so after he gets this role in place it was called the bear stearns -- bear stearns exemption bear stearns gone, lehman brothers bond, maryland just about and rescued from the grave by bank of america, morgan stanley turned into a bank holding company goldman sachs into a bank holding company all five companies given exemption are either gone or no longer exist in the prior forms a when people say the fed killed these guys, they committed suicide these companies all got what they asked for and it blew them up. i want to see how far we are. the book is not nearly as dry or a tedious four as boring as this. [laughter] i just find myself still up to researching this for over one year, is still astonished that a lot of the mainstream policy makers and press and pundits are still putting out less than ideal affirmation everybody is making excuses and very few say here is what happens so i will give you just five moreata points on what i think we need to do to fix its member from the depression through 2000 whenever things looked pretty well it is not that i think we need to regulate everything,

so, it has alway been something that i have been interested in writing about in after the bear stearns dl i figured wow, it is never going to get any better an the selling cards by my agent, i started on the book thinking that was going to reconstruct this moment when the fed used powers that have laid dormant since the great depression. i am the guy who thought you write a history of the great depression hn 1931. it turd out that that was just the opening act of something extraordinary. and so, the book turned out to be about a relatively small number of people, most of the men,ll of the very smart, surprisingly small number of people actually have got stuck with the job of preventing an economic calamity, and i am kind of surprised by the reaction that peoplehink it is a thriller. [laughter] wittney your times sunda book review descbibe it as a thriller i called my editor at random house and that i was worried we were raising expectations for people who bought the book. it is after all about the fed, but i think it's a pretty good ory and an important one and i'm really glad t be her

merrill lynch, lehman brothers and bear stearns is gone. these banks are making more money than ever. >> citigroup? >> bank of america, citigroup, jpmorgan and goldman sachs. >> morgan stanley would be number five of. >> how has writing this book change youfinancial career? >> a lot in this sense i will not be on the sell side which means that will n be working at a trading desk with richard fuld. [laughter] or any of these guys. but i find interesting one week ago friday i got a call from steve shaw, i would call him the nuclear physicist type that really deeply the plate understood credit derivatives and he was s happy about the book in his role and he wanted to thank patrick for the portrayal of the credit analyst did he felt proud and he said wh don't you come up on the trading floor? i went there it was 5:30 p.m. on a friday afternoon. and the trading floor was half full. this is barclays that bought the remnants o lehman brothers brokerage it i the trading floor on seventh avenue i am not at the scene of the crime of back on the scene

it was called the bear stearns exemption because it was anyone as large as bear stearns or bigger $5lion in assets or larger and all five of the companies now no longer exist as they did at that time. merrill lynch got absorbed by bank of america. goldman and morgan stanley became holding companies. bear is now part of j.p. morgan and the bulk of lehman is now part of barklay's. it is not just the government's fault. the government granted special dispenizations, special legislation at the behest of wall street and ultmeatally these firms ended up blowing up. >> host: we are talking to barry ritholtz. he is joining us from our studio at pace university in new york. our phone lines are open. we will take your calls and e-mails, as well. you spend time talking about the culture in washington and mentality of america's largest industries, most notably the automotive industry. you said, and this goes back to bailout of chrysler. had senior management been forced it would have served as wake-up call to all too many layers of management of the remaining two companies. what happened instead

not to mention all the other people, some make more money at bear stearns.does that upset you, a man who has built a brilliant worth, to build a business? does it upset you? >> no, it doesn't upset me. it's not how i choose to run whole foods market, but it's not my responsibility, or i question the responsibility of government but it is the responsibility of the board of directors and shareholders to make sure that those excesses are held in check. >> mr. madrick, do you have anyone question. >> one last. free market advocates like milton friedman argue competition will hold these in check. he will allow that occasionally it will get out of hand. the competition will hold excesses in check over time. in my view, they haven't. do you think there is something a ride in that ideological attitude about markets? >> i don't think the problem here is market so much as we need reforms in corporate governments. i don't think board of directors and shareholders are doing their jobs properly. >> that you, sir. >> thank you. [applause] >> mr. moore, do you have any que

