that was 31 million weak and subprime mortgages.f those, 73% were on the books of the government agencies. the blue happens to be freddie may and fannie mac. they were government-backed mortgage committees. -- mortgage companies. they are still in existence. they are, at the moment, insolvent. the government is controlling them and supporting them. just above that, the red is the federal housing administration. isnt is that the government what produced all of these mortgages. i am not trying to say that the private sector had nothing to do with this. we can see that about 25% of these bad mortgages were on the books of the private sector. but principally, if you're looking for the cause of the financial crisis, you would have to say that the fact that the government was holding 76% of all of these mortgages would suggest something about who was really responsible. let me go to the next one. now, why are we at this stage -- six years after the financial crisis -- why are we concerned about this issue? what you see here is a chart tha

kind of hundreds of billions of dollars bet on subprime mortgage bonds. >> stephen: letting up to the 2008 financial crisis. >> most of the inside of wall street was long, they owned subprime mortgage bonds. and the guys in the movies, the guys in the book from betting, they saw it coming and were betting against it. >> stephen: how many people you say that wall street was long, like everybody on wall street was like how is this. >> i think it's fair to say that up until almost the very end, all the big wall street banks, certainly the regulators, most investors didn't really see it coming. when i was working on the book, i remember asking the question, who was on the right side, like who were the smart people, all these banks were the stupid money. and now there is the thing that was shocking to me. you have these banks that have had call, like the best and the brightest from america's best universities, for 30 years, they ship these people in, and they commit mass suicide. i mean they make this-- these horrible investment decisions. the one thing they are supposed to do, right, is f

quite honestly, one of the reasons that there wasn't more aggressive efforts to address subprime lendingas the fear of cutting that off. again a very strong distinction made between predatory lending which was already illegal, it was a question of enforcement so we can debate about enforcement, versus subprime lending which was viewed as a different kind of thing. >> let me take it from a different angle. before your book, you write i don't think he fed staff spoke about how good the staff was and in my dealings i would agree with that. i don't thing the key fed staff are captured by the firms they regulated in the sense that they perceive to be in their own career for financial interest to go easy. they were open to arguments that regulatory burdens should not be excessive in the competitive market forces would, to some extent, extent, deter poor lending practices. i work at an institution where lobbyists are omnipresent. regulators here are some the same people you might remember. after dodd frank passed they said now or at halftime. now we need to go after the regulators. you and i an

build on subprime mortgages? i don't think so. so we didn't really have the right weapons at its disposal. that doesn't mean there was nothing to federal reserve could have done and should be done but most of those would've could've were from the fed regulatory role of something a few minutes ago. tell the bank is to stop doing this, rather than their monetary policy. >> host: was anyone yelling the sky is falling prior to september 2008? >> guest: by the time he got to september 2008 loss of people were yelling the sky was falling. i doubt any of them how badly it would fall after. but there were plenty of people issuing warnings. by then, of course, the housing bubble is way, it's actually starting to go down by 2008. house prices are already falling. that's why you d had to be that smart to start issuing warnings because a lot of these mortgages were going to go bad if house prices went down. people would not be able to refinance. the securities that were therefore built on these mortgages was going into defau

we have played in the higher quality auto story as well as the subprime story. but in today's market where spreads in both sectors have widened pretty significantly, we're finding more value in the high quality, not the subprime space at the moment. >> we'll leave you with one final question because people say this is really the housing problem redux on a smaller level. and the housing issue, as our viewers know s that crap loans were bundled in with good loans and then sort of packaged together and sold. is there any indication that these crap for lack of a better term, auto loans are being bundled with the good stuff or can you really identify the good stuff as the good stuff? >> i think it depends on which name you're speaking towards. there are certainly programs out there that do pubundle a wide spectrum of loans out and pile them into one broader securitization. then you brought up the story of subprime auto loans and generally speaking in the market they tend to be two different buckets, if you will, where the higher quality securitizations go into a uniq

