if treasury does not put this information up on its website this committee will come and treasury does not turn over this information voluntarily, secretary geithner will be brought before the committee to explain why not. what we have heard today convinces me that one of the best things congress did when they create t.a.r.p. was to also create the inspector general to oversee t.a.r.p. spending. i can now understand why the treasury department would like to rein in sigtarp, but we are all going to let that happen. you heard from the amendments on the committee today in terms of their commitment. again i thank our witness, mr. barofsky. finally, please let the record demonstrate my submission of a binder with documents related to this hearing. without objection i enter this winder into the kennedy records and without objection, the committee stands adjourned. thank you, mr. barofsky, for your time and information you have shared with us. the committee is adjourned. >> thank you, mr. chairman. [inaudible conversations] [captioning performed by national captioning institute] [captions cop

if that is the only goal and that is what treasury should be doing, then treasury should act like anyestor. they should take these to market when it's appropriate to take them to market when they make the judgment that they would be better off to hold, then they should hold. there are those who believe there are alternative considerations. there are those who are deeply concerned about the notion that the federal government holds warrants. we ultimately believe that is a policy choice. there's a difference of opinion on which is the right way to go with these warrants. and my strong view on this is that we laid this out in our report and ultimately congress should advise treasury about what it thinks is the right way to go here. i think we do this through this hearing process. we want to say that if what they're trying to do is maximize value, we can point out ways that we think that is best accomplished. if they have other considerations, then let me be blunt. then they should articulate what those alternative considerations are and how much money is left on the table in order to acc

treasury. >> okay. so the head room is the difference between the amount that we have budgeted and the amount of the total limit, which is $700 billion. plus the amount that's been repaid. we have budgeted dr 643 billion but we also have repaid money. when you add the repayments between the 643 and the 700 billion, you end up with about $128 billion of head room which we think is important to have at this point in this economic crisis in case banks find that they need additional funding in order to maintain their activities and preserve their financial standing. >> when you define budget those are funds you already committed that have not been -- >> these are funds that we have allocated and we may use for certain purposes. let me point out at this moment that we have invested about $360 billion. >> this is 643. >> if you extend to october 2010, is that correct? >> it would be the treasury secretary who has the authority to extend the program. the head room in flow and outflow remains the same. you've g

treasury. and so the head room is the difference between the amount that we have budgeted and the amount of the total limit which is $700 billion. plus the amount that has been rebuilt its we have budget and abroad for injured billion but we have repaid and when you add three payments to the difference between the 643, 700 balad and you end up with about $128 billion at this point in this economic crisis in case banks and find that they need additional funding in order to maintain their activities and preserve their financial strength. >> but, we need to fund a budget you mean those are funds you already committed for? >> these are firms we have allocated and we might use for certain purposes. let me point out that at this moment, we have invested about $360 billion. so it is the difference between the 360 and 643i believe it is is what we have more or less earmarked for additional use. >> when you say allocated, it might be an asset type of allocation but not a specific obligation to fund a ba

if treasury does not put this information up on its website this committee will come and treasury does not turn over this information voluntarily, secretary geithner will be brought before the committee to explain why not. what we have heard today convinces me that one of the best things congress did when they create t.a.r.p. was to also create the inspector general to oversee t.a.r.p. spending. i can now understand why the treasury department would like to rein in sigtarp, but we are all going to let that happen. you heard from the amendments on the committee today in terms of their commitment. again i thank our witness, mr. barofsky. finally, please let the record demonstrate my submission of a binder with documents related to this hearing. without objection i enter this winder into the kennedy records and without objection, the committee stands adjourned. thank you, mr. barofsky, for your time and information you have shared with us. the committee is adjourned. >> thank you, mr. chairman. [inaudible conversations] [inaudible conversations] [inaudible conversations] adel conversation

statutes initially prevented the treasury to prevent a warrant to cash or exercise when treasury decided that doing so would allow public reasonable gain and that the market was optimal for such assets, and that the goal was to maximize the value for tax payers. is that correct? is that your understanding? >> diaz, congresswoman. in fact, the law has changed several times since the eesa law was enacted, and recently we've been given the ability, again the flexibility to sell the warrants at a time of our choosing when we think it is in the best interest of the tax payers. >> and you believe that is still despite the changes in the goal to maximize return for the taxpayer? >> we believe that selling the warrants relatively soon after we are repaid by the bank for its preferred stock investment that it is appropriate for us to sell the warrants in a way that will benefit the taxpayers and the reason for this, one of the reasons is a war in the value is based on a stock value that incorporates the market's expectations regarding the future performance of the stock so even if we sell the war