it was called the bear stearns exemption because it was anyone as large as bear stearns or bigger $5 billion in assets or larger and all five of the companies now no longer exist as they did at that time. merrill lynch got absorbed by bank of america. goldman and morgan stanley became holding companies. bear is now part of j.p. morgan and the bulk of lehman is now part of barklay's. it is not just the government's fault. the government granted special dispenizations, special legislation at the behest of wall street and ultmeatally these firms ended up blowing up. >> host: we are talking to barry ritholtz. he is joining us from our studio at pace university in new york. our phone lines are open. we will take your calls and e-mails, as well. you spend time talking about the culture in washington and mentality of america's largest industries, most notably the automotive industry. you said, and this goes back to bailout of chrysler. had senior management been forced it would have served as wake-up call to all too many layers of management of the remaining two companies. what happened ins

in 2007 bear stearns nearly went bankrupt and actually did. it was a run on the bank in 2008. >> explain to me how you think capitalism is supposed to work. we believe that people should make whatever they can make because they are managing their companies well, creating useful products, contributing to the prosperity of america. can o'neill made enormous amounts of money compared to most of us. their companies went bankrupt. >> was capitalism working? >> i think it was to a certain extent. you can't regulate greed. you have to essentially kill everybody on the planet because it's a basic human instinct. some of us have more than others. if you want to regulate greed, good luck. you need a bigger government than barack obama ever envisioned. >> do you think that that -- the compensation system contributed to bad decisionmaking? >> absolutely, yes, it did. >> you don't think there is a way to regulate bad decisionmaking on wall street that d. >> well you know, the way to do that is to have government involved -- for example, talking about the f

. >>> plus, speaking of clunkers was quintin stearns tina a dud this weekend. >>> one swing, three outs. you're watching "early today." >>> good morning and welcome back to "early today," everyone. i'm dan kloeffler. and here are some of your top headlines this morning. >>> nasa has given the green light to launch space shuttle "discovery" to the international space station early tomorrow. "discovery" will roar out of florida with a crew of seven. forecasters calling for 80% chance of favorable weather. >>> cuban called recent footage of fidel castro yesterday apparently looking healthier and rested. the 83-year-old has rarely been seen in public since falling in three years ago when seating power to his brother raul. >>> a gruesome twist, canadian twist said they found a reality tv star wanted for killing his bikini star ex-wife dead in a hotel. ryan jenkins has prompted an international manhunt after fleeing the u.s. apparently took his own life while hiding out at this out of the way hotel in vancouver. >>> second year in a row, miss venezuela is the fairest of them all. she beat out

same is true with bear stearns lehman brothers. the vast majority of people working in the fi had nothing to do with the rklessness that led to the firms going belly-up. most of wall street is looked at, and motivated by money. they do what they do, it is a stressful job. it is not easy. a lot of these guys end up having ulcers and coronary problems. it is very tough job for which they're extremely well comp s t compensat compensated, but these aren't the people that cause t problem. look at each of the major wall street firms, i think lehman brothers at peek had 26,000 employees. it is less tn a thousand peopleesponsible for what went -- what was the problem. i'm in favor of more aggressive gulation. i think when we talk about regulation, what we are talking about is moderating the behavior of the worst element necessary a firm and making sure there is a bright line and people know how far they can go and not further. what i've been calling in the book radicness that took place overhe last 20 or 30 years led to that bright line be

more money now than they were when they were with their firms prior to lehman going under or bear stearns going under. and i think that's happening under the radar. >> real quick, red flags here. what turns this around? what could get in the way of a consumer recovery? >> oh, it's the biggest concern is regarding taxes. i'm very concerned about the stability of the fiscal condition of the states and what the states might have to do on state taxes to businesses and the household sector. and i'm very concerned about all of that for the second half of 2010 but not right now. >> we know that taxes are going up. so should we expect that the economy recovery gets choked off? >> maria, i'm not sure that that's the case. the obama administration may have to make kind of a mid-course adjustment on their plans with respect to higher taxes. i'd be also worried about geopolitical uncertainty in the middle east sometime this fall. if we get another oil price spike, that could be problematic as well. >> all right, gentlemen, great conversation, we appreciate your time. thank you. we'll see you soon. >>

