it's become a $700 billion slush fund for the treasury. when the banks repay the money, it's not getting drawn down. is that the way this program should be handled? >> i think this is a serious problem and the best i can say is that congress gets what congress wrote in this statute. the statute speaks of a ceiling of $700 billion of which treasury cannot go. treasury takes the position that means when money comes back to pay down that that gives treasury as they describe it more head room to be able to use that money in other places where it's needed. quite frankly, if that's not what congress wants, then congress has to be more specific in the legislation. >> my guest today, elizabeth warren. thank you so much. >> thank you. >> susie: citigroup is one of the biggest beneficiaries of the government tarp funds. the bank said today the program helped to increase lending during the second quarter $6 billion worth. most of the loans went to state and local governments as well as mortgage lenders making more money available to new home buyers an

>> well, it's funny, i don't think that the treasury, excuse me, the fed buying of treasury securities has really done a lot to keep treasury yields down. but the fed has also been buying mortgage backed securities and agency debt. and there i think we've actually seen some frankible impact, i think that's what's been important. they are winding down the treasury purchases, but they are going to continue to buy mortgage securities, and i think that that will help to keep mortgage rates from rising, even if treasury yields start to move up, i think the ongoing purchase in the mortgage sector will provide underlying important for the housing market. and slowly make a bottom and perhaps start up modestly by the end of the year. >> susie: we have less than a minute left. go ahead, michael. >> michelle, i thought the interesting thing there too was the feds giving us an indication of how they are going to terminate some of these programs, not just a dead stop at the end of september, they're going to taper it off. and that gives us a sense of what they might do with a mortgage back repurcha

from the treasury market. at least the long end is minus 25%. the overall treasury market has a return of somewhere around zero for the year. and the federal reserve announced today they are not going to be buying treasury bonds after october. so we have a $1.2 trillion deficit. we've just been told that the $300 billion buy of treasuries has left the market, and i'm not sure where you're going to get support. in particular i know the previous guest was talking about foreign demand, but if the dollar's going to continue to head lower foreigners would be insane to fund our deficit at these low interest rates that are not just low on an absolute but a relative basis as well. >> tom, we're glad to hear you with something we bantered about a few minutes ago but we are happy could you make it. ira, thanks so much. and rick santelli,al at always, thank you for being here. with 20 minutes to go the dow not the highs of the session but still about 156 points to the up side. >> and rebecca, our next guest is not sold on

the benchmark 10- year rose to 3.75%. suzanne pratt explains what soaring sales of u.s. treasuries could mean for you and the interest rates you pay. >> reporter: on a hot summer day you might easily argue there's no such thing as too much ice cream. when it comes to treasury debt however, too much is never good no matter what the weather. the u.s. will be flooding the bond market with a wave of treasuries in the coming months the likes of which we've never seen. the issuance of debt goes to fund our federal budget deficit projected at about $1.5 trillion this fiscal year, the biggest ever. treasury market strategist gary pollack says remember the mortgage purchases, bank bailouts and fed liquidity programs. we have to pay for all of them. >> in order to stimulate the economy, they created programs to create economic activity. in order to finance these programs, the government must go into the bond market and borrow money from the public. >> reporter: how much money? barclays capital estimates the treasury will sell more than $2 trillion in debt this year, more than double last yea

the treasury still has a trillion and a half to two trillion to issue on a fiscal year basis. mebody has to buy the bonds, the chinese are pulling back and holders of reserves are pulling back. if the fed itself ends a program that was $300 billion, you'll have less demand going forward. i think caution is going forward in terms of yield and relative to tomorrow. >> as we wrap it up here in a word. what would you be buying or selling today, kent? >> continued to like investment grade credit and continue to think has more to go. with money market funds at zero%.? it's a lot of money out into ? credit. that's still a good trade. >> and bill?? >> erin, in addition to sugar cookie as the trade of the day, 50 prosecution appreciation of the stock market since march, ? similar effects on high yield and corporate bonds as well as we've mentioned, compressing ? yields lower and squeezing a lot of value out.? i'm ambivalent when it comes to bond market these days, but there's one particular security? if i had to choose, it would be? short-term securities of aig an? their subsidiar

both the fed and the treasury are the tp taxpayer.n is focus, and the fed needs to focus on monetary policy. and in order to be independent in monetary policy, it needs to be out from under the treasury's bum. >> mr. hubbard, do you think ben bernanke is doing a good job? do you think that has navigate ed crisis well, or do you think there is room for improvement? >> well, i think there is no question that the fed under chairman bernanke's leadership has taken very bold steps that have lessened impact of the crisis. >> do you think he'll get another turn? do you think he'll get reappointed next year? >> there is only one person whose opinion counts on that, and that is president obama. i would say that ben certainly deserves reappointment. >> talking of president obama, obviously there is some financial regulation reform on the table right now. and amongst those proposals, there is obviously to give the fed essentially the mission control spot. how much do you think that is also jeopardizing further the independence of the fed? >> i t

