she's putting taxpayers on the hooks for billions in subprime loans. could taxpayers be in line for the biggest failure of their all? . pappas pass to stay on top of my game after 50, i switched to a complete multivitamin with more. only one a day men's 50+ advantage... has gingko for memory and concentration. plus support for heart health. that's a great call. one a day men's. are more than words here. it's personal. i have diabetes. rodney's kid too. so we're so proud to manufacture... the accu-chek® aviva meters and test strips... here in the u.s.a. plus, we've proven you'll waste 50% fewer strips... when you use our meter, which means greater savings... for people with diabetes, like me. now that's a true american value. accu-chek® aviva. born in the u.s.a. >> happy anniversary. one year since you the taxpayer took shares in fannie mae and freddie mac, and meet their cuss en jennie mae, about to join them as a trillion dollar packager of subprime mortgages and could lead, could lead to the biggest bailout of them all. editorial page editor james fr

she's putting taxpayers on the hooks for billions in subprime loans. could taxpayers be in line lee (announcer) if you think all batteries are the same, consider this: when a tornado tore through holly, colorado, air life denver took to the air... their night-vision goggles keeping them safe on a perilous flight... and powering those precision goggles--- is the only battery air life trusts: duracell. trusted everywhere. look for new duracell ultra advanced now with even more power to protect. >> happy anniversary. one year since you the taxpayer took shares in fannie mae and freddie mac, and meet their cuss en jennie mae, about to join them as a trillion dollar packager of subprime mortgages and could lead, could lead to the biggest bailout of them all. editorial page editor james freeman is here to tell why. tell bus fannie and freddie. how much have the company's bailouts on the taxpayers? >> we the taxpayers have given them about 85 billion dollars. we're on the hook up to 200 billion. >> for each of them. >> for each, that's right. and freddie inke

treasuries but subprime mortgages or cdo's? that is not so good if you're lovebird 30 times and have a loss of just 3% or 3.5% you have wiped out your equity that is what happened maryland wanted to replace it remember the cap of raises late 2007, the sovereign funds? it is amazing so much money came and yet it was wiped out again. total failure on the part of the sec which we have seen so many other ways, bernie madoff, right? it is just criminal almost in a way. and as far as the way to regulate credit default swaps to allow for the creation of an enormous market place with the collateralized debt obligations to know it gets complicated and even more with the synthetic ceos that made up cdo's on mortgage-backed securities but it had an enormous impact in 2000 it could have been regulated but it was not kilogram through a bill, a writer on the omnibus budget bill the election was over, after bush had won it was a lame duck congress nobody knew what was then the bill it completely deregulated everything in terms of credit def

treasuries, but when they are subprime mortgages, or cdl is made up of subprime mortgages, it's not sogood if you are leveraged 30 times and you have a loss of just 3%, 3.5-inch, you wipe out your equity. anthat's of course what happened. merrill lynch kept replacing it with remember all those capital raises that went on in late 2007, 2008, all the sovereign funds? amazing that so much money came in and it was all wiped out yet again. so yes, total failure on the part of the sec which we have seen in so many other ways. and i hate to tell you, made o off. its criminal almost in a way. and as for the cftc and the failure to regulate credit default swaps in particular which really helped in some way to allow for the creation of an enormous marketplace and call our eyes that obligation that i notice is all getting propagated and it gets even more competent in the sense that ceos which were made in credit default swaps on mortgage-backed security to. in 2000, it could have been regulated. it was not. phil gramm, a writer on the omnibus budget bill for that year, the election was over. it w

same with subprime arms.and some good news is that foreclosure starts were basically flat, thanks to government and banking industry loan modification programs, and also do a big moratorium in illinois. >> i think foreclosure starts numbers will continue to increase for the prime side, and we may see some continuing flattening or further moderation on the subprime side and may continue to offset each other, but overall, an ongoing increase in the foreclosure starts number, probably through next year. >> and also important to note that the foreclosure crisis is still centered in those four big states. california, florida, arizona and nevada. they make up 44% of all foreclosure starts in the nation. for more, go to the blog, realtycheck.cnbc.com. mandy? >> stay right there. let's talk more about the foreclosure rate and whether it will prevent a rebound in the housing sector and broader economy. joining us is susan was co real estate and finance professor, and dean baker, at the center for economic and policy r