i might've used bear stearns, lehman brothers or citigroup, merrill lynch means a great firm that it was of course being on its knees as well last september 14, openly sold to bank of america i felt would be a good example. so that's what i tried to do in the book. there are any number of different things i think that our significant in terms of the focus, but other things that i was trying to do more to combat some of the i think myths that are out there that have been promulgated. for example, that fannie mae and freddie mac caused the economic crisis or caused the credit crisis. visited something that is been bandied about certainly in political circles. and it is really not a big fannie mae and freddie mac at many wrong things but ultimately, if you read the book, i think i try and explain that it was in fact their absence from the market for mortgages that allow wall street to move in and overlake ao many of the problems that we currently are still suffering from. rather than their irresponsibility in terms of offering subprime mortgages and the like. what fannie and freddie did

during the bubble and the fha today has a leverage ratio of 33-1 and it's a reserve fund which is bear-stearnsevel. >> dlielinquencies on fha, 13% believe is for at least 30 days. now, that is getting into the territory and the taxpayer could be on the hook here if the housing market keeps going down and something to stabilizing in some markets, but if it goes down, what's the time for the taxpayer loss, the scheduled loss here? >> could be huge. the portfolio was ar proechg a trillion and to protect against defaults are training every quarter, approaching zero pretty quickly, so, these-- >> the biggest problem with fraud. >> big problem. >> yeah, the group is called the mortgage asset research institute and estimated that overall, in the overall mortgage market, fraud, instance of fraud are 45% and that they've also said that in the second quarter of this year, they were at all-time highs. >> one other thing, fah says we don't like the former level, i think 400,000 or so-so let's increase it to 729,000 or so inco income, very expensive market, california and some others, but that's not that.

, first state bank of sarasota and community national bank of sarasota county will be acquired by stearns bank of st. cloud, minnesota. >> jamie: and federal prosecutors say bernie madoff's chief financial officer will likely plead guilty to criminal charges on tuesday. and victims of madoff's multibillion-dollar ponzi scheme say frank pasquale was their chief contact with the madoff firm, the person they spoke to if they ha questions about their accounts or they wanted to add or withdraw money. >> president barack obama: as president, i will give every child in florida and every child in america the skills, the knowledge they need to compete in the new global economy. [cheers and applause]. >> we will not allow countries to out-teach us today, so they can out-compete us tomorrow. every child deserves a world class education. >> jamie: then candidate barack obama on the campaign trail, in 2008. but as many parents are preparing right now to send their kids to college, in the fall, we wanted to know, where is the money? joining me now, fox business network reporter rich edison. good mornin

nouriel roubini, professor of economics at nyu's stearns school of business. professor we've been talking an awful lot about how you're looking at the future. you're not nearly as pessimistic as you used to be. we have some questions coming in from viewers. frank from california writes in and says there are some signs china's internal stimulus growth stock market and purchasing of industrial commodities may come to an end. we saw the market fall off a little bit on concerns of that yesterday. does the country by itself have the ability to throw other world economies back to the brink of recession or at least prolong the recession. >> i expect the slowdown in china. stimulate too much on the supply side, produce more, buy more, situation huge amount of excess capacity, that's a factor in china. the growth sprt spurt us unsustainable for private demand, growing public demand of that's a risk on the downside. first half of the year, maybe a contraction in the second half, push lower commodity prices. certainly there was talk but china driving asia, emerging marke

>> their reluctance stearns. first, i want to congratulate her. mobil she will be a good judge. -- there were a lot of concerns. i want her to be a good judge. nothing would make me happier than to see her do a great job on the court. i salute her and her family. i think there were several big problems. first, in her speeches over a decade, she said openly that per opinions, synthetase, and prejudices -- her opinions and herb prejudiced -- a judge does not put on the road and take an oath to be objective in every case that comes before them and not allow their personal bias to affect the decision making process. there were three big cases that becamcame before her in the laso or three years. i thought she was wrong in all three of those paid in the gun case, she held that the states had the right to deny individuals within their cities the right to have a gun. shepard: i know you are one who understands and appreciates the fact that there's a big difference between one drained around -- there are just different rules for different places. >> they

