at the time paul volcker said this bailout would not set a precedent but the market's new that it would. if not in the public lexicon and they understood to big to fail and they understood the implications at the time it was warned of the big banks have the ultimate anti-competitive subsidy. they are too big to fail the matter how mismanage they may become the book will stop with the taxpayer. when the government once more of something, it will subsidize it. if you want a financial crisis built up over decades based on other companies borrowing for the purpose of reckless speculation, then beckham late for the purpose of reckless speculation and that is exactly what the government did with this policy and other financial institutions to borrow rates make could not have otherwise because this was in effect lending to the government said a higher interest rate. this was the first limited to commercial banks. but investment banks had to compete so they created there on two big to fail. this was two complicated to fail. [laughter] hearing about the exotic financial instruments, many had goo

crisis but may soul will come back to haunt you. >> that was a pessimistic former fed chairman paul volckeremanding his plans. we'll have a lightning round debate. university of maryland professor and chief economist at the trade commission peter moricci and mark calabria. is volcker on the right or wrong road or in between? >> i think he's some place in between. i share his pessimism. too big to fail is a problem. i think we have to get to a world where banks don't expect bailouts. more importantly where the creditors don't expect bailouts but the plan presented doesn't do that. he admitted it. there was debate during the hearing and at no point did anybody say it would have stopped a crisis. there were examples people gave where you would look at behr and lehman. >> lightning round. lightning response. is it too big to fail or bank holding company trading activities? >> it's both. banks should be limited in the securities they hold. if they will perform trust activities for individuals, companies and so forth they shouldn't trade on their own account. they can't advise people how to inves

paul volcker may be pursuing the wrong demon. it's too big to fail that has to be repealed.att fasten your seat belts. "the kudlow report" begins right now. >>> good evening. i'm larry kudlow. welcome back to "the kudlow report" where free market capitalism is the best path to prosperity. for tonight my key thought is how can t-mobile say they are to kwused on jobs and economic growth and propose tax hikes on successful earners, businesses, banks, hedge funds and almost everything that

they applied the old rules to new markets and when a civil of this is in the 1980's when paul volcker the fed chairman of the title recognized that the jump on markets were getting ahead of themselves, speculatively, and he simply got the fed to put the old rules regulating how much borrowing people could do for stock speculation on this new market which was effectively the same thing to say and take over companies could only borrow half of the price for a takeover. this provoked a tremendous outcry but it did mean when the jump on the markets went through its turbulence and a downturn in the late 80's and early 90's the economy didn't suffer the kind of catastrophe we suffered today. unfortunately most of the time the governments and financial institutions did the opposite. they confuse what kind of risk taking needed to clear consistent limits on borrowing and what kind of risk taking just needed discretionary surveillance. they thought the financial industry have identified and courantyne all risk with no risk let you didn't need these limits and that is exactly what alan greenspan

the man leading the charge: paul volcker, the former chairman of the federal reserve. today he told lawmakers those "too big to fail" banks shouldn't own or run hedge funds. he's urging them to pass what's being called the "volcker rule," a bank ban on speculative trading. volcker says limiting that kind of risky behavior will help prevent a repeat of the bailouts of 2008. here are the stories in tonight's "nightly business report" newswheel. an uptick in homes under contract led to an uptick on wall street today. the dow saw a second day of triple-digit gains, up 111 points. the nasdaq gained more than 18. the s&p 500 is back over 1,100, up 14 points on the day. the national association of realtors' pending home sales index rose 1% last month to a reading of 96.6. that marks its ninth advance in the past ten months. in tonight's market focus, a mortgage analyst tells us the biggest threat to those gains. that housing report also pushed oil prices to a two-week high. light sweet crude for march delivery jumped $2.80, or almost 4%, to $77.23 a barrel in new york trading

and again, chairman paul volcker and neal wolin are here and i thank you for joining. we meet here in the past number of months in the shadow of financing crisis that nearly topples the american economy. it's -- retirement plans of millions of americans have been dashed dollars. trillions of dollars of household wealth and g.d.p. is gone regardless of what your political party is or affiliation we cannot allow this to happen again. the obama administration has proposed bold steps to make the financial system less risky and we rum those ideas. -- welcome those ideas. the first would prohibit banks or financial institutions that contain banks from owning investing a hedge fund a private equity fund. this is called the volcker rule and today chairman paul volcker himself will make the case for it. i strongly support this proposal. i think it has great merit. the second would be a cap on the market share of liabilities for the largest financial firms which would supplement the current caps on the market share of their deposits. i think the administration is headed in the r