>> similarly, france was somewhat buffered from all of the subprime contagion thing. as recently as two or three years ago, france was an economic punchline. the labor force is not very mobile. it's harder to hire and fire people. that cuts both ways. when you try to insulate yourself amid a global contagion, the likes we have seen the past two years, you're bound to do better than the other economies. >> okay. but despite that, there are many european economies that are not seeing any real signs of hope. let's talk about great britain. their unemployment rate is up. spain is now approaching nearly 18%. how do those facts fit in with the news of today? >> well, it shows you that you're not talking about a single entity in the european zone of economies. spain, for example, was precisely one of those economies that binged on subprime, that espoused new paradigm thinking, that built condos as far as the eye can see, that opened its borders to come in and mix cement and now it's actually having to pay people to go away and it's dealing with a significant hangover. ditto,

words enough to cover the subprime exposure and a closer read of the quarterly documents. what's the reaction on the floor?r? >> i got hit with a bunch of ims. that 10-q came out at about 6:10. about 100 pages long. it takes a while for people to read through t. i think that's what you saw. the fact that it's not the exposu exposure, but the lawsuit. once we got that under control, you still have the markets sell off and you have the markets rally. >> we point out to the people that state street is coming off the loans. >> everyone read it as subprime exposure and not the lawsuit exposure. that's what you are seeing right now. >> the fed meetings? >> my clients are more focused on the retail earnings coming out this week. seeing if it's going to catch up. >> you know what i did this weekend? i read by faith alone. it's a great book. >> you did come through. we are even. >> downloaded now by space alone. a brilliant offer. the ongoing cluf caused many landlords to make a deal with tenants. diana? >> that's right, bill. with job losses mounting and real estate prices falling

coming up next, white house giving subprime lenders billions to help out there was a time i wouldn't step out of the house without my makeup. now, it's no problem. (announcer) neutrogena tone correcting night serum with high performance soy to even skin tone and active retinol to speed cell turn over. clinically shown to visibly fade brown spots in 14 nights. i even out my skin at night so it looks younger, flawless in the morning. (announcer) neutrogena tone correcting now you can fade and prevent discolorations all day. new tone correcting spf 30. >> terry: repeat ago bad mistake a government planning on forking over billions of dollars to subprime lenders. idea is to help prevent more foreclosures but wayne you say this is what crippled the housing market in the first place. you are a real estate expert, why are we doing this? >> it's one of dumbest ideas i've heard of. here is the government rewarding the criminals that bumped the law in the first place. they are passing out money to big banks. all the people who were earning outrageous commissions not even signing and doing thei

we try to pass a bill to regulate subprime mortgages.e did propose regulation of fannie mae and freddie mac when the republicans were controlling congress. the republicans passed a version he did not like. two years later when bush was the president, i got the bill passed when i became chairman that bush wanted. i only blame the republicans when they were in power. >> [inaudible] >> i want to stick with this. i think it is important to take some of these things to a logical conclusion. the republicans were in power from 1995 through 2006. i was not in charge of legislation. when i can't became in charge in 2007, -- when i became a charge into a dozen 7, i helped the committee passed the bill. do i blame the republicans? yes, when they were in power. >> i am a physician living and serving this town. i see patients every day at my practice. i am appalled by the fact that i have full insurance -- not insurance, healthcare rights in my other country of turkey. i am proud to be an american. however, they give me full health insurance for free

the share of subprime loans in the same position has dropped to a third. the rest are federal housing administration and veterans administration loans. in the past year, the share of prime loans going bad has increased as the share blamed on rising joblessness and the sour new job market. as we continue our coverage on health care cooperatives... today we bring to light the history of that concept.. and it turns out there are more failures of health insurance cooperatives.. than there are success stories. today.. there are two health co-ops that are still going strong... one in washington state.. with close to 600,000 members.. and one in southern wisconsin which has 62,000 members.. but history also points to difficult times for other health coops which have failed: including california's pacific health advantage - the florida community health purchasing alliance and the texas insurance purchasing alliance problem with coops.. some failed.. not able to negotiate with providers to the same degree insurance companies could. "...did not obtain premium reduct

this is the guy that famously went short financials, went short the the subprime market. went short the financials because of subprime back in 2006-2007. made a lot of money out of it. a handful of hedge fund managers. john paulson was one. phil falcone was another. goldman sachs went short the market as well. they would say as a hedge. paul on is now turning around and buying a substantial stake? b of a. $168 million shares right now at $16 a share. that gives him a stake of $2.7 billion. is my math right on that? what's interesting about this, about a month ago he kind of signaled i think -- i just spoke with somebody who's an investors in his hedge fund who said about a month ago a letter came out where paulson basically said he was going to go long on bank of america. this is really interesting. bank of america's a company that gets beat up on all the time. right? because of its -- lot of people would say some of the mismanagement of ken louis buying merrill lynch and the company imploding, merrill lynch having a $15 million loss in the fourth quarter of last year. >>