my experience in government, including the u.s. treasury, and elsewhere, is that institutions work best when they focus on a limited set of understandable goals and are held accountable tn the public for achieving these goals. as the number of goals and the lack of clarity increases, the effectiveness and the performance generally decline. my second concern is at responsibility for these new tier 1 financial holding companies would reduce credibility of the federal reserve by involving it directly in potentially ctroversial decisions. in fact, it seems to me the experience over the last few months illustrates this problem the fed's credibility is an extraordinarily valuable asset and it would be terrible to lose that asset. my third concern is that the plan would create a conflict of interest. indeed, this has been discussed widely already at this hearing with the vice chairman and others. firms in the tier 1 financial holding company would be perceived as too big to fail and perhaps too big to resolve to go through that complicated process

markets and new regulation, but they have been publicly disagreeing with pieces of the plan, so the treasury secretary said, hey, enough is enough. stop it, and one of the regulators who was in the meeting confirmed today that -- confirmed the story but called the meeting candid. that's the strongest word he would use. >> candid and frank. that's always good. peter, thanks. while the house is on vacation and the senate prepares to go, we will tell you who is looking over their shoulder at ethics investigators as lawmakers in d.c. keep up the push for a healthcare bill. to stay in tune with life after 50, i switched to a complete multivitamin with more. only one a day women's 50+ advantage... has gingko for memory and concentration... plus support for bone and breast health. just what i need. one a day women's. bret: senate democratic leaders are promising to get a bill passed and to the president sometime this year. the differences remain over what to put in it and how to get it past opposition democrats and some republicans. james rosen reports from capitol hill. >> emerging from their whit

and even the secretary of treasury now, mr. geithner, just a few months ago recognized that during the time he was in the fed, the fed kept the interest rates way too long, too low too long. how can you defend the fed maintaining indendence or secrecy in order to maintain stable rates and to even try to achieve a stable economy, which obviously nobody argues we have a stable enomy. >> so i do not equate independence and secrecy. in order i agree with the underlying recommendation. i think of your question which is indendence and secrecy in a democratic society are antithetical. i thinkt haq become much more transparent under chairman bernanke about what we are doing and why we are doing it. and i think we can retain our independence and your ability to trust what we're doing only by explaning to you what we're doing and why we are doing it. we have not only the statements which you mentioned in your opening stament after every meing explaning what we did and why we did it. we have minutes, you have hearings, there are monetary p

the treasury is the white house's financial political arm. don't these agencies have their own relationships with the oversight committees in congress? >> it goes to show you that there's a lot of hammers being used and there's a lot of speed being used and i think that this is a great little litmus test for a lot of issues going on between markets and washington. just consider that some of the regulatory -- i read these working sheets. it's kind of complicated. but it's pretty easy at the same time. there are products throughout that cause a lot of the crisis. they need shall kind of management attached to them even if it's just more capital set aside. but they can't agree to it. then they put speed, complexity and politics into this and how going to do something a thousand times bigger when something so obvious gets so muddled up. that's the way traders are talking about it about sgrp a lot of coops in the kitchen. >> exactly. >> when you look at what the treasury secretary did, do you think it was tactically smart, is he going make any hea

we know from the u.s. treasury department as the chinese are complaining about the dollar, the need for international monetary regime change, the chinese bought a third of their treasury, they increased their holdings of treasury by 38%, the second half of this year. they continued to buy throughout the first quarter before taking a lit before of profit in may. i think a lot of this stuff about china is mostly politically aimed by the chinese, taking its mind off the idea that the chinese and repegged their currency of the dollar. they have a large growing trade share plus. they've got problems at home. this -- let's not talk about that, let's talk about whether they diversify for dollars. bottom line no, diversification. >> just chatter. >> just chatter. >> interesting. very interesting. all right. hang on. >> we're still waiting on that breaking news. but in the -- okay, we're going head over to the breaking news desk. >> just got signals out. mary thompson has some breaking news. i'm sorry to put butt in. >> lar

beginning, the banking supervisor was not a part of treasuryat the last minute it was put back in. i just wonder if one of the things we ought to be looking at is absolutely ensuring that this banking supervisor -- even more independent than has been laid out. very briefly. >> may i respond to that? >> adulate this may surprise you, but i was a strong advocate of keeping it within the treasury but subject to the same fire walls we have now, which dose -- does give the agency is strong ability to operate independently. i believe creating a new board, if you have three other regulators still in existence and everyone has forced them i'd think it will confuse things. it is critical, however, you do have the statutory fire walls. that is a position that i actually advocated for. >> any different opinions in the panel? >> as an independent agency, i think the types of supervisory functions that occ and ots perform, and will look at them in terms of the front line prevent -- prudential supervision of the banks we ensure. i think there are some merits