treasury-only money fund. interest rates are so low now that many treasury-only funds yield exactly zero. you can get better yields and government safety from your friendly local bank. finally, look at funds that have rotten records for a long period of time. sure, they could get better. but they usually don't. most people don't need more than six to ten broadly diversified funds with low expenses. all those other funds do make money, just not for you. i'm john waggoner. >> paul: recapping today's market action, caterpillar's outlook helps lift stocks. the dow gained 67 points and the nasdaq added almost seven points. and to learn more about the stories in tonight's broadcast, to watch our streaming video and to take part in our daily blog, go to "nightly business report" on pbs.org. you can also email us at nbr@pbs.org. >> suzanne: that's "nightly business report" for tuesday, july 21. i'm suzanne pratt goodnight, everyone. and good night to you, paul. >> paul: goodnight suzanne. i'm paul kangas wishing all o

>> i think fit in the ig act and what treasury suggests we fit within that scheme secretary of treasurys the ability to shut down an audit or investigation of the treasury ig and we think there would be a great threat to our independence of the secretary had that ability over us. by way of an example obviously the treasury has been strongly worded that the portions of the report they disagree with. theoretically could the years that supervision authority to order us to keep that out of the report and keep that information from the taxpayer and members of congress i am not sure but we think those are the types of dangers we see if we are under the supervision of the secretary of that type of authority was asserted that would be a direct threat to the reason we were created. >> i concur with that and i think you would like this body no and me in particular if there is any instance moving to get them to control that natural tension having an independent auditor, and is healthy for the process and the viability and physically to the american people at me talk briefly about the personnel and

government is set to auction off billions of dollars in short and long-term treasury bonds. we've seen this time and time again in every other week really since the spring the government continues to issue a record amounts of ious every week backed by you and i in every other market. let's take a look at how this is plain and charts to f t zero t f which is the e t f that tracks long-term treasury bonds and f s h why is the e t f that tracks short- term want to pre year treasury bonds in and he compared them both you can see that s h why the short term bond e t f which is down 1% and t o t a one that tracks the long-term bonds is down 21%. if to what is this telling you is telling you that people don't mind buying owns but they better mature in a year or three years or something like that very quick time in what some interesting here is that when you take a look at the stock market hit the flat spot in june or july this when you saw the shy which is short-term treasury prices moved higher as people plowed back into the treasury market to get a little bit of yield and a lot o

treasury department? stay tuned for this important update. >>> and giving away ak-47s in order to sell cars and trucks. you know what, folks, it works, and we have the kansas city car dealer to tell us how.w. >>> fasten your seat belts, everybody, "the kudlow report" with capitalism and freedom begins right now. >>> good evening, everyone. i'm larry kudlow. welcome back to "the kudlow report," where we believe, free market capitalism is the best path to prosperity. here's my keynoter for tonight. a fantastic week for stocks, a great start for earnings. let's not look these gift horses in the mouth. in other words, a bullish week. let's enjoy it for a change. america has some life and resiliency and optimism still left in it.Ñ there are even signs of free market capitalism reemerging from washington's decision not to bail out cit. for the moment, i'm going to try to forget the horrendous tax spend and nationalized health care bill. i still believe it will never pass. the best piece of economic news i saw t

and yet to date, the treasury has not purchased those assets.know, when did you know that you could not be able to do what you told congress -- i remember hearing -- sitting in on the conference calls. i remember when you came in front of lawmakers and you talked about, we're going to buy these troubled assets. and yet -- actually, ten days later, you changed direction completely and instead just injected capital into the institution. so did you did he receive congress before the october 3rd vote, mr. paul. >> yeah -- >> and, again, pretty clear pattern of what's taken place. >> well, unfortunately, i don't think i have time to respond to every question you asked or every statement you made, many of which i disagree with. but let me get to the t.a.r.p., because i think that's critical. we went to congress, and when we asked for authority to buy liquid assets, we also recognized we needed flexibility. and we worked with congress to make sure that we had the flexibility to deal with whatever we had coming at us. congress, i believe, knew they were

he served as secretary of the treasury from 2006-2009, at january 2009.e previously served as the chairman and ceo of goldman sachs. it is policy that we swear our witnesses in. >> ok. thank you. what do you solemnly swear to tell the truth, and the whole truth, and nothing but the truce? >> yes. >> he may be seated. >> distinguished members of the committee, i served as secretary of the treasury from july 2006- january 2009. during my tenure, the world experience of financial crisis was unprecedented in our lifetime. the crisis presented a relentless series of novels challenges that required swift and innovative responses. had the crisis of 2008 been let to one fold without strong federal reaction and intervention, the world 2009 would look very different from the world we live in today. many more americans will be without their homes, their jobs, and their businesses, their savings, their way of life. the crisis last fall friend to disrupt our financial system, not just the institutions that had high credit losses, but all financial firms. as liquidity