again,again, it gets into the same kind of stuff about the subprime's.esponsible for knowing what is in that loan package? >> and it is obviously against the law for an american bank to help finance terrorism. my e-mail to city has bounced back as undelivered. i have to find someone else to contact. >> it will come down to what the application looked like and if he told the truth on the application about what he was doing and what kind of checks they have in place. it reminds you of the financial things we have seen in the past. >> it could put up feel freeze on this development. in some cases it looks to be a great source of funding coptic particularly when the banks are as frozen as they are. on the other hand,hand, you have to take responsibility for the loans that you buy. could they be considered a funder of terrorism? it is possible.l, i know th >> interesting. we will follow the story and be right back. mm hmm. just wanted to touch base. how did edward jones come to manage over $800 billion dollars in assets? huh. okay. here's our latest market ou

they've been trying to combat the effects of an economic slowdown brought on by the subprime mortgage crisis. then in december they lowered the rate to near zero for the first time in fed history. and they bought mortgage-backed securities and long-term government bonds to pump liquidity into the market. fed officials spent trillions of dollars before finally putting an end to their asset-buying program last october. they saw some encouraging signs that an economic recovery was taking shape. since then, investors around the world have been watching and wondering when the fed will raise the key rate. in march, fed chair janet yellen hinted that the bank would consider it once it's confident of the recovery in the labor market and prices. then in summer, global stock prices plunged due to concerns over china's economic slowdown. at meetings in september and october fed officials decided to keep the rate unchanged. meanwhile, the u.s. economy continued to get stronger. in november, the number of nonfarm jobs increased by more than 210,000 from the previous month, exceeding market expecta

we also knew that subprime mortgages were not doing well. what we didn' t appreciate was that this was going to trigger a broad financial crisis, a panic we only began to see that in the summer of 2007. >> were members of the fed having communication with the executives running the various funds? dr. bernanke: all the time. not necessarily mean personally, but bank of new york where tim geithner was the president , hank paulson in the treasury, lots of senior staff, kevin worsham who was a member of the board of governors worked at morgan stanley, and he was in touch with people in wall street. we had great intelligence on what was going on, but even people on wall street didn' t have that clear a vision. >> i remember sunday night in the city when it was evident that lehman was going to collapse. it feels like yesterday to me. tell me about that night for you. dr. bernanke: we were worried that if it failed, it would another level and create a huge problem for the economy. we tried to save it. we used the same strategy we used with another

we sold 7.5 million subprime mortgages to people who got the risk was not present -- who thought the risk was not present because even know they cannot make monthly payments, there were lots of them and they were lumped together and they were sold into the global market as soon as people began to look carefully and they said, oh, my god, they have no value. now we have $21 trillion of sub prime carbon assets. we are challenged to make the right decision where that is concerned. the day before yesterday, mark carney, the head of the central bank in the u.k., gave an amazing speech which i commend to you about the risk to the global economy inherent in the stranded carbon assets and called upon the u.k. business community to look at the fact that they are over invested in carbon and to look at the enormous opportunities that are inherent in the carbon i think, installing solar equipment and one final point -- when we were founded in the great depression, the global economy is lifted up i was about to give up by the mobilization detached of them here at the post post -- the post-world w

we sold 7.5 million subprime mortgages to people who got the risk was not present -- who thought theisk was not present because even know they cannot make monthly payments, there were lots of them and they were lumped together and they were sold into the global market as soon as people began to look carefully and they said, oh, my god, they have no value. now we have $21 trillion of sub prime carbon assets. we are challenged to make the right decision where that is concerned. the day before yesterday, mark carney, the head of the central bank in the u.k., gave an amazing speech which i commend to you about the risk to the global economy inherent in the stranded carbon assets and called upon the u.k. business community to look at the fact