of treasuries hit the market next week. a look at what thameans for interest rates. >> paul: tonight's "street itique" guest says the technicals aret looking so hot r tech stocks. he's todd harrison foundernd c.e.o. of minyville. >>usie: cisco systems' latest results beat expections despite a thirstraight quarter falling sales. our guest tonight, chairman d ceo john chambers says t tech slump may ve reached a tipping point. >> paul: i'm paul ngas. >> susie: and i'm susie ghar. this is "night business reportfor wednesday, august 5. "nhtly business report" is made possible by: this program was me possible by contributns to your pbs station fr viewers like you. thank you. 7//& >> susie: good eveni, everyone. the big question aut the economicecovery is when will american businesses start hing again? more than 6.5 milln people have lost jobs sincehe recession bega onriday, the labor department reports on unemploent for july. and today payroll processoadp said the nion's businesses cut 371,000 jobs lasmonth the 18th straight mont

just 235,000 loans have been modified out of the almost 3 million eligible for the program. treasury undersecretary michael barr says the industry needs to do more. >> we're disappointed in the performance of some of the servicers, we think they could have ramped up better, faster, more consistently. >> reporter: the industry says the home affordable modification program is just one way to modify loans. another way, the industry's hope now program, which has modified an additional 300,000 loans since june. paul leonard of the housing policy council says some of the banks on the treasury's list haven't been enrolled in the program long enough to make a difference. >> what's not reflected in the treasury's initial announcement is when the company actually signed up for the program, so i think in the fall we'll have a better sense for the companies that have really kicked it into gear. >> reporter: the administration wants the industry to modify half a million loans under the program by november. but even that goal is met, analysts expect a record number of foreclosures this year. steph

i want to ask you, will this new budget bankrupt the american treasury? yes or no. ch deficit. they won't bankrupt us but put us in one hell of a hole. >> robert reich. >> absolutely not. the proportion of gdp was much, much larger at the end of world war ii. we've had bigger deficits. >> you hated the reagan deficits. you used to hyper ventilate about the reagan deficits. these are five times bigger? the question is what are you using the deficit for? building the economy? trying to get back to full employment? >> hang on. a second round real fast. good question, robert reich. does this budget help grow the economy? yes or no, in one word. >> no. higher taxes don't grow the economy. >> i haven't heard anything about higher taxes. steve moore, you don't have an idea how to grow the economy. >> hang on, we'll come right back. we'll tease later in the prachlt our investors including the famed byron weem will tell us what it means for stocks. i can only get it out until next spring or next summer. i am worried about this tax, spend, inflate, my goodness, keep it right h

there are still concerns that he is everything ok if it is why isn't the fed and the treasury taking back some of this there not. but you will hear more in the coming days. taught colvin enough global over at the cme group. thank you tom. still to come the popularity of the cash for clunkers program has ignited lots of internet scams... what you should do to keep from falling prey to them. but first, why one author believes the price of oil will only go up from here and why it may not be such a bad thing. though oil prices have pulled back since reaching record highs over 140 dollars a barrel, some oil analysts believe there is only one direction for black gold to head in the long term: straight up. christopher steiner agrees and writes about a world of rising energy prices in the new book, $20 per gallon: how the inevitable rise in the price of gasoline will change our lives for the better." we trailed him around chicago to get his insights on a world when a gallon of gasoline costs more than 10 bucks a gallon. steiner's book is built on the premise that the rising middle class in pl

accordi to the treasury department report released today, so far fer than 8% of eligible borrowers have had their mortgage modified. >> we are not satisfi with the progress of servicers of banks in reducing foclosure sales. >>reporter:ichael barr is the treasury department official i charge of the making home affdable program. he says participating leblers, which present5% of the mortgage market, neeto improve. >> we're not satisfied with the pace of loan modificions. we're noatisfiedhat banks are doingnough to rea borrowers in a humane way, in fairway, inan efficient way. >> reporter: today's port shows that since may, the 38 lenders involved in e administration's program have modied just over 235,000 home loans on a trial basis. but over the samperiod, feclosures outstripped an difications by five to one. that mans for each home loan th modified, banks took possession of five homes. banks seized a record milli and aalf propertiesuring the rst six monds of the year, acrding to realty track, a quarter of the nation'sforeclosure fings were in california. many housingcounselors and homwne