let's toss in one more quote from treasury. we will seek to collect and provide useful information that can help determine if we are making progress toward restoring financial stability. >> what am i missing? >> they're saying, look, we do believe it will be good to follow what happens with the money but their argument is banks have other arguments, too. they can't say i'm spending t.a.r.p. money here and other money over here. that's what happened to this t.a.r.p. money. >> does t.a.r.p. money go into a big pot? >> he agrees with you. the inspector general is saying, you know what, i turned to hundreds of banks and they told me, here's where the t.a.r.p. money is going. >> just tell us, come on. all right, josh. >> everyone wants to know. >> show me the money. >> i was waiting for one of us to say it and i knew it wasn't going to be me. >>> the economy is a big concern on wall street this week. the fed chief is talking about it and so is corporate america, so, where do we stand and what do today's earnings reports show? susan

. >> paul: former treasury secretary henry paulson gets grilled on capitol hill for his role in the sale of merrill lynch to bank of america. the tough questioning and his answers ahead. >> susie: the bankruptcy countdown is on for c.i.t. tonight. the nation's leading small business lender is poised to fail. now that uncle sam has put away his checkbook. coming up, what c.i.t.'s failure could mean to small businesses that depend on it. >> paul: j.p. morgan chase checks in with record second quarter revenues. analysis of the results and a preview of what's ahead for the financial sector in the second half. >> susie: google continues to search out profits. the company posted a near 20% rise in second quarter earnings. but the giant web search engine isn't firing on all cylinders. we'll explain. >> paul: i'm paul kangas. >> susie: and i'm susie gharib. this is "nightly business report" for thursday, july 17. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. 7//& >> susie: good evening, everyon

people from treasury. and i came away from that -- those calls with that understanding. >> well -- wait, wait, wait. you came away from that -- well, listen, just a second. if approximate you came away from that from those phone calls, somebody must have said, hey, we can't let them do this. and i would suggest that it might have been mr. bernanke. >> well, what i would say to you, i do tnot know whether someone in those conversations or calls expressly said it, or if my understanding came from just the town and the forcefulness -- >> you know, you're a very smart man. i don't think anybody is buying what you're saying right now. i mean, you guys were on a phone call, there was a number of conversations and e-mails and you're saying that you didn't get any suggestion from mr. bernanke that he wanted you to let them know they were going to be fired if they didn't do what you said? >> i said i clearly came away with the understanding that this committee has in it which was substantiated by the e-mails releas

we're still talking about treasury octobers in which the treasury is basically pushing a lot of paper into the marketplace. i would argue from that perspective, some of the news this week could be more on the dour side by comparison to where it was last week. last week was very filled with earnings. earnings is really the most positive story right now aside from a couple of the things i highlighted earlier. >> in terms of that second quarter gdp reading, what's your expectation, and how is that going to impact what you do this week? >> so we are very focused on third and fourth quarter and some of the more forward numbers than the second quarter one. the number i've been hearing is somewhere around 1.5 down still. if it surprises to the up side on that, i'll be pleasantly surprised. there is a little possibility of that. i think the 1.5 is a pretty accurate believe in for this current quarter. as we said earlier, our general outlook is that we're going to see positive surprises as you move into the third, fourth quarter and first and second quarters of this next year due to the stimul

treasuries have room to move up.d moving up, look at grains, maybe even sugar, cocoa, coffee, look at those markets. right now we're trading in a correlated market. everything is moving right now. >> matt nesto, what do you think the markets will do on gdp report tomorrow. >> you had your outlyer estimate. i don't know where you got that. good research, half a percent positive. >> everyone else is thinking 1 1/2%, joe of deutsche bank thinking 2%. >> it will be a trailing indicator. we need to see the print number and can move on. we will see the close of the month. a lot of statements getting ready to go to mail and a lot of fund managers looking to get long in this market before they look bad. >> both bulls and bears can make money in this market. thanks to all of you. the real deal squad gets into this act. who gets credit for this rally? what could stand in the way? lots more to talk about. i've been growing algae for 35 years. most people try to get rid of algae, and we're trying to grow it. the algae are very b