the new data, though, not being driven by people with subprime loans. is that something to be concerned about in diana olick in washington now with the story. hey, diana. >> hey, maria. and that's right, it's all about prime loans now. while total delinquencies and foreclosures rose to a new record of just over 13% of all loans in trouble, prime loans really led the way. the percentage of prime fixed rate lows in delinquency rose to 5.23% from just 4.68% in the first quarter and really spiking over the past six months as opposed to subprime. subprime fixed rate delinquencies showed the most dramatic spike during the crash, of course, but starting now to level off a bit in just the past two quarters. >> we had 43 states that actually had a drop in foreclosure starts for the subprime arm completely flip side. on the prime side we had 41 states with an increase in foreclosures on prime fixed loans. so it's clearly an issue that's being driven much more by the economy rather than issues with the type of loan. >> overall, the foreclosure starts or new forecl

what proportion of subprime loans, letzig, i voted down. in 2006, they created this crisis. proportion did they buy on wall street didn't buy? >> in terms of what fannie mae ended up giving team, it was subprime mortgages and what they call off a mortgages, ended up coming villages look at their numbers, it actually exceed a trillion dollars to wall street wrote the stuff, and fannie mae guaranteed it. however, again, this could not have happened, the federal reserve hadn't done what he did to create that excess liquidity. >> just to let you know, they made bought 20% of subprime mortgages. >> they bought them. however, those are mortgages i think that they kept on their books. they started to drink the kool-aid to an keep this up because they thought it was way -- >> mr. madrick is a bad dream eyewitness. >> mr. moore. mr. forbes isn't even swingsets it down. [laughter] >> quickly. quickly, steve. mr. forbes. the federal reserve has lowered interest rates drastically before and notches in the early 2000. the late 1990s. we had early 1990s. i can properly, if i do still have

it did all of the subprime lending outside the bank, not in the subsidiary bank. >> it was subject to california law? >> but the bank itself was not subject to california law, and it is also where they did not do their subprime lenng that caused them a number of problems. >> prime lending it was an entity that was subject to california -- a prime lending was an entity that was subject to california law, attorney general review, all that? >> at that time, before they switch charters, yes. >> did they do that, to your knowledge? what completed the use? -- what template did they use? >> you will have to ask the regulators. historically, there has been this anomaly where the banking company gets heavily regulated, and the holding company affiliates were not subject to the same requirements for annual inspections, and that is a thing that needs to be fixed, and the federal reserve has been doing more on that area, but it is not the same, and i believe it should be. >> let me switch to mr. bowman. when countrywide came to your supervision, you were the holding company supervisor and also of

about subprime in 2005, and this ishe first time i was exposed to these words, subprime, these mortgagesets, words all over the american vernacular today, i was ang the best an bravest and smartest people who were starting to call the warnings, and one by one the warnings we ignored and these wonderful people were silenced. at lehman brothers you kept your head down or you lost your job. and i saw a chief risk officer, global risk manager of the year in 2005 in one meeting, one investment banking meeting she was questioning whether or not lehman should get into one of this big lbo deals, richard told her to shut up. this is the top of culture that we had in lehman brothers, really a culture of fear, @nd the tragedy was that we were going faster and faster and faster right toward that iceberg, and one by one by one, great people ce a lot about were silenced. and there's so many lessons here for us all. i think going forward we need boards of directors that are more accountable. if you think about it, lehman brothers was at the t of the market was a $750 billion investment bank. $750 blio

. >> but first, jane wells with a story of a subprime survivor. hello, jane. >> this bank is successfully modifying mortgages, redefault rate is lower than the national average. the problem is it's losing money and the clock is ticking. a rare look inside a subprime bank when we come back. >>> the treasury department complains some banks are move toog slowly. one that specializes in mortgages have been way ahead of rivals. they say the problem is the bank may not survive. >> it may be the last bank specializes in subprime loan which is has not gone under, but a year ago, i reported on this show that this bank was on the list of who might be next. a ratio of about 40% he says is, quote, in the daker zone. >> one of the banks in the danger zone, the stock collapsed from $25 to five cents. >> all of our clients were panicking because they thought everyone was going to turn into indymac. >> reporter: but one year later, they're doing everything to keep first federal bank of california afloat. how does this bank even survive is this first, it stopped m

subprime a.r.m. and it was flat thanks to banking loan industry modification programs also due to a big moratorium in illinois. it's always good in those four states we always talk about california, arizona, and nevada and they account for 44% of all foreclosure starts. michelle. >> thank you. what is going on with aig? amanda showed it to you. stocks skyrocket over 20% today. our markets on this move. we'll talk about it. "the kudlow report" is back in two minutes. announcer: what are you waiting for? all around the world, men with erectile dysfunction have asked their doctors about cialis. ask your doctor if a cialis option is right for you because in addition to 36-hour cialis, there's another dosing option: cialis for daily use, a low-dose tablet you take every day so you can be ready anytime the moment is right. man: tell your doctor about your medical condition and all medications and ask if you're healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as thi