it all started really with the president's top money men, the treasury secretary tim geithner and the chief economic advisor larry summers were asked over the weekend about tax increases for the middle class. summers replied that it's never a good idea to take anything off the table and similar words from secretary geithner. >> i think that what the country needs to do is understand we are going to have to do what it takes. we're going to do what's necessary. shepard: that is a bit ambiguous do. what's necessary. some experts interpreted comments like that as opening the door to the possibility of middle class tax hikes. just hours ago, the white house press secretary tried to slam that door shut. listen. >> let me be precise, the president's clear commitment is not to raise taxes on those making less than $250,000 a year. shepard: of course the president was very clear about that when he was campaigning. remember how he put it? >> i want to give 95% of working families the tax relief that they deserve. >> if you make less than a quarter million dollars a year, then you will not see y

the companies are being run by the u.s. treasuryny managers there that might have put up a really hard fight. right now they are busy executing the president's plan, and they really don't have a choice in the matter because as they say, in their earnings reports they are completely dependent on the federal government for the financing, otherwise the companies would not survive. they actually would not produce enough cash to meet their obligations, and they would default on their bonds if it weren't for this treasury backing. >> we talked about the house. what about the senate, what can we expect from them? >> the senate is always slower to act than the house. chris dodd has a bit of a conflict because he had one of the vip mortgages through countrywide that may have had ties back to fannie mae. so the senate is always a little slower there. but i think you will see, you will see shelby and dodd. is an issue that senator shelby who is the ranking member, he cares very deeply about. and i think chris dodd will probably go along with w

needed, the fdic can borrow fr the treasury to shore up it's depositnsurance fund, but elliott thinksaxpayers won't ha to any losses. >> my best gue is that taxpayerwon't have to put up anything.

the treasury department was going to take a look at this, but today we learned that treasury decided not to stop this paycheck from going through, because this trader's contract got in under the wire before congress passed these new rules. here they are, back in february, but on friday citigroup, a.i.g., g.m., chrysler and three other companies that got the most government assistance have to submit their pay plans to the new pay czar and treasury to have their pay plans reviewed and then he has 60 days to decide if he wants a change, to reject them, accept them, so it's unclear if these $100 million paydays are going to continue for wall street. bret: one guy is happy tonight. >> one guy is having a good day. bret: peter, thank you. well, if you are an average american, you are finally working for yourself now. let me explain. the americans for tax reform foundation and center for fiscal accountability say you have been working all year so far just to pay your share of the total cost of government. the mark falls 26 days later this year because of the increase in government spending.

here are some of the stories that we've been watching from around the globe. treasury secretary tim geithner reportedly losing his cool at a meeting of top u.s. regulators last friday over their faltering support of president obama's financial reform plans. geithner told his counterparts enough is enough. the meeting including fed chairman ben bernanke, mary schapiro and fdic's chief sheila bair. bair and schapiro have argued authority should be shared. geithner told them, even though as regulators are seen as independent of the white house, the administration and congress are the ones that set policy. democrats dianne feinstein and republican susan collins have dropped their opposition. last week wbl the two said they would vote no unless higher standards were put in place. and meet the new boss, same as the old boss, donald trump and daughter, ivanka have fought off a rival bid from bondholders to regain control of casino trump casinos. the company filed for bankruptcy a third time back in fed. trump and beal bank plan to take the bank private. >>> anz has agreed to

. >> how lg will the treasury's private investnt program go towards cleaning up thisess? bottom line is we really don't know. it's got two problems with it again. the first is whether or not sort of the ientives the trsury isffering to get to get people buy the assets will b enough toridge the gap betweenthe amount the banks are carrying these assetsn their books and what mos buyers think i the true value. e second big problem with th treasury's progras it oks only t securitytizedortgages. those are mostl the way mortgages are heldn large financial institutio but in th mid-sized a smaller fincial institutions, they're held as whole loans, that is t institutio the bank,olds the ole mortgage andhe treasury'srogram doesn'tdo anything for those. so treasury once again is focused on the very big guyut not on t rest ofheanking stem. >> theeports suggest th banks wi need a lot more mono. >> we're really tryingto see. we have to tak a loo througut the banking system, nojust at the two dozen big, big banks. andhe reason for that is we have to look at the smaller banks, notnly do th

when i was at the treasury, that is the way we did things. i believe that is the way things are done now. to put on a more solid footing for the long term is the best thing to do. you cannot have only one institution. all three institutions have got to work together to deal with the problems. >> the governor said a week before the paper was due out that he had not been consulted. the paper had been delayed. has the governor become a loose cannon? >> no,, the governor does a very good job. people recognize his talents. that is why he was appointed for a second term as governor. i think the important thing to recognize is that you will always have to have a system they're recognizing this in america as well. the regulatory authority, the central bank, the treasury, and the finance ministry about to work together. otherwise, you cannot deal with the complexity of problems that arise. some affect the stability of the system. some affect the individual institutions that are supervised. some obviously affect the public and public finances. therefor