pistol shooting team was constantly winning the world championships which was one of davis' bacon stearns. in anyway ere isnd i shot that will come u at some point of davis organizing a turkey shoot so you see these lapd guys blazing away at a couple of help lister keys. the central of the story is about this guy called dave clark and as i piece together the way in which he was cnect to many of the other stories better in the book, i realized that he was convincedn some way a symbol f me of what l.a. is, and so he was this guy, very handsome, looked lik clark ble, tall, slim, at an, had a very pretty wife and he fought in world war i, was aly here come the came out of world war i-- he had grown up around downtown, went to usc. he didn't actually graduated in law, but took the california bar before doing that, which was kind of more routina then, and went to wor for a fm, a downtown firm which primarily represented oil interests from-- called wellborne, wellborne, and wellborne. clark, he wanted the fast-track. he mary debary clements girl who was the daughteof a famous new york judge, he

we look at volatility bhp we look back a year ago and we were pushing $80, lehman and bear stearns was plummeting and falling out of business, when you look at markets now, i think equity markets, people have at least more comfort. i think they are looking at mr. bernanke and saying, hey, the president better not remove this guy at any time. >> couldn't they also say, listen, we're looking at mr. bernanke but maybe the president will put somebody in that will make a bigger punch bowl? >> rick, last question. say bernanke has a plan to soak up liquidity. he's allowing to pay interest on bank reserves which means no lending whatsoever. say he goes ahead with that plan. is the president going to allow the banks not to lend so they can soak up liquidity? >> i think that's an interesting question. we'll get the consumers and if they're able to borrow, but an even bigger question is, a lot of these programs might snug up rates an curtail borrowing. but the bond markets rates can move much higher no matter who's in the cockpit or what the fed does. >> rick, thanks so much. the great santelli

bear stearns went under, washington mutual, countrywide went under. don't know what other evidence -- >> where were all these leaders when they recognized this was going on in '06. >> there are ashes and there are smoke. there is very, very obvious evidence of a fire, not to mention the flames we all saw in the market.t. and more importantly, though, i want to get to the latter point. >> how we cured it. >> the fed stepped in and provided liquidity. >> credit crisis fixed -- >> rick, what would you have done? would you have just allowed bank after bank go out a la lehman brothers? where would we be then? >> i think more institutions should have failed. we do need spending when we break down. >> this is exactly what jpmorgan did in 1987. he stepped in in that case and did what absence of a central bank is supposed to do. >> we're out of time. steve liesman, do we need a second stimulus. answer the question. >> i would like to wait, see the fed program, see how they are designed to run offer. we have more stimulus from the stimulus package in addition t

lehman brothers, bear stearns. why are they telling me this? why does anybody tell me anything? i mean -- >> they can't help themselves. they hang out with you and people can't help themselves. they come over and talk to you. i've seen it myself. it happens all the time. >> obviously, goldman sachs wants to spread around the nasty stuff. >> i think so. >> but that's how i get all my stories anyway. let them have their chance once in a while. >> this is why we love youish charlie gasparino, thanks very much. >> equal opportunity abuser. >> there you go. 20 minutes to go before the closing bell. the dow and nasdaq both in the red. the dow down about 40 points. bob. >> we'll discuss which retailers will make the grade this school shopping season. retail sales tomorrow, folks. and which you should expel from your portfolio. >> and then coming up after the bell a "first on cnbc" interview with the ceo of utility giant pg&e. hear where he thinks energy prices are headed and whether he thinks president obama's cap and trade proposal could have on his business. we'll be right back. i ge

european investors to buy all of these securitize products from lehman brothers, maryland, at bear stearns, citigroup for creating and there we have we have exported mortgages it was one of the leading exports of our country so we should take some of the blame the u.s. will lead the world into recession because we consumed so much and when we stopped and then those countries are finding their economy being heard now china chief amongst them now china has done an incredible stimulus to stimulate its own country which is amazing. >> [inaudible] how long do you think that monitors aging can last before the u.s. hit a wall? >> what do you mean by debt to monitor the setian were you talking about? >> turning bonds, about bonds and cash the federal reserve turning bonds into cash. >> you mean creating money and increasing money supply? i don't know when that day and is. it does. right? >> a time frame? >> i cannot give you one. it is not something i am familiar -- familiar enough it is an important question and it is one that is being asked a lot but i do not know when that day comes but we will

