three of the regional bank board directors are chosen by the fed. e are chosen by regional bank members. what would you think of having the three chosen by the region shows by d.c.? -- chosen by d.c.? >> to begin, i want to make clear the perception of conflict is more perception and reality. the members of the board are completely isolated from for supervisory positions, and most of them are lifetime employees. they are all approved by a board of governors in washington, so the conflict is not as great as it is made out to be. that being said, i think we would be open to changes of that type to try to make sure everybody understands their role of those boards regionally is to represent their area, their broad public, and to give us the information provided by vegas and other community development people, business leaders, and so on -- provided by banks and other community development people, business leaders, and so on. >> you have got five seconds. which you just lost. the gentleman's time has expired, and i am going to go to mr. foster for a minut

recently the ohio democrat said he would not support the measure. later, fed chairman ben bernanke testifies about federal supervision of banks. ♪ >> mr. speaker, a message from the president of the united states. >> president obama praised the senate today for passing and $18 billion bill aimed at creating jobs. his comments came after a meeting with irish prime minister bill cohen. the president will sign the measure on thursday. >> i just want to thank congress for passing this morning the hire act. it is the first of what i hope will be a series of jobs packages that help to continue to put people back to work all across america. this bill will provide tax cuts to small-business is that are willing to begin hiring right now, putting people back to work. it will also provide significant tax breaks to businesses for investing in their business, so hopefully at a time when we are starting to see an upswing in economic growth that will help sustain it. the bill also will continue to improve our ability to finance infrastructure projects all across the country.

i want it goes through this process of the fed being a prudential regulator. ve had all lot of people come in here for the last 18 months looking for the bogyman and all the calamity that has happened in the financial market. everyone says that it was not my fault. the bottom line is, on the the propose structure of the house or senate version, basically, the fed had regulatory authority over many of these entities that people are saying were part of the problem. the question i have is, if it did not work before, how does it work now? and the second part of that is -- these large financial institutions, if you had gone into them, let's say, 18 months ago and said we were concerned about what is going on here, and they say, we have record earnings and we're making lots of money and we have good liquidity, good balance sheets, and our ratios are right in place. you want us to stop originating mortgages? you want us to slow down our securitizations activities? you want us to get out of the credit default swaps activity? how did you miss it and how would you have d

three of the regional bank board directors are chosen by the fed. three are chosen by regional bank members. what would you think of having the three chosen by the region shows by d.c.? -- chosen by d.c.? >> to begin, i want to make clear the perception of conflict is more perception and reality. the members of the board are completely isolated from for supervisory positions, and most of them are lifetime employees. they are all approved by a board of governors in washington, so the conflict is not as great as it is made out to be. that being said, i think we would be open to changes of that type to try to make sure everybody understands their role of those boards regionally is to represent their area, their broad public, and to give us the information provided by vegas and other community development people, business leaders, and so on -- provided by banks and other community development people, business leaders, and so on. >> you have got five seconds. which you just lost. the gentleman's time has expired, and i am going to go to mr. foster for a m

captioning sponsored by wpbt >> susie: when it comes to when the fed will hike interest rates, richard fisher of the federal reserve bank of dallas is not a gambling man. >> i'm unwilling to wager on that, because it depends on, again, whether or not this economy keeps moving forward. i don't think we're going to go into reverse gear, but i do think we have an anemic recovery. it will take a while. >> tom: stay tuned for our exclusive interview with fisher. we get his take on rates, the fed's exit strategy, and job creation. you're watching "nightly business report" for tuesday, march 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good evening, everyone. a top federal reserve official tells "nightly business report" that interest rates will "not" be going up for "some time." tom, just a short while ago richard fisher, the president of the dallas federal reserve, told me the economic recovery is "anemic"--

so why is the fed opposed to the audit the fed amendment? since 1978, congress has specifically, specifically exempted monetary policy decisions from these gao audits with good reason. if we politicize monetary policy by removing that exemption, individual members of congress would have the ability to challenge monetary policies decisions, and will. as i noted earlier, such an attempt to politicize monetary policy, i believe, is wrongheaded. it would result in less effective monetary policy for the american people. another frequently mentioned proposal on consideration, politicize the governor of the 12 reserve banks as i mentioned earlier. making pictures of the board of directors or the reserve bank presidents political appointees. on the federal open market committee by reserve bank presidents. such changes would weaken their regional and decentralized rector of the federal reserve and lead to a more centralized and political institution with less effective policy. or regional reserve bank presidents or chairs to become political appointee

