also working. neil: did you say that last year when the republican president was pushing it? >> yeah, i was. i have said on the air many times on this network an elsewhere that the bush administration deserves a lot of credit for the financial institutions coming back, because i think they bit the bullet when it wasn't politically popular and did it last october, but it is working. a.i.g. is paying back some loans. about 33 or 34 of the banks are praying back about $140 billion worth of loans and the philosophical question is when we're in an economic recession that some people thought would lead to a depression, is it ap

ex fed chief paul volcker urging limits for banks. plus, carl reporting live from pittsburgh. >> yes, joe, world leaders descending on this city. protectionism, executive compensation and financial regulation are key items as "squawk box" begins right now. >>> good morning, everybody. welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen and carl quintanilla. who is reporting live from pittsburgh today. carl, obviously, the g-20 coming to pittsburgh is a big deal for america, very big deal for pittsburgh, but we have seen some clashes in the past at these g-20 events at some of the other huge events. why don't you set the scene for us and tell us what we can expect today. >> we have already. we're on our first at the alcoa corporate center. you can see the allegheny river behind me here. the president and other world leaders as you mentioned will be arriving here throughout the day. a lot of them are, of course, coming from the u.n. general assembly in new york. the global economy is at the top of their age

on economic policy, associate with warren buffett and ub and paul volcker, and foreign policy, joe biden or with dick lugar of the republican ranking member on the senate foreign relations committee, or general jim jones, the former supreme commander of nato. those are the people, democrats and republicans who have shaped my ideas and who will be surrounding me in the white white house. glenn: hmm. those guys really aren't surrounding him now. and really, it is not working to his advantage to continue to look who is surrounding him. we're not talking tonight about marxism, but now we're expected to believe and accept that the way to help people in the inner cities an set them on a path of growth and education is to support with tax dollars an organization that has demonstrated over and over and over and over again. currently, arrests have been made in 14 states, many of them led by state democrats -- thank you, democrats, local democrats, for still having a soul. they have nailed them on fraud, voter fraud, corruption. the tapes that we have shown you now involve tax fraud and the sellin

last week new respected names joined the cue, paul volcker, carla hills and paul wolfson. france has indicated a willingness to engage hamas and london surprised preparedness for dialog with the political wing of hezbollahn lebanon would appear to be the opening for a similar deal with the hamas political wing in the near future. hamas, it seems, it on a roll. more than arafat and fatah ever could, hamas has proved that it can fight but it has also demonsated that it can hold its fire. the movement still has a foot firmly planted in resistance but it has stamped the other firmly in the democratic political process. hamas refuses to recognize israel but it has moved its bottom line. it says it can accept a palestinian state adjacent to a jewish state. the two-state solution that benjamin netanyahu opposes and leaves the question that the provocative question that all of the land that became israel. in traveling to the united states this week i stoppedn damascus to interview mishal for my newspaper. this was the first time for the hamas leader to be interviewed on the implic

at the top of the list former fed chairman paul volcker. th an eye towards theg-20 this weekend in pittsburgh, volcker reminding laemakers that any domestic reform enacted will have international consequences. >> a lot of what needs to be done really does require a certain consistency internationally because these markets are global, and that just adds another complication. you can't have capital requirements, for instance, for american banks way out of line with capital requirements elsewhere. >> reporter: and, yes, the form he fed chairman said he's worried about the obama overhaul plan that it preserves the policy of too big to fail and the possibility of future bailouts. proposals designating some companies as broader to the financial system implies those firms will be sheltered by a federal safety net. he said new rules should apply equally to banks and nonbanks. >> what needs to be done is extending that to the nonbanking world without the implicit promise and, of course, this is key, without the implicit assumption that federal money

there you see paul volcker, the former fed chief, dick parsons, and the former head of the s.e.c. there you see pete peter son, head of blackstone. the president outlined what his administration did to prevent a second break depression, and a vision for future regulatory reform. he at once chided wall street. but also tried to give skeptics that he believes in free markets. >> we will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis. where too many were motivated only by the appetite for quick kills and bloated bonuses. those on wall street cannot resume taking risks without regard for consequences. i have always been a strong believer in the power of the free market. i believe that jobs are best created not by government, but by businesses, and entrepreneurs, willing to take a risk on a good idea. i believe that the role the government is not to disparage wealth, but to expand its reach. >> the president reiterated his desire for the federal reserve to become the super regulator of risk in the markets. he also reinforced his i