then subprime, 2%, 3% of the subprime.ge credit bubble orchestrated by this and this is just the beginning of the little thing that we're going to, think is totally contained but spread to something better? any possibility of that? >> sadly the answer to your question is yes there's a possibility because when you have interest rates, in my view, at a level below at outwhere they should be at this point in the cycle, people can do things that they shouldn't be able to do and this is one of them. i guess one of the things that make me feel better around energy is this has happened, this energy boom and now bust has happened largely outside of the banking sector, unlike earlier energy booms, unlike the mortgage crisis of the great recession, this is a bit outside the system. doesn't mean it doesn't affect the system but that makes me feel better about the banks. >> okay. so we end this year, i don't know, looking like flat, isn't it? equity. >> flattish for the year, which is, i guess after three double digit years in a row w

leverage that the particular institutions -- broker loans for example were highly leveraged and subprime mortgages especially when they got into securities were highly leveraged. so it's more the leverage issue than it is the issue of bubbles. bubbles, per se, is not a pejorative term if i may put it that way. >> i want to ask just one more question about the current policy and market reaction and then move on to some of these other areas that we were going to talk about. notice this morning the long end of the curve, 2.25, basically unchanged, maybe even a little lower in yield on the 10-year. it reminded me of the conundrum that you talked about. how much influence would you say now the fed has on the long end of the curve, which obviously matters, because those are the ones that are going to determine borrowing rates out of the real economy. could you foresee a situation here where the fed raises rates on the shortened but the long end of the curve remains stable? >> well, that's basically what happened to us in the period when i said we're raising rates and the 10-year note ought to

this has now gone beyond -- it started as subprime lenders going out of business. things we forget about now. the special interest vehicles. and got into core america. it will be very difficult. it took 15 months to get into the liquidity crunch. i said this is going to be very difficult. it was not difficult in the middle of 2007 when other stuff was going on, but this was affecting people. it was considered to be a banking crisis. it was actually in economic crisis. it got to the people that were not overleveraged. the engine of the economy cannot go so how do you get out of it? charlie rose: how does bank of america, the second largest bank, have to change? brian: we ask yourselves a lot because of you think about it bestthe time to make the decision is in the best of times. what you will do today is what you will see in the next crisis. not the last crisis what you could not do. that is an easy decision. you look at it and say we should not have all these home-equity loans. that is easy to stop it. i think that is the key issue. what can we not do now. we have

consumernce, subprime used to be an arm of citibank called will make financial.by fortress led group called spring leaf financial. just one example of an entity that used to happen within a big bank, now happening outside the system. joe: is someone active in the credit markets? are you interested in investing in some of these loans that are produced by these online target places -- online marketplaces? david: i won't speak for myself, but it has become popular in the hedge fund community. they see it as a field of inefficient loans that they can better right -- better underwriter than other people. it is an interest in space. we are in the infancy of it. in between regulation, growth, and how it works, there is a long way to go. joe: thank you so much. fascinating discussion. next, we discussed how it all went wrong for mining giant anglo-american. ♪ alix: "what'd you miss?" investors abandoning anglo-american as it announces the scrapping of dividends, cutting 85,000 job, surpassing glencore in the year's worst performer. take a look at the five-year chart. sto

for american consumers and trying to prevent the kinds of practices that did not harm people with subprime mortgages. they threaten to take the american economy. unless your business model is based on unfair and deceptive practices you should have no concern about transparency in the cfp be having the data and using it as a tool to do better consumer protection. so honestly when i 1st saw the panel lineup i thought to myself my friend mr. gingrich has a phd in history and may no a lot about that, but what does this show about big data? it turns out you actually do know a lot about big data because let me put it like this. republicans in general claim they have collected more than 300 terabytes of voter data including more than 725 billion data points on nearly 200 million american voters. this information is matched to individuals and voter data files which contain personally identifiable information, home address, phone number, e-mail. not only are they collecting voter data, some of it lends out the data to other campaigns. they leasehaley stated a marketing firms and other private entit