when you talk to people at the fed or at the treasury and others, they say -- and perhaps rightfully,what did you want us to do? sit there and watch while the real economy melted down? you want to us teach a few lessons to speculators and traders and watch the economy crash? and the answer obviously is no. but there are ways to handle systemic risk and there are ways. handling things as the federal reserve system did in the aig bailout where the american taxpayer used -- was -- money was used through the conduit of aig to fortify financial institutions, some of which are foreign and not under the literal protective umbrella of the united states to manage systemic stability was a tremendous abuse of american taxpayers. because in the aig bailout, had they bankrupted aig and marked down all the exposures to those counter-parties and then the american people would put up exactly the same amount of money in recapitalizing all of those firms, the american people would have owned stock in this recovery, and they would have owned a piece of these firms that are all doing very well again. i t

you mentioned stand alone and you mentioned the fed. what are you betting on? >> interesting question, larry. at some level the white house and chris dodd in particular, since as you know, he's retiring from the senate, they just want to get a bill. how do we get republicans and make republicans cooperate or induce a larger number of republicans to cooperate? and so they'll get some pushback from the left if the regulator is made too week in that process, so i would bet that the thing ends up at treasury. that's how ultimately once you get barney frank and the house position reconciled with the senate position, i'm betting that it won't be independent. it won't be stand alone, but it will be within treasury. there's negotiating left to do. >> john har bood, putting his chips on the table. is the legislation that congress is closing in on viable? will it do any good? joining us now janet tavacoli, from tavacoli structured finance. and and the cnbc contributor and plus our own rick santelli. all right. janet, let me go to you. i frankly think this consumer protect

we also have limitations on the auditing functions of the fed. we insist that the vice chairman of the fed be exclusively responsible for supervise ory function report to the congress with frequency on those issues. the argument being when you don't have a single prudential regulator which is what i advocated earlier but the sfats and the others wanted to maintain the dual banking system began to break down the idea of a single regulator. the idea was to create clarity and account accountability which is what we've done with this bill. the fed has jurisdictions over non-banks with assets over $50 billion. national banks will be controlled by the o.c.c.; state banks by the fdic and holding companies of less than $50 billion would be under their jurisdiction. in the past, judy, you had overlapping jurisdictions creating a lot of... a lack of clarity, a lack of accountability, people pointing the finger at different regulatory bodies as to whom was responsible for not doing their job. >> woodruff: let me.... >> sorry. >> woodruff: you've referred in

the fed is managing the economy with other instruments. yesterday brian talk about the interest-rate on access reserves -- assets reserves. >> i did not have the benefit of hearing brian yesterday, an excellent presentation on shore. in terms of exit strategy, we have a lot of accommodations in place with a large amount of excess reserves. when the time comes, when it's time to move to less than highly accommodative policy to only accommodative policy to eventually neutral policy, we will have to either find a way to withdraw these reserves or somehow extinguish their power. one way to extinguish their power would be to provide an opportunity calls for banks to not be in the mood to lend as much. remember, we're talking about an environment where the economy is growing, so we want to make sure lending does not get out of hand. we want lending to take off. if interest on excess reserves is a possible tool to do that. reverse re-purchase actions would also have that effect. but i think, for myself, as the fed funds rate got close to zero and

a decision to raise the fed's short-term interest rate target may be unpopular. ises the cost of funds for businesses seeking to borrow, invest, or hire, leads to higher mortgage rates, and boosts the cost of government borrowing. and here's the connection to deficit. in the future, with large and persistent federal budget gaps, some people might hope that the fed would help finance all that fiscal red ink by boosting the money supply and tolerating a higher level of inflation. an independent fed would find it much easier to stay focused on its statutory goals of maximum employment and stable prices. an independent fed would allow interest rates to rise if needed to address inflationary pressures and resist calls to monetize the debt. by contrast, a central bank that wasn't independent might succumb to demands to keep rates low, even if the economy were in danger of overheating. to my mind, this is one of the greatest arguments for preserving the fed's independence. i have seen vividly how independence works in practice. at meetings of the federal open market comm