a what proportion of subprime loans did they buy? i wrote it down. in 2006, they created this crisis. what proportion did they buy and wall street didn't buy? >> in terms of what fannie mae ended up guaranteeing, subprime mortgages and what they call a mortgages ended up, you don't look at just their numbers, actually, ceded a trillion dollars. now, wall street wrote this stuff and fannie mae guaranteed it. however, again, this couldn't have happened if the federal reserve hadn't done what they did to create that excess liquidity. >> fannie mae bought 20% of subprime mortgages. >> they bought them. however, those were mortgages that i think they kept on their books. they started to drink the cool aid too and keep this stuff, because they thought it was a way of enhancing their profit. >> mr. madrick is badgering my witness. >> mr. forbes, mr. moore isn't even sweating, so sit down. >> quickly. quickly. steve, mr. forbes, the federal reserve has lowered interest rates drastically before, not just in the early 2000's. the early 1990's. if i still have

like sub, sub, subprime. it's way, way down. we don't have any gates -- we don't have any lawyers in our system. it's a trust-based banking. it still works. it works much stronger than any other banking form. >> how about this? is it growing at all? >> it's growing. we just -- in bangladesh, we have now 8 million borrowers within grameen bank, but there are many other micro credit programs in bangladesh. i would say 80% of the poor families with micro credit facilities reach out to them, and we are hoping we will reach 3% in the next three or four years. so our growth has not been impacted at all. >> you know, it's certainly a critical part of helping the developing world to reach the next level of economic status, so congratulations to you on all your hard work, and we really appreciate you joining us today, professor yunus. thank you r. >> thank you very much for inviting me. >> let's go to jim goldman who has breaking news on microsoft and nokia. jim. >> yes, melissa, this has been speculated. microsoft an

it did all of the subprime lending outside the bank, not in the subsidiary bank. >> it was subject toalifornia law? >> but the bank itself was not subject to california law, and it is also where they did not do their subprime lending that caused them a number of problems. >> prime lending it was an entity that was subject to california -- a prime lending was an entity that was subject to california law, attorney general review, all that? >> at that time, before they switch charters, yes. >> did they do that, to your knowledge? what completed the use? @@@@@@@ e bank, i presume. and the company that the bulk of the subprime was a california-regulated market and it -- california-regulated mortgage entity? >> i don't remember the percentage of california as opposed to new york or other states. >> when you, your organization, reviewed and inspected these holding companies, did you notice anything? did you inspect them, or just the fsb? >> we spent a lot of time with the fed and the occ earlier in previewing for what it was that was coming our way. we also convened shortly after granting th

are not talking of the subprime mortgage youere not getting money to subprime mortgages.we are telling the bank, not so much whoever lend the money, that they have to accept that. that is not public money. what i said was we would lend the money to people who were in trouble not because they had a bad mortgage, but because they lost their jobs through no fault of their own. i would differ with you when you said that was your situation. if you are included your mortgage -i'm sorry, please. [inaudible] >> no, what you said -- i was quoting you, you sd you don't see why everybody should hao he with yo personal situation. did you not say that? okay. th is at i was saying. i know, but that's -- i was in thsamehen you said -- i was going what you said and what i'm ying is this. i would differentiate bet someone who is in difficult it sushi was impruddnt, and meone w was in difficulty because of national economic product of the crisis caused them tlose their job for no fault of their own. i would say ithe circumstance of someone whoost a job in this recession, lending them the m

first of all, the subprime mortgage crisis was government created. the federal reserve had a long-term history that really -- i mean, starts before that and goes through this. you know, it's easy money. they had lost their sense of mission. i've watched congress since i came there and before in the mid '80s, wining for the fed to maintain loose money to grow the economy. that's not the fed's purpose. the fed has a very narrow purpose. armey's ax yumm is division of labor works when people mind their own business. the fed should have done that. now the fed has itself in a big pickle and it has to be cleaned up, disciplined and brought back to its tradition role. inflation, fighting inflation in the futures as a result of all of this easy money, all these big deficits, is going to be -- >> steve, how much baggage does he go into this second act with? >> well, i think dick armey is more decided about the causes of the subprime crisis than most economists are. >> but i brought this up to you last week as he was about to make his speech on friday, i said,