> they make way more money than we do, and we do the work in the treasury. we keep the state rollin'. you know, we always have to take the hit. i don't really think it's fair. >> reporter: it may not be fair, but it's the law. >> all in favor signal by saying i. >> reporter: the gch has no control -- governor has no control over or legislative budgets, but legislators do. speaker of the house mike bush says he'll voluntarily take a 10-day pay cut and expects other legislators to do the same. a spokesperson for the court system says administrators there are studying the situation. the cuts made today include $211 million to counties which use the money from everything to paying police to paving roads. layoffs of local employees in jurisdictions all around the state now appear all but inevitable. in annapolis, scott broom, fox 9 news. >>> the cuts approved by the governor, treasurer and comptroller amount to $454 million. >>> police are stepping up patrols near the site where two virginia tech students were murdered. the bodies of 19-year-old david lee metsler

it's challenging for the treasury and also for the fed. there's a lot of hostility in congress. a lot of reluctance to give the fed new powers. and very frankly, congress just didn't have seem to understand the situation very well, because the treasury's proposal in fact doesn't give the fed vast regulatory powers since it's already the supervisor of almost all systemically important financial institutions. >> susie: real quickly, we just have a few seconds left, david. i want to ask you about larry summers. the rumor mill was that he was very interested in being the fed chairman. what happens to him? does he stay as the chief economic advisor to president obama or does he move on? >> i think he will stay as the head of the national economic council. the right-hand man for the president in terms of economic policy. i think he might at one point have wanted that fed chairman's job, but i think bernanke did a good enough job in handling the credit crisis and championship to deserve to be -- and -- deserved to be nominated. >> susie: we'll leave it there. thank you so much for comi

argues on the the new treasury proposal are notuite as balanced. gether the sec and treasury initiatives are positively addressing rating shopping, conflict and the disclosure, transmission issues and release fording with the nrsro from revelations. for our complete comment on the stomach and, i would like to refer you to our sub mission. on the current side the proposal despite its positives, threatens to erect more hurdles to competion in thisndustry. further solidifying the entrenched position held by s&p, moody's, and fitch. a few items. methodology disclosure. rules in the treury proposal on transparency of rin methodology could come dangerously close to meeting rating firms would have no intellectual property protection. ratings is closure requiring subscriber-based rating agencies to disclose their history of ratings and ratings actions can undermine the subscriber-based business model which is predicated on selling current and past writings to investors. treasury proposal covs all types of rating agencies, and for 100% of their ratings. requ

we had the auction today of relgs treasuries, the three-year. the government is trying to borrow a pile of money to fund these deficits we're taking on to fight the recession. the three-year went very well today. the question is the ten-year tomorrow and the 30-year the next day. >> right, the longer you get out on the yield curve, the more advanced in the future you get, the bigger question mark there is about whether or not peopling are r going to be interested in consuming especially as we grow deficits here and as we continue to want to have more out there.. the question is are these foreign governments places like china going to be interested in owning that debt longer out into the future. >> if you're worried about inflation like you were talking about with oil, why are you going to lend somebody money for 30 years to get a yield of less than 4%? right? that's the question. >> that is the question. that is absolutely the question. >> thanks, rebecca. >> coming up next is, we'll come right back with the closing count down. >> after the bell

what else do we need to see from the treasury market now? obviously, there's going to be more very quickly. >> yeah. there's going to be probably a trillion dollars worth of supply about the market. supply concerns, inflation concerns exist, but what you've seen over and over again is the treasury's able to more or less sell their debt, bring their debt to market with little concession on the part of the marketplace, and that is a net positive for stocks and for the economy. >> i would think so. one of the things that's amazing to me, rich, and you watch all these numbers like a hawk, we're what, 50% off the lows from march 9th? >> yeah. 50% up. >> at that level. in five months, though. and it has been remarkable. we've never seen that maybe since the depression going back five months. have we come too far too fast? 50% is an amazing move. >> some may think it's unprecedented. what would be unprecedent sd that droch, over 1,5000 in october '07 to below 670 in march '09. >> what does it mean to you that we've come historically fast in the last