massif fed and the treasury acting in such a way. they have used this to control our economy with the increasing nationalization from banks to car companies, higher taxes, government takeovers, and possibly health care, more american jobs are being lost. the american people are saying enough is enough. they want answers. an accord to hearing from mr. paulson about his role in these dealings. -- i look forward to hearing from mr. paulson. i yield back. >> thank you very much for your statement. we turn now to our witness, henry paulson. mr. paulson served as the secretary of the treasury from 2006-2009. he previously served as the chairman and c.e.o. of goldman sachs. we swear our witnesses and freed would you please stand and raise your right hand? do you solemnly swear to tell the truth, the whole truth, and nothing but the truth? let the record reflect that he answered in the affirmative. you may be seated. mr. paulson, you may begin. >> ok. chairman, ranking members, and distinguished members of the committee, i served as secretar

meineke. >>> and we're back with secretary of treasury, timothy geithner. let me ask you about this, because i talked to a number of businessmen preparing for this conversation. and a lot of them said, can we tell geithner to stop beating up on business, tell obama to stop beating up on business? we feel like we're the villains, like we're being treat like criminals. congress does it and they don't stand up. the businessmen are heroes. >> if you listen to what the president says, and i stay all the time, we deeply understand that the future strength of the economy depends on the work of the united states. the judges they make and their willingness to take risk again and put money at stake in the economy again. the president understands that. >> do you feel it fair to say that they've been battered unfairly? >> you're thinking about the financial system? let's talk about the financial system. again, the financial system has suffered a dramatic loss of trust and confidence largely because of the judgments many of the leaders of our institutions made in managi

will the prime minister accept that his own figures show that once the treasury's forecast for inflation of total spending will be cut after 2011? >> no, mr. speaker. total spending will continue to rise and it will be a 0% rise for 2014 and 15 last. in 2011 and '12 and '12 '13 -- >> order, prime minister's answer must be heard. >> i think that answer gets 0%. the prime minister said very clearly, no, it will lies well, can he explain this? this is a treasury presentation that has been given to us and on page 7 -- on-page 7 it says very clearly with headings for current spending and capital spending the headline in reduction in medium-term

treasury telling me, we all had that same conclusion. when it came to the amount of money that was needed from the government, they just said, you know what, that's too much money. now -- >> we continue to get stuff, like this e-mail that just came in. citi's collapse will destroy -- gl cit's collapse. >> i'm sorry. will destroy the new york garment industry. factoring is a need for the industry. >> we just talked to the man who makes patio furniture. you can say there are other places to get it and there's not a need for small business lenders but we get anecdotal evidence through our e-mail that a lot of people who think they won't be able to get this from other banks. >> people will feel this.y that's the most difficult part of going through this kind of financial turmoil. people feel the foreclosures. people feel unemployment going to 10.5%. all of these have enormous consequences in human terms, but, unfortunately, that doesn't necessarily justify -- >> wouldn't you argue, though -- >> taxpayers coming in and supporting every compa

meineke. >>> we're back with secretary of treasury, timothy geithner.e ask you about this, because i talked to a number of businessmen, and a lot of them said, can we tell geithner to stop beating up on business, tell obama to stop beating up on business? we feel like we're the villains, like we're being mistreated by congress. >> if you listen to what the president says, i feel at times the same way. we feel deeply that the strength of the economy depends on the work of the united states. their work at putting things at risk again. the president understands that. >> do you feel it fair to say that they've been battered unfairly? >> the financial system? >> let's talk about the financial system. >> the financial system has suffered a dramatic loss of trust and confidence largely because of the judgment many of the leaders of our institutions made in managing those institutions. the consequences of those choices were vae damavery damag to people across the country, and i think those firms will still have to do a lot to try to earn back the trust and conf

we've had -- i think in the range of $80 billion in capital come back to the treasury. just over the last two months. >> yeah, the capital purchase plan, making money. >> and -- >> and some of the lending programs. >> and if you look at the value of the investment the government made in goldman sachs after the warrants, the government did realize that 23% annual return on investment, and that is a measure of the effectiveness of the policies congress helped put in place to try to bring more stability to our financial system with the effect of those actions, the ultimate cost of this crisis could prove to be very modest, relative to the scale of the risk we confronted. but we won't know that until -- >> and let me ask another question. but i think you've got fannie and the car companies are our biggest loss, looking to me, maybe aig. you know, you -- you're talking about the capital purchase plan. the idea there was, we put the money in the banks, they'll lend it, you get a multiplier effect, and then it will pass through the economy and i think velocity is the economic

treasury.nd we report -- as set forth in the statute, we are required by each quarter to report to congress. we are within treasury but the special inspector general serves at the pleasure of the president. we are certainly part of the executive branch and the reports are public and we are intended to be an independent oversight body. host: do tarp funds have a sunset? guest: the program does have several provisions -- first, for example, treasury cannot institute' additional investmens pass this year unless extended through treasury. and the program and when treasury no longer holds assets that it purchased guaranteed. host: the web site is sigtarp.gov, and what will people find? guest: they will find a lot of information about our office. all the reports that cannot -- including from this past money -- all the announcement, and most importantly, our quarterly report. we put a great deal of time and effort into this product every quarter, and it really is a place to go. if anyone has a questio