earlier we showed the sound when the subprime mortgage crisis is going on.didn't see that it would bleed into other parts of the economy. but i bet be can expect more of this type of questioning or issues to come up during the senate confirmation hearing. >> yeah. he will still go through this even though he's in the position now, he will have to go through the confirmation hearings and it could get tense. bernanke acted too slowly in the early stages of the crisis and republican richard shelby said he's disappointed by some of the fed's actions. still, bernanke is expected to win a pretty easy confirmation. despite the criticism, president obama is focusing on the end result and the end result is a stabilizing economy. the most recent example, home prices rose in the second quarter. the first time we have seen a gain there in three years. consumer confidence also jumped this month. let's give you the numbers right now very quickly. the dow up 98 points and nasdaq up by 11 at 2029. so, obviously, he will have to go through the browbeating, but more than like

that as opposed to subprime., but levelled off in the past quarter. even that improvement may not help the overall recovery. >> i don't see recoverings until we see unemployment drop. that's a year away and we have a continuing supply of housing coming into to the market because we have elevated other sources. the option arms and et cetera, it is a problem that will be with us. >> important aas to note that the usual suspect states are still the ones dominating the foreclosure numbers. california, florida, arizona, and nevada accounting for 44% of all foreclosures. >> diana, stay there and add another voice to the discussion. >> it's far from being over and this report confirms that. there is a lot of mortgages that are first turning delinquent and with an end to the foreclosure process and entered the market and will add to the oversupply of homes for sale. i think this is a concern and an hour, it is reason we don't think we have seen a bottom yet until foreclosures peak. that is likely going to happen in the s

he was asked again and again what about this subprime crisis. this doesn't feel right, this is what he said. >> we do not expect significant spillovers in the subprime markt to the rest of the economy or to the financial system. >> ouch. that's the fed chief who is the depression expert who there in the middle of all this happening was still saying the subprime crisises, he and many, many others say the subprime crisis will be detained. when he goes to the nomination process you'll hear some of this questioning about how do you know for sure what we're doing right now is the right way forward? >> aren't we coming up on the anniversary of the lehman brothers collapse? >> god help us, yes. >> so, my question is, you know, critics have suggested that he could have, he should have done more to save lehman brothers. what's your take on that? >> many of the people inside when that was all happening and literally going down and figuratively going down said they didn't have any other choice. they'll see the history books and write what was the fallout f

same with the subprime arms. good news is that foreclosures starts were basically flat thanks to government and banking industry loan modifications program. important to remember, of course, the foreclosure problem is still worth in those four culprit states. california, florida, arizona, nevada. they account for 44% up all foreclosure starts. talking about this on the blog. go to it. realtycheck.cnbc.com. mark? >> thanks very much. >>> let's get right to it. kick things off with bob pisani here at the big board. robert? >> another chance to sell off the market. and remember, there is a substantial amount of not just bears but bulls like the market to drop a little bit more because they want to buy at a lower price. they're still interested. look at the s&p 500. it hasn't happened. after monday's drop you think you would have a few opportunities to shuttle the market off right at the open. they tried and just like yesterday, it goes nowhere. even market immediately starts rising within a few minutes after droppin

quote - we see no serious broader spillover to banks or thift institutions from the problems in the subprime market. but just three months later, the fed and bernanke took their first action to try to ease the credit crunch... eventually lowering rates to almost zero and launching a variety of programs with the hope of thawing the frozen financial system. if ben bernanke returns next year as federal reserve chairman in addition to trying to re- ignite the economy he'll be in a leading role to fulfill white house plans to redraw financial regulations. president obama's efforts to bring new rules to finance and help protect consumers would expand the role of the federal reserve. we cannot go back to an economy based on overleveraged banks, inflated profits, and maxed out credit cards. for even as we've taken steps to rescue our financial system and our economy we must now work to rebuild a new foundation for growth and prosperity among the president's proposals that would likely expand the federal reserve - more oversight of financial companies and responsibility as the systemic risk watchdog.

foreclosures on subprime adjustable-rate mortgages actually fell this spring, while the number of prime fixed-rate foreclosures rose. prime loans accounted for one in three foreclosures in q-2. the mortgage bankers say that reflects the toll of job losses on home loan defaults. >> paul: there's a saying among investors: so goes trucking, so goes the economy. that's because trucks carry 70% of the manufactured and retail goods around the country. the industry is typically among the first to benefit from a pick-up in consumer demand. erika miller looks at whether the road ahead is bumpy or bright. >> people now are moving into bigger places, finally. and they're moving into homes again finally and even businesses are finding bigger office space because they're getting good deals, so why not? >> reporter: if you want to feel good about the economic recovery, talk with jon katz at flat rate moving. new york's largest mover says business has been improving steadily this year. ditto for profits. >> we're down slightly from where we were last year. but we feel good about the rest of this year.