no stated or local authority is going to be able to seal piece of paper if the treasury is out there ogging all the credited markets. >> without all those visuals, is the move that jefferson county.... >> as a cautionary tale for fiscal discipline. the problem is they really have too much debt. they have 4 million dollars in sewer debt and you can't expect the stimulus package to solve all the problems. >> it eventually all comes from the same potted. taxpayers all over the place are strapped. >> john is on to something here. if you are drowning in debt, the only way to do it is with inflation. >> that the only way to do it is to print more and more money. when is that a possibility? >> everything is possible, david. any's job numbers showed the recession easing out. job losses, six months before, they are about the same but the stimulus spending seems to be the spotted right now because of the credit crunch. the fact of the matter whatever recovery you are zbg from stimulus. it's only hundred billion of the $700 billion. cash for clunkers, it was going too fast. >> the matter is we s

when i was with the treasury, that is the way we did things, and the way things are done now. but to put it on more solid footing for the future is the best thing to do. you cannot have one institution only. all three institutions have to work together. >> but the governor said a week before the paper was due out that he had not been consulted and the paper then get delayed. has the government become a loose cannon? >> no. the government -- the governor does a good job and people recognize his talents. that is why he was appointed a as a second term of governor. the important thing to recognize is you will always have to have a system, and they are recognizing in america as well, where the regulatory authority, the central bank and the finance ministry have to work together. otherwise, you cab not deal with the problems that arise. some affect individual institutions, and some affect public fbses. the basis of our system, i believe is the one that will be followed around the world. it is not that we are moving from the previous system. we are trying to make it even stronger in

because corporate bonds really key off of the treasury and you have the ten-year treasury at still less than 3 1/2%. so there's not much competition for the stock market right now. hence it's had a 50% recovery. >> let's talk about how to invest, then, in this environment. you both feel there is still great value here and things are not overdone even though we have seen this market rally pretty substantially since the low. how do i want to invest, then, in this environment, doug? give me some names or sectors you that feel are ripe for even better performance going forward. >> yeah, i think the litmus test is companies with growth that have been able to grow the last couple quarters. if you can grow in those quarters, you can grow anywhere. and i think what you'll find is most of those companies trade for a very little premium over the s&p. so what i want to do as an investor is be willing to plug my nose a little bit, pay up for a stock, but i think that premium's going to grow significantly higher. that includes tech. it includes software. big names like apple or, you know, software c

in a statement to abc, the treasury said t.a.r.p. payments help reduce the deficit and decrease the need for additional funding for economic destabilization. but with a ballooning deficit and a still uncertain economic future, experts warn that there are still risks to be had. the weakest banks have yet to pay back the largest loans made. citigroup and bank of america each owe $4 billion then aig, freddie mac and fannie mae. >> the outcome of those depends on what happens next in the housing market. experts warn that foreclosures will continue to rise until unemployment peaks and, charlie that could be next year. >>> and on the money tonight, as summer winds down, gas prices drifted lower for the third week in a row. down 2 cents to an average $2.63 a gallon. >>> and there's a deal that merges mickey mouse with spider-man. disney is buying marvel entertainment and all its characters for $4 billion. >>> and when we bomeitack -- the extreme camp daring children with autism to push the limits. my name's lisa. i'm from fayetteville, north

treasury -- well, mainly to the risk council that's staffed by treasury and chaired by the secretary. >>hank you, i'm not sure i understand all of that but i'll try to absorb it but i appreciate your answer. dr. berner, you indicated that coordination with other regulators will be essential to all of this. can you be more explicit about that. what other regulators -- i assume the fdic andthers and exactly what that coordination would be. is that something the federal reserve would do or there should be some sort of council that would meet on a regular basis. how would that coordination occur in your mind, at least. >> well, i mentioned there are probably two aspects of that coordination. one is within our own boundaries in the united states and for u.s. financial institutions. but i also think that that we need to coordinate globally since our markets and institutions are global as well. as far as the u.s. is concerned, you know, we have a multiplicity of regulators and even in the sweeping proposal from the treasury or in other regulatory proposals i haven't heard any move to -- you

isn't that new hampshire to get the marginal treasury invest og back in the game including a stronger dollar?r? so can't we get a place where treasuries and equities are possibly rallying at the same time? >> i think it's possible. you brought up a good point. if you look, there was a point today where we were 3.83 in the ten-year and it's now 3.77. we're still roughly in a seven-week high yield low price. there should be plenty of investors especially when everybody's duration, their portfolios have too much short maturityies. i think the 10 and the 30 will go extremely well. you not only have real investors matching duration against liabilities but there is also a much jucier yield above 4.5 on the 30. >> thanks for your time. appreciate it.. rick santelli, the big sir coming to us from chicago.o. >>> specifically this big treasury auction, $75 billion worth of supply is a whole lot. do you go into something like a tbt in anticipation?? >> you know what? the tbt was a great trade.. karen was in it for a long time. it hurt you a lot lately. i hate to do this. longer-term investors wi