one of the things the fed would say is the board's job the wall. why are we doing this and not the board? this is what they're supposed to do, said and design compensation and improve it. what's interesting is as many of you know in 2002 after enron you had sarbanes-oxley, you have requirements that most of the directors be independent and they follow a elaborate procedures to be the interesting thing is if you look at a board like citigroup they did all of that. they were mainly independent directors and they followed all of the sarbanes-oxley procedures and they don't seem to have had a very good sense of how risky the institution of plus or what was happening. when we look we can see three things. but i believe account for that unit one is these are very large ports. citigroup was usually about 17 or 18 people. when you have that larger board of the psychologists will tell you there is a lot of avoidance of personal responsibility. second is surprisingly most of the board's of these mega banks had very few financial sophisticated institutions pe

guest: they're a group convened by the fed. it consists of a number of community advocates, people who work with consumers and communities across the country and a number of bankers engaged in lending. they meet regularly to advise the fed on issues of how the banking industry is doing in its relationship with consumers. you know, during the economic boom, during the housing boom, many members of that committee, many people who sat outside the fed came to federal reserve officials and said there are abuses occurring. banks are making loans they shouldn't make. mortgages are being made on outrageous terms to people who cannot afford these loans. this is going to go bad. and specifically what they said to the fed is you have the power under federal law to restrict certain types of lending practices to say this is inherently bad. and you're not doing it. you're not exercising that power and you need to. and the fed did not exercise that power until the housing market had crashed. and so during the period when it might have done the

she's been in the fed both as a governor and as a president. perspective on the -- i'm not sure who the other two nominees might be. >> i went, let the good times roll, let's go. how much longer are we going to live, senator, right? easy monetary policy now. and you guys can tighten when i'm 80. >> but other days you think it's the rate thing, joe. >> yes. >> you're a true keynsian, joe. >> can't we just do it? >> president bullard, thank you vex. and steve, thank you. again we'll be talking more about these issues in ten minutes' time with senator corker. >>> right now, a quick break, we've got a lot more coming up. we'll talk about the futures that have been under pressure and why they've been under pressure. >>> all right. welcome back, everybody. the u.s. equity futures are still under pressure at this hour. it's not necessarily because of the health care names that are under pressure. if you look at stocks like aetna and cigna that are higher. dow futures down by about 47 points below fair value. so keep an eye on what's been happening wit

charlie and i have worked together since he joined the fed in 1991. the federal reserve bank of chicago is one of 12 regional reserve banks across the country. these 12 banks along with the board of governors in washington make up our nations' central banks. his background prepared him well for this job. before becoming president, he was a director of research at the chicago fed, overseeing the study of monetary policy, financial markets, regional economic issues, and banking. much of his personal research has focused on measuring the effects of monetary policy on u.s. economic activity. as well as inflation and financial markets. it has been published -- he has been published in the american economic review, journal of monetary economics, quarterly journal of economics, a handbook of macroeconomics, and another journal. his academic experience includes teaching at the university of chicago, university of michigan, and university of south carolina. he gets outside the midwest. he has a bachelor's degree of economic it from the university of virginia, e

because it rates going up, i don't think the fed leaves it up. i think the long end of the curve goes up. the fed follows it. you still have the yield curve you like. that's not the issue. the issue then will be if the higher rate environment does something to the economic or the environment. >> you're staying with the bank play. >> in any version of the economy, you have risks out there. probably the biggest risk is fast being the market. >> a mark to market loans now. this could be an unmitigated disaster. >> they don't understand loans versus securities. and a lot of congress does not either. >> god help us. but the basic message is stay with the banks. banks are the only groups to rise today. very interesting. thank you very much. >> good to so you. >>> coming up, why is no one paying taxes? it's an incredible outrage, and it leads, by the way, to more taxes on investors which is exactly what the economy does not need. you're not going to believe the statistics we have. no one is paying taxes. robert rice and dick army will discuss recontribut

what the fed will do about that. to what extent do you... o higher interest rates pose a risk for the stocks going up? >> well, first of all interest rates, meaning longer-dated treasury securities, actually moved up during 2009 as fear began to recede and confidence started returning. we'll get more of that this year in our view. interest rates moving up, if it's just a bit, the economy, the markets can handle that. the real fear, of course, is if we have a run on the dollar and rates go up. i think the probabilities of that are not real high. >> susie: all right. and your other point about what is going on in washington. all this discussion about health care. do you think that there will be some kind of health care bill passed by congress? and if so, how will that play out in the stock market? >> well, markets hate uncertainty. that's what we've had for health care now it seems for months. i think predicting what politicians are going to do is a fool's game. i've learned that the hard way over the years. best guess is that the democrats wil