they applied the old rules to new markets in one example of this is in the 1980's, when paul volcker, the fed chairman at the time, recognize that the junk bond markets were getting ahead of themselves speculatively and he simply got the fed to put the old rules, regulating, jafaar wing people could do for stock speculation, on this new market which was effectively the same thing saying takeover companies could only borrow half the price for a takeover. this provoked a tremendous outcry but it did mean that when the junk bond markets went through its turbulence in downturn in the late '80s and early '90s, the economy did not suffer the kind of catastrophe that we have suffered today. unfortunately most of the time, the government's in the financial institutions did the opposite. they confused what kind of risk-taking needed clear, consistent limits on borrowing and what kind of risk-taking needed discretionary surveillance. denefec thought that the financial industry had identified and quarantined all risk with no risk left. we did need the sold limits and that is exactly what alan gr

. >> rose: paul volcker wants to see certain activities of banks that were there when you were at goldmanachs and which unless they change the rules continue this that have... deposit banks can be prevented from engaging in proprietary trading and having interest in hedge funds and private equity. are you at one with mr. volcker on that? >> i'm not at one on that. >> rose: why not? >> why, as i said, my first priority by far is the kind of broad authority i just descbed to you and i don't want to slow down the process. and when i look at what i went through-- bear stearns, lehman, a.i.g., washington mutual, wachovia, fannie mae, freddie mac-- that authority wouldn't have made any difference. it wouldn't have helped us in any of those situations. rose: but would we have had the problem if those institutions... if they there hasn't been any... >> as i said, i don't think they are dhash is to the point with those. now, what i do believe, and i do think that there's some real truth he's on, and when i... in the book i talk about the risk posed by very large, complicated institutions, the conc

and again, chairman paul volcker is here for the witness so i think all of you for joining. as we have over the past number of months in the shadow of a financial crisis that nearly toppled the american economy. is worth repeating again the cost of the greed and recklessness that brought us here over 7 million jobs in the country have been lost. their retirement plans of millions of americans have been dashed, trillions of dollars of household wealth in the gdp are gone and obviously all of this regardless what your political party is or affiliation and we cannot allow this to happen again. the obama at patrician has proposed bold steps to make the financial system less risky and we welcome those ideas. the first would prohibit banks or financial institutions that contain links from owning, investing were sponsoring a hedge fund private equity fund or any proprietary trading operations unrelated to serving its customers. the president of the united states called this the volcker ruling today chairman paul volcker himself will make the case. i strongly support this proposal a

former federal reserve chairman paul volcker is credited with pushing that plan.oday, he testified before the senate banking committee. here's a bit of the case he made. >> commercial banking is a risky business. now the question is whether you want to, in effect, provide a subsidy or provide protection when they're lending to small business. when they're lending to medium- sized business, when they're lending to homeowners, when they're transferring money around the country. those are important continuing functions of the commercial bank in my view. i do think that these are getting public support. i do not think speculative activity falls in that range. they're not lending to your constituents. they're out making money for themselves and making money with big bonuses. why are we... why do we want to protect that activity? >> lehrer: now we >> lehrer: now, we get another perspective on the big banks, as seen by one of the leading c.e.o.s from that industry. newshour economics correspondent paul solman has the latest in his series of stories and conversations on t

at the time chairman paul volcker said this would do such a precedent but the market's new is that apresident. we got a new freeze in the financial industry have not yet in the public lexicon which was too big to fail and the independent bankers association which represents small banks understood the implications of this its president of the time or not these big banks of the ultimate anti-competitive government subsidy. they are too big to fail and regardless of how mismanaged the may become the buckles stopped with the taxpayer. so, when the government wants more of something is subsidizes it. if you@ @ fail. when we hear about exotic financial instruments, credit the fault swaps and everything else, these are not so complicated. these are many of them have good innovation and market signals and all kind of other things but one of the reasons for their creationists to a scheme for was to ease keep these reasonable consistent limits on borrowing. credit stifel swaps, sprick dewitt -- this is a way to speculate without having to put cash to single securitization creating complex fina

and the most interesting thing, paul volcker. but i fear that paul volcker might be marginalized because the volcker rule is so open ended. now, there was a supreme court case about pornography and they asked judge stewart, he said, what's pornography? he said, i'll know it when i see it. so i'm afraid that the definition of prop trading will be left to interpretation. if it's left to interpretation and a regulator, the investment banks will drive right through that and nothing is going to change. so i think volcker is going to have to assert himself in demand, a more institutional of glass steagall. i think that is what he's pressing for. i don't know if he's going to get it. >> i'm glad he said that. some of these things that were said, you can use them again and again. let me ask you, though, brian, at this point, i think the market -- and the interest rate environment you were talking about, we're reeling from that last employment report, which that threw a wrench in to all the works, didn't it? even australia seems like they