this is the way signals occur when, for example, the first sign of the subprime mortgage problems occurs when bnp ends up saying they were having funds which are losing money, french bank is holding funds in the american market in sub primes? i think, what in the world is going on? that was the first sign that something was askew. and i'm a little concerned when i saw those reports, this is nervous making. i must admit the markets are still moving ahead in the usual, wonderful form. >> we have time for one more question. right here. maybe another one. ask kate. she's the boss. >> my question is about liquidity deterioration, chairman greenspan. are to profound changes in markets compared to the last 10 years that have created concern. one is the reduction in the number of market participants with heterogeneous preferences, or by corollary, the increase in the concentration of market power in fewer market participants. the second is the unwillingness of the broker-dealers and intermediaries to hold inventory because of the higher costs of capital and volcker rule and variety of things. ha

when the subprime market blew up everybody said, it's the size of cleveland. don't worry about it.etastasized into something bigger. when greece was having problems, everyone said, it's the size of cleveland. and it got bigger. if the high-yield market blows up, it's not a big deal. but that's just the beginning of it. 2007.ike we had some small markets having problems. we had a couple of funds having problems. and then 2008 game and it was way bigger. that doesn't mean this one has to follow that track. whenever you get a market like a high-yield having the problems it has, you can't ignore it. especially the type of problem is having. right now what's going on is investors are demanding their money back and the market is to illiquid so they are preventing them from getting their money back. that's what's most worrisome. our investors going to stop asking for their money back the rest of this week? stephanie: if the market continues to go down, more investors -- it turns into a runaway train. it's not an isolated market. they are completely interconnected. the commonwealth of mass

look into that, especially a subprime loan, you can get money.nd i don't think he was too worried about paying it back. having said that, if there's so much energy and jazz for the cause, then isis doesn't have to send them a check, right? >> that's right. you know, isis doesn't need to cross the border to inspire recruits. >> how are they inspiring them? obviously, there's social media sites and sort of bringing people in -- >> the social media sites are really incredible. the number of twitter accounts that they have where they push out these propaganda videos and these training manuals. we know the pipe bombs had the same sort of attributes of the al qaeda magazine inspired of how to build these in your house. >> they actually do. >> exactly right. >> here's what i don't understand, and you know far more about this than i do, but i used to like the columbo series and i'm scratching my head. it doesn't add up. if they are acquiring thousands of rounds of ammunition, all the pipe bombs, there were maybe a dozen more, all the ied stuff, obviously

matt: people talk about subprime auto loans and terms are getting longer.concern for you or ford credit if interest rates rise that it will be affected? mark: we have been prudent, particularly around the terms of in theand we have seen industry, terms extend overtime which is a concern for the industry. we have been in a tight range in terms of offering credit in the subprime area, so i think our team has managed it terry well and i think it will serve us well going forward in an era where interest rates are going to rise. matt: i cannot wait to get behind a mustang with a 5.2 liter v8. destined for the museum? is it going the way of the v12 with eco-boost, twin charge v6 engine? of demande is a lot for that engine. it is iconic. when you look at our mustang sales around the world, we expect it in places like europe where they would more prefer are engine, buto-boost in actuality, the majority of the orders are the v8. they want that iconic five leader v8 engine. i will never say never, but i think it has quite a life left to it. david: a lot less interest

could they be the subprime bonds of 2016? is there a lot of stuff leveraged on top of these high yield bonds, if they collapse a lot of other things could collapse too? >> there could be. this is not as pervasive and destruction sieve of 08 scenario. perfect example what the market. high yield bonds which have been decent investments in the past now turning over on investors, that sends people to the exits both in bonds and stocks as they raise cash. david: by the way, dow ended 252 points down today. that is where it settles. scott martin, united advisors. thanks for coming in. melissa. >> thank you, david. melissa: world leaders meeting at united nations this afternoon to seek stricter measures to restrict funding to the islamic state an terrorist organizations. fox news's david lee miller is at the u.n. with the latest. david, what did they get done there? reporter: moments ago, melissa, a vote held in the u.n. security council unanimous resolution to try to stop the funding of isis. take a look at the live picture of unit