but sometimes the business cycle and, of course, the fed, are very, very important. we'll talk to senator judd gregg about this in a moment. but first up, i want to talk about this boom in stocks. how long can it last before the tax hikes kick in? is 2010 going to show us even greater appreciation? is the dow going to cruise through 11,000? let's bring in our ace investors. we have the president of berini associates. we have jim le camp, portfolio manager at macro portfolio advisers. hello, gentlemen, thank you for coming on. you've been a bull, i take it you remain a bull and i would like to know how far this great dow rally can continue. >> well, we just published a piece literally this afternoon called the rally one year and counting, and our attitude that this is a multiyear bull market, and that unfortunately, precedences don't hold here. so we're just going to play it as it goes. but i think you're in for a long ride. >> why don't precedents hold and let me ask you about the future tax hikes? we get a bunch in 2011, more obama care ones in 2013. what's the prece

we're going to talk about the fed. the fed ends its purposes of mortgage backed bounds. and be sure to catch the fuel time geithner interview on tomorrow's "today" show. is the fed cutting off the money supply inwhat is that going to mean for your investment. (announcer) we're in the energy business. but we're also in the showing-kids- new-worlds business. and the startup-capital- for-barbers business. and the this-won't- hurt-a-bit business. because we don't just work here. we live here. these are our families. and our neighbors. and by changing lives we're in more than the energy business we're in the human energy business. chevron. >>> we are talking about the fate of the economy. $84 a barrel of oil. drill, drill, drill discussion, that can't be good. let's talk fed for a little bit. $1.25 trillion in mortgage backed bonds they purchased along with $500 billion in treasuries, fannies and freddies. close to $2 trillion of new money. all ends today. no more new money. peter, what's that mean, no more new money? what's that mean? >> we are going to see a little steeper

>> well, it is the fed put, and we have been talking for years about the bernanke put, and the investor risk of a big downside move has been reduced drastically, and lot of cash has begun to flow through the equity market through retail and money market, and that is putting pressure on the options. >> well, that makes sense. if we have debt instruments and high-yield instrument giving me 40 cents on the dollar a year ago and now 80 cents on the dollar, i am less interested in buying protection and playing the interest market. >> well, that is true, when the high-yield funds are trading at 40 cents per dollar, they were setting up the bonds and buying puts on the equities in case they went bankrupt, but now as the high-yield bonds and the high-yield market is recovering and they are trading 8 0 cents n the dollar, it is less need for the protection. >> and some traders are underperforming the benchmarks, so for example on the s&p 500, if you are an equities trader, they are catching up, and less worry about the potential downside at this point? >> yes. most people are worried about under

because a decision to raise the fed short-term interest rate target may be unpopular. or businesses seeking to borrow, invest, or hire. it leads to higher mortgage rates, and it boosts the costs of government borrowing. and here's the connection to deficits. in the future, faced with large and persistent federal budget gaps, some people might hope that the fed would help finance all that fiscal red ink by boosting the money supply and tolerating a higher level of inflation. an independent fed would find it much easier to stay focused on its statutory goals of maximum employment and stable prices. an independent fed would allow interest rates to rise if needed to address inflationary pressures and would resist calls to montize the debt. by contrast, a central bank that wasn't independent might suck come to demands to keep rates low even if the economy were in danger of overheating. to my mind, this is one of the greatest arguments for preserving the fed's independence. i have seen vividly how independents works in practice. at meetings of the federal open market committe

the feds arrested three members over the weekend. seven arraigned in detroit today. the other suspect is on the loose. the raid took place in three states, michigan, indiana and ohio. the group calls itself hutaree and members were preparing for the anti-christ. according to federal documents the plans included ugly stuff, including killing police officers and attacking their funerals with bombs luring officers to their deaths. david lee miller is live in the newsroom here in new york. >> they called themselves christian warriors but there was nothing christian about their alleged plot. according to a federal indictment, members of the hutaree had a plan to kill anyone connected to law enforcement. first to get the attention of local police through a fake 911 call or killing an officer's relative. step two, attack the funeral and law enforcement officers in attendance. the third phase called for hutaree members to meet at rally points with trip wires and bombs to begin a widespread uprising against the government. authorities say they planned to implement the plan in