on economic policy, i associate with warren buffett and former fed chairman paul volcker. if i'm interested in figuring out my foreign policy, i associate myself with my running mate joe biden, or with dick lugar, the ranking republican member, or general jim jones, former supreme commander of nato. those are the people, democrats and republicans who have shaped my ideas and who will be surrounding me in the white house. glenn: just so you know, because i don't want to take anything out of context, do you know why he gave that answer? that was because john mccain had said, you know, you're around jeremiah wright and bill ayers, and the president got very indignant. you want to know how my policies are and what i believe? look to the people around me. this answer was given when somebody said you have a lot of marxists around you. no, no, no. i have dick lugar. i have joe biden. really? let me go back and look at the politico article again. they say in the article that they didn't scrub van jones. what does that mean exactly? that the white house should have cleansed the int

paul volcker says they should be regulated like bank. >> we feel strongly in the industry, the smalleam i work with, the key to money funds is maintaining a stable nav, operating with the s.e.c. and we do not need bank-like regulation. if you look at the history of money funds, it is one of the great success stories dlrks 3 trillion in assets. two moments of down tick, one of which investors got 94 cents on the dollar and the most recent one 98 cents to 99 cents on the dollar. >> not bad. it is great having you with us, mark fetting, chairman ceo and president of legg moose. >> david bianco, thank you. we are watching this market and many people hoping your bullish call on the money. >>> find out why one wall street firm is bullish on retail. we are back in a moment on the rough good times and bad, including five previous recessions, re/max agents have provided the kind of experience america relies on to get the job done. today, in the worst housing market most of us have ever seen, that experience is more important than ever. find out what re/max can do for you. nobody sells more re

on economic policy i associate with warren buffett and former fed chairnlg paul volcker.f i'm interested in foreign policy i associate myself with my running mate, joe biden, or with dick lugar, the republican ranking member on the senate foreign relations committee, or general jim jones, the former supreme allied commander of nato. those are the people, democrats and republicans, who have shaped my ideas, and who will be surrounding me in the white house. glenn: i hope they have their union cards, because if warren buffett is not in seiu, i haven't seen him lately. i have been looking into is surrounding the president, and at least me, i don't like what i see. there is van jones -- oh, he keeps going on about van jones who was so radical he was forced out. there are many others who still advise the president who shouldn't be anywhere near the president, from carol browner, she was a socialist, and it's wierd, because when she was nominated, the socialist thing on the website went away. she was all of a sudden wasn't a member, what are you are talking about? cass sunstein

no surprise the former fed chairman paul volcker. don maren is here as well. roj cohen, one of the individuals in the room for nearly every single one of the mo mentous, calamitous moments. we also got a brief interview with the chairman of citigroup, dick parsons. >> what do you hope to hear from the president? >> well, i think that the president is here essentially to try to give a state of where things are, build some confidence or continue to build confidence. and hopefully to sort of acknowledge the significant role that new york and wall street, in particular, play in terms of this whole economic recovery and turnaround. >> reporter: does he see wall street as a friend or a foe can be be, do you think? >> we'll find out. i'm hoping a friend. >> reporter: that is one of the key questions. what is the tone going to be? how does he see wall street? is it a friend or a foe? how hard is he going to push for financial reform and regulatory reform, which seems to have been stalled in the wake of health care reform.. back to you. >> thank you so much. i want to

. >> rose: occasionally you'll s arguements that paul volcker and othersanted the adminiration to go further in regulatory reform than it's willing to go. do you know any confirmation of that? >> i don'tnow about the specific debat with pau volcker, but i can tell you this s been a very, very intense debateithin the administrion with some pple... some forces, some individuals whoreore comfortae with a more unregulad wall street or less regulated wall street sang at the obama admistration shld not rulate too much. and others, perhaps more of e progressivwing of the democratic party, theiberal wing, wanting more regulation. and think it's difficult to argue on the merits that the... for want ofa batte term, wall street pro-busine types in the adnistration didn't win out. beuse with thexception of this consumer financi protection agcy, there is nothing the admistration is proposing that wl street is really fightin tooth andail. >> rose: my impression from watching is that the secretary of the treary, tim geithner, is increasingly comfortable and sure food and confident about his role. >

former fed chairman paul volcker is pushing for tough restrictions for commercial banks. volcker, now an economic adviser to the president will testify before the house financial services committee today. he says commercial banks should be prohibited from running hedge funds and private equity funds. also, citigroup may be planning to dramatically scale back its retail banking presence. the wall street journal says citi will concentrate on six metro areas right now, new york, los angeles, san francisco, chicago, miami and washington. the citi may reduce consumer lending to mainly credit cards and jumbo mortgages. sources tell cnbc that this report may be premature, although city is rethinking its strategy. by the way, if you want to take a look at shares of citi, right now, a little above the closing price of yesterday. 4:00 p.m. closing price yet was 4.52. of course, joe, this comes on a day when we saw big turn arounds in the market late in the day yesterday. >> there was a lot of scuttlebutt that the fed was going to start draining the money. that didn't happen. no ind