and we all have to watch very carefully where prime mortgages are going because i think the subprimeis kind of behind us, not entirely but kind of behind us and the prime effect is beginning to take place right now. so i'd say that those are the two headwind factors which is why i'm cautiously optimistic about this. >> it's interesting to note it's not a subprime problem only anymore. we are seeing even jumbos, right? you've got certainly prime and larger more expensive jumbo loans, as well. >> absolutely. and that's a whole new phenomenon. it's not just the number of loans that are delinquent anymore. there's a big behavioral shift that's going on in our borrowers and the way we have to treat them is quite different to the way things were last year. >> nice too have you on the program. we so appreciate you joining us tonight. >> my pleasure. >> we'll see you soon. san ji daas is ceo of citi mortgage. up next, we'll take a look at one of the firms regulated by our last guest and that is the cme group. terry duffy joins me coming up. i'm racing cross country in this small sidecar, but

that's subprime mortgages and leveraged loans. and i would argue, the loss cycle is pretty much through in those asset classes. much we still have credit issues coming, but i think you start looking forward about those massive losses. >> that's what i'm saying, jeff. that's my point. you can earn your way out of this. the toxic assets on a cash flow servicing basis with a very steep curve and zero rate at the bottom, that's taylor made for earning their way out. >> and you kind of have to pick your spots, because to get bullish on banks in general, you've got to believe the economy is going to make a turn. but to get bullish in citigroup, you have to believe what you're looking in the rear-view mirror is a lot worse than what you're looking through in the windshield. >> can't i find a bank i hate and just buy it? look at this environment. the interest rate on the environment is so great for banks. i have to pipe down, i'm sorry. thank you, gentlemen. i appreciate it very much. i've got to get out. coming up, folks, natural gas pri

the numbers are being driven by borrowers with traditional fixed rate rather than those with subprimens with adjustable rates that kicked off the mortgage crisis. >>> and airline passenger revenue fell 21% in july of this year versus the same months as last year. this marks the ninth consecutive month in which passenger revenue has fallen from the previous year. demand for air travel remains weak despite double digit declines in the air fares. >>> starbucks says it will be raising the price on some beverages. the price increases are as high as 30 cents on some drinks. most items would increase about 10 cents to 15 cents but changes will eventually expand in other markets in the coming months and some basic items have price cuts like a plain old cup of joe. >>> a big financial boost to our area. the port of baltimore will help cut diesel pollution and also create jobs. the money is coming from the recovery act funds. the port of baltimore receives a total of $16 million. >>> here's an interesting new concept popping up all across the country now. it is called baby-sitter co- ops. basic

they also saw a higher proportion of subprime mortgage during the boom. >> nice to see, sir, ray khouchaba. you have been surveying minority groups in a number of urban areas, how are you sensing they are approaching this economy? >> well, tom, we're seeing three things. first of all an increase in optimism amongst these groups. first. second, much greater focus amongst african-american and hispanic communities on what they are spending their dollars on. third and probably most important, a significant increase in savings. when you look at this group versus the national average across ethnic, across income. so -- so there's good news. >> yeah. >> there on the changes and behavior that we are seeing. >> what are you seeing -- where are you seeing those savings come from? certainly the national savings rates spike significantly higher as the consumers are leveraging, paying back some of what they have borrowed. from the ethnic groups where are the savings coming from. >> we want to peel back, look at that more closely. as people assess needs versus wants, you know, as i look at my spending m

but instead ey lost money from subprime mortge exposure. >> paul: the swiss gernment took a break from its summer cation today, to hold a ecial meeting over banking giant u.b.s. the ba is negotiating with the i.r.s. on handing over theames of u.s. clients suected of evading taxeby hiding money in secret u.b.s. accounts. the swiss cabinet won'release details until a deal is reacd. on wednesday, bo sides will update a fedal judge on their on negotiations. >> susie: tonight's commentor wants regulators to crease the capitarequirements of banks. he's richard dekaser, esident of woodley park resech and the formerhief economist of national city corporation. >>eporter: most people would agree that it makes sense toet aside money during good timeto weather e bad ones. that why 90% of state governments have rainy day fds and 60% of american falies save some of their ince. but bank regulation nes to do more in this regard. as things now stand, ban are requed to hold capital at around 10% of sets to protect depositors, taxpayers and investors from their insolvey. but whenhe economy turns down d l