. >> what about the explosion to the bear stearns fund? in the concept of how the group -- talking about buying them from all kinds of banks including j. p. morgan, that is why j. p. morgan was one of the biggest hedge funds. it sort of came back to them because they had 90% of the money. >> jamie winters would say over and over again, we made mistakes. it has been like japan. no one wants to talk about that because they get too much traction. in the course of my interview, we made mistakes too. i mention them all in the book. you can look at who made the big write-off in the last two or three years. the scale j. p. morgan made so far, plenty of things could go wrong in the future. they have credit card exposure, there are mistakes. but the scale of right offs are nowhere near the scale of investors that citigroup, ubs, morgan stanley. guess what? they are not on the radar. you probably got more questions. thank you for coming along. [applause] >> gillian tett was named british journalist of the year for coverage of the market decline in 2

bear stearns was sold to j.p.organ for pennies on the dollar, lehman brothers was allowed to go belly up, and a.i.g., too big to let fail, is on life support thanks to a $180 billion investment by u.s. taxpayers. it's legalized gambling. >> dinallo: it's legalized gambling. it was illegal gambling, and we made it legal gambling, and some... >> kroft: with no regulatory controls. >> dinallo: with absolutely no regulatory controls-- zero, as far as i can tell. >> kroft: it sounds a little like a bookie operation. >> dinallo: yes, and it used to be illegal. it was very illegal 100 years ago. >> kroft: in the early part of the 20th century, the streets of new york and other large cities were lined with gaming establishments called bucket shops, where people could place wagers on whether the price of stocks would go up or down without actually buying them. this unfettered speculation contributed to the panic and stock market crash of 1907, and state laws all over the country were enacted to ban them. >> dinallo: big he

i mean, it's sort of like bear stearns at the end of the year saying, we'll do our own accounting, and trust us on this. so the jury is still out where torture worked or not. i have yet to see any evidence that torture has worked, no good evidence. what cheney said and what's come out in these documents don't prove anything at all. >> i want you to take us inside a little bit. can you speakinterrogators can information from terror suspects using these techniques that were used post 9/11 was introduced? >> i have never seen torture work. i have watched other countries use torture and it never worked. in fact, there was a rule, a very fixed rule in the cia, don't accept torture information because it's unreliable. and that was across the board. it went from china to zimbabwe to every country in the world. it's unreliable. >> and the theory is because someone will say anything to stop being tortured. >> wouldn't you? everybody does. they'll figure out what the interrogator wants and they'll answer that question in the way they think the interrogator wants the answer. >> mr. dhcheney has r

rnanke helped shepherd the rescue of one investment bank, faing bear stearns, and las fall was involved in the decision let another, lehman brothers, go into bankruptcy. he was also involved in bank of america'scontroversial acquition of mrrill lynch. he later pushed for the something shally approved large bank bailout of last fall. he fed pumped an aitional $2 trillionnto the banking system to stablize it. andhrough it all, bernanke has kept interest rates at record lows. near zero this morning thechairman spoke of his decisio as h looked forward. >> we have been bold or deliberate as circumances demanded but ourobjective remains constant, to refor a more stab financial and economic environment in which opportuni can again furish and in which americans' hard work acreativity can ceive their proper rewards. >> reporter: last wek bernankeave a cautiously ptimistic appraisal of that objective, telling a meeting of glob banking officials that the us. economy is poid for growth. for closer look at the fed and budget news, we turn tmaya macguineas, present of the committee for a reonsible fe

percentage -- i don't know what the percentages are, but i worked on wall street years ago at bear stearns. if you don't make it, you don't get it. to me a guaranteed performance bonus is an oxymoron, is it not? i come back to that. >> absolutely. it's a great point. and it's funny, because when companies aren't doing well, it becomes a guaranteed bonus and then when they're doing well, it becomes pay for performance. so they kind of get their cake and eat it too. >> look at what is happening with goldman sachs. look at how goldman sachs takes back their money as fast as possible because they want to remain competitive. >> yes. >> but we're not talking market rate tax. >> when the market rate calls for a guaranteed contract, i don't think a-rod should make $25 million a year, but that's the market rank and if the yankees don't give him that guarantee, he's going to show up at another team. >> we appreciate it. >> theian ease -- >> he's going to go down. >> the yankees. -- >> the whole issue is a guaranteed bonus is really on wall street. a guaranteed salary. people depend on those bonuses,