paul volcker is almost never in town and is overseeing the advisory board.e have somebody like the white house adviser on violence against women. that is being called the domestic violence czar. then we have the other ones that are causing the most contention, the ones handling energy and , also working in the white house. the urban affairs czar. the one causing the biggest stink was vaqn jones. i highly doubt he ever would have gone into the administration if the administration had better understood his past. host: so you think if he had to face congressional scrutiny, he would not have made it? caller: i think he probably would have pulled himself out -- host: are these numbers radically different from these types of positions, say, in the bush administration? guest: there are differences. part of it is the fact that obama came in so aggressively, and it was one of the things that people are now a restaurant -- reacting to. we are going to push for climate change, therefore we need a climate change adviser. on the foreign-policy front, we're going to try t

more about financial markets and the economy generally than just about anybody in this country, paul volcker. thank you, paul. the outstanding mayor of the city of new york, mr. michael bloomberg. [ applause ] >> and assembly speaker shelden silver is here as well. thank you. we have a host of members of congress. but there's one that i have to single out. because he is going to be helping to shape the agenda going forward to make sure that we have one of the strongest, most dynamic, and most innovative financial markets in the world for many years to come, and that's my good friend, barney frank. [ applause ] i also want to thank our hosts from the national park service here at federal hall. and all the other outstanding public officials who are here. thanks for being here. thank you for your warm welcome. it's a privilege to be in historic federal hall. it was here more than two centuries ago that our first congress served and our first president was inaugurated. and i just had a chance to glance at the bible upon which george washington took his oath. it was here in the early days of the

the single most important action by reagan in that period of time on inflation is that he gave paul volckerho have been appointed by jimmy carter, very strong support to use monetary policy to control to bring inflation rate down. carter had appointed, without knowing who heeally was. he had appointed poker as a consequent of a recommendation from others. voelker came in and started tightening the money supply very quickly. and the fall of 1979. carter reversed volcker on that matter becse 1980 was a presidential election year. and so volcker did not have support of the president to maintain a tight monetary policy that he had started in the fall of 1979. but when reagan came in, he gave volcker for a strong support to impose, tighten up monetary policy to substantially reduce inflation. and it worked within two years, much more quickly than most people anticipated. more than as city inflationary rate was brought down by more than twohirds. on taxes, the perspective of a reagan not at the time or the fact is that very different effects on the economy than was from the position, perspective

the single most important action by reagan in that period of time on inflation is that he gave paul volcker who had been appoinded by jimmy carter very strong support to use monetary policy to control -- to bring the inflation rate down. carter had appointed volcker thout know who he really was. he had appointed volcker consequence from tony solomon in the treasury department. volcker came in and started tightening the money supply in the fall of 1979. cart reversed volcker on that matter because 1980 was a presidtial election year and so volcker did not have the support of the president to maintain the tight monetary policy that head started in the fall of 1979. but when reagan came in, he gave volckerery strong support to impose a tight enough monetary policy to substantially reduce inflation and it worked within two years much more quickly than most people anticipated. more than the inflation rate was brought down by more than two-thirds. on taxes, the prospective of us reaganots is that taxes have a very different effect on the economy than was from the conventional -- than the perspect

former frerve chairman and top white house economic adviser paul volcker saying yesterday keeping toosks with your money. pay themselves the upside and you take the downside. that's concerning enough. but then consider this. we still don't know exactly what happened to the 2 trillion handed out over the past 12 months. that is 12 zeros of cash from the future of this nation. a rescue package unlike anything we have done before. and when it is capitalism, a love story, michael moore puts the very question as to what happened this money to elizabeth warren, member of the congressional oversight committee. here is warren's response. >> where is our money? >> i don't know. >> that answer not good enough for many, including bloomberg news and a few other news organizations who have filed what is called a foya request. it's a request to force the federal reserve's hand and disclose a full accounting of its actions and the location of the money the fed took the matter to court saying we don't want to disclose it and we'll get back to that in a second. in case you missed it it foia request, f