it didn'tbinge on subprime serities like some of the other western economies and especially the emergingpean econies did. so it didn't have ch a hard fall because it didn't soar as high. >> and franc also had pitive news. what is the explanaon there? >> silarly, france was sowhat bufferedrom all of theubprime contagi thing. as recently aswo or thre years ago, francwas an economicdnchline. the labor foe is not very mobile. it'sarder to hire d fire people. th cuts both ws. when youry insuleate yourselfamid a gbal contagio the likes we have seen the past two years, yu're bound to do better th the other economies. >> okay. but despite that, there are many european economi that are not seeing anyreal signs of hope. let's talk aboutgreat britain. ploymentate is up. spaiis now approachg nearly 18%. how do thos facts fit inith e news of tod? >> well,t showsyou that you're not talkin about a single eity in the european zone economies ain, for example, was precisely one of those economies that binged on subime, that espoused new paradigm thiing, that built condo as far as the eye can see, that ope

everybody doubled down for merrill lynch and morgan stanley and citigroup on the subprime area.aig stopped doing underwriting on cdos and the toxics securities. it's already out there. goldman does the thing. it's being interpreted as securities fraud. i think they clearly have a big pr problem. i don't know what that means. i have known lucas for a long time and maybe he should step up to the plate. a lot of this is totally insane. the financial break down as one of the main culprits. you have to blame warren buffett. he owned a chunk of moody's. guess what moody's investment did. they clapped the aaas and they were paying their analysts to rate them by volume. all the incentives were set up to slap the aaas. do i blame warren buffett for the collapse? no way. if you are using the goldman sax logic. >> thank you, charlie.ó cash for clunkers. a huge hit. what about cash for computers or washing machines or refrigerato refrigerators. >> or clothes or shoes and is this obama's best brand? >> we will follow the markets and up about 17 points on the trading session. "power lunch" i

subprime mortgages, horrible stuff.ed on the core tax business which is insanely profitable. 3.5% yield. >> the internet and competition is goglet their luncheon. >> and what is your prediction. >> hasn't happened yet. >> am i going to give my prediction or what? go ahead. >> cisco systems. they have come through the bad times and sector is leading the way out. i think the stock could be up 30% in 12 months. >> gary b., do you agree? >> i don't. it is way overbought. i would buy it on a 20% pullback which i think is going to happen. >> and your prediction? >> you think you have the ultimate prop. i have the ultimate prop, brian. citibank doubles, right? >> he is better looking than you, glow there is two of them, no! >> if i had a nickel for every

legal reserves related to its subprime mortgage portfolio may not be sufficient. goldman has been underperforming the market, particularly the bank stocks, for the last four or five days. a lot of commentary on that, there's citigroup up fractionally again here today. tradertalk.cnbc.com. i want to just close with priceline. the important thing is priceline had excellent earnings reports following orbitz, some of these other stocks. hertz and other big travel stocks did very well here in the past week. priceline now following next. melissa? >> all right.. bob pisani, thanks so much. taking a look at today's business headlines, mcdonald's july same-store sales rising 4.3%. that was better than expected because of a strong promotion of its new coffee drinks and a big jump in european sales. in the u.s. sales rose 2.6% as budget-conscious consumers hungered for the fast food chain's dollar menu. >>> southwest airlines is making a firm bid for bankrupt carrier frontier. late last month southwest put in a non-binding bid for more than $113 million. the move sets up an

the recession was caused in large part by the huge real estate market bubble fuelled by reckless subprime mortgage lending. but imagine this. imagine you made the most important investment of your life and for more than two decades you patiently watched the value appreciate before suddenly with little warning you were right back where you started. brian rooney has this report for our series "realty check". >> remember 1989? big hair and leg warmers were the thing. michael keaton was batman. >> i'm batman. >> george bush became president. not this george bush. that george bush. and bette midler had the song of the year. ♪ you are the wind beneath my wings ♪ >> that's a long time ago. so if you bought a house in some parts of lancaster or palmdale, california, for $100,000 in 1989, today that same house might be worth, oh, roughly $100,000. >> up, up, up and then crash. >> larry louie is a motorcycle dealer who bought his first house out here for $23,000. saw it appreciate to $100,000. he paid $150,000 in 1986 for his current house. and stayed there while it peaked at half a million dollars