quite concerned by proposals to make the fed a regulator only of the biggest banks. it makes us essentially the too big to fail regulator. we don't want that responsibility. >> bernanke argues that the central bank needs to be connected to both wall street and main street to get a complete picture of the economy. >>> kraft is the latest company to give in to pressure to make foods healthier. the nation's biggest foodmaker says it is cutting the salt in its products by an average of 10% over the next two years. that affects more than 1,000 products including oscar mayer and velveeta. >>> general motors lost about $88 billion from 2004 until it entered bankruptcy last year. but the automaker's new finance chief says there's a reasonable chance of earning a profit this year if the economy cooperates. he also says the company could sell stock to the public later this year. but executives are in no hurry to do that. >>> nine-month investigation finds products intended to rid cats and dogs for fleas and ticks kills hundreds of pets each year. now, the government is mandati

or when the fed makes them a stake, bad things happen. reddie and fannie, fannie mae and freddie mac to government can unshared out the bubble. $1.5 trillion is suspect eber, no private companies could amount on such a scale. and then when the disaster hits, another utterly boring subject, accounting. government regulation changed. anything called market to market accounting deals with how do devalued bank capital. traditionally, the bank but a bonsai $4000 for regulatory purposes it was kept on the books at $8000 a month the bond went bad for the banks of the bonn. otherwise for regulatory purposes or capital purposes, kept about 1000. but in all part of the last decade, especially 2007 the robust change creeping up like a day trading account. so when the market turbulence, suddenly banks capital was not just suffering -- is suffering a hit from that paper, but also for perfectly good paper where there wasn't a decent market. so if you look at the actual losses of banks and insurance companies, do you realize most of those losses came fro

. >> reporter: she said the feds want the program in place by 2013. she is determined to have the district's policy written and ready to go by then. >> there is a balance between making people feel uncomfortable in any part of our community and then ignoring the fact that we have people here that we may be able to take off the streets before they commit a violent crime. >> reporter: not one person testified at the hearing was in favor of the program for a variety of reasons; notably police work. >> people will be afraid to interact with police. secure community means coming in and making arrests and then fingerprints being sent to ice, they will be less than inclined to work with us. >> reporter: the aclu says it's he will every illegal to share it with the feds. >> the feds say it's the practice of the district of columbia not partner with the federal government on immigration enforcement. very clear. >> reporter: the chief is open to hearing from anyone in the community on how the policy will be crafted before it goes into effect: at the hearing chi

the fed gets it wrong, you get the world of stalling or flooding the engine.the early part of the last decade, the fit start to print for its own reasons too much money. they artificially kept interest rates low. ladies and gentlemen, you could not have had a housing bubble is the fed hadn't supplied the fuel for it. it just could not have happened. anytime, especially a bank as important as the federal reserve prints too much money, provide excess liquidity, that things will happen. in this case, it first hit the commodities market as it always does. and went into housing. the 1970s, it went especially in the energy industry and in agriculture, and a commercial real estate. look at iowa, in the 1970s they were encouraged to borrow, lan prices soar, crop prices were. this will go on forever. and in the crash came in the 1980s. texas energy, real energy space had a depression in the 1980s. in fact, every major bank in texas went under, once controlled local. every single one had to be liquidated or bought out by another bank. so it's just where it's going to ha

guest: they're a group convened by the fed. it consists of a number of community advocates, people who work with consumers and communities across the country and a number of bankers engaged in lending. they meet regularly to advise the fed on issues of how the banking industry is doing in its relationship with consumers. you know, during the economic boom, during the housing boom, many members of that committee, many people who sat outside the fed came to federal reserve officials and said there are abuses occurring. banks are making loans they shouldn't make. mortgages are being made on outrageous terms to people who cannot afford these loans. this is going to go bad. and specifically what they said to the fed is you have the power under federal law to restrict certain types of lending practices to say this is inherently bad. and you're not doing it. you're not exercising that power and you need to. and the fed did not exercise that power until the housing market had crashed. and so during the period when it might have done the

i know someone who was at the fed at that time, said they opened up the champagne when they had homewnership in america pass, what was it, 70%? >> i don't know. >> they had a big champagne event because fannie and freddie had, due to pressure from democrats and congress and republicans in the white house, changed the lending standards and so that more people could own homes. >> all right, well, once these opening statements are done, and the treasury secretary begins to speak, we will take you there. >>> wednesday on "squawk on the street," small may be too high, big may be too low, but midcap may be just right for your portfolio. we're naming the names you should be on the watch for. watch the opening bell live on "squawk on the street" with erin burnett, mark haines and david faber week days at 9:00 a.m. eastern. >>> and right now the dow jones industrials up 41 points. we were up only 22 prior to the housing data, even though the existing home sales data is really rather unexciting, to be honest. and we are at a fresh 18-month high for the dow overall as that upward trend continue

