no one knew what a subprime loan was. everyone now has opinions on it, but that is the start of it. the recession we had was extremely severe, and it was a financial recession, and it takes a long time to recover out of them, but we are on the right trajectory, and that is the important thing in terms of the outlook for this economy. inflation -- this chart is the consumer price index, the broadest measure of inflation, and it goes back to 1975. many of you in you may remember the very high levels of inflation we had then. now, it is down around 2%. this is a level that is acceptable for the federal reserve bank, and it allows them to use their tools to try to stimulate the economy because they do not have to use those tools to try to fight inflation, but this is the concern -- housing. i love the start because it puts in perspective how bad the housing market was affected in this economy. the overall economy is the green line, and it measures the change in the drop of the economy from the recent peak. it dropped about 6%. now, look at the red line. that is the housing market. you c

i can tell you that both prime and subprime, first hand, we are the whipping boys.if you really understand the mortgage industry, securitization and credit ratings, you will know the demand came from the securitizeers like -- securitizers let goldman and lehman. they get all their prices from lenders, but not one loan that we did was not under wic -- underwritten and reviewed by the lender. you say it is the brokers. i will tell you right where it was. i studied this. i have listened to the hearings. i have written articles. the problem was, when the rating agencies rated these subprime loans, rather than triple c or c, they rated it investment- grade. the proof of that, lehman and other company did not know because when they went down, they held these things. they thought was good, too. but rating them -- if they had raided them triple c -- that is what the pipe line came from. ben bernanke at one of his hearings said that demand came from the people who securitized loans. guest: and at that time, like the brokers or the banks or the lenders -- securitizers had no

baltimore ity 44 skinner 37:08 prince george's county, baltimore city were the subject of a lot of subprimey population 17 the 960-million dollar settlement &pwill be divided into four pools... with 25-million set aside forrvictims f people who've lready lost their homes will get cheek thousand dollars - once the &psettlement is approved by the feds. 36:14 we believe literally thousaadd of people in baltimore city will be able to take advantage of this settlement 21 officials say while the settlement involves five of the natioo's largest banks... the plan is to now go after the next nine. which likely means evennmore payouts in theefuture... for victims. myranda stephens, fox45 news at ten. marylanders could qualiff for the settlement checks. to find out if you're one of them and other ways you can benefit from the settlement, go to foxbbltimooe-dot- com-slash-newslinks. after.../ a... mild winter.../ mooe snow ... on the wayy .../ making it... twice... in onn week. week. is winter finally arriving or is it just a fluke of flurries let's go to vytas for yoor skywatch forecast. 3 3 that's on

when the subprime problems got us into this bad economy, you also had all this enforcement from the immigration. they would go after good people, arrived in the middle of the night to get someone from their home. i have a case of a young man where immigration came to pick him up at 5:00 a.m. his wife is a citizen. the other siblings were citizens. by 3:00 in the afternoon, he was already in tijuana in his pajamas with no money, no nothing. fortunately, the other people who were arrested gave him $10 so that he could call his family so that they could wear him money and he could go home. -- wire him money and he could go home. these are the types of cases i see. we need this immigration reform, but what i wish we could do it is -- i would like to see a media campaign. we want you to present the benefits that immigrants bring here. what we see everywhere is that immigrants are taking jobs away, they are the pressing salaries, they are committing crimes. that is not true. republicans to press our salaries. -- depress ourur salaries. [applause] look -- [laughter] look at all of the major cities aro

multi-billion dollar litigation today, and mid-sized banks like city national that didn't do the subprimeages or ro bo signing. and i think that's what you've seen over the last couple years, the fact that there are mid-sized banks like city national presents an attractive alternative to the biggest banks like the ones that are settling today. that's helped mid-sized banks. >> mr. goldsmith, can you help me understand one thing? i ask the question because i find it fascinating to see so many people so angry about the unfairness of this settlement. in their view those that perhaps have not kept up their commitments to their banks and mortgage holders in a sense being rewarded for that when those that have done what is right and made sacrifices -- a sense of getting penalized, they don't get so much from this. >> well, you know, you're raising a really important and i think difficult question. and just like i think there has to be a distinction between mid-sized banks like city national that didn't do robo signing, didn't do subprime, there should be a distinction made between decent americ