. >> paul: that's why the treasury secretary says we need a new single regulator for things like mortgages and credit cards. but he's running into a host of opposition. >> suzanne: getting the engines of economic growth cranking again. coming up, we take a look at what the recovery will look like when it finally takes shape. >> paul: tonight's "market monitor" guest says investors beware, we're definitely in a bear market rally. he's frank cochrane, president of investment timing consultants. >> suzanne: then, the recession is wilting flower sales as americans pull back on everything from major purchases to incidentals. and that's pruning growth for the floral industry, here and abroad. >> paul: i'm paul kangas. >> suzanne: and i'm suzanne pratt. susie gharib is off tonight. this is "nightly business report" for friday, july 24. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> suzanne: good evening, everyone. protecting americans from another sub-prime mortgag

. >> reporter:he treasury depament is under fire for keeping secrets. specifically, how e money the govement provided tohe banks is beingpent. investigatn and oversight mmittee chairman edolphus towns demanded actio >> if treary does not put this informion up on its website, this committeeill, and if treary does not turn over this information voluntary, secretary geithner will be ought before the commiee to explain why not. >> reporter: treasury says oe the banks recee the tarp money 's impossible to distinguish it from other fund special insptor general neil bafsky did his own survey and found banks have used the ney to do everything from paying do debt to mergers and lending. he says the treasu knows exactly wh banks have done wi the tarp fund and should say so. >> the most alarming thing tme is that treasury ctinues to rese to adopt this recommendation, even in lighof the proof that we now ha at this audit, th continue to tell us it was a meangless survey. >> reporr: the treasury's thirty billion dollapublic private investment pgram, known as t p-pip

treasuries. meanwhile, china's second quarter gdp is up nearly 8%, and it's being closely watched worldwide as the first major economy to show signs of improvement. >> translator: a more open and more dynamic chinese economy will bring opportunities to all countries in the world, including the united states. >> and the president said he hopes these two days of talks will help overcome mistrust on both sides, whether it's the economy, climate change, or relations with north korea. maria? >> all right, hampton. thanks very much. we take a closer look at the u.s.-china dialogue right now with joe muse, and don straszheim. nice to have you on the program. good to see you again, don. it's been a while. joe, you've been in china recently. give me your sense of what they're trying to accomplish with this meeting. >> well, maria, i think this is primarily a listen politely and go your own way sort of a dialogue. you heard already in hampton's introduction, we didn't really focus on the currency, they did

so can i ask the prime minister if the treasury -- if even the treasury is going around giving presentations around the country saying public spending as a total is being cut why can't he admit to the truth? >> because, mr. speaker, i've told him previously that current spending is going to rise and that capital spending as i explained last week -- last week will fall after 2011. that is -- that is the -- these are the public spending projections for the future. but i have to say to him, the debate on public spending is about this. how we return to growth and jobs in the economy. the reason that -- the reason we have advanced spending to 2009 and '10. we have proposals for homes and jobs for 2009, '10. the opposition rejected this proposal and increasing the expenditure and the opposition has rejected that. the capital spending that we have proposed is not available, therefore, after 2011. this is precisely the way a government will act to take the country out of recession. and i've together ask him, therefore, why -- oh, yes. his shadow chancellor should explain why he was going to televisi

>> we have an office of ethics and treasury and a white house ethics office? you got it from the white e house?e? >> we got it from the ethics office. >> time is expired. >> this is part of the record. >> without objection. so ordered. >> the congresswoman from california, diane watson. >> mr. paulson, i want to thank you for being here and your patience. a few mondays ago, we talked about an institution that you thought would be able to deal with regulatory activities. how do you feel about the regulatory proposals that have been put forth by president obama and congress. >> that's a brought question. >> have you been following it? >> i would say i made when i was secretary of the treasury, a number of regulatory proposals. put forward a blueprint and there a number of things that the administration put forward that i am pleased about. the wibd down authorities for nonbanking institutions and the idea of a macrostability regulator. >> would you please if we send your questions responds in writing and say when we form this system that these are the points we o

treasury? let us know what you think. >>> today is the day you can drive your old gas guzzler to a dealership and get up to $4,500 that you put towards a new car that is quote/unquote fuel efficient. the program is nicknamed cash for clunkers. it's been trade in places a far flung as egypt and germany. it's designed to help the environment and, of course, the nation's struggling auto industry. joining us to talk about the program kickoff is transportation secretary ray lahood. secretary, always a pressure, sir. >> my pleasure, thank you. >> i know this morning you were announcing the formal rollout of the quote/unquote cash for clunkers program. how many cars do you think will get turned in, in this country during the program, which is i believe, what, a billion dollars in value? >> it's a billion dollar program, and all of this man is used, 250,000 cars, new cars, will be sold in america. that would be a huge, huge boost to the car manufacturers all over the country. >> and the car has to be l