a century of housing policy from segregation laws to the subprime mortgage crisis has divided baltimore lines and the effects of those policies can still be felt in the city's african-american communities today. it is in that context that we examined the unrest of april 2015 and the unrest that fell on the city nearly half a century earlier in 1968. former congressman kweisi mfume a son of baltimore, witnessed both firsthand. >> there was a lot of anger as there was in a lot of american cities in the 1960s. it was the period of the black power movement. people were very much divided over the war in vietnam. jack kennedy had been assassinated earlier that decade. and then his brother. and then dr. martin luther king. there was a lot of strife between people who thought that they had the right to impose their will on others and others who thought they had the right to protest that. so it's in that context that on april 4th, 1968 when dr. king was finally pronounced dead that evening that the community exploded. therefore there should be no peace. i remember leaving the funeral at my churc

the pendulum in terms of mortgage qualification after the subprime debacle clearly swung all the wayl yet. normal underwriting that worked in the 50's, '60s, '70s, is not around anymore. everyone is afraid to stand on a limb to qualify someone. and we're extremely strict. maria: what about the prices. cities like new york and say, look, prices have gotten away from me, i can't afford this. things have gotten to a much higher level. >> new york is a world unto itself. it's a completely different stratosphere. what we build is to the rest of normal america, so to speak, suburban and semi urban areas, all over the country. prices are going up and that's a good thing. affordability, fortunately, is still at very, very good levels. there's something called the affordability index and it measures the median family income compared to what they need to buy the median priced house. that's still very good, thanks to interest rates. interest rates are going to creep up. i'd be shocked if it's a big movement and if it has a big effect. maria: you expect the feds to raise rates december the next

stephanie: do you think we could see another subprime situation here? in the near future.he crisis of 2007, 2 dozen 8, 2009 was so extraordinary that we clean the slate for a while. for a while. still badere are practices, and over time, those bad practices could get worse, especially with the prodding of easierians to make money to subprime lenders. i just don't think enough time has gone on for it to be the pressure cooker that it was back in 2007. stephanie: tom, thank you. we're going to let you get back. it's late in the day in london, you probably want to head to the public. tom: there's a rumor the seat warm for me. stephanie: thank you to tom keene. something else i love is good business. joining us as kenneth frazier, chairman and ceo of merck and a member of the american ceo roundtable. there's a lot going on in the pharmaceutical and street right now. i want to talk about good business. you are part of this roundtable, and you say you can prioritize any cause or benefit you want. why are you putting health and wellness on the top of your list? are your employees

that was 31 million week and subprime mortgages.ose, 76% were on the books of the government agencies. the blue happened to be fannie mae and freddie mac, and as you've heard about them they were government-backed mortgage companies. they are still in existence. they are at the moment insolvent. the government is controlling them and supporting them. just above that, the red, is the fha, the federal housing administration, and above it is a number of other federal agencies. but the point is it was the government that called for and cost all of these mortgages to be produced. i'm not trying to say that private sector nothing to do with this. we can see about 25% of these bad mortgages were on the books of the private sector, principally if you are looking for the cause of the financial crisis you would have to say that the fact that the government was holding 76% of all of these mortgages would suggest something about who was really responsible. let me go to the next one. now, why are we at this stage, six years after the financial c

and he said this thing has now gone beyond it started in '07 as a subprime lender sort of going out of business. and you know, things we forget about now. the special interest vehicles and money funds. it had got into core america. i said this is now going to be very difficult. and it took 15 months to kind of migrate through the system, liquidity crunch. and when i said, i said this is-- i said this is going to be very difficult. and it wasn't that it wasn't difficult in the middle of '07 when other stuff was going on, but said this has now affected people who it was considered to be a financial crisis or banking krieses. it was actually a-- it had finally got into people on the fringes of it and weren't overleveraged. if you hear that in the markets, then the engine of the economy can't go. and how do you get out of it. >> you are a pilar of the financial sector. how does bank of america, the secretary largest bank have to change. >> well, i think it's been interesting because we ask ourselves a lot of that. if you think about it now, the time to make the best decisions about whatnot