as with subprime in the u.s., investment bankers played on the weaknesses. the institutions that were supposed to protect the eurozone failed catastrophically and they felt the greek people. germany and eu institutions expressed outrage. in 2003, the story of how legalized financial trickery was writing the eurozone from the inside was not something that the guardians of the euro wanted to hear, so they ignored it. it is tempting to ask whether a single currency held together with such toxic blue is actually worth it. -- toxic glue is actually worth it. >> that is all for us this week. goodbye. >> funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. >> at union bank, our relationship managers use their expertise in global finance to guide you through the business strategies and opportunities of international commerce. we put our extended global network to work for a wide range of companies, from small businesses to major corporations. what can we do for yo

the subprime market exploded with the risky loans. some americans thought if you could get the house for zero down and they can figure out how to pay the balloon later. no one was watching the rating companies, the agencies that were giving the aaa ratings to complex securities that were filled with high risk loans. when the market crashed, those on wall street who saw it coming, they made millions. and those who didn't see it coming, they got bailed out. now we learn that $700 billion t.a.r.p. payment, that was small compared to the secret loan guarantee of $7.7 trillion. you ought to be outraged. youug incensed. those paying the price are not the large banks who are overleveraged sh not the insurance companies that took on too much risk, not even the executives who continue to repeat t reap the large bonuses. no, it's people like you and me. it was those of you in this audience and all across this country that are paying the price, average americans, main street businesses, our children who stand to inherit the worst financial mess

which is the more concerning risk which would be consistent again with what happened during the subprime crisis as well as again some of these other positions held by m f global. >> their investments in sovereign debt, i take it. when asked about the concerns you raised, mr. corzine testified that we allowed people to speak their minds and your testimony here today suggests something slightly different. you raise concerns about the positions, as you laid them out to the board, and you walked them through the risk scenarios and they were challenged as being implausible, as you said, and shortly thereafter, you were let go. but they were challenged as being implausible. can you reconcile those two representations of what was going on in the board room there? >> i'm sorry. can can you repeat the first part? >> well, the first part, mr. corzine testified, you know, we allowed people to speak their mind. that was his argument about what went on. but you say when you brought up these risk scenarios, you were challenged before the board that that was implausible. what you were arguing was impla

the problem, as i see it, is that the subprime mortgages would cause all the problems. you did not have to prove that you had money or a job. you had nothing and you walked out with a house. guest: i agree. caller: when we get in power, the president, all that he talked about for two years was health care. you have to buy health care. how're you going to buy health care if you have not got a job? i do not understand. how can people uplift themselves? the government does not have a way to make money, other than to tax people. that is the only way. guest: let me tell you this -- i wish that there was only one problem for us to deal with in congress. i wish that we could only focus our attention on the housing crisis, but we also have a health care crisis. we had people going into bankruptcy because of medical debt and all kinds of problems with the health care system. not to mention, we also had questions about civil-rights and all kinds of things. when you make the case that the government should not have focused on health care, but should have focused on the subprime mo

service style is got itself back in the black it was in the red in the boat now around half of the subprimedimitry call from investment research is going to expose it for the rest of the day. i think we'll see. relatively illiquid trading we'll see. the investors looking for interesting ideas before we had a couple of headlines. where a couple of headlines on the advertising work i think people will be focusing on the interest or i look younger. interesting but overall i think we will see a lot of preposition for the election as i don't expect their position to be very aggressive and people will be carrying a lot of page people we looking for ways to trim exposure in the. names. buses largest internet company a mile route has reported a fifty three percent increase in earnings for the second half of twenty eleven has benefited from attracting new users on selling premium services however it does expect a slowdown in growth this year following a similar full cost by russian rival john. don't worry. we're going to see how the exchange rates a getting going you can see there just slightly high

there that both african-american and latino households were more likely to be targeted by these subprimens. obviously, white americans also being profoundly impacted here. that disparity, when we already know from the raisin in the sun story that this disparity is a long-standing one with within american history. with he have to get to see black and brown home ownership and this crisis intervenes. >> don't forget, there was a gender element. especially for african-americans because many of those african-american home buyers were african-american women. >> right. >> who had overcome gender discrimination and racial discrimination to be able to afford a home and then just as they were getting in, the subprime market exploded, and they lost a tremendous amount of wealth in african-american communities and latino communities. 65% of wealth has been lost since 2008 there. >> so much the wealth of the communities were in homes. not in the stock market. this their homes. >> because they believed so much, i believe, in the american dream and getting that place. that has historically been how we