potential lawsuits regarding some of their -- the people involved with the subprime mortgages. tradertalk.cnbc.com. let's go around the horn. let's go to all my friends. we'll start with scott wapner standing by over at the nasdaq. >> thanks, bob. technology stocks like so many other sectors bob showed you have been weak throughout the day and nasdaq sitting right around the lows of the day, down around 3/4 of 1%. research in motion has led big tech to the down side for much of the day today. was downgraded over at ubs. it's a valuation call. they also lowered the price target there by a couple of bucks, but the stock has been down about 5%. elsewhere in tech, yahoo is fractionally to the up side, but yahoo and microsoft are giving back some today. one of the stories i've really been following today is priceline.com. out with earnings. take a look at the stock. first of all, the stock's up 14% today. but take a look at the stock chart because the stock has been on an absolute tear year to date. first of all, priceline.com is at a new 52-week high today.y. it's up more than 100%

that could, the regional bank that's showing the big guys what to do and how they avoided the whole subprimeabout it, the music gizmo that wants to give nintendo a run for its money. "the wall street journal report" begins right now. >>> this is america's number one financial news program "the wall street journal report." now maria bartiromo. >>> here's a look at what's making news as we head into a new week on wall street. federal reserve chairman ben bernanke won't have to pol earn up his resume any time soon. during his vacation on martha's vineyard, president obama announced he will be appointing mr. bern anke toe a four-year term. he led the fed through one of the worst financial crisis the nation and the world has ever faced. the president cited bernanke's calm temperament, boldness and creativity in helping to avert a complete collapse for the economy. >>> the summer rally continued this past week. the dow industrials up eight consecutive sessions by thursday, after a late-day reversal. the dow fell on friday. u.s. home prices rose for the second straight month in the month of june. m

i'm just saying that those -- that the means by which these subprime mortgages could have been stopped, because they were too easy -- the credit was too easy. debt regulatory process was already there it just wasn't used. that's what mr. morrison just said. >> i think you have all convinced me at this point we have to prevail upon the speaker and leader of the senate to convene a committee to determine what the hell caused this thing. if we think 2/28 orbiters cause this thing, no wonder we can't solve this. it has nothing to do with this. is miniscule. you don't testify earlier, mr. locker, about the 200,000, or $200 billion in lost interest on a hundred billion dollars loss. it is minuscule. our problem is why are we accepting the presumptions that we have a role to play, a committed role, and why are we blind to really what happened? and i had to suggest, as i did earlier, you know, our civilians in the real estate breakup occurred in the last four years. and it is when securitized mortgaging left government regulated interested untrimmed industries and what wall street and wall str

it was also the companies like countrywide that were selling a lot of their subprimes to fannie and freddie. >> of course, we were all drunk at that party and it's a big mess. but, look. after two years the capital markets are beginning to come back. that's why we're starting to see the stock market come back. the bond market is open for business again. barney, don't close the bond market again. we need it in order to get the economy back on its feet again. david: mark, go ahead. >> what michael said is totally wrong. this is not a situation where barney frank has created the problem. and, steve, i think you've got a good point. what's happening is the mortgage companies and the banks are milking this system dry. they're taking the fees out of this thing and prolonging the crisis. they're not solving the crisis. give some money to the homeowners to allow them to hang on to their homes. allow and restructure the law to allow the renegotiation of these loans. david: last word. mark, thank you very much. no matter what happens in the home market, our informers tell home market, our informers t

i asked him, how did you know to short the subprime market?it was a weird thing where two analysts came into the office from bear sterns and lehman brothers and laid out the charts and graphs and said here's how it's going to happen. it will unwind in 2006 and will be a big explosion. think about it. this is two firms that were so heavily tied to subprime and real estate where you have an analyst telling brokerage. what does that mean? does that mean they are selling cdos and stuff and they are telling people to short? sometimes there is a conspiracy. >> lots of confusion as well. >> you know where i'm going with this. >> from goldman to bloggers. michelle and i had the discussion about the bloggers that keep writing the nonsense. most are anonymous. there was the cycle of zero. i called it zero intelligence and i said the problem is these guys and gals who say they are guys, i ran into one of those. >> they are anonymous. you can't pick out the information. >> i said they have financial interests and i guarantee there will be a scam and you d

than half of the delinquent loans were prime mortgages, evidence that the crisis has gone beyond subprimeorrowers. >>> the first phase of a new set of rules for credit card companies went into effect today. part of an effort to protect consumers from some practices congress said were unfair. nbc's trish regan joins us with more on this. hey, trish. >>> hi, ann. we have seen credit card companies raise rates ahead of today's changes. hopefully that will stop. beginning today credit card companies are going to have to mail your bill out 21 days before it is due. this will give consumers an extra week to avoid any late charges. the other big change, ann, they must give you 45 days notice before they raise your interest rate. however this only applies to fixed rate cards not to variable rate cards. majority of card out there are actually variable rate. consumers should also know they have the right to reject an increase in their rate and pay off an existing balance at the current rate. additional changes are coming in february of 2010. some include the fact that credit card come pans are goin