money that money should go to taxpayers in the form of debt reduction, whereas the treasury department wants to keep the money alive and not bury it in debt reduction. is there any sense how much money we're talking about here. >> the discussion is in the early phases, to give you a sense of context, the program in questions, the 7-a lending program does about 12 to $15 billion of business a year you doubled that, it would be about a $15 billion increment. that would be sizable but still sizable small share of the remain i remaini remaining bailout funds. >> do you think this debate of a second stimulus package, first of all, is this a second stimulus package. >> a lot smaller than the first stimulus package. if it is -- but it does have one quality in common which is this is not an attempt to fix the plumbing, banking system, this is handing water out directly to the people who need it. it is stimulative in that sense and goes directly out to small businesses and say, here's the money you need to operate, we're not getting it to you through the banking system, we will try something a

and so did treasury. so now we're in the process of trying to look at the problems that are in the past, but not repeating those problems in the future. and that is why i think it is important, at the end of day, that the regulator for safety and soundness be able to trump these other missions. fannie and freddie became the most powerful influence or lobby up here. and as you know, i've supported a federal insurance charter for some time. and i would like to talk about another issue here. i was concerned about the aig problem and not being able to get our hands around the information. and i think you were, too. we've talked about that. as you've laid out your regulatory reform proposal, there are several problems with the current balance conized state system. it hampers u.s. competitiveness and lacks a centralized regulator which is the key concern for me with the ability to look at the entire u.s. market. as we are working to streamline and consolidate regulatory authority in the insurance portion of our

treasury bonds have completed a 28-year bull market. they hit 2% ten-year treasuries.again in my lifetime, and neither are you. so basically, this is a stock market story in a sustainable economic expansion we're not going to have a double dip. the double dip we had in the '80s was because volcker intentionally drove interest rates way back up to a 17% t bill, 21% prime rate. ben bernanke's not about to give us a 21% prime rate and recreate a double dip. >> and he said, bob, that he has an exit strategy. gentlemen, thank you so much. we appreciate it. >> richard hoey, nigel gault, we appreciate it. 35 minutes to go before the closing bell. we're flat but the do you dow was down 60 points and has come back rather nicely. >> up next a new study unveils the staggering cost of o'boast and the impact on the health care system. details when we come back. today there's a way to save more for retirement, with annuities from fidelity. turn your savings into income -- guaranteed, and get a retirement "paycheck" for life -- guaranteed. call... to get started, and learn how to sec

higher treasury yield, stronger dollar weighing on the markets. the dow is off its lows for the day, maybe 20 points off the lows. nasdaq same situation. >> up next we're digging deeper into today's pullback. does it signal for weakness ahead or are we poised for more up side down the road? first take a look at bond prices today. we're going to show those to you in a second. we'll be right back after this break. >>> welcome back. good to see you again. the five-year auction was a disappointment. now, here to discuss the implications of higher interest rates, charles campbell, senior sales trader at miller tabak, an old friend of cnbc's. charles, i dutifully reported interest rate sensitive stocks got under pressure here, your reits, your housing stocks. but does this automatically mean that interest rates are really going to go up here? >> bob, it doesn't necessarily mean that. here's the problem that we're confronted with. the u.s. government we know has to issue about 3 trillion gross of instruments for the fiscal year ending september 30th. a l

so, can i ask the prime minister, if the treasury, if even the treasury is going around giving presentations around the country saying that public spending as a total is being cut why can't you get to the truth? >> because mr. speaker i have told them previously that current spending is going to rise in capital spending as i explained last week, last week will fall after 2011. that is, these are the public spending projections for the future, but i have to say to him, the debate on public spending is about this. how do we return to growth and jobs in the economy? the reason we have advanced spending to 2009/10 is so we can spend to get out of recession. we have brought proposals for homes and for jobs and for more money in 2009/10. the opposition have rejected this expenditure. we have put forward proposals for expenditures in 2010/11 increasing expenditure and the opposition have rejected that. the capital spending that we have a bense 40009/10 is not available until 2011. this is precisely the way the government will act to take the country out of recession and i have got to ask him,-- is