and then plot -- and then white house economic adviser paul volcker. >> this week on "the communicators," the proposed merger between comcast and nbc universal. monday night on c-span2. >> former british international secretary clare short spoke to members of the and crack inquiry last week, saying that tony blair and gordon brown misled the panel. she gave testimony of private conversations of tony blair over her concerns of entering war. this is 2.5 hours. >> we will be hearing from clare short, who was secretary of state for international development from 1997-2003, when you resigned over the iraq question. i think everyone in the room will be aware that clare short has written and spoken extensively on her views on iraq, and today is an opportunity to hear those views within the process of this inquiry and an opportunity for clare short to respond to the many comments made by others about dfid and, at times, by herself. we authority heard twice from served suma chakrabarti, and this afternoon we will be hearing from hilary benn, who was secretary of state for international developme

but there's -- but this notion, and i know paul volcker has been saying i'm not nostalgic about reinstating glass stiegel, similar to the mccain and cantwell bill and turning the four or five main ones into a public utility where they're serving the economy and serving society. >> all right. dana and then we'll do one more in the back and then we need to have to close this down. >> thanks to both of you, and a question to both of you and thanks to the center for holding this important form. my apologies not to be at the 30,000-foot mark and i guess without getting into the leaves either but somewhere in the middle ground stipulating that you're both -- that we agree, that there's some very serious flaws to the current american financial regulatory system, that they need to be addressed, and that we're suffering as a result of these flaws. but also, that the senate, is battle weary, has been dealing with health care, that its agenda is full of high priorities, that this set of issues is very complex, and that the forces on behalf of the status quo are strong. how do you make the argument, wh

and again, chairman paul volcker and turn to our heroes witnesses. we be today as we have overpass number of months in the shadow of financial crisis that nearly toppled the american economy. it's worth repeating again the cost of the greed of recklessness that brought us here. over 7 million jobs in our country have been lost. the retirement plans of millions of americans have been dashed, trillions of dollars of household wealth and gdp are gone and obviously all about, regardless of which are political party is a affiliation, we cannot allow this happen again. the obama administration has proposed bold steps to make the financial system less we welcome those ideas. the first would prohibit banks or financial institutions that contained banks from owning, investing in, or sponsoring a hedge fund, private equity fund or any proprietary trading operation unrelated to serving its customers. the president of the united states is called this the volcker will and today chairman paul volcker himself will make the statement. i think it has great merit in t

. >> former fed chairman paul volcker, though, offered few details on the president's plan at the senate banking committee hearing on tuesday. senator chris dodd who chairs the panel says while he supports the proposal, piling on too many new ideas would be a mistake. ross. >> nicole, now, the european commission will today signal its approval of greece's plan to slash its ballooning deficit. the commission president says the plan is feasible, but the risks remain. last night, the creek prime minister outlined additional measures to cut spending, which included a sector salary and a hike in fuel practices. greece has promised to bring its debt to ge ratio below by 2013. at the moment, it stands around 13%. >> and guess what is my top story today, ross? it's toyota once again saying its north american and japanese dealers have received several complaints about the new preyumm hybrid. people have experienced difficulty when breaking or driving or bumpy roads. the company first heard of the complaints in december, but there were no accidents related to the matter. separately, the wall stree

trading by banks and in this case technical banks which we are quinn to go ahead within which paul volckert. the committee that i chair-- many suggestions being made by mark karney of the canadian bank and others, the notion is that you get proprietary trading not so much by a sharp line but by a volume of more or less, because there's a certain amount that has to be done to keep things going so the answer is, i believe that the major financial institutions understand regulation is coming. that is their interest to give us the kind of the advice we need so we can do it in the best way in the best way includes a tough way but a smart way and the other good thing is there i think a strong movement and it would help today. the european union, the united kingdom, japan, the candidate and u.s. work in the financial economy, working together. i think this has been very helpful and tougher regulation is coming and can be done thoughtfully, and it will be done in a way-- there is no overall sovereignty nobody to impose a bank tax. you don't need to have all and all one because there's no sovereign

host: a former fed chief, paul volcker, he is here and talks about the direct it to me to congress toe a proposed ban on banks. a member of the senate banking committee announced opposition to the barack obama plan. there was plenty of criticisms that the lack of details were in the announcement. guest: the big issue now is that banks are not lending to small businesses. the president is right about that. we need to un-freeze that gridlock. banks need to loans of vacant lot and expand their businesses. i am in favor of taking steps to expand the banking sector. the of the problem is that many businesses do not want to expand right now. what we are facing now is the national health care bill which kills small businesses with new taxes. you also have the democrats passing the cap and trade energy tax. that would have a major negative effect on our manufacturing. the small businesses that i talked to say that they cannot get loans but they are also saying that right now they don't want to expend. they see a tsunami of terrible ideas coming out of congress that will make it impossible to