the fed turned out to be right about this. rcome the fact that when we create a government-sponsored enterprise it becomes so powerful it leans on the very institution that was supposed to regulate it? >> even without the many failures in the g.s.e.'s, what happened in the derivatives market posed significant danger to the market. we would have to impose standards over the derivatives markets themselves. you are right to emphasize, the heart of all financial crisis when you have too much leverage and not enough financial capital to back commitments. that was pervasive across financial systems, not just in the g.s.e.'s. >> i have a few more questions for the record, and if you wouldn't mind getting back to me in writing, i would appreciate it. >> thank you, gentleman. and i recognize the gentleman from new york, but i ask for 20 seconds, if you would yield to me just to say that, yes, the fed was complaining about fanny and freddie buying up mortgages, but the fed at the time was refusing to use the authority congress gave it in

was running the new york fed. countenancing all kinds of risks that were taken at citigroup, which was under his purview. you know, it's troubling that we have the very same people who were really on the scene of this disaster. you just don't get a sense that they are really and truly reformers in, you know, the true sense of the word. >> moyers: well we will be watching what happens and reading what you write about it. thank you very much, gretchen morgenson, for being with me again on "the journal". >> my pleasure. >> moyers: listening to a seasoned reporter like gretchen morgenson talk about how money overrides reform calls to mind that wicked old curmudgeon and satirist from the last century, ambrose bierce, who described politics as "the conduct of public affairs for private advantage." that was long ago but in an eerie way he was forecasting america's perverse political culture today. it seems like every effort to reform a system that's gone awry ends up benefiting the very people who wrecked it in the first

i am not a chairman of the fed. lso recognizes and understands the difference because in his statement he says "i have noted the fanny and freddie debt did not have legal standing as treasury debt" so he recognizes there is a distinction between sovereign debt and g.s.e. debt. >> they are different. i want to emphasize in saying that they are different i want to make sure you understand that again we will make sure they have the financial resources necessary to meet their obligations. >> and i undp. and the chairman says the same iggw@@@@@@@ @ @ @ @ , @ @ @ @ @ these institutions have the ability to meet their obstacle gages present and future. >> so the chairman is incorrect when he states there is a distinction between the debt they have and sovereign debt? >> no, i don't think so. you know the answer to this question. they are different types of obligations. but i want to make it clear that you understand we will use the authority congress gave us to make sure they complete their agreements. >> it is not sovereign

is there any way the fed can capture that? >> those are difficult issues to reliably will calibrate what, what the effect of different businesses practices are how the aggregate data proceed and that's why researchers such a driver in activity what universities and research institutions. there's a lot we don't understand and a lot we can learn. from the standpoint of making monetary policy and living within our dual mandate to focus on maximum employment at price stability, when i was talking about the labor market implications the first thing on my mind was not want what's the best way to engineer who the lowest possible unemployment rate because it has to be sustainable level of unemployment, and got to be sustainable growth and that's what we're after. what was first on my mind is one of the implications of these developments for our inflation outlook and, because we have an awful lot of accommodation in place and if you didn't have some confidence there were factors holding back inflation, holding firms back from marking up

it's the fed. he can put five out of seven governors on that and you're not going to have to be an economist, larry. just learn to be a printer or engraver. it's easy money. >> andy bush has the right idea of balancing the supply side of the money. but andy bush isn't going on the fed and nooirt are you, peter or me. thank you both. >>> coming up, senator jim bunning continues his one-man filibuster against extending unemployment benefits without paying for them. i think he has a good point and i think extending benefits may extend unemployment. we'll tall to allen reynolds from the cato institute. stay with us. we're the kudlow report '. you want to see the future? look at breakdown of europe. is that really what ewe want to do? i think not. >>> senator jim bunning is holding firm against extending unemployment benefits without first figuring out how to pay for them. his unpopular politics are, i think, good policy but that may only behalf of the problem. let's talk to alan reynolds. great to see