they come to this weekend hoping to sell lehman brothers to a british bank like they had sold bear stearnso j.p. morgan/chase earlier, they don't have a plan b and the rest is history. >> brown: there is that sense of -- it's an interesting mix of making it up as you go but based on some experience. >> no, this is all new. >> well, i think in a way the most eventing event is bernanke since the man spends his entire previous adult life studying the mistakes the fed made in causing the great depression. once he figures out that this is like that again, he looks at the whole world through that lens. some people think he's overreacting or just sticking to the paradigm he knows, but it becomes clear that it is the right paradigm, it is the right metaphor, and because he saw how serious it was when financial institutions collapsed during the depression, the collapse of lehman was quite painful to him. >> brown: it's also interesting that you wrote about the fact that he didn't catch on right away, right? he was part of the fed -- alan greenspan's fed, in spite of all this experience, ben bernank

that is stearn now partly because of the stance,ell of course there is a divorce, the issue of the divorce. >> that was more of a personal >> point taken, however they were well within the church and then of course there was the divorce, his stance against abortion among other things and the personal behavior. pez that cover some of t shoes? go ahead. >> in the '94 campaign he was on the other side of that issue because if you remember in the heat of the battlwhen it was really close between romney and ted kennedy, joe kennedy, ted's neph famously was on the campaign stop and he criticized the mormon church for its exclusionary policies particularly against african-americans and women and there was a cure. romney phelps this was a serious sort of breach of contract because when jack kennedy had run forsident of course the whole issue was the irish catholics d was he going to be the first catholic president and could be overcome tha romney felt very bitter about that issue being raised and sort of demanding an apology and ted kind of stuck up for joe and said n it is legitimate. and it was

and i think it stearn will require a new strategy and a new approach to this problem. i do think that mcchrystal is the right man in the right place. and i think that if he is properly resourced, i think we can turn this around. but i think it's going to be a harder fight probably than most people imagine. >> rose: michael, what's the influence of admiral mullen in afghanistan, and afghanistan as a priority for him? >> well, i think afghanistan is the american military priority, first of all it's the obama administration's priority. second of all, it is the military's priority, admiral mullen is the chairman of the joint chiefs reflects that. but i think swren mcchrystal is the key figure. and you know, the obama administration has allocated some forces for afghanistan. and it was apparent to me just as an analyst writing an iraq book that that would not be sufficient to turn that difficult situation around. and even general mckiernan who recently retired and was being replaced by general mcchrystal indicated that he wanted some 10,000 additional troops next year, that

proportions with plunging prices in stocks and housing already having forced government bailouts of bear stearnsnnie mae and freddie mac? yet despite all this, rising prices were still paramount in the minds of most folks here. >> we were planning a trip to italy with my wife so we decided we had to cut down a bit so i left her home. ( laughter ) >> reporter: the humor here, from macaroni to matrimony, suggested that oil & food price hikes and a rising budget deficit had folks more spooked about a declining dollar than almost anything else. in oakland, california, gloom and doom economist john williams was so afraid of the buckling buck. >> i buy gold coins as a hedge against inflation. >> these are called gold eagles. >> reporter: williams had taken us to his local gold dealer, charlie mammoser. a lot of people like him, chlie? >> yeah, there's - quite a lot of them actually, especially the way, you know, the economy's been going, and the dollars been down, and oils been up, and gold's been running crazy. >> reporter: what was gold at the time, per ounce? >> right now gold is seven-fifty and te

that morning bear stearns traded at $75 per share. flew home thinking, maybe larry has just gotten pessimistic these days. [laughter] those doubts only lasted for 10 days because we were together on a friday and a week from monday bear stearns had been taken over $40 per share. we were writing a new chapter in global financial and economic history. this fnn he will talk about the administration's economic program. i am delighted to welcome him to the platform. -- this afternoon he will talk about the economic program. [applause] >> jim, thank you very much for that generous introduction. can we be a tag team wherever i go and you introduce me? that was really terrific. it reminded me of the old lyndon johnson line, about -- i wish my parents had been here for that. my father would have appreciated it. my mother would have believed it. i really do appreciate what you said and i have valued our friendship. it must now be more than 30 years since you came to work as a research assistant for me in the late 1970's. there has been an enormo