treasury will love the power.it's got absolutely no chance in that form of passing the house of representatives on a fair up or down vote. so the question really is whether my party will fall in love with the idea to the point where we try to force members to vote on it as in the dead of night or as part of some major appropriations bill because i think the only thing less popular than t.a.r.p. in an emergency is unlimited permanent t.a.r.p. our -- the economists here have asked us to design a system that implies the possibility of bailouts. at least as a possibility. and i hope that whether that's great economics or not, you'd recognize the political situation and help us design whatever the best economic regulatory system is that absolutely shuts the door permanently and absolutely on bailouts. i don't think there are many members of the house that don't want to shut that door. the idea of hiding which companies are tier one seems absurd. first word favor transparency. second, everybody will know anyway. and, th

the only thing i do with bonds is trade treasuries. if i see the treasury yield go below 3.2, i will be shorting. >> no shorts. our second bull, what have you got? >> i'm right there with you, dennis, you echoed some comments i was going to bring out. two things i look at, consumer confidence which is strong right now and look at rising interest rates of all things. rising interest rates, that simply means the mbs market is flooding right now, people are buying and refinancing, refinancing means more discretionary money and buying means more ancillary services bought and sold. this is a great time. two years ago i predicted we will be out of this third quarter '09, i'm feeling real good. >> john, you're a bearish kind of guy, but if you're not careful, you will miss this bandwagon. >> am i on here. >> yeah. >> first of all, it's john lekas. >> sorry about that. >> i appreciate merrill's comments, they make 300% more if everybody is invested in equities. the last time they did this was in 2005 and almost put them in bankruptcy. >> just

copper off 2% and really in an amazing statistic, treasury bond rates, the ten-year treasury down all the way now to 3. -- no, 3.29%. a month or five weeks ago, that thing was 4.25%, now it's back to almost 3.25%, i'm regarding that as a lower expectation of the economic growth, dan. how do you see it? how do you play it? because there's enormous cash on the sidelines. >> right. >> maybe it's time to go into corporate bonds. i don't know. we need some advice from you on this. this downdraft in commodities and fears of no growth are real. >> they're absolutely real. i think it's a little too late to be getting on the corporate bandwagon right now. but it is telling to me, i mean, you kind of said it as far as all the cash on the sidelines. i hate to be a party pooper, but i've been telling the folks that i talk to that, really, just on the sidelines waiting and seeing is not a bad place to be. because we are at that kind of tipping point with a lot of the different -- >> you don't get paid for it. >> no. >> the problem with the cash story is you don't get paid for it. i'm looking at th

reporter: neither does he, insisted treasury secretar timothy geithner >> innation in products-- that's verimportant to us. this is one of the great strengths in our syste we just let it g a little too far away from any bac sense of gravit weeed to bring that balance back a little bit. >> reporter: but every regator inown is shooting at some aspect of the new agency, calling it powers too broad or its structure o insular. testifying lat, federal reservchairman ben bernke, f.d.i.c. cef sheila bair and others we all asked whether they would take backome of the powers the ainistration wants to take from them and gi to the new agen. as fra predicted, they all agreed. >> yes. >> reporter: thaunited opposition is one reon treasury sectary geithner wants to movby the end of the year on regulatory reform. bankers, brokers andven regulators allave reasons to rest change. the adminiration fears reform will only t harder if it slips into next year. darren gersh, "nightly biness repo," washington, d.c. >> suzanne: stronger tn expected cporate earnings have helped undern stocks this week and push th

treasuries? i think they'll buy less of them as it when it was indicated they're looking to deploy more resources and prestige it activity overseas but what they're really concerned about is getting their dollars back into one piece in other words the monetary or quantitative easing and reflation one make sure the economy is what they hold is coming back to them one piece. and add to this question does china's steel survive on the appendix of united states? no. there's too much growth hormone in time if you look at the makeup of the last she d quarter you have retail sales growing at 15% you have a middle-class of to propose million board to 400 if million- plus i think the united states or the bull story in the u.s. is the broader increase our exports from the one country where you have to have a strategy to do that is in china because nowhere is there greater consumption potential been china. and ok i have another question for you? pakistan still a bear? we have been questionable about this gro

since the treasury, this is important to keep in mind, the treasury department is the sole entity that borrows on behalf of the frl government and can do so more, the bank should be under the treasury's authority, otherwise it just becomes a part of the department of transportation. and their existing finance program. we need to be thinking bigger. and if ever there was a time to start thinking big, it would be now. . been performance and opportunity are all built on the platform of investments -- innovative public investment. every great american president has come up with a great investment project. from the rear can now -- eerie canal to others. the chapters of our american success story have always been written in stone and mortar and iron and steel, granite, and fiber-optic cable. we must come together to write the next chapter in infrastructure investment for our nation. i look forward to working with you. we can do this. we need to have the courage and the will and the foresight and the vision to move forward on this plan. you can play an incredible significant role in raising t