more about financial markets and the economy in general and just about anybody in this country, paul volcker. thank you, paul. [applause] the of staying mayor of the city of new york, mr. michael bloomberg. -- the outstanding mayor of the city of new york, mr. michael bloomberg. and the assembly speaker is here as well, thank you. we have a host of members of congress, but there is one that i have to single out because he is going to be helping to shape the agenda going forward to make sure that we have one of the strongest, most dynamic, and most innovative financial markets in the world for many years to come, and that is my good friend, barney frank. [applause] i also want to thank our hosts from the national park service here at federal hall and all the other outstanding public officials who are here. thanks for being here, thank you for your warm welcome. it is a privilege to be in historic federal hall. it was here more than two centuries ago that our first congress served in our first president was inaugurated. i just had a chance to glance at the bible upon which george washington to

economic czar paul volcker is almost never intel. that leaves us with seven people that do not apply -- is almost never in town. the domestic violence czar. then we get the ones that are significant, carol browner, handling energy and climate change issues in the white house. the health czar, also working in the white house. the urban affairs czar. the one causing the biggest stink was vaqn jones. i highly doubt he ever would have gone into the administration if the administration had better understood his past. host: so you think if he had to face congressional scrutiny, he would not have made it? caller: i think he probably would have pulled himself out -- host: are these numbers radically different from these types of positions, say, in the bush administration? guest: there are differences. part of it is the fact that obama came in so aggressively, and it was one of the things that people are now a restaurant -- reacting to. we are going to push for climate change, therefore we need a climate change adviser. on the foreign-policy

administration, you know, if you read the tea leaves, not disclaiming any middle class tax cut, paul volcker has a review due sometime next year. there is a possibility of the administration trying to impose some sort of value-added tax on the u.s. kind of like the europeans already have. and that would be a major problem. when we start to actually have to pay for all the extra government spending we've done over the past few years, that's going to hurt. >> well, you know, the europeans are leading the way now. and free market capitalism. so we need to pay attention as we -- >> are you going to move? >> i'm looking at different a place. thanks, bob. thank you, harry. >> thanks for having me. >> i think you'd look good in frankfort or berlin. >> i'd hate to say it, it would have to be paris. you know what? that might do it. >> something like that. >> yeah. that might work. but i don't know. it might be 10% or 11% unemployment over there. sometimes things don't work. they do, everybody's happy, though. you're in olive -- got olive fields. >> something like that. >>> when we come back, a look a

economic czar paul volcker is almost never intel.that leaves us with seven people that do not apply -- is almost never in town. the domestic violence czar. then we get the ones that are significant, carol browner, handling energy and climate change issues in the white house. the health czar, also working in the white house. the urban affairs czar. the one causing the biggest stink was vaqn jones. stink was vaqn jones. i doubt whether he would ever on had better understood his past. host: so you think if he had to face congressional scrutiny, he would not have made it? caller: i think he probably would have pulled himself out -- host: are these numbers radically different from these types of positions, say, in the bush administration? guest: there are differences. part of it is the fact that obama came in so aggressively, and it was one of the things that people are now a restaurant -- reacting to. we are going to push for climate change, therefore we need a climate change adviser. on the foreign-policy front, we're going to try to ju

we do not know if there is another paul volcker in our future or not. but it is concerning to me.can it be on wound is the question i as a banker get routinely. in a theoretical way, yes, the economy grows, the fiscal policy becomes more appropriate. the fed does a good job in read -- in withdrawing reserves and raising rates. but this is an increase as world. -- and in precise world. then they have no more knowledge about it than you do. therefore, you will have to air on the side of--- err on the side of-perio negative. things that can and just price, things that have the ability to hedgeç the dollar like a multinational corporation -- as buffett said in the "new york times," the fate of the economy rest with the market. in the words of my co-year-old, " "omg!" [laughter] everyone shouldn't worry about the possibility of that and they next few years. >> one thing you do not want to be in that is a creditor. you do not want a long arm when you do not know how high the dollar is. that undermines the ability of the country to make long-term investments. if people are learning from

. >> suzanne: rmer fed chairman paul voler today criticized president obama's plan to pose strict rules on systically risky firm volcker ys, even if the rules are adopted, we' still have firms thatre "too big to fa." he serves as an outside onomic advisor to the preside, and suorts much of the administration regulatory refo plan. but volcker told conessional lawmakers the proposed rules could encourage en riskier behavi. >> suzanne: anwhile, volcker's former agency was to keep one of the tls it's been using to cope with the financial isis. the federal resee wants to make t term auction facility or t.a.f. permanent. at program's used to make short-term emergencyoans to banks. the central bank is scalinback the lending progras operations becausof the improving economy, buthe fed wants to ep it as an option. >> pau the last few weeks have seen a surprising incrse in merger and acquisition activy on wall street and fothe most part, the deals are being done wh cash, which leus to wonder-- how much cash do companies have on hd, and what will they do witht? scott gurvey gets some awers. >> rorter: what will they do with all t