the impact of a bailout of bear stearns, a at, chrysler, and gm, our markets have good reason to expect that the federal government will bail out any prominent company that gets into financial trouble. my question to you is what steps need to be taken to restore market discipline and minimize the moral hazard created by the bailout over the past year? is this a problem that will not be solved until the federal government actually allows several prominent institutions to fail? we're going down a road -- a dead man rode on the too big to fail a thing. sheila? >> our priority focus when i testified before had been on resolution a party. we need a mechanism that can resolve a very large financial institutions in a way that is orderly and protect us from systemic risk but make sure that creditors and shareholders take losses. we will not have rest until congress does something like that implies. >> we need more orderly resolutions for companies they get into trouble were you do not have threats to the system just by rabat -- resolving them. we need more capital requirements and liquidity req

morning bear stearns traded at $75 per share.s. [laughter] those doubts only lasted for 10 days because we were together on a friday and a week from monday bear stearns had been taken over $40 per share. we were writing a new chapter in global financial and economic history. this fnn he will talk about the administration's economic program. i am delighted to welcome him to the platform. -- this afternoon he will talk about the economic program. [applause] >> jim, thank you very much for that generous introduction. can we be a tag team wherever i go and you introduce me? that was really terrific. it reminded me of the old lyndon johnson line, about -- i wish my parents had been here for that. my father would have appreciated it. my mother would have believed it. i really do appreciate what you said and i have valued our friendship. it must now be more than 30 years since you came to work as a research assistant for me in the late 1970's. there has been an enormous amount of research amending technical change if you think about com

well, the picture could be a lot more grim even than the stearn report predicts, and that's grim enougha couple days ago a group of m.i.t. scientist released the result0s of what the called the most come send modeling about how much hotter the climate will get in this century and says without rapid and massive action the problem will be as twice as severe as previously estimated a couple years ago, and could be even worse than that because their model does not fully incorporate positive feedbacks that can occur. for example, the increased temperature that's -- is causing a melting of the perma froth which is going to release neglect -- methane. he said must start now and overcome in the coming decades to lower greenhouse ecommitting gas technologies and there's very little sign of that. further motion while new technologies are essential, the problems go well beyond that, and in fact they good beyond the current tech -- technical debates about cap and trade devices discussed in congress. we have to mace something more far-reaching. we have to face up to the need to reverse huge state co

they financed a bunch of assets that once held bear stearns to facilitate. they stepped in and paid off the creditors, including gold goldman goldman sachs and they used the same statutes to support the housingarket by buying bonds orinancing purchases withhose bonds. so on the footnote here, even some fed officials have said wait a second. this isn't monetary policy. you're extending credit. you're entering into our domain and saying what industry should get what break and special treatment. i think rightfully, cgress is saying where ishe line? it's something, it's a discussion and a debate that's goin on. >> the administration has also proposed changes to the role of the federal reserve. what would they like to do and why? >> so one thing they would do would be to strip the fed of the broad rule writing of consumer financial products. they were pretty disappointed on how slow t feds were. the feds ar opposed and would like to keep it inside. the second thing they would do it make the soul regulator the largest financial institution. those might number awhe

has faced a generation and longer that was the morning when bear stearns was trading at some of our dollars per share i remember flying home thinking maybe larry has just bought 10 pessimistic. [laughter] and maybe that is earlier headed those doubts only lasted for 10 days because we were together on a friday then one week it was taken over for $2 per share and we began writing a new chapter in the global financial and economic history. he will talk about the administration's economic program and i am delighted to welcome him to the platform. [applause] >> jam, thank you very much for that generous introduction in. can we be a tag team wherever i go? for every reintroduce the? that was terrific. it reminded me of the old lyndon johnson line about the wish my parents had been here for that my father would have appreciated its and my mother would have believed it i really do appreciate what you have said and i have valued our friendship what i am thinking now must me more than 30 years since you came to work as a research assistant for me in the late 1970 is. there has been an enormous amoun