treasury securities. top chinese officials did not mention their concerns about trillion dollar u.s. budget deficits and the possible impacts on the dollar. vice premier wang choose to emphasize the positive, talking about global cooperation between the superpowers in stemming the crisis. >> translator: thanks to the posing measures adopted by the u.s. government, the market fi markets are also stabilizing. >> the u.s. wants china's cooperation in leading global financial reform, as well as chi climate change. the two countries recognize their differences. president obama talking about human rights. a top chinese official saying china will never be the u.s., and the u.s. will never be china. sue? >> thank you very much, hampton. >>> before we go on to talk about this, bill, you were mentioning the tip auction. >> the 20-year tip auction, the results are in, 2.378% is the coupon. i'm trying to get a read on what the nontips, what the treasuries are doing to this now. the bid to cover ratio is 2.27. santell

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 at way too long, too low too long. so how can you defend the fed maintaining independence 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 economy. >> i do not equate independent to secrecy. in fact, i agree with the underlying premise i think was your question which independence and secrecy in a democratic society are antithetical. and i think the federal reserve has been quite transparent and has 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 are doing only by explaining to you what we are doing and why we are doing it. we have not only the statements which you mentioned in your opening statement after every meeting explaining what we did and why we did i

what about the difference you're seeing versus what treasury sees?what treasury has done is they've taken a number, taken it out of context, erected a straw man and knocked it down. if you look at what our report says, and you look -- i think it's on page 13, we make it very clear what we're talking about with these numbers. what we've done is, in the name of transparency, there's so much controversy, so much discussion, not only about the t.a.r.p. but the context of the t.a.r.p. the other bailout programs, the other financial support that the federal government has. we often hear about a bank not only is it borrowing from the t.a.r.p. but also taking money from the federal reserve under the taft. so we decided to put all of these programs in one place in our report. so we go through 50 different programs, approximately 50 different federal programs. what we did for each of them is take the numbers put out by the government, the treasury, the federal reserve, the fdic and we put three numbers up. one, total number outstanding as of today, which about

that would be a good question to ask the treasury or the fed. but it could be quite large. >> in your opinion -- could you give us an estimate as to how many you think it might be? >> i have no idea. i think one of the problems, quite frankly, operationally, there is no definition of systemic risk here. and so it could -- it might not be by the way, this federal reserve. these people who make a decision. it could be their successors. >> yes, sir. >> and so i think the danger just as you say is once these institutions are in this group an they do become too big to fail, in fact, probably too big to resolve, because it will look like a black mark, and so, they could become fannie mae's and freddie mac's of the future. >> i like your emphasis on realism. >> i'm new here, so i'm sure i'll get over it. >> try hard not to. the realism to me says what would the systemic risk regulator do with a tier one holding company? in my opinion, it would be fannie mae and freddie mac -- >> that is my concern. >> there would be -- these are going to be banks or in

treasuries. we saw the two-year treasury yesterday, that massive $42 billion offering, not quite as robust as some of the previous. today we've got a five-year note at 1:00 new york time, one of a slew of offerings this week. so those are being watched. we've got the ten-year yield at 3. 6/6%. that's down from about 3.7% or so yesterday. taking a look at gold, the dollar is getting a respite and gold is coming down just a bit, off about 2 right now at $935.20. christine. >> bertha, let's get more on china's state construction, the ipo, biggest so far this year, the stock surging as much as 90% in the market earlier. lei, tell us more. >> we had a dramatic day and a big sell-off in china both which had been expected. so analysts say that is well ahead of fundamentals. the shanghai xotit had its worst day in eight months. the first day gains swung in a wide range from 48% to 98% finally ending up about 56% at 6.53 yuan. the ipo was hugely popular because its business is construction and property de

the treasury department said foreign investors sold almost 20 billion more in treasuries than they purchased's a big jump from -- a big drop, rather, from the 11 1/2 billion in net purchases for the month of april. as congressional committees continue to drill down into specific moments of the financial crisis, a new commission will soon begin to put the entire puzzle together. from causes to shortcomings and solutions. joining us in a cnbc exclusive right now is phil angelides, chairman of the newly formed d financial crisis inquiry commission. he's also the former treasurer for the state of california. mr. angelides, good to have you on the program.m. welcome back. >> it's good to be back with h you, maria. >> well, we've heard very little about the financial crisis inquiry commission. who called for the commission to be established? who's on it? tell me what you're looking to achieve. >> sure. earlier this year congress passed and the president signed legislation to create a ten-member, bipartisan financial crisis inquiry commission to pursue a mission of great national importance, which