the way the fed works is the fed gives surplus by to its treasury chair. that was a way of solving the problem, because a consumer protection agency would have a source of funding. i think the people shown look -- i know there was a lot of negative reaction, but the fence off a lot of problems. it did not really report to our chairman, so it was a lot different than people thought. here is where it has been. don did republicans -- conservative republicans have agreed to broad scope rulemaking. we are talking about rulemaking were the shadow industry has to live by the same rules that the regulated market does. that is breaking ground. we do not want the consumer in enforcement. if the consumer issues exist, we want occ to implement or the fed to implement. we do not want rulemaking and enforcement combined. there was a veto process. we made the first real offer on consumers, and we feel better. it was the first real offer to try to get a deal done. there is a process. it is consultative. there is a veto process. if systemic risk is created, there is a veto

i know saying the fed, eyelids get heavy. there's no more boring subject in the world than monetary policy. i'll acknowledge that. and i'll give you a travel tip. if you ever find yourself in an airplane in coach, middle seat on the runway watching your life pass away. do you want a little bit of elbow room talk to your seat makes about monetary policy. you'll have all of the room you want. or if any of you are single, department out of a date, talk about monetary policy and you'll never see that person again. guaranteeed. but in essence, monetary policy is similar to an automobile. you can have an magnificent vehicle. you don't have sufficient fuel, you stall, too much, you flood the engine, just the right amount you have a chance to move forward. same is true of monetary policy, the fed gets it wrong you get the equivalent of stalls the engine. the fed started to reach the money. they artificially kept interest rates low. ladies and gentlemen, you could not have had a housing bubble if the fed hasn't supplied the fuel for it

. >> the san francisco fed president janet yellen says with unemployment high, the fed is no no hurry to raise interest rates. there may be a bump in the jobs market, but only expects unemployment to be at 8% by the end of the year. >> when the time has come, am i going to support raising interest rates? you bet. i don't want to see inflation kick up and we have to take the punch bowl away. >> yellen says that she's open to serving as fed vice chairman if asked by the president. the white house said last month that she's a leading candidate to replace done al kahn who is retiring in june. christine. >> nicole, the three-day rio tinto trial in shanghai has come to an end, even though it could take some time before a verdict is released. so far only one of them is pleading guilty to stealing secrets. rio tinto shares gaining 2% in sydn sydney. in london, they are currently up 0.78%. >>> still much more to come. german daimler is in trouble with the u.s. find out why after the break. >>> welcome back to "worldwide exchange." it is 5:23 on the east coast of the united states. you're looki

they don't care what the feds think. they think potential fed increases. k at housing, we still haven't seen any turn around in housing. the higher mortgage rates are likely and home buyer tax credits are ebding. >> housing and the difficulties in housing have been built in at this point? >> no. >> a small percentage of gdp and the reality is people don't anticipate a huge rebound in housing any time soon. >> one thing to say the market's bottom in housing. we have to see a lift in jobs and lift in housing and it's not. if we're here six months from now, bad. we need to see some real improvement and we're not getting it yet and i'm very hopeful we'll see it soon. >> let's move on to energy, energy stocks on the upside today in part because of that weaker dollar. >> look, president obama's announcement on drilling, even a little expansion of drilling is a good news and service oil stocks are up. not up big here. this is certainly a good sign, eliminates, gives the energy initiative a little bit of what they want and helps us down the road and won't be for se

because the decision to raise the fed's short-term interest rate target may be unpopular. it raises the cost of funds for businesses seeking to borrow, invest, or higher, it leads to mock -- to higher mortgage rates, and it boost the cost of government borrowing. and here is the connection to deficits -- in the future, faced with large and persistent federal budget gaps, some people might hope that the fed would help finance all that fiscal red ink by boosting the money supply and tolerating a higher level of inflation. an independent fed would find it much easier to stay focused on its statutory goals of maximum employment and stable prices. an independent fed would allow interest rates to rise if needed to address inclination very pressures and would resist calls to monetize the debt. by contrast, a central bank that was not independent might succumb to demands to keep rates low, even if the economy were in danger of overheating. to my mind, this is one of the greatest arguments for -- for preserving the fed's independence. i have seen vividly how independence works in pr