stearns should know that the bill was introduced last year, to reinstate these federal benefits and we went through the story of what happens in the agreements and why we think that this is a good, sensible case to be made and it was -- it was exactly like this amendment, that legislation. and it did not -- it was never isn't to or had to go the interior committee. so, i just ask you to consider that if, if the chairman thinks that we should withdraw and this will be -- you got a ruling in. >> mr. chairman? >> i'm ready -- >> mr. chairman? >> do you want to withdraw it? >> what's the ruling? >> mr. chairman, mr. chairman. >> committee will come to order. committee will come to order. let's -- i have just now had an interpretation from the parliamentarian, now, i request not to withdraw your amendment. point of order has been recognized. mr. scalise or mr. barton, if you would like to elaborate. the parliamentarian has given me an interpretation. >> i'll yield to the ranking member. >> i think i said what i wanted to say. i might ask the gentle lady from california, when her bill was in

i believe it's a short squeeze, and don't forget, the ceo of bear stearns came out before the drop andhing is okay. i think you've got to be careful if your retail investors -- we have seen the options markets, that most retail investors don't see. it's a very dangerous stock to play, if you don't understand. >> in terms of the options doctor, j., if you can't find o can't find the short to borrow, if you are so inclined to play aig. >> if you are seeing that, people buy put options and the puts are bid up extraordinarily so as far as volatility and the skew between the call. there is a direct relationship when you can't borrow the stock, the put goes up higher than does the call that. being out of line means people are continuing to be squeezed until it comes back in line. the stock trades higher. >> we are seeing the whole financial sector going gangbusters. the big names are moving also. jpmorgan and goldman sachs. what do you see in terms of financials? >> the financials will follow the broad market. we have resistance from two weeks ago and i'm not willing to buy in at this level

we talk so much here about citigroup, about the travails at merrill lynch, lehman bear stearns. sometimes we forget that ubs lost as much as they did. the swiss government coming to its aid. you can look at a two-year to see what the stock has been doing of late, like so many other banks globally, it has had a nice move. yes it lose money, loss per share was 36 cents. the net loss about 1.3 billion or so for ubs. like there has been with so much other investment basics and larger banks there's a lot of noise around this. operating income $5.2 billion but had to take a charge as a result of tightening of their credit spreads, we've been dealing with this volatility quarter to quarter with so many bank. they also took restructuring charges of $509 million and a good will impairment charge of $460 million. the full screen here is a little bit behind me. but we're just about to catch up, that being said, wealth management is interesting because throughout it all, all of the problems that the investment bank, the question was will it bleed over? will people lose confidence in wealth

not the uaw or the machinists or the teachers or any other union that was calling the shots at bear stearns and lehman brothers or aig and goldman sachs. i can tell you for a fact that no one at the fed with the treasury department ever picked up the phone and called the afl- cio or any of the trade union for our advice and opinion. even though it was not organized labor that got us into this mess, we will lead america out of this mess. there is no other way. the bottom line is that you cannot rebuild this economy and thus you raise workers' wages, and the fastest and surest and most effective mechanism for raising workers' wages is the collective bargaining process. increasing productivity only raises wages when workers have bargaining power. take bargaining power out of the equation, and you still generate wealth, but it will not get into the hands of the people who created it, or who really must have it, in order to grow the economy. that is what has been happening over these last 30 years. john maynard keynes understood the dangers of the ravages of free-market fundamentalism. i am conv

about enron, tacio, arthur andersen, general motors, chrysler, ford, merrill lynch, wachovia, bear stearns, a.i.g., bank of america, exxon, and of the valdez fiasco, lehman brothers, washington mutual, countrywide financial, and so on. do we not ever consider? we talk about the inefficiency of the government and our enormous deficits. as of october last year our country had commended itself to something like $7.70 trillion with all the bailouts. >> if you could wrap it up because we have a lot of folks behind you. >> do we not ever consider -- yes, there is waste and fraud in government. but we need to give a lot more attention to the waste and fraud in business and the burden it places on society. [applause] >> thank you. scott, i share your concern about waste, fraud, and abuse wherever it is. the fact is i am elected to represent you in washington and overseas. your taxpayer overseas so, it is not my business to be in your business. [applause] look, i voted against all those bailouts. i thought it was the wrong direction. [applause] but when companies succeed or fail it affects those pe