the government alleges route and matthew to mean knew the funds were failing but you but as the subprime mortgage market collapsed pulling their own personal money out while telling others to stay vested so apparently now at the last minute the f.c.c. has settled a civil suit against ralph cioffi and matthew tanny of the now defunct bear stearns as you see they knowingly fraudulent lee sold fraudulent mortgages to the likes of cal pers the biggest pension fund in the world and now what their punishment is. chump change according to the federal judge in brooklyn overseeing the case chalfie who made twenty two million dollars in two thousand and five and two thousand and six at bear stearns who paid just eight hundred thousand dollars and agreed to a three year ban from the securities industry teniente who was paid four point four million in his last two years that bear stearns will pay two hundred fifty thousand dollars and agree to a two year ban we need these guys they shovel the ape poop. they're the shovellers that's their job so embarrassed turns or some other bank emits a few trilli

the banks didn't get involved in subprime mortgages and the like. and so some of the things that created our housing boom and bust in our financial crisis were not as severe there. and that's why they didn't have as deep a recession. >> would you personally favor a model more like canadas in terms of better regulations? >> well, i don't think i want to go to just a small number of large banks. i think community banks and medium size banks play an important role in our economy. i think they were right in being tougher and making sure that banks were not taking excessive risks. i think our system is a plus here. canada has a less complicated financial system. >> finally, if you had to choose one of the mandates, which would you rather per snu. >> pursue? please answer the question. >> you said you had subpoena power? >> ultimately, central banks only control inflation. so obviously price stability is a critical function of central banks. and that provides healthier economy in the long term. that being said in the short term, i think some benefits coul

this catch twenty two rates are low so they look for higher risk that's exactly by the way why the subprime catastrophe started happening because rates were so low in the beginning part of the two thousands of banks looked for other ways and other places to extract high interest rates from and hence we saw what happened from a fourteen trillion dollar toxic asset scheme that was based upon that situation right now if they're looking towards europe for higher rates that's that's the reason but what they're doing is really betting on european countries and they want money markets come out of that that it hurts the countries even further so it's it's a negative catch twenty two in that respect and what about the impact of dollars lines that the fed open for european banks is that kind of a backdoor bailout for these money market funds. it's more of a bailout for the banks themselves to some extent for the money market funds that are customers of the banks in other words the managers that buy their securities from the banks that are really the bigger players in europe and so forth and it was de

and then it recovered and everyone said happy days are here again in ben bernanke he told us that subprime was contained it was all going to be ok and six months later everything went right down the toilet yeah and yeah when i was a loser is then at the end of the day is not everybody is going to be a winner who is going to be the major loser here just real quickly i think at the end of the day what you're going to see is those people who have become dependent upon the government cheese are going to end up being the biggest losers and it's not going to be by choice it's going to be by force which is an unfortunate result and i want to talk about some political solutions when we get back we're going to go to break real quickly but we will be back with more with karl denninger. and still ahead drivers start your engines because bidding is now open for obama is old chrysler on e.-bay the price may not be getting a break so we'll give you our three cents on the up and first or closing market numbers. wealthy british style most of the time to buy stocks because. of the. markets why not. find ou

because the banks were trying desperately to move the money to create loans to create this entire subprime loan market that padded the pockets of a very a lot of very very wealthy investment bankers and traders and and others but ended you know who ended up holding the bag and it was a lot of average working people who discovered that once the bubble burst they were underwater. and leo hindery as soon as president obama came into office he passed the the americans recovery and reinvestment act known as the stimulus act three years showing a clear line of demarcation from when the stimulus ask act was passed and an uptick in job creation numbers you're probably a businessman did you support president obama did stimulate the economy and if so. can you describe the results and why conservatives are calling the stimulus act a failure you know i think there was one clear message to the you know wait election and that is we're we're we're very broke and as an economy we're very united as a citizen really to try to fix this by the bipartisan nonpartisan response to the travails that bob in and he

agencies have been under great scrutiny since the financial crisis for giving rosy ratings to toxic subprime mortgage bonds. now this issue of hem not doing a good job is coming up again at mf global. in may of 2011, mn global had disclosed that it had this $6.3 billion exposure to european sovereign debt in a 10 k filing with the sec. and despite that being out there in the public be fear, neither of the ratings agencies took any action until october that moodies had downgraded them to near junk status the 24th of october and downgraded them again to junk not till october 27th and s&p didn't downgrade them till the actual day of the bankruptcy. so it raises a lot of questions about what they're doing, why they didn't see red flags and could this have been spotted sooner. >> and so from your standpoint as somebody covering this story, where does it go next? >> well,ern the chairman of the subcommittee of investigations and oversight for the house financial services committee revealed today that they're going to keep having hearings on mf global. they want to get a little bit more obviously i