. >> easy money from the fed. greece is a gift. greece brings down the euro. that drives up the dollar. that holds down inflation. that gives the fed more open field running plus profits. dave kelly, i just want to say, david, i was reading your notes from your report this morning. this is really as good of stuff i've seen from anybody. i hope people read your stuff. you talk about price setting regarding the various health care sector. give us your thoughts on price setting. obviously from prices often come profits. >> for the moment it looks like everybody's basically punted here in trying to control pharmaceutical costs, insurance costs. i'm not seeing a lot of price control in this. i'm not seeing a lot of control of consumption either. i think the big end game apart from the increase in people covered is we're going to see higher overall health care spending in the u.s. economy. that doesn't stop the economy from growing. it's basically a choice we're making as a society pip think the u.s. already leads the world in terms of health care spending per perso

we do not think the fed will move much. e secular headwinds will continue to be and secular idea and long-term rates as well. >> at 11,000 the cyclical case is strong on the dow. you are still worried about the secular case. is it at this point time to be worried about the secular case? are you saying that 11,000 is pricey for everybody? >> one has to think in terms of risk diversification and not just asset diversification. you can have equity risk in a bond because bond prices fall. you can have interest rate in stock. you have to look at the commonalities. >> could the strong secular case take us to 14,000 before your secular case kicks in. >> in a nominal level of spending will be lower than it used to be. the rates of return on investments are lower than it used to be because you don't have financial and operating leverage you used to. you can have a gradual move up into the stock market. >> we could go to 14,000 but you better are worried the entire time is what you're saying? that doesn't help us. >> we're talking abo

. >> a local doctor with ties to the capitals is in trouble with the fed's tonight. i discovered the problem growing grass seed, is me. i'm a grass seed failure. well, i forget to water it, and the seed dries out. and once it's dry, it's dead. and once it's dead, it's just... [ male announcer ] that's why there's scotts turf builder grass seed with water smart. scotts best seed wrapped in a super absorbent coating that actually holds ter to keep the seed moist. so now i don't have to worry if i miss a day of watering. this seed makes it almost impossible to fail. it's me proof, in a way. [ male announcer ] seed guaranteed to succeed. that's the scotts advantage. >>> the washington capitals' doctor at the center of the steroid scandal faces a judge. >> we have new insight into the case. john gonzalez is live outside the verizon center with the latest. >> the chiropractor who lives in ruston, va., declined to waive -- who lives in reston, va., declined to waive extradition from florida. capitals fans packed the verizon center for a major rivalry game against pittsburgh,

don't forget at the end of the month, the fed will stop buying mortgage-backed securities and they crowded everybody out of that, and that is why a lot of people are overweight treasuries, so there is a temptation to get back into the area of the market where they have not been, trish, for a long time. >> and i don't believe it is google, because google has rallied late morning, because some perception that there is a detente between the chinese government and google. >> all right. all right. that is a question whether or not it is a retaliation from china as a result of the google situation, bob? >> but either way, no matter what is pushing it, you look at where the money is going and people are squaring up positions here when it comes to commodities, where we are obviously reacting to the euro dollar today and you have sell-offs across the board, so if money is not going into equities or commodities, people seem to be cautious today. >> well, the dollar is getting stronger and the euro is weaker -- >> well, looking at the -- we have sat here and kind of climbed the wall of worry and angs

i am not a chairman of the fed. nizes and understands the difference because in his statement he says "i have noted the fanny and freddie debt did not have legal standing as treasury debt" so he recognizes there is a distinction between sovereign debt and g.s.e. debt. >> they are different. i want to emphasize in saying that they are different i want to make sure you understand that again we will make sure they have the financial resources necessary to meet their obligations. >> and i undp. and the chairman says the same thing. although the chairman did say, i believe, thout the debate we will make sure there is no implicit guarantees, hints, suggestions, winks or nods. we will make sure it is explicit. with the debt we are incurring, is that on the same standard of the existing debt that is out there? >> by the g.s.e.? >> yes. >> yes. >> whether he says we should have no implications we are nodding and winking -- >> no, we are not doing any nodding and winking. we are saying very clearly, we will make sure using the

but the market participants and the fed clearly think that there's risk in the system.risk in the system, and that's where the ball is going to have to bounce. >> are we hearing the bond vigilantes coming back? >> some people say, it's going to lead to an inflationary situation. on the fed, on the other side, there's people that clearly feel that the risk is tilted toward a debt deflation. so somewhere in the middle. if you can lock it down and hope that it stays here, that's going to be the best possible outcome. as a trader, all i can say is that's the least probable outcome. >> let's get more reaction. steve liesman is standing by at the jeffries trading floor. steve, you got any more thoughts on what we heard from these numbers on the durable goods? >> well, the first thing i heard, becky, over the jeffries squawk box here was about that sizeable revision to january. they went up from 2.6 -- 3.9. so that's going to be important when we start figuring out gdp for the first quarter. 0.5% is okay and transportation is better. we look every month at the nondefense capit