. >> paul volcker will love you. >>> coming up next, financial expert jean chatzky joins the conversationhis checkbook. that'll be fun. we'll be right back. >>> look at that. that's from the top of the rocket. 8:00 in the morning. a live picture of new york city. we're getting some low-hanging clouds and perhaps even a wintry mix, i like to call it, savannah. pictures there of times square. it's actually snowing in wk d.c., at the white house, where savannah guthrie does her best work most days of the week. but today she's here with us. so glad to have you. >> one night only. >> when you say that, it feels a little inappropriate. >> you won't there, i didn't. joe and mika en route to the west coast where they'll be doing some live shows from l.a. we've got a great group assembled around the table, well, for the most part. >> with a glare exception. >> we also have mike barnicle. how are you? >> i'm increasingly angry. >> i can feel it. oh, the rage. >> jonathan capehart of "the washington post" with us all morning. joining us today at the table, personal finance editor, jean chatzky, also

everybody was outraged as i was and as paul volcker is about the outrageous bonuses paid in the industrythose are not free market bonuses. they are beyond the pale per 140 million, more than the u.s. grew in the fourth quarter. but we have to look at where it came from. and the beginning, we provided banks with an fdic insurance scheme, because we decided that banks are a vital facility like electric lights. so we have to protect that industry from self destruction. that is fine. but to accomplish social purposes, the government has required banks to make loans and establish competing banks, that make fannie mae and freddie mac that make loans that they should not make, which make the banks themselves ineffective and sometimes insolvent. at the same time, what we guaranteed banks their survivability, and we're really doing that we generally do is put it into another bank and cover its losses. that is what we do when we close the bank group we have a group of people that close banks every friday night in washington. they're people that work and custodial work in the department of commerce

the question of banning proprietary trading by banks in this state technical banks which paul volckeralks about. the committee i chaired had given the regulator power to go forward to give a reason for the suggestions being made by the ssa. i spoke with mark of the canadian bank and others. the notion as you get the proprietary trading and also much by a sharp line of either work but by a volume of more or less because there's a certain amount that has to be done to keep things going. so the answer is all i believe the major financial institutions understand the regulation is coming. it is in their interest to give the kind of advice we need so we can do it in the best way and that includes a tough way that smart way and the other good thing is there is i think a strong movement and was hopeful today. the european union, the united kingdom, japan, canada, the u.s., all the manufacturers work in this finance and economy, working together. i think this has been very helpful in the financial industry understands tough regulation is coming and can be done thoughtfully and it will be done

indeed i am in total agreement with paul volcker. it is hard to find evidence of any real growth associate with many of the so-called innovations in our financial system. it is easy to see the link between those innovations and the disaster that confronted our economy. underlying all the sailors is a simple point, which seems to have been forgotten. i natural markets are a means to an end, not an end in themselves. we should remember that this is not the first time that our banks have been bailed out, say from bearing the full consequences of their badly needed market economies work to produce growth and efficiency but only when private rewards and social returns are allowed but unfortunately, in the financial sector, both individual and institutional commitments were misaligned which is why this discussion of incentives is so important. the consequences of the feathers of financial system were not born just by those in sector. but by homeowners retirees, workers and taxpayers and not just in this country but also around the world. t

greenspan's predecessor at the fed, paul volcker, it went well beyond mr. greenspan's call for mere heightened regulation. it would ban commercial banks from engaging in pro piery -- proprietary banking. banks would stick to banking, providing credit to those who need it and an efficient global payment system without, our worldwide economy could not work. banks should exist to serve their customers not as platforms where elite traders make their careers. sound advice, mr. chairman. remarkably, some on wall street an washington argued that proprietary trading did not cause the crisis even though the crisis began on wall street with the collapse of a bear stearns hedge fund even though all of the major firms the crisis built up major proprietary positions. as professor roy smith of new york university, a former goldman sachs partner said and i quote -- "those weren't client-driven trades. they decided to take them themselves. the idea that proprietary trades were were thes losses of the bank is not realistic. unquote. this is a foam goaldman sacks partner. --