the treasury said it will negotiate that with congress. bret: thank you. >> oil futures fell below the $71 a barrel mark today. september crude lost 33 cents to settle at $70.60. gasoline is averaging $2.64 1/2 cents a gallon, up 2/10's of a cent overnight and almost ten cents a gallon in the last week. stocks began the week on a down note. the dow lost 32 and change. s&p 500 dropped 3 1/2 and nasdaq gave back 8. a house plan to get more jets for congressional travel is taking heavy fire, and what is the u.s. plan for the political conflict in ( conversation ) garth, you're up. hold on, i'm at capitalone.com picking a photo... for my credit card. here's one from my prom. oh, what memories. how 'bout one from our golf outing? ( shouting ) i know, maybe one of my first-born son. dad, mom says the boys gotta go. personalize your card by uploading... your own photo at capitalone.com. what's in your wallet? ♪ bret: as we told you a few moments ago, president obama spent much of the day in guadalahara where he met with his counterparts from mexic

the sidelines. i don't think they're going to ramp up treasury purchases. but at the same time, they're not going to do anything in the statement to signal that a near term tightening is imminent. that is is the last thing they want to do. what i would say is that the august meeting of the fed is going to be one of those meetings where the internal discussion might even think that we don't hear about are going to be far more interesting than the statement. they'll be talking about things like sterilization, exit strategy, all sorts of things that had market would find juicy. unfortunately we're not going to get too much more clarity. >> we'll have just have to wait a couple of weeks, then, for the fed minutes. but one of the things that might cloud the picture is we've got this record quarterly refunding auction this week today with 37 billion and tomorrow, the ten-year just one hour ahead of the fed announcement, how is that likely to impact currencies? >> i'm not so sure about a currency impact. clearly, the market is still looking for what the demand pict

for example, the $70 billion the treasury invested in insurance giant a.i.g. and the 75 billion it has invested in general motors and chrysler. shepard? shepard: peter varnes at the business desk. thank you. southwest says it needs more time to replace unauthorized parts on some of its planes and jets. facing a federal aviation deadline of tomorrow, the flier originally told regulators that the parts were installed on 46 planes. now the company says that number is 82. f.a.a. officials have said that the unapproved parts do not pose an immediate safety hazard for anybody. but that they do need to be replaced. a southwest airlines spokeswoman also says the parts are safe but acknowledges they were made by a subcontractor, not approved for the work. the airline reports it has suspended the maintenance narm hired that subcontractor. how much do you think it would cost to buy spiderman or the x men? turns out it's about 4 billion. disney announcing today it plans to buy an icon of the comic book business. it's a deal that would give disney control of marvel's 5,000

the fed is now in the process of buying 300 billion dollars in treasury securities... in an effort to keep overall market interest rates low... and to help improve the credit markets. that program has been under fire since it was announced... back in march - and yeilds went up anyways.. from 3 to almost 4% today. the fed also kept short term interest rates close to zero as expected and those rates will likely remain low for an extended period. later in the show we'll talk more about the the fed's exit plan...and what that may mean for investors come this fall. ben bernanke has only three more scheduled interest rate meetings left before his current term as fed chairman is due to expire. bob chirinko is a professor at university of illinois at chicago. so how would you grade the chairman does far? very good but not perfect. he has made few mistakes over his three- year tenure but he had a very challenging times. he's done an absolutely up excellent job. was that the top of it in a state list? lehman brothers. budding member of the failed. the second when he was a little

the fed. one good thing that did happen yesterday is we had a successful treasury auction. we had a $37 billion offering of three-year notes and those went very well with a decent bit to cover and the thing that people were watching was foreign demand. there's new sort of rules about how they count the foreign demand, but it came in at well over 62%, which would mark a record. 3.44% for the 10-year bund yield this morning. today we will have a auction one hour before the fed decision. the ten-year yield has come in, 3.65%. taking a look at gold this morning, it is trading at this hour -- there we go -- off almost about 3 points at $942. christine. >> hey, bertha. joining us now for market strategy ahead of the fed decision is franz winsel and ajune know mahindra, managing director at hsbc. gentlemen, thank you very much for being with us. ajuneau, let me start with you. what could the fed do that could possible out of investor confidence? >> at this point, not very much. if they give any hint that rates could raise, that could rattle markets because nobody is convinced about

treasuries? >> no, i think for the moment our purchases on treasuries are quite low and it's by nar our largest underweight in our portfolio just now. >> is that because you are concerned about growth picture, inflation picture in the west? >> no, we don't necessarily see the month supply picture as favorable at the moment. that's why. >> and on the equity side, one thing that i noticed, and in norway, you take the time to look through things.. sometimes in a different way than others do. i wanted to highlight on this. looks like about 11% of your equity holdings are your fund overall, which perhaps is a more significant statement, are in water related companies. why is that? >> well, you know, we have been having a big explosion in that area. and corporate efforts, water management is one of our focus area for that work going forward for the next few years. and that's an area we look more closely into. >> is that because you believe we're going to have a shortage of freshwater or we look here in the u.s. it's amazing how cheap water is when you just look at your own home, compared to heating your homes? d