they get the third trophy wife and the tax break and we get subprime. they get to candidates and we're told to choose but they get the gold mine and we get the shaft. i will be signing books and answering your questions out there. go to "vultures' picnic".org this is about the information job creators or vultures waiting for us to die to feast? waiting for the economy is to die to feast? i have not even got into the goldman sachs chapter. [laughter] that is what is inside "vultures' picnic" go to "vultures' picnic".org to download the first chapter. that is against my publishers corporate policy. download the first chapter spread the information around. because i want you to have the information about the 1% to answer the question why reoccupy. i want to mr. singer, a goldfinger in the rest of the gang and stoner webster no matter what shape they have shifted into, to know that the picnic is over. in fact, i agreed on one thing.

host: how often are subprime loan still being issued?uest: in terms of people who have subprime mortgages, they are still in the pipeline from the legacy impact of the bubble years, but in terms of loan origination, it is not occurring. in fact, 95% of new originations are 30-year fixed rate mortgages, and that will be the foundation for a much healthier housing market going forward. host: louisiana, thanks for holding. donald, republican line. you are on. caller: they keep talking about people are due this housing like barney frank and all theat. but the thing that befuddles me is that people should be responsible and know what kind of house they are going to buy. these kids have to go into a three-story house and are not able to make the payments. we need to go back to a 20% down payment requirement and let these people live like we did coming out of the depression, start out in a 1-room shack if they have to. they have the right to own a house, but it is their opportunity. it is not for the federal government to give it to them. guest

the subprime market exploded with these risky loans.s thought, if you could get the house for 0% down and they could figure out how to pay the balloon payment later been nobody was watching the ratings agencies that were giving aaa ratings to complex securities that were filled with high risk loans. when the market crashed, those on wall street who saw it coming, they made millions. and those who did not see it coming, they got bailed out. now we learned that that $700 billion tarp payment was catapulted compared to the secret loan guarantee of $7.70 trillion. you ought to be outraged. you ought to be incensed. those paying the price are not the large banks who were over leveraged, not the insurance companies who took on too much risk, not even the executives to continue to read these large bonuses even after the walls came tumbling down. no, it was people like you and me. [applause] it was those of you in this audience and the rest of the country who are paying the price, average americans, main street businesses, our children who stan

we force banks to maybe subprime loan, we force freddie and fannie to buy them and when the housing bubbleroke it, injected poison into the veins of the system. now look, if allowing banks and security firms to affiliate caused a problem, why didn't it happen in europe where they never had glass-deegle. and obama campaigned against gramm-leach-blyly for six months. he didn't change a single major thing. >> should banks be able to trade for their own account? >> yes. >> you say voker is wrong? >> i say voker is wrong. >> should they be able to sponsor priority equity and hedge funds inside their own accounts? >> in their holding companies, not in the bank. >> that was the fire wall you always wanted. >> thank you very much. you bullish or bearish? >> in the long run america is going to work, it's going to overcome not only the disease but the absurd prescription of the doctor. >> senator phil gramm, we appreciate it very much. tomorrow i'd be jond by ed lazear. i'm larry kudlow. we'll see you tomorrow night. tdd# 1-800-345-2550 let's talk about fees. tdd# 1-800-345-2550 there are atm fees.

it led into the subprime mortgages and it led into car loans that were ridiculous levels and credit cardans and a large portion is auto and the rest is student loans. the small increase in credit card debt in this data which is somewhat encouraging, only 6 percent increase. the auto loans are way up and that is good for the auto industry means they are selling cars but we are seeing ten percent or 12 percent increase a healthy move in an economy that is crawling out of a recession. so, that is cool. student loans everyone agrees but for the students they are out of freakin' control. they have completely exploded. and now passing credit card debt in terms of the debt owed on student loans. so, we have to have a wake-up call on the issues. >>neil: i am wondering if we as a people are back to splurging again, i worry we are not as worried about washington splurging, period. >>guest: well, i am always saying our spoil congress is a reflection of our spoiled spoil. we need to get our act together and we need to demand the same thing of folks in washington but it is hard when we run up our deb

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