not subprime necessarily, but going up to 60, 72 months. disconcerting.it to get people into cars they could maybe not afford otherwise. a risk that is providing factor. i agree that that is not something you want to see, helping people buy a car today that they might not want later. but people are doing better with death and paying on time than in the past. right now it's not a major concern, but it is something to keep an eye on. general motors's financing arm is out. it has nothing to do with the company anymore. how will that impact their bottom line? are tryinghink they to get an financing because that works with their arrangement, but they're real big business is talking about selling cars in delivering that way. the financing is good. the fundamental business is selling cars. how will they cope with an interest rate increase? they've have the first one. we will begin to see a difference for next year? economics expect, s&p expects an increase, a gradual .ncrease $15 a month is not a big deal for most people. who are some of the best companies that

it is not quite subprime n close.g but dam c >> i always ask consumers, would they be comfortable payingthly payments for a seven-year-old car? most of them say no. yet, they are still signing onto these contracts. >> how much of what happened in 2015 was because -- we talk about the suite of cars on the road today. people had to buy a new car. jack: there's a lot of replacement because the cars needed to be replaced. cars are lasting longer and longer. the alternative to a new car is a late-model used car. >> are you shopping for a new car right now? jack: if you were shopping for a new car, you might also looking at a late-model used car. those vehicles very often look identical to the new car. they have the same features as the new car and yet, they are priced significantly lower. those are alternatives that consumers are increasingly taking a look at. cory: some of the anecdotal evidence i've read is that those are not the cheapest those vehicles -- they are going more towards the high-end. : when people look to do car shopping, they often look at the monthly payment only. their budg

>> i don't think it is systemic and the way that subprime was, for many reasons. i think the credit cycle in the u.s. has turned. the scale of the damage to investors is up for huge debate. we have raising our exposure to high-yield. but you have to be selective. anna: thank you. stay with us. manus: mining misery. the worst performing sector in the stock 600 for 2016. is there more or have we hit bottom? ♪ anna: welcome back, this is "countdown. " nejra: air france says passenger traffic was affected by the harris terror attacks. -- paris terror attacks. the company said the impact will not be big enough to hurt the 2015 targets. orange is said to be in talks to mediaek telecom and projects. they protected -- rejected and $11 million takeover offer in june. firearms and rifle shares are up in the u.s. today. the company shares have advanced in recent years in the wake of mass shootings like the one in california last week. heavyweightng for names in an effort to reassure its clients. andbernanke, gordon brown, will be partrichet of a new global advisory board. th

you do not have the excesses by a long shot that you had in the mortgage market, the subprime mortgagesappened, and steve was talking about this. you have those ultralow interest rates, and that has made investors jealous for yield, so they have been dumping money into junk bonds, and of course it took skill to default on the junk bonds in the last few years. there was so much money thrown at them. they took the money and a lot of it is now in jeopardy. i think there is probably going to be a lot more problems in the junk bond market. michael: is this going to be confined to people who should know better, professionals, and if they lose money -- gary: you had a lot of individual investors, they have been retreating lately, but there is probably a lot more. when you have some of these funds, like some of these hedge funds, where they are not liquid -- what do they do? they close them down because they cannot liquidate except for very distressed prices. francine: what do you mean by a lot more problems? have the credit markets become so it liquid and difficult to navigate for hedge funds

. >> eric, kyle bass, who many will remember made half a billion dollars betting against subprime mortgagesinterview to another tv network in which he suggests that now is the time to buy energy if you are on a three to five-year time horizon. you should commit capital now. if i believe what kyle bass says and i am sitting at home and i want to commit for the next three to five years, what do i buy? what do i know will be there in 3-5 years time and will be a sure bet? >> the best risk to reward opportunities are buying those named that are perceived as being overleveraged. as oil recovers, the perception will swing from the balance sheet problems to the missed pricing. bay tex energy as i referenced. everybody is concerned because debt at $35 is very high. this is a name where there is no debt maturity until 2081 and given that it has fallin 80, it could potentially double that year and that oil will rally into the 50s by q-3 or q-4 by 2016. >> do you have a safer bet, a slightly less risky mid-stream bet that people could go for? >> i don't focus op the mid streams. they have held up much