why isn't there a rush by the treasury and the banks to do loan modification? >> i have gotten some done it in the past three or four months. i would say some go as long as six months. in my opinion, it is incompetence, lack of staff, disorganization. we submitted the same paperwork up to five or six times. greta: why can't this get done? why want of the banks do this or the treasury? what is the holdup? -- why won't the banks do this? >> they were waiting for the federal government to come out and make some changes. they were holding everyone off. there was a loan modification case, this is a real hardship. he is using up all of his assets. he has made all of his payments on time. this is the perfect case of getting it done quickly. greta: you can go to the government web sites for more information on loan modification. we will show you what rush limbaugh has to say about the cia torture. does the word chomp describe us? we bailed out aig for $180 billion the ceo is on vacation. wait until you see these pictures. carol, when you replaced casual friday with nor

s half arillion dollar credit line at the u.s. treasury. but bair also ded she never sa never. darren gersh, "nightly busins report", washiton. >> many of the enomic reports wee seeing show signsf improvement. so if the onomy is doing better, why e the banks still in trouble? scott gurvey explains, it's matter of timing >> reporter: it ll take months before t green shoots appearing in the ecomy show up at youneighborhood bank. that's because the j loss comes firs then the missed rtgage payments, then the foreclosures. and with home foreclosuresomes trouble for tailers and others dependent on consumer spendi. morningstar nk analyst jamie ters, says that's why banks are just beginningo feel the pain fm commercial mortgage failures. >> you have alst half a year betwn the time when the first mortge payment was missed to the ba's probably charging off the loan. and so what you have is ha a year and sometes on commercial credit it's almost as ng as two ars of lagging charge-offs the banks are having so the combition of that the ct that these problems have just been accumulating throug

moving on to the treasury market on the back of another relatively successful auction yesterday of two year notes and ahead of another auction today of seven year notes, we do see the bund yield creeping up at 3723%. yesterday, the price went up just a little bit on the benchmark ten year t-note and the yield came down and that trend is continuing, although it's basically unchanged with yesterday's close right now at 3.43%. and then moving on to gold, it dropped just 20 cents an ounce yesterday to $934 an ounce. today right now, you see it's down 75 cents at $944.55. a lot of analysts think gold is locked in a range new mexico after the united states labor day. >> joining us right now. we have our panel dibie and daniel. gentlemen, thank you very much for being with us. daniel, let me start with you first. a lot of risk aversion here in asia. how bumpy is the road ahead going to be for equities? >> i think it's going to be reasonably bumpy. valuations are clearly extend at about 9 1/2 times earnings. your risk/reward from these kind of levels is poor. back testing is a guide. also, i t

s half trillion dollar credit line at the u.s. treasury. but bair alsadded she never ys never. daen gersh, "nightly business report", washingto >> many of the econoc reports we're eing show signs of improvement. so if the econy is doing better, whare the banks still in trouble? as stt gurvey explains, it's a matter of timing. >> reporter: it willake months before the gen shoots appearing in the economyhow up at your nehborhood bank. that's because the job ls comes first, tn the missed mortge payments, then the foreclosures. d with home foreclosures com trouble for retaers and others dendent on consumer spending. morningstar banknalyst jamie pete, says that's why banks are just beginning to el the pain from mmercial mortgage failures. >> you have almostalf a year between e time when the first mortgageayment was missed to the bank'srobably charging off the loan. d so what you have is half a year and sometimesn commercial credit it's almost as longs two yearof lagging charge-offs the banks are having. so the combinati of that the facthat these problems have ju been accumulating thr

beginning, the banking supervisor was not a part of treasuryat the last minute it was put back in. i just wonder if one of the things we ought to be looking at is absolutely ensuring that this banking supervisor -- even more independent than has been laid out. very briefly. >> may i respond to that? >> adulate this may surprise you, but i was a strong advocate of keeping it within the treasury but subject to the same fire walls we have now, which dose -- does give the agency is strong ability to operate independently. i believe creating a new board, if you have three other regulators still in existence and everyone has forced them i'd think it will confuse things. it is critical, however, you do have the statutory fire walls. that is a position that i actually advocated for. >> any different opinions in the panel? >> as an independent agency, i think the types of supervisory functions that occ and ots perform, and will look at them in terms of the front line prevent -- prudential supervision of the banks we ensure